Transcripts For CSPAN2 Capital News Today 20110316

and structure supportive of these schools and other schools to join the ranks. first of all, we do reward superior teachers and we will pay a bonus for when students learn. it is fair, if you work hard and help the kids to succeed, you should win. we are bringing teach for america to this state, like most other states already do, and in fact, they are taking our graduates from ohio universities and taking them somewhere else. it is time to let them come home. at the same time, we are going to end the use of seniority, and employment decisions. now why is this important do you suppose? well, one example. after retiring from the army rangers and raising a family, a gentleman by the name of homer nightstep went back to school and became a teacher and hired on at dayton schools. in his second year at kemp elementary, he was honored by the peers and his school as dayton's teacher of the year. two weeks later, he was laid off in a senior-based system. this is is not something that should happen if we put kids first. by the way -- just for the rest of the story, he actually went to a nice suburban school district where he continues to be an outstanding teacher. the loss of those urban youth who deserved that talent. we are also going to test teachers in chronically failing schools and second support innovative schools and follow california and colorado where the parents and the teachers are allowed to take over failing schools. compton, california, parents are exercising this as they speak. they were tired of miserable student results and tired of a district that simply and i quote a commission, state commission, "lacked any sense of urgency to improve their schools. "the tparents said enough. they are taking over the school and converting it into a charter school. we will also give teachers based on a vote in their school the right to create an innovation school, to create new opportunities for our best and brightest teachers and principals to lead. we will also be calling for greater transparency in school performance. currently, a school can have one of five students fail and still be labeled excellent with distinction and i don't know about you but a 20% failure rate doesn't sound excellent and distinguished with me. we will be ranking the schools on the basis of the student results, because parents and communities deserve to know how well the schools are doing. we will recognize high-performingle skoos and propose to close chronically failing schools. it is time to put the kids first. third, we are going to invest in students not bureaucracy, and simply put, we will drive more money to the classroom. fourth, we are going to increase choice. we are going to let parents choose schools that are safe and where they know their children will learn. we are going to double ed scholarships and remove the cap are from the charter schools and as the governor indicated for those sponsors who don't know how to properly manage those charter schools, we won't let you keep doing business either. we are going to put them where the people who actually know how to operate the schools are. and finally, we will make ohio's system tech friendly and make it the student's right if the student and the parent choose to use online instructional options and simplify, and easy for me, to say, the maze of bureaucracies that manage the state's technology systems. these reforms will empower teachers and principals to deliver better results at a better price. but k-12 is not the only area we need reforms. ask wayne strubl to -- you want to introduce wayne? >> yes. -- >> the reforms are designed to give people an understanding of what works. now what i will say to you is that i am familiar with the efforts going on in cleveland right now to transform those public schools in cleveland. folks, we have to think differently. we can't keep producing a product that can't compete and can't get a job. so, we are not going to abandon the traditional public school, but we are going to force accountability. you saw where the resources are. they continue to go up, and we are not getting what we want. and i don't blame anybody. it is a systemic problem. so, i don't want anybody to think that we are abandoning the traditional public school. or anybody to think that this is somehow meant to disparage the hard work of our teachers. but they need the tools, the principals need our tools and the parents need to understand that their kids are in a location where they can be of great excellence. and you know in the middle of all thofshgs and i hais, i have michelle rhee, the great reformer, and jack canon who has done an incredible job to take kids who got nothing and be able to get them graduated and get them to college. i have been in schools all over new york, and i have been in a school in new york where they the frederick douglass academy where they are miracle workers. and those are one offs. we need to change the system so we can have more success. i want to be clear, i'm passionate and emotional about it, and we have to put our kids out there and get them going first. wayne strubl is going to talk about higher ed. wayne has been with me forever. he was the house staff budget director committee, and he helped get the negotiation in the balanced budgets in 1997, and he is going to talk about higher ed, but he could do this whole program by himself. wayne. >> thank you, governor. over the past several years we have had a national debate over rising health care cost, and lost in the debate however has been the fact that education costs, higher education costs have actually been rising faster than health care costs. these costs are being borne by our students, our parents and our taxpayers. in some cases, it is happening, because our laws are so rigid that it is making it difficult for a universities to manage the costs. in some cases, it is happening, because the students are entering college without mastering the knowledge they need to succeed and knowledge that they should have acquired in high school, but did not. according to the board of regent, our universities are spending over $100 million to fix this problem. in some cases, it is happening, because it is taking five and six years for students to complete a four-year program. during the past year, we have talked to parents. we have talked to students and we have talked to university officials and the one thing they have told us is that these trends are not sustainable. so, here is what we are going to do. the governor has directed the chancellor to work with the universities and colleges to develop a process to give them when appropriate more freedom from overly burden somerules and regulations, and in a couple of minute, randy cole will describe what we will do in one area, specifically construction. second, we are going to make certain that the students are prepared for college. we will work with the universities and our colleges to identify what college freshmen need to know and how best for them to acquire that information. third, we will expect students to complete college in a reasonable time. according to the board of regents our four-year universities graduate only 60% of their students within six years. we believe that it is important for our students to finish a four-year program in four years. [ applause ] however, where we have especially talented students, we believe they can complete college in three years. through advanced placement, through testing, through any number of other avenues. we will work with the universities to develop this program. [ applause ] and finally, we are going to ask the full-time professors to teach one additional course every other year. thank you. >> just a word. we are pursuing the idea of a charter university. university of virginia, one of the finest schools in the country is a charter university. what does it mean? it means that you get freed from a lot of the rules and the regulations. when ohio state wanted to get in a position of being able to raise some money through a private offering, you wouldn't believe the hoops they had to jump through which drove up the cost of being able to raise this money. so, we are going to syst systematically work with our new chancellor to free universities from a lot of the problems that they have, but we also want to make sure that we work with them, with the businessbes in this state. who say with 63,000 unfilled jobs in this state, 63,000, if i walked on the stage tonight and said, hey, i just got a company that provides 50,000 jobs, everybody would be, that, you know, everybody would be shocked. so we have a lot of jobs that are open. but as tom tells us at the university hospital tells me, we haven't trained the people for them. honda said we need flow and we need more people in maintenance and i said, what do you mean by that? we have robots down, and we have to keep moving. i said, you know, that's cool. people want to be involved in stuff like that. so, we can bring our technical schools and the community colleges and the universities in line and also create a system so that they are not competing against one another. folks, this is difficult to do. we are going to get it done. so, let me ask you a question, here, wayne, on this issue of coordinating that curriculum. what holds us back from that? >> well, f shg, first of all, l say that this is one of the most important tasks. as the governor said that we have 60,000 jobs that are open that businesses can't fill. i mean, in some cases, we are talking about people, companies looking for advanced manufacturing. and in some cases we are looking for companies looking for insurance workers and in some case in terms of health care. as far as i can tell, it simply has been that there is a lot of bureaucracy, and things don't happen very quickly in the realm of college, and we are going to fix that. >> when you think about it, ohio's universities and the knowledge workers is one of the greatest assets, and we have not used it. we have to leverage our assets, so if we can tell somebody, you go up to cleveland where they have clinical medicine, and if you want to invent something, a medical device or something, you need the clinical practice to get that done. so between tcleveland clinic an the clinical hospital, and we have the knowledge workers, folks, we have to get this together. we have to. and then we can begin to build real things in our state. doctor, tell us about the background and is this pie in the sky? >> no, actually it isn't. i have spent 32 years on the frontlines as a teacher working at the department of ed and seeing a