started her remarks by noting that every one of the organizations
where she has worked was dealing with the reality that the way they
had done things in the past was not working any more. They were
struggling with how their business models needed to change in order to
address the new realities of the new economy and the new demographics,
what she called "the new normal."
- Planned Parenthood was struggling with the economics of how to
provide health care to poor women. It couldn't afford to do things
as it had in the past.
- The City of Minneapolis had major problems with debt in their
service areas. The city was borrowing money to pay for ongoing
- The state government is facing the same challenges now, Smith
said. The budget has been out of balance for 10 years. Some
programs' operations have not been seriously looked at in decades
and the Governor and his administration are addressing that. There
has been a significant underinvestment in technology and
infrastructure that would allow the state to operate like a modern
enterprise. The average age of employees in most state agencies is
51 or 52. At best, in some of the state agencies, she said, there
are eight percent of employees who are people of color. "That's not
the way Minnesota looks now or in 10 years," she said. "We have to
adapt to that."
The Governor is a strong executive, going
out and finding the very best people and persuading them to work with
him. Smith said Dayton has surrounded himself with commissioners
recruited because of their big ideas. He's given them the capacity to
move those things forward. "He's told them, 'I don't want
drop-in-the-bucket government. I don't want all incremental change,'"
Dayton's model, Smith continued, is to
recruit and retain the best talent and to give them the opportunity to
do big things without fear. "That's hard in the public sector. We have
a huge amount of talent within the state bureaucracy, but they've been
told to keep their heads down and not make waves or do things that
could embarrass anybody. We've been working on thawing out that
Gov. Dayton supports redesign and reform
work. "The Governor believes passionately in the power of
government to make a difference in people's lives," Smith asserted.
"He believes just as passionately in the obligation of government to
do a good job. He wants to make it work."
She pointed out that Gov. Dayton brings a
background of customer service learned from growing up in the Dayton's
Department Store family. He also brings 30-plus years of public
service with him. "We approach work in redesign and reform with him at
our back," Smith said.
The state's most significant redesign work
is in the health care area. Smith pointed out that health care is
where the state spends most of its money. She said passage of the
health care exchange is one of the most dramatic reforms in the way
we're going to be providing health insurance to Minnesotans. "It's
massive reform," she said. It's transformational." Not only will
individuals and small businesses buy private insurance through the
exchange, but almost one million people will be buying public
insurance there, as well.
Smith stressed that Department of Human
Services (DHS) Commissioner Lucinda Jesson has made big changes in the
way the state purchases health care. "We're completely changing the
way health care is provided," she said.
DHS and Jesson are now implementing reforms
to how the state is purchasing health care for 100,000 of the state's
900,000 Medicaid recipients, Smith continued. "It's a completely
different way of purchasing from the health plans, where we're saying,
'these are the outcomes we want to achieve. How much is it going to
cost to achieve those outcomes? If it costs less than that, we'll
share the savings with you. But it can't cost more than that.' That's
a great example of a shift in the way we need to think about how we
purchase health care. It's a really great innovation."
The 100,000 people DHS is working with on
this reform are the children, families, and low-income adults on
Medicaid, Smith explained. "The plan is to move into more challenging
populations. But we have high hopes for that."
MinnesotaCare is now in a transition period
and will evolve and improve. In response to a question about
MinnesotaCare, Smith asserted that Minnesota has been on the forefront
of innovation in health care for several decades. MinnesotaCare has
given more working people the ability to get health care. As we move
into implementing the Affordable Care Act (ACA), she said, we don't
want people getting MinnesotaCare to be worse off because of federal
Eventually, MinnesotaCare will transition,
Smith said. "We have a vision for a unified, streamlined program in
which low-income people will be able to get affordable health care
with more efficiency and smoother transitions as their income
increases. Right now we're dealing with an awkward transition period,
where families sometimes lose eligibilty for certain affordable health
plans as their income increases. We need our federal partners to help
us ease that transition so people can get health care they need at an
Health care quality measurements will be an
important innovation. An interviewer commented that Minnesota has
a strategic opportunity in health care that no other state has. The
capacity we've built up over several decades of measurement of
outcomes and cost and the expertise in the Legislature are unique to
Minnesota. "That's a game changer," he said.