lot of the schools across the country, and ten years with butler tech and the charter schools, and i can tell you that it is happening all of the time and you are right on to say this isn't about laying blame or anything else. everyday we can go out the find great teachers and great principals and superintendentinsuperintendent ins, and great boards of education to get it done, but just like the knowledge works, it is not about someexpectation, but it is about moving it to the new level of expectation that we have done and that is the beginning. wait until the folks have the key yay creative space, because they will generate the next generation of schools. >> and the stimulus money is gone and you have to fill the hole. i always thought that you shouldn't do that, but what is your view? sgh we >> well, it is funny, because when we were in detroit, our charter schools had to be funded and one of them was a major charter growth fund and they weren't talking about how much money do you need to run the school, but they said, you have to be in the top 5% in the market and urban environment and do it for 7,000/kid for high school. so i think that we have lots of room to talk about not just the stimulus money, but what -- we have a great opportunity to find a better way to do this to serve the kids better. to allow great teachers to get well paid and be very creative and at the same time, make it affordable for taxpayers in the long run which brings us more jobs and brings more taxes and makes everything move forward. >> okay. guys, you know, a rising tide, and john kennedy said that a rising tide lifts all boats and more education creates more jobs and more jobs, more revenue, and more revenue, more growth. and i see valerie here from the conservative group of cleveland and there is a lot of things here that will include mitigating the income from casinos, but randy cole is here for a short presentation to talk about how to drag the local communities and the local schools, towns and cities and into the 21st century. randy? >> thank you, governor. you mentioned the rising tide to lift all boats, but here in ohio we are facing rising costs. the cities and the villages and the libraries and we have 3700 separate units of government that i believe are tied to the docks with over 200 years of red tape. we have four strategies that the governor has asked us to employ. or we like to think of it as four pieces to puzzle, reducing mandates and using 21st century technology and increasing shared services an reducing government cost containmentch and first, mandate. we recognize this try times you cannot put five pounds in a three-pound bag, and we are looking through all of ohio's laws an policies and rules and regulations to see what we can strip out. one of them we found out that the county boards of developmental disable had to create a report that john martin's report is not using any more. we worked with the department and clarified it doesn't have a use and striking it from the law. the county boards were still doing the reports because they didn't want a fine against them, because it is in the law. everywhere there is an unneeded mandate, we are striking it from the law. we want governments to utilize new 21st century technology. one of the initiatives is the creation of a statewide public notice website available at no charge to any of the 3700 public entities or colleges or universities. why is it important? because cuyahoga county alone spent $750,000 alone on legal advertisements for jobs forbid. if you add it up, it is tens of millions of dollars. it is easier for business, one place to find 3700 clients and what they are buying, when they are buying it, and how they are buying it. is going to be good for the public, for the taxpayers and good for business and good for the governments, but there is still an important role for newspapers. we are still going the require a smaller, simpler ad that directs the public to other places to find the information and to the public notice website. we will allow governments and schools to use the internet to sell advertising to expand other e commerce opportunities. in the area of shared services. we are trying to do two things here. first, we want universal authority for the governments to work together, and cities an townships and villages and schools and wherever they are, if they want to band together to find a way to drive down costs and improve services, we will let them do it. why is it necessary? again, a quick example. right now in ohio law, townships have four different authorities to do a joint ambulance district and joint fire district and joint police district or band together with someone else for construction. and guess what, the rules on who they can partner with are different in every case. no more. if you want to work together to do things better, you are allowed to do it in ohio. we are tearing down walls, not erasing the political boundaries through the changes. second, we want government agencies to focus on the core missions, and get out of the business of bureaucracy. at the the county level, the commissioners can create central services for back office and administrative functions like purchasing, it and printing and human resources to reduce costs and bureaucracy. in education, the state of michigan has studied what the consolidation of administrative functions can mean and it is to reduce costs over $112 million. and in ohio, we will develop a process or planning a process to bring over seven separate support groups through an integration together to reduce costs and we will call them regional shared service centers and make it clear they can serve the small local government partners as well. the last initiative in the shared services area is pooled health care. we have got a great health care plan for the state government and we have been asked by local governments to join our health care plan, and we don't want to break what is working well, so we want to maintain the state health plan and take four years of accumulated learning by the health board and take it to the department of administrative services where they have negotiated that good plan before and expand it to local governments and figure out over the next couple of years how to develop a statewide plan for public employees health care. again, the estimates there out of the state employees health care board are $318 million in health care savings in pooled savings alone and when it is applied to government alone, it is big taxpayer savings. finally, increasing flexibility for local governments and the colleges and the universities. they need to be able to control the costs. one of the initiatives is construction contract reform. we are talking about allowing for single, prime and design build. today, instead oone contractor or a local university or college might have to go through to find out their aspect of their project, no more. we will bring accountability to those systems. better resourcing at the budget level. last year, unfortunately in ohio the first county in ohio's history had to go into fiscal emergency. if they had been able to do a quarterly spending plan instead of just an annual budget they would have been able to -- the county commissioner saw the problem coming, they would have reined in cost and we will allow the county commissioners to do that and clarify the governmental authority to use furloughs and modified work weeks and make sure that the services are delivered properly and that government workers are treated fairly through those practices. look, the bottom line, this is a very exciting time. to modernize government for the 21st century and stop fighting to defend the status quo or worse holding onto the outdated concepts that were borne in the 19th century. thank you. [ applause ] >> okay. bob blair is the head of the administrative service, and he is a very, plays a very big role in all of the operations of the state government. randy, excellent job. let me put it to you clearly, we don't think that county recorders and prosecutors and auditors ought not work together with commissioners to save money. i mean, come on, folk, it is the 21st century. there's a lot of the changes that can make a huge difference. the pooling of health care and i call it the walmart plan. the more people you pool together the cheaper you buy. these are the kinds of things that our communities need to be doing to deal with the change in the loss of revenues that they get. if they get move on it, come business life, and not raise their taxes and learn how to be efficient, i'm not telling you it is easy. it is difficult, but if they will do it, we will be more prosperous and have more jobs thaflt is the whole key to this whole thing. bob, you were -- you have been a schoolteacher, a city adm administrator and worked in the state government and running administrative service, and what would it have meant to you back in a city administrator tiffin to have the ability to manage your costs. >> governor, huge. cities have small budgets and have to work hard to control the costs. the pooled health care would have been incredibly helpful to us, and one of the problems that the small governments run into is that with the small number of employee, they are not able to work on programs like wellness and some of the initiatives that you can with a large number of employees, so pooled health care would have been incredibly helpful at reducing costs, and also, i will tell you one of the huge things for me is that you could have a small groups like this, and you could have a bad experience one year, and your health care costs would go off of the charts. you could not budget for that. and so, just like insurance, the costs to be smoothed out and it would give you a chance to manage the costs. initiatives like that are incredibly important. >> and randy, how did you find all of this? is this just the beginning of where we are headed? >> governor, i think it is clearly you set the direction and how we got here and how all of this came together was you made a comment back in november shortly after you were elected a and told people to get on a bus. i have been working on budgets and around government for a long time and in fact, 20 years ago director keen and i worked on budgets as legislative staffers and back then budget process was people coming in and defending where they were and what a great job they did and say can i have the budget i had last year and everyone i have met with and the e-mails and the phone calls and going around, everyone has come in with a solution with a request asking, helping, giving suggestions on where they need to go, and the the tools they need to get there and it is changing the culture for this specific budget process. >> translator: that is one of the keys to the entire process is changing the culture of ohio. back in washington, we changed the numbers and we didn't change the culture. we need to change the culture so that this is sustainable for a generation. bob, just one question about our very effective i.t. systems. tell them about how they are all linked together and how effectively it works. >> well, we have a number of department heads out there, and they can tell you that we have 6 basically different systems out there. one i will tell you about, economic initiative to get system. [ applause ] w lowered the cost. costs will soon be down to $250. right now they are at $450. you get the chance to help them. >> thank you very much. we have a lot of other direct others out here. we have the first woman general ever in our operations out here. the national gouuard. she is a two-star general. that is pretty good. there is only one other general in the country she is in california right now. got david goodman and the great kernel here. we all feel better with the fact that tom charles is there. harvey read. jim searinger. trying to transform this entire reform. five years and several months in the hilton. being tortured, colonel tom mode. he runs veterans affairs in ohio. [ applause ] stand up colonel. [ applause ] scott mally. david musteen. we are marcella shale could transform the entire eastern part of america if those findings prove to be true, and i don't know who i missed.findings the head of the workmen's comp. he is the one on the line in the second half of this year we havu to make the workers' comp systen work so small business the linee second half of the year. we need to make the worker's comp so small businesses can flourish. one of the most unreformed and in terms of out of the box thinking and for all states is the department of corrections. we are so fortunate to get a wardon and the corrections corporation of america. private sector he was asked to do this job three times. they say the third time you are out. it was the fourth time. and we wouldn't be -- let me tell you, this guy is fabulous. and i'm so proud to have him as the director as the part of corrections. gary more. thank you. [ applause ] thanks governor. you know it is a great day to be alive. you know i spent my entire cr k career in this profession as a teacher and been a trainer and director and hr assistant ward on a few times and a director in this department. it was a great experience. i loved the profession so much. i spent another six years working in systems around the country and working in a private sector to see what works. what i do know is that the ohio department of corrections employ employees has given the tools to provide them. we are going to continue a great tradition in the state. what i know is possible is this. we can develop a high quality blended public, private system that is safer. i'm telling you now we need to be i'm going to tell you about this in a minute. we are foe cusing on reform aim at reducing crime. we didn't find ourselves in reducing education. we used federal stimulus money to pay our staff and bills to operate. that is gone. part of accepting this position maybe the fourth time, the plan and the plan was to close military prisons all over the state. so thousands of inmates out of state away from their families, close the facilities and abolish jobs. my wife told me that was not acceptable to mi any of us. we asked our employees what do we need to do this to make this a safer place and save money. i have over 1,000 ideas. fg w everything was different and we saved $30 million based on staff ideas so what else are we going to do? we are going to sell five prisons. two privately operated prisons. and two state operated facilities. and grafton and vacated juv night facility and it is our newest facility in ohio. what we are going to do is safe ohio jobs. we are going to get agreements and put an rfp together and turn around and have those facilities operate with ohio infamates and ensure that our employees are going to promote economic growth and these facilities become private and taxable and become incomes to our local communities. we are going to avoid closing beds and avoid that because that would create crowding and violence and we are going to get more competitive. we are going to take a look at best practices learn from them and we are going to get better and safer as we go along. this is the same system that i left years ago. 2007 we had a violent incident and we had one of those every 28 days. in 2010 we had one of those incidents involving six or more inmates every 7.6 days. in the last two days, we have received our incident reports in two different facilities and we had to be hospitalized with staff we have to reform our directional practices. we have to put staff back inside these housing units to be proactive a thing called unit management that was taken out of our system in 2008 and 2009 which was the fastest increase in violence that we have ever seen. at the same time in the private sector we had private sector system violence went down. we have to improve sentencing practices in the state. last year we received 12,000 inmates into ohio that were doing less than a year. we were doing less than three months. they were setting in reception centers waiting for a vacant bed being du ining bumped next to c criminals and when they were released within a year they are going out with no super vision on definite sentences. we need programs that have produced credit to support that. we need penalties to sanction inmates further that are hurting staff. there are many parts to the system that are impacted and i'm going to tell you these were gutt wrenching systems. the budget impose d supports local economies with property that they can gain from. provides an opportunity for us to stay in the business that gets in our blood. allows best practices to promote the greatest opportunity to have the greatest opportunities in their lives. thank you. [ applause ] . >> one other areas before i interview gary. couple of members of the black caucus including the great mayor of cleveland have talked to me about felonies. there was a man that was a senator smith. what happened was he was working at the cleveland clinic. when he filled out his paperwork they asked him if he has a fellony. he had worked there for eight or nine years and they fired him. these felony convictions. we will work with the most conservati conservative member of the house and senate to make sure that we come up with the system that gives people a second chance. we are not talking about violent offenders and all that. we are talking about people who got caught in a web that they can't get out of. that is something that is going to come later. we all believe that people deserve a second chance. now director let me ask you t s this, this is a question on everybody's mind. are we going to be safe. under this arrangement you want to make? we are going to be safer. we are going to learn best practices and put staff back in the housing units to support the offices whose job is to take care of issues before they become incidents and that is going to improve our safety throughout our system. we are too violent right now we can get better. >> when you talk about the fact that the private experience that you have seen has resulted in lower savings and less violence how does that happen? >> it is a matter of putting prioritied you put your staff resources with offenders in the street. you maximize that staff inmate interaction you do it in a producttive environment and you get better results. >> you know, um, i understand you believe that when we sell these prisons, again two of them privat private, you said it was vacant? >> yes, we have two. we have a vacant juvenile facility. >> what is your judgement as to what we could sell these for? >> well, i have -- i've been told to be conservative. >> what do you think it is? >> i think we could gain $200 million from the sale of these. we are going to get into a long-term interagreement to manage these facilities with our monitors in there to ensure that they are operating under a higher policy. this area is one of the most unreformed. i think the reason why this is working, a guy with vast state experience and vast private experience, maybe we can be in the front of prison refor a cross this country. a big sacrifice, this is a very, very difficult job. and he's carrying it out with distinction and you are the best gary, thank you very much. [ applause ] so, it is what i like to call quami time. mark is a friend of mine. he has lived we are interesting to see what is developing here in the silicon valley. i met mark i don't know 15 years ago. he's been a supporter of mine and in my life. he's a friend of mine. and when i was elected, he said john i want to come and help you create jobs. i want to come out here and you want to have the job in ohio. a little bit about mark. his father was a founder of national seem my conductor. he is an entrepreneur at heart and a ceo. he started his own company. he did quite well. he became a partner at seqoia capitol. he makes a dollar a year. business people all across the state. business people say i want to hire him. there are people in the state that want to drive him out. it is -- that is like saying we are going to have a football team in ohio but nobody can play for him that doesn't come from ohio. mark is going to be here. what is a record in 50 days, 2,000 jobs saved in cleveland american greetings. $40 million of revenue going into cleveland. and how about the fact that bob evans which had a headquarters in texas. the cea thinking about texas they are staying in ohio and there is more to come. what we are try iing to do is t take the tools, a friendly government, mary taylor on rules and regularlation regulations w create a program to give the poorest people to create money to start businesses. we have a million things that we are thinking about. we need the weapons to help people to go outside of the borders and stop playing defense and get on the offense to bring jobs here. and the guy comes here from california. brought another guy here from california. there is a guy here from wyoming. it is incredible folks and, some people think he is over paid at $1 a year. you will have to judge that for yourself. mark, you are up. thank you. thank you very much. the governor calls me great friend. he puts me last before all of you. i'll go through the