Smith responded that the quality ratings the
state Department of Health is working on should be valuable. "You can
measure the quality of what you're getting and apply those measures to
what you buy as a purchaser of health care," she said. "That's going
to be a really important innovation over the next couple of years."
An interviewer commented that the quality
measures must take into account new procedures, new pharmaceuticals,
new training and other improvements in health care. "We're getting so
tied to what's being delivered today that we're not looking at what's
going to be delivered tomorrow," he said.
The Dayton administration has been working
hard on results-based accountability: what is it you're trying to
change and what progress are you making in changing it? "You need
to think about what's the curve you're trying to bend," Smith said.
"We're not setting a goal and when we hit that goal we're done. Are
you measuring all the time whether you're getting better? And you
should be constantly adjusting if you're not getting better. If you
are getting better, you figure out what you're doing that's working.
It's an ongoing process."
Public funding should go to things that
work. An interviewer commented that there is a distinction between
doing better and doing more. When the system is capable of doing more
things, then there's a desire to have those things paid for publicly.
He said looking ahead, the big policy question is not so much the
equity of financing, but what is going to be reinforced publicly.
"In theory, you'd pay for things that work,"
Smith responded. Using the example of special education, she said
there is intense pressure around treating autism. "Very passionate
advocates believe certain things are demonstrated to help with
autistic kids. Other people question that. It's difficult for a public
policymaker to say no to parents with an autistic child who think the
new therapy will help their child. That's the challenge you see in the
public schools with burgeoning special education costs.
Companies must make factory work more
attractive to young people. An interviewer commented that the
renaissance in manufacturing is opening up good jobs. Smith replied,
"Students don't think of going into factory work. It's up to the
companies to make that more appealing and more attractive."
An interviewer explained that in Finland
about 40 to 45 percent of students follow a vocational track. "It's
not considered inferior; it's good for the country," he said. "It's a
Grades 11 to 14 initiative is aimed at
giving students better information on the opportunities available to
them. Smith noted that the state Department of Education, the
Office of Higher Education and the Minnesota State Colleges and
Universities system (MnSCU) are working on an initiative focused on
students in grades 11 to 14. The initiative is aimed at helping
students learn what opportunities there are and how they should plan
to move toward those opportunities. It's also geared at making a
smoother transition for students moving from high school to a MnSCU
campus, she said.
Match standards for entrance and exit in
education. An interviewer commented that our standards in
education have been exit-based, e.g., what do you have to do to finish
high school? Outside of the K-12 system, there are all kinds of
postsecondary choices students want to pursue, but admission to those
programs is based on entrance standards that are not necessarily
aligned with high school graduation criteria.
"We must make the standards for entrance and
exit the same," Smith responded. The Minnesota Chamber of Commerce and
the Department of Employment and Economic Development (DEED) are
working together to find out what jobs are available and how they
match up with the training available on MnSCU campuses. She asked what
the role of businesses should be in providing internships and
apprenticeships to let students get some job experience while they're
The Governor believes in a public/private
partnership to make sure the Mayo Clinic grows in Minnesota. Responding
to a question about the Mayo Clinic's proposal for a public role in
subsidizing its future growth in Rochester, Smith said, "The Mayo
Clinic is a jewel. It's an incredibly powerful engine of economic
growth in the state. It's a center of innovation and the largest
private employer in the state. Mayo has proposed a new and innovative
idea. It's a little different from the old-fashioned economic
development tools. The questions are what is the appropriate role for
the state and how do we pay for it."
There are intense pressures on higher
education institutions to think differently about how they are
operating. Smith said the new Massive Open Online Courses (MOOCs),
free college courses available to anyone who wishes to enroll, are
among those pressures, along with rising tuition, student debt, and
unemployment among college-educated young people.
One of the most important competitive
advantages for a region is a transit system that works. In
response to a question about the proposed sales-tax increase in the
metro area for transit, Smith said transit spurs economic development
and shows a clear return on investment. Regions around the country
able to grow jobs and attract young workers have good transit systems.
She said the sales tax increase would provide a stable source of
funding for transit operations and equipment, not just for light rail,
but for buses, as well.
Thanks. The chair thanked Ms. Smith for
sharing her thoughts with Civic Caucus.