next 52 slides as quickly as possible. so, let's talk about first where we are at. we've heard about the $44 00,00 jobs that were lost. an average salary represents $14 billion a year. of pay roll that has been lost in the state of ohio. that is a great deal of money. when you think about $14 billion as you are driving down the stre street. think about the local florist and the hair salon, the corner store. those are dollars that have come out of the economy that has effected every single person in the state. fo former budget director published a report that said ohio is 47th in economic growth and 7th in job loss. we have a big hole that i believe through the great citizens here of ohio we can pull ourselves out of it. one other thing that is very important is we saw the headlines of last thursday from the census report. we are losing people in ohio. the most mobile people are the well educated and folks with resources. we are losing the entrepreneurs that are going to reinvest here in ohio. we are losing those key people and we cannot afford to do that because those are the growth engines going forward. so, what we need to do is figure out how to attract and retain the best people and capitol to make ohio a competitive again. and the key thing here is, how do you create the jobs in the key industries around this state that get people excited about what they are doing so they call their friends up and say, i'm doing the cool thing at the cleveland clinic. or i got a job working on new ua kr uac -- uav's. we need to create these jobs so our young people can find their passions. so, the second thing capitol, after we've been working on getting jobs ohio going and working with the general assembly so well, i've been working talking to a lot of folks and it is scary, on how little capitol is being invested here in ohio. from a growth perspective, i've been talking to the limited partners, they are not investing in managers ohio, they are not going to see how they are going to create the returns. we need to focus on this. we have taken a lot of good steps. as the governor mentioned in the last five weeks we passed jobs ohio with the help of the general assembly. why was this important. the market is moving faster and faster. all of you are carrying smartphones. hopefully you are hearing me right now. the market is moving faster and master. when you are a private entity. you can move with the market. when you are a government entity, you move at the speed of statute. it doesn't work. okay. we need to be able to move at the speed of the market. second, we need to create a private entity that allows us to invest in the great companies here in ohio. imagine if the department of development that provided the first loan that helped first solar get started. that is now worth $150 to $200 million we take that money and reinvest. we create the entity that allowed us to go do that. one of the key issues i had is capitol. we need a reliable source of capitol to invest. we do not have the other folks out there to invest in the sources today. that is normal because budgets go up and down with where the employment is. in bad times we tap the funds that are most important for us for economic development. we can't do that. we need to benefit from the companies that are successful. in the form pharmaceutical business. they are now employing ten people but they are a public company. la lastly, we must attract a large enough amount of capitol to make a difference. we have a large economy here. $50 billion in overall budget. we need enough capitol to move the needle. what we are proposing is to take the profits from the liquor establishment and use that for a job creation. for today we use a third of it. it is used for the bonds that we use for low interest loans to attract companies for ohio. we need to provide a reliable source for income and focus on job creation. we need to have these funds to pro c focus and economic growth. with a healthy economy it raises all growth. we need to have that back. third thirdly, ohio's treasury will be held harmless. we are purchasing this. we are playing a fair market price for this. the key thing for all you users of alcohol, it will nothing will change. okay? you can still have your bourbon and your gin. we are working with the department of commerce to keep the system as it is today. the key thing that i want you to hold us to are three key objectives. one, what we need to do is finalize the department of development into jobs ohio and we will be bringing that here in a couple of months. second, is we are privateising the liquor profits to use that for economic growth. we need to define clear metrics. one, net new job growth. two, net new capitol invested. three, net new number of entrepreneurs and companies created in this state. i think we have the opportunity in the tools to take this great state forward. thank you very much. [ applause ] . >> before i interview mark. let me make it simple. ohio controls the liquor business. there is not a handful of states that do that. private individuals -- it is a slam dounk. he said i'm quitting. he said i'm going to buy the liquor business. what we did was rather to sell it to a private investor. which we didn't think made good sense. if we moved it into jobs ohio. there will be a revenue flow. what happens is there is a growth, dollars that get spun off. we take liquor which has been basically used to run different things into the general revenue fund we stick it into jobs ohio every year we use to offer the benefits that we need to help benefits to expand and bring businesses here. so it is -- look, it is the 21st century folks. these are the thing that is we need to do to push ahead. mark, tell them about your experience since you have come to ohio and what you have found in the early days. i'm a marketing guy. >> what they do is look at markets. they figure out how they cancel those. as i mentioned to you. you played golf and i flew over the state and did not know much about this state. over the last ten weeks, i have learned we have an amazing asset here. 60% of america's population is within 600 miles of ohio. as manufacturing technology gets more and more sophisticated the cost of labor in producing these goods is declining. what is happening is, where you make things begins to matter. mo moving those items from one place to another. who benefits, in ohio so i believe between manufacturing engineering and the eaero space industry, it is a great product to sell. we did our first domestic mission. i feel confident in the next couple of months we will be able to announce our first one at 150 jobs. >> mark, when you call ceo's what is their reaction? >> what are you doing? what are you talking about? they don't get it. so, what i have been doing is spending time with them and educa educating them and telling them what we are doing here. you talk about ohio state. there are so many amazing tools we have here. i am very happy that you are the governor of ohio and not the governor of another state. >> what i mean by that is, you make some times two or three calls a make. what do they tell you? >> they tell you. okay. first of all, they are surprised. i'm a big believer that i have two customers. i have the citizens of ohio. the customers are creating the jobs that they give get to enjoy. i don't -- people never call these guys. i believe people -- when we go to these places, it is amazing. when we went up to detroit. 42 hours after the inaugural. the big three were blown away. you have to treat them fairly. you have to listen to them. and react quickly. >> i was in a meeting today and we were on the offense now. we were looking at getting a major headquarters in kentucky. the guy said how long will it take you to go through the process? we had wonderful people, by the way if you want to work in that department you have to be named christy. i said i have the information and i will get you an, answer in under 72 hours. we have to move quickly as well. working with mary taylor and the department heads. i know we are late and everyone is hungry. >> they are fine. that is why they came here. hey, they are here. c-span3 is here. no one ever sleeps. they want to hear about where we are going to. >> so, i get a call. i was talking about this today. i get a call from northwest ohio. and there is a company where it is a jfmajor company that has bn hard hit. and they have been allowed by the department of transportation to have michigan loads enter the state but we only allowed ohio loads on truck loads of 80,000 pounds to go out of the state. we allowed 140,000 pounds to get up. and this is causing a development problem. it is a major distribution center. i called jerry up fmenup. i said does this make sense to you? he gets back to me in 90 minutes. done deal. called up the company. it looks like they are coming to ohio. that is how we need to react here in this state. [ applause ] >> this is so important. you know, when people originally, they are like what do you mean you are going to have jobs ohio. it is going to be a private board. >> the people are going to meet the same standards of a person that going on the board the trustees of a university. there will be a report. the sun will shine into this. you load thigs up with too much and people will walk away. what mark has is a vision. once you know where the vision is, you know where to go and we are both continued to explore the state will think about where is the prosperity. i will tell you like southern ohio. we meet with the japanese and the chinese. you go down to southern ohio and go to kenworth trucking. it is remarkable. they have low cost, high productivity and great customer satisfaction. southern ohio is a great opportunity for us. the eastern part of the state with the shale and people that nknow the hands to make things. we have to get them making things again. with the whole you heard this in the state of the state if you watched it. if you didn't i don't know if it is available. we have a lot of great things. that was your speech right? we have to leverage these things. >> can i do one thing? the governor mentioned a lot of the large companies but we know great job creation happens by small business and entrepreneurs. we have been focused lately on retention of big companies. to replace 2,000 jobs that we were able to safe with .. dpre dpreetings. it takes a long time. once we get jobs ohio going and once we control the liquor profits. i want to focus on microloan programs. we want to look at these things to entice mom and dad to invest in their sons and daughters to create the new great companies here as well. >> governor, there's an industry that has been lost in ohio that i have not heard anything said about it, and that's the horse racing business. i saw a report recently that over 8,000 jobs have been lost in ohio from the harness horses. have you looked into that? >> well, let me just say that on the area of this horse racing, this all is related to being able to have pots of money available for those horses that win, and that's supposed to revive the industry. i don't know whether that's true or false, but what i am doing is we are bringing a gaming expert in. i do not believe that ohioans got the best -- the best shake when it came to the operation of the casinos. i just think we could have done much better. i'm bringing a gaming expert in because, frankly, we're not qualified to deal with the people in the gaming industry, so we're going to bring up very smart person, i don't know who it's going to be yet. we have a process that bob blair runs out of the department of administrative services to bring an expert in. once the expert comes in, they will talk about horse racing and about what more we can do with casinos, a whole series of things, and none of that revenue, by the way, is calculated as part of our budget. i'm not going to make a commitment tonight as to what we're doing. i've thought about it, leaning a certain way, but we're not ready to go, and i spoke to a cay see known operators and i said let me get my people here because we want to make sure at the end of the day that taxpayers in the state get a fair share and because we didn't deal with this upfront to be monnest with you -- honest with you, we got a proposal on the ballot and lost control of the process. i don't want that happening again. this comes over the period of a next couple months. [applause] oh, let me see what we got here and who i can call up. this is ken from twitter. what will ohio do to address the poor infrastructure, civil engineers, greater infrastructure items as a c-minus. pass this over to jerry ray. [laughter] most of what we -- >> most of what we talk about tonight is the general revenue fund. transportation is financed through the federal and state gas taxment consumption has been down over the years as we are driving less because the economy. construction inflation has gone up. we have a serious issue to deal with. we're going to be looking at other options beside the gas tax, doing everything we can to make the department of transportation as lean, efficient, and effective as we can. all the savings goes into preserving and maintaining our system. >> let's see here. we've got another twitter. the question is my daughter has mental illness. what changes in the budget help or hinder her care. currently receiving medicare and ssi. where is tracy? >> we have a number of changes that are going to be taking place in the next couple years as part of the budget. we are going to be actually transferring the financing of the medicaid services for mental health and addiction services to the department of job and family services. this is going to make things easier at the local level because the predictability of medicaid has been a challenge to fund over the years, and so we see this as a positive step forward. it also gives us the opportunity to integrate the physical and mental health care needs as i discussed earlier. we are looking at possibly recooling some of our benefit package in fiscal year 13 related to this, and we recognize that for medicaid, there are federal requirements that all medicaid eligible children have to have those services to which, you know, they are entitled to because they are medically necessary, and we take that very seriously. >> here's a good one. why do your children attend a private school? why is that fair when parents cannot afford to have that opportunity? it's a good question. my kids go to christian school. i think they ought to hear about god every now and again. [applause] i think that's a good thing. [applause] hey, waiting for superman. go rent the movie. i'll preview this movie in every major city in this state. i i think mothers and fathers who don't have money ought not have the opportunity to send their kids to a private school? absolutely not. we are doubling vouchers, maybe you should triple them. if mom and dad feel their kid is not in the right setting, not safe -- a perfect example, a lady in akron, didn't tell the truth about an application where she lived, because she wanted her kids in a safety setting after school. she was charged with a felony. i asked the board to look at it. seems ridiculous to me. we'll see when they come back. the bottom line is we want to expand choice, be in a position where not only people who have means are able to have this kind of choice for their kids, so that's kind of what it's all about, but listen because my kids aren't there doesn't mean i'm not passionate about physical fixing it, but i believe we're fortunate. they are in a setting where i'm comfortable, my wife is comfortable, i just want to give more people across the state regardless of income an opportunity to have that same privilege. i am a public school graduate as is my wife. let me see what else her. how are you planning to provide funds for libraries? they provide useful services and people can use them in places. some government services, please consider a strong funding stream for these valuable community assets. >> tim, you want to talk about what we've done with libraries? >> governor, absolutely. libraries in ohio rely heavily on state support by the public library fund that gets a portion of all the tacks that are provided into the state revenue fund i talked about earlier. libraries are heavily reliant on this state funding source. some have local levy support, but many do not. across this budget, we try to think about the reliance and capacity of entities to fund themselves. in this case, we recognize that we had to be very careful in how we address the funding of libraries, and so there is a reduction, but it's about a 5% reduction relative to the funding that they received last year which we think, again, reflects their reliance on these state moneys. >> i understand the library association put out some sort of a statement saying they breathe a sigh of relief. it's good they breathing a sigh of relief. [laughter] here's a good one. governor, you didn't increase taxes directly, there's an indirected tax increase or cuts on the local level because of the budget. you shifted the cuts in tax hikes into the local level. come on, ipad. ohio ranks 33rd in the nation at 5.9%. these are the facts. sorry. basically, you kept an $800 million tax reduction and expect local government to pay for it with tax increases or cuts. good question. let me answer it. this entire state has got to learn to do business differently, manage costs more effectively. i believe that we have provided a lot of the resources, and you saw it tonight from randy cole and the shared services we can bring in. again, i want to remind you about the casino dollars flowing to the local governments, and also we are the legislatures working through an initiative now to provide more stability for local governments to control their costs. the mayor of toledo wants to control his costs, all of his costs. we are trying to provide the opportunity. we are also saying that we have worked with some of the operating engineers to try to carve out areas that shouldn't apply with prevailing wage in our communities, our cities. we are trying to give them the tools. let me just say to the local governments, you raise taxes, you got a chance of driving out jobs. i was up there with american greetings, the city of brooklyn is at risk right now. they raised taxes, and they didn't ignore it. they ignoredded the warning of american greetings. folks, government is not going to solve our problems here. we need an environment of job growth and risk taking. do i like to have to do this? no, but i kind of can't figure out why revenue sharing was ended by the federal government, which by the way, has a $14 trillion in the hole, and why we weren't able to end revenue sharing here. politics. now, some of the local governments would have thought we would eliminate this thing in one year. we didn't do that. it's a 25% reduction in the first year. 25% reduction in the second year, and some of those effects are later in the calendar year based on the way that local governments budget. folks, we have to pull together. i met with the county commissioners. they were all worked up. they said we have ideas. i said go over and meet my staff. they met that afternoon. we incorporated a number of the recommendations they want in this budget. one of the things we thought about that we didn't do, you know the state of ohio with joe testa, could collect the revenue for other communities and save money by not doing that themselves. we didn't put it in there. you can only do so much, but if they want us to do that, if they have other ideas to save money, we're there. we will hand them the tools that they need, but this state has become not competitive because of tacks at -- taxes at all levels. folks, make the investments now, we grow jobs later. as we grow jobs issue everybody is better, families, communities, hospitals, our schools, all of them. okay, that's enough twitter and facebook for tonight. yes , ma'am? >> governor, i heard terrific education reforms in your proposals, but i did not hear or see in my very quick reading of the documents today was any funding at all for stem schools or stem initiative? hopefully that's moved to some place else in the budget. >> well, you know, we can't do everything right. we're working at it. i don't know -- i don't have the answer to that, but, bob, do you? >> yep. you know, stem is a program that has a lot of proven track record, but so do a lot of things. we've learned the hard way that there is no right answer or thee answer to solve kids problems. all the money that we could get put together to send to the public schools so they can make choices, and we're going to work hard to eliminate things that put pots of money here, here, and here, and avoid the ability to make those things happen. the other is that stem is heavily dependent on technology and engineering. we need to get the career technical schools more involved in that stuff. we got to get the technology up to speed so that you're highly supported. we support a lot of things, the budget's trying to make flexibility at the local level for you. >> senator, listen, you have a crack at this thing, and the process is that the leaders that are here, the bipartisan group i'm pleased to say, they get a chance to look at it. no pride of authorship on anybody's part. if you have a better way to create a priority, we're for it. let us know what it is, but don't monkey with the numbers. we're not going into imbalance or raising taxes. anything else you want to do? go for it. you can make the document better, no question about it. it improves as the process goes along. they improved the jobs bill. they got it fixed for you. it's part of the legislative process. one thing i ask for throughout this whole process is just remember ohio and we'll get through this. it will be fine. way up there -- everybody up there, what's going on up there? >> it's where all the action is. [laughter] i'm ron from westerville. thank you for the town hall meeting tonight. you have a very impressive team, and i would suggest that you have one every year because it's very productive. my question pertains to taxes in general. last week bob evans made the decision not to move to texas, but to move from columbia to new albany. they lost income tax revenue from the employees, and new albany offered bob a package of $20 million. today, and no net job increases. today, i believe columbus announced they were creating jobs which is fine. however, i think about 30 of those jobs came from westerville and a number of the other jobs came from other suburbs in columbus. as a cpa, i know businesses are very smart. as a business owner, i go to westerville and i say, hey, i'm moving to new albany, what can you do for me? and i'll create 10 new jobs on my staff. how much can you give me? westerville makes me an offer, i go to new albany and ask them the same question. what happens, of course, is that westerville loses revenue, new albany gives it away. it seems to me that the taxpayers in central columbus lose money. as a taxpayer, i resent that because somebody has to make up the lost tax revenues. yes, we do, but we don't create any new net job. >> got you. >> my question is what can be done to eliminate this? >> okay. mark, you want to start? i'll follow-up on it. >> yeah, first of all, there were some new net jobs on bob evans. >> they would have been created in columbus if he stayed. >> yeahment we're focused on this. we do -- we want them to stay in ohio. we're focused on them staying in ohio. when we saw the threat of texas,ing we had to move, and, in fact, we put together packages, actually our pack package to stay in columbus is larger than the package to move to new albany from a state perspective. secondarily, 50% of the package is for redevelopment in the site in columbus. it's not for us to decide. they are a publicly traded company, and they have shareholders just like any other company. if they want to move their company, it is their prerogative. we want them to stay in the state of ohio. it is, i think the key thing that the city's need to do is do their best to work together in these sorts of situations, and we need to figure that out, and i think that's very important. on your last point, we had a company down in cincinnati who called us up and said we're going to move -- we're moving to indianapolis. i talked to my staff. i asked what is the likelihood of them moving? 90 jobs? it's a fairly successful company. they said, it's not very high. we basically said, sorry, we can't provide the benefits. i will tell you it's a little bit like -- unfortunately, you don't know everything, but the last thing we can afford is another ncr. we cannot afford another company to move by ignoring them. we have to figure this out. we work closely with the companies. i will tell you, i work closely with steve davis at bob evans, and they were seriously considering texas, and we could not have afforded that here in the state of ohio. >> also, sir, i was at a meeting and somebody said shouldn't we keep the people from competing against one another to attract a company. yeah, that makes sense. somebody says well what if i want to do something special. i said, you got me there. it's a tricky issue. we, as a state of ohio, will never pick one area over an other. secondly, mark just got back $9,000 from 11 companies not living up to their word. thirdly, this stuff is left on our plate. there was a development department who couldn't tell you what the revenue or payroll was of the companies we were trying to help. the programs we designed so far are ori positive. american greetings is ori positive, and there's another one coming out soon that we can't announce at this point that is ori positive, but we're very concerned about what you're saying, and it's a very perceptive. you're a smart guy, a cpa, and you know how that works. one of the things we'll demand is more evidence that somebody cease really thinking about leaving. the other thing we need to do is we can't rescue everybody. we want to rescue companies where the jobs represent the future, not jobs that represent the past. we're going to have to say no to some people, but the ability to have a revenue stream through this liquor business will put us in a position of strength. your comments with -- are well taken. we think about it every day. the metrics are important, and we're worried about it, but, you know, as i said to mark, how do we know that company will leave? scott said to me, let them move, and then try to explain it. we have to be care l about this, on our game, and at the end of the day, by the way, bob makes more investment in the state of ohio. they make investments in the southern columbus. marathon they were announcing they were moving their head quarters. there's office jobs, and when you have head quarters, that's where good things happen. we need that in the state of ohio. i was on the phone today trying to get one. i want you to put it into a letter to us, put your concerns down, and we'll mull it over. it is a challenging issue for our state. >> thank you. >> thank you. >> my question, governor, is you know, i heard a lot about the different departments and i've had the pleasure of knowing and working with a lot of people, the director from the department. in our state there's a lot of divisions, programs like director mccarthy said. i work with people with disabilities and i have a disability, and i'd like to know what your commitment is for people with disabilities to achieve equal opportunity and to live up dependently aside from -- >> well, i mean, again, if we can allow a human being who through anything whether it's birth, an accident, it doesn't matter what it is, to be able to carry out their god-given destiny, we are for it, and i would also say to you, ma'am, that this problem of turf protection, the problem of silo, the problem of ego, hey, it haunts everybody. we're all flawed, deeply flawed, and don't ever get things always right, but i think that with tracy and john and the whole team here -- give you a story. bonny cancer one say said i'll give up a half million dollars from my budget because it doesn't belong here. i won't forget that as long as i live. there is a spirit here of getting people to lift themselves, to do better jobs of serving the client. hey, look, in the humdrum of politics, in the debate, the 30-second sound bite and everything else, sometimes it's extremely extremely difficult, and we just got to get this -- accomplish that, and not have people, you know, ma'am, we all remember, and i keep talking about this because it's sered in my mind, the story of the miners, those chill layian mainers, and the take away from is is they didn't take care of themselves. they took care of someone else first. that's how they survived. we're not in that condition, but if we think about how we can help one another rather than i got to take care of me, we've seen some of that lately. we've seen some of that lately. it's not pretty, and we can get people to raise their game, we need to change priorities, you know, we work on that, we'll see where we go, but god bless you, and nothing would make me happier than to see you doing whatever it is you can do with your capabilities so that you don't have to live an empty life. look, i've said it before i'm a servant of the public, and i'm a servant of the lord. i'm just going to do the best i can. thank you for your question. any other questions? [applause] okay. oh, all the way up there at microphone four, i think, yes, you may be the last one. >> well, thank you, governor. in the briefing i saw very discouraging graphs that show the rise in cost of college tuition across the country, and, indeed in my district now in cincinnati, that was one the stop issues among the parents i talked to, how are they going to send their kids to college? these are not parents qualifying for pell grants nor are they wealth, they are middle class working families. now, in the last general assembly, we were able to keep college tuition flat for one year and cap the increase at 3.5% for the next year. what's going to happen with college tuition? >> yeah, we've capped tuition at 3.5%, and i will tell you the gordon said, you know, john, can you give us space? i said talk to connie pillage. [laughter] that's pretty good, i must say, that's pretty good. [laughter] no, in all seriousness, look, i think you would agree with this, i love the idea that one of my colleagues had, he's gone, to allow kids who are really particularly bright to be able to -- or those like me, you know, kind of average and hard working, okay, to be able to accumulate college credit in high school. we also believe, and i have to tell you, i believe that the university system will ultimately be under attack from online schools because you can go to the university of phoenix and you can get a degree and compete with anybody for a fraction of the cost of what it takes at a university. i think the universities have had great difficulty because of their up ability to control their bureaucracy and their costs. i hope you'll join us because i think there's a number of things we need to do. we need to rationalize these programs. does miami have to compete with ohio state and compete with ken state? interesting story. up at the university of akron at ken state, they're involved in advanced materials. i mentioned this to gordon one day. he said i want that program. i said, gordon, no, you can't have every program. we have to think about who is grading what. we can a university system, not a system of universities. that's what we need. they have that in california. i just stole that line, but that's true. that helps us to reduce cost. the flexibility we want to give the universities if they can move towards a charter university idea, we think can also reduce cost, and i must also say that there's a critical role for our community colleges and technical schools, and you can go to a community college at a fraction of the price and transfer to a four year institution and save a bundle of money. i don't think anybody's really figured all of this out yet, but we want to do that. see, the one thing we're trying to do is to leave no stone unturned. if there's a problem, let's look at it, be hon honest, examine it. you know, you can't fix everything. i think we're rolling pretty well, and i would say to you, representative, please dig in. come and help us to do this, and, you know, on thursday, the president and speaker and capri, who, by the way, went to stanford at the age of 16, i mean, that's unbelievable. i was going to say something, it was a good joke, but it would just get me in trouble. i'm learning about these offhanded comments. [laughter] [applause] we're going to go down to dc as a group and we're going to say to the congressman if there's a problem in grand lake st. mary's, it hurts in cleveland. if there's a problem in youngstown, it hurts in columbus. pull together. now, look, republicans and democrats are going to have their differences, and i want to tell you the thing that's most stunning to me when i first came in was the level of partisanship, but the clouds part the when we did jobs ohio. we're going to have our differences as parties. we're going to have differences in terms of my lossty, -- my lossty, but we wake up and think about that person who snort smith and i were just the greatest of friends now. we agree on like 1%, okay? [laughter] you know what? 1% may get the felony law changed. 1%, okay, let's fight like cats and dogs. the budget is about philosophy. we can fight. let's realize you never want to poisen the well that doesn't allow somebody to come back. some people call it not come back and do it a, but i see it differently. it's an opportunity to bring improvement to people's lives, and i saw it. i participated in it. i tell you the great story of teddy kennedy, pat and bill clinton. millions of lives were saved because we worked together. it's a challenge, bonnie. you talk about the middle class squeeze. it's like my mom said, we make too much money to get help, and we don't make enough money to do what we want to do. we have to think about it. one thing i think about is if we prieftize the turnpike and there's a $1 million leftover, maybe we can create scholarships for our students as long as they stay in ohio. let's be creative and imaginative. thank you for your questions. thank you, all, very much for coming tonight. i hope you enjoyed it, and we will do it again. thank you. [applause] >> up next on c-span2, a house hearing looks at u.s. military operations in the pacific region. then former reserve charm alan greenspan discusses the economy. later, federal officials discuss plans to build high speed rail. >> a house subcommittee today looked at u.s. military capability in the pacific region. among the topics, china's rapid modernization and the moving the u.s. marine corp. facilities and operations from the japanese island to guam. witnesses including officials from the pentagon, u.s. officials, and the navy. this is just over an hour and a half. >> good afternoon, and we're calling this meeting of the readiness subcommittee to order. several of my members will be coming in in a few minutes, so just to let the witnesses know, they are in other meetings right now in subcommittees that are overlapping, and also, we expect to have a vote probably at about 2:30, so we may break briefly and go to that vote. we want to welcome our witnesses here. we think this is going to be a crucial hearing for us on our readiness in the pacific region. we have three witnesses that bring a great deal of experience and expertise to this issue, and we welcome them here today. first of all, we have mr. michael skhiffer, the deputy assistant secretary for asia security affairs, east asia, michael, thank you for being here, looking forward to your testimony. >> we have general randolph, general, thank you, strategic policy and command. general, as always, we appreciate your service to our country, and we thank you for your willingness to be here today and to lend your expertise to the subcommittee, and finally, we have honorable jack jack -- jack lin. this subcommittee is unusual in that it's probably one of the most bipartson subcommittees in congress. we are trying to look and make sure that we answer the question, are we ready? that's the purpose of the hearing. my partner in this een denver and the ranking member from guam and i'd like to defer at this time to madelyn. >> thank you, and i appreciate your willingness to hold this hear on the security in the asia region which is certainly important to me. as we heard from witnesses in previous hearings and briefings, this area of the world requires our focus and our attention. before i begin with my statement, i would like to recognize the people of japan and ask that we keep them in our thoughts and prayers as they we roof from the -- recover from the earthquake and tsunami. these unt fortunate events, however underscore our alliance and strong relationship with the japanese people. our military forces in japan are helping with search and recovery efforts. further, other civilian agencies like u.s.-aid and fema and the nuclear regulatory commission are assisting japan. in the wake of this unfortunate tragedy, we must continue to focus our military resources on this important region of the world. nearly 42% of all u.s. trade occurs with asian-pacific nations which makes this area critical to our national economic security. i applaud this administration for its greatly increased focus on the asia pacific region. to highlight this point, one the first major actions of the obama administration was the signing of the so-called guam international agreement by secretary of state hillary clinton hillary and then the foreign minister. however, despite greater focus, we must continue to asees the readiness of forces to protect our economic, political issue and other strategic interests in this vital region. one the most important strategic matters is continuing to fulfill the united states obligation under the guam international agreement which is based on the 2005 u.s. japan alliance transformation and realignment for the future agreement. this agreement outlines the numerous realignments of personnel in japan. of the greatest impact to guam is the construction of a replacement facility for marine corp. air station. this new facility allows the transfer of more than 8,000 marines and nearly 9,000 family members. this committee has supportive of this strategic realignment in the past, and i hope to remain so in the future. i ask our witnesses today to make clear to the committee the significance of tangible progress by japan toward the replacement facility and what commitments the united states must make in the meantime to achieve the goal of moving the marines to guam. while dealing with the challenges of the military buildup on guam, we must not overlook the strategic importance of guam's location and the value of freedom of action from basis on -- bases on guam. just this past weekend, several global hawks based in guam conducted authorities in japan to assist the region to assess the destruction caused by the massive tsunami. our location in the pacific can never be overstated. the governor of guam recently signed an agreement with the department of defense that outlines a process for consultations to ensure the preservation of certain historic sites and paves the way for spending military construction funding authorized in previous fiscal years. the administration budgeted for infrastructure support to improve life in guam and at the same time enhance the military mission. further, the u.s. government has been successful in obtaining financing for certain other improvement projects on guam that are needed for the buildup to be successful. however, i remain concerned about the placement of a proposed firing range on guam and would ask today's witnesses to explain to the committee the strategic necessity of the range site as currently proposed. many have questioned whether alternatives to the route 15 ranges were adequately vetted. there have also been questions raised as to whether the navy property examined alternatives that would keep the ranges within their existing footprint, thousands negating the ability to pursue leasing land with route 15 in guam. conducting discussions with the governor over the route 15 range location, i would caution that it may be very difficult for dod to reach a deal that will be approved by the guam legislature who ultimately approves the leasing or the sale of government of guam lands. i continue to encourage dod for robust training capability to include individual skill qualifications. finally, it is important to reiterate as i have in previous hearings that we must keep in mind the threats we face in this region of the world. china's secretive military buildup coupled with north korea's building nuclear ambitions are at the fore front of our strategic posture in asia, however, we must not lose sight of other nontradition gnat threats in the region such as the southern philippines or southern tie land. i hope the witnesses will discuss our pos clur in the asia pacific region through both a military asset framework scwels the soft power frame work. this administration's focus on military to military engagements is very important to establishing a greater cultural understanding and foster stability in our region. in particular, the mill to mill efforts with china i believe can help us avoid misunderstandings that will lead to far greater concerns in the future. so, ladies and gentlemen, i look forward to the testimonies from each of you as i yield back my time. thank you, mr. chairman. >> thank you for those remarks, and as we discussed prior to hearing, i asked unanimous consent we depart from regular order so members can ask questions during the course of discussion. this provides a round table type forum to enhance the issues. without ob jec, that's so ordered. we do things differently in here. we try to really get at issues rather than have five minutes of questions, if one of the members has a follow-up questions, the chair recognizes them, and we try to do that to keep the dialogue going. the other thing i asked members for is permission to submit to the record a written statement i've prepared and any members with written statements can prepare to be entered into the record. i'm going to ask you to do myself is take the written amarks and put them aside. you submit to us written statements which you've done admirably. we thank you for that. we read your statements, and so we appreciate the time that you put into those statements and the fact you delivered them to us. often times what we have is our witnesses take about five minutes each for a regurgitation of the written staples, but we read them. i want to change it a little bit today and take the written remarks that you might have and put them aside for a moment. if you want to submit them for the record, we'll read them. here's what i want to pose to you that you start and you have five minutes to have a bite at this question. the goal of this committee is to ask a very simple question, are we ready? over and over again our witnesses come in and the response that they rightly give us back a ready for what? we should have a strategy to use as a yardstick to compare where we are against that strategy. we try to do that in the defense review and the national defense strategy, but as you know, more and more, there's a consensus building that the defense review and the national defense strategy is driven by budget and bureaucratic desires simply to reenforce what they are already doing. in fact, when the independent panel was created to look at the qdr, that was the exact conclusion that that bipartisan group determined and they used the word like "train wreck" if we continue to do what we're doing. we have to reach to get the strategy and bill the yardsticks that we're comparing. our military, too, to make sure that, in fact, we're ready. just last week, we had our deputy chiefs sitting right where you are sitting, and where others are sitting, we had the deputy chief of the marine corp. and the deputy chief of the army. the two agreed on one thing. they said the greatest component for readiness is time. they needed to be able to react quickly and as quickly as they possibly could. gentlemen, ladies and gentlemen, the question i have for you is this, if we look at the pacific and we recognize that we may not as a committee have a strategy to use as a yardstick, one the things we know is that the most probable conflict we may have may not be with china, but if we ever had a conflict, probably the most devastating conflict we would have with china, none of us want that conflict, we hope it doesn't take place, but when looking for readiness, we want to be prepared because oftentimes if we have a lack of capability, that determines the decisions that players make in that area, so the question i'd like for you to start with in your five minutes or so today is this. we know if we don't have a strategy that we can get our hands around, we know china does. one of their strategies is their antiaccess denial strategy that they have been trying to implement. a year ago, secretary gates directed the air force and the navy to develop a air-sea battle concept to address the antiaccess denial problem. first question i'd like you to respond to is that concept ready? do we have it? are we prepared in our readiness to implement that strategy? if not, when's it coming? the second thing we know is my dear friend sitting to my left, not too far from her home, she's been willing to take me and show me those huge fuel reserves that are sitting there on guam. we know that one of the strategies is part of the denial strategy that china has would be able to do something to those fuel reserves, so the other question i have for you to be responding to is if something happened to those fuel reserves, how long would it take us to replace them? where would that replacement have to come from? then the third thing is if we look at china's strategy, it's very clear from their writings that one the things they believe is that the united states can't endure a long conflict, that we need short conflicts, and they are prepared for a loping one. questions for you is, if we had a conflict, and that conflict had a high intensity operations that lasted more than a month, is our industrial base capable of supporting that kind of long term cop flick and -- conflict, and if so, for how long? i know that's a lot, but it sets the parameters to look at for readiness in the pacific. with that, i'm asking you to start with whatever response you have to that and feel free to interject anything else that you'd like to in that. >> well, thank you very much, mr. chairman, and thank you, ranking member, and the other distinguished members of the committee, and thank you for the privilege of allowing us to appear before you today. let me try to provide you in my opening comments with the strategic context that underlies our approach to the region, and how we are preparing our presence and pursuing our presence in our policy in the region, and i think in so doing, i'll be able to shed some light on the questions that you've raised. before i begin my comments, however, i want to join ranking member in reiterating that our thoughts and prayers today are with the people of japan. i was in japan last week when the earthquake struck. though i was not near the area affected by the tsunami, the magnitude of the earthquake on both real and psychological terms was powerful. we are still learning the total extent of the devastation. the united states is working side by side with the people of japan, the japanese government, and the self-defense forces to manage the consequences of the earthquake and the tsunami. to address ongoing nuclear issues at the plants, u.s. forces are engaged in search and rescue operations and support from u.s. navy ships including the ronald reagan strike groups are providing resources. our presence in japan allowed us to respond to the needs quickly, and we'll continue to facilitate assistance on whatever they require. you asked us to address the question, are we ready? in your comments, mr. chairman, you talked about the issues we need to dig into as we address that question. it's an important question, and one with many facets, and at the risk of stating what other witnesses have state the before, -- stated before, i want to be clear from the outset that the department of defense and men and women in uniform wherever they are stationed are ready to meet any challenges we face in the region in the near medium or in the long term. our ability to respond rapidly and effectively to provide stance to our japanese friends is one facet of the question are we ready and the related question of ready for what? it's no surprise for members of this committee and as the ranking member pointed out that the asia pacific region is the most die naggic region tailed hole -- dynamic region today and it's home to six of the world's largest armies. over the past six decades, the region has experienced extraordinary growth. in large part because of the peace, stability, and prosperity of our security presence, u.s. military presence made possible for all states in the region. that military presence is critical to our readiness to have peace and prosperity prevail in the region. we remain committed to the enduring presence in the asia pacific and the investments and forces necessary to protect our national interests and those of our allies and partners in the region as well as for meeting the full range of traditional and nontraditional security challenges. i would like to focus for a little bit in getting to some of the questions the chairman raised. focus my attention on three particular issues. the rise of china, north korea, and our evolving regional posture. i'll keep my comments brief and the remapping time that i have -- remaining time i have and my written testimony has a more detailed assessment. as you know, over the past 30 years, china transformed itself from a impoverished country to the second largest economy. as the economy grown, so has the capabilities across a range of measures including military. president obama and secretary gates stated that the united states welcomes and encourages a strong and prosperous china that makes contributions to the growth of the international system. we continue to see positive examples of cooperation and partnership from china on certain regional challenges. there are, however, other areas like military modernization efforts. it is opaquely defined long term strategic intentions and questions about the development of the antiaccess capabilities causing concern in the united states and around the region. in this respect, long term readiness means that the united states must continue to work with allies and partners and with china to positively shape china's rise in the region and globally. u.s. strategy has been to be flexible to balance multiple outcomes and capitalize on the cooperative potential of the u.s.-china relationship while managing the risk inherit in china's rise including the investments that the department is undertaking precisely to make sure to counter antiaccess denial capabilities. if i can ask the indull gent to continue for a little bit? >> go ahead. >> as china continues to rise and the military capabilities increase, boast the united states and china benefit from a healthy, stable military to military relationship. during the recent state visit by president hu jintao, both sides agreed on the enhanced dialogue and communications on all levels. we will also continue to strengthen our posture, presence, and capabilities in the region and partnerships to share a common view of how the united states can best continue to work in and within the region for peace and state. the second issue i'd like to highlight briefly is the continuing challenges of north korean provocations. north korea is a complicated security threat. in case of north korea prove cigses -- provocations, the united states and ally, the republic of korea are ensuring capabilities and ensuring we are prepared to meet a threat from north korea. the united states has drawn closer with our allies of south korea and japan and also seen positive progress in the past year in trilateral relations as well. critical to ensuring readiness is having a guard looking process. it is our forward presence, 28500 strong that has resolve to defend the republic of korea. our regular exercises like key resolve and legalities serve to serve the ability to defend iraq and defend the region. lastly, let my address the effects taking to implement the road map and broader moves in the region. as you though, the department of defense is evaluating u.s. global posture on an ongoing basis to better position us and our forces 20 meet the demand of the myriad of threats in the region. this subject will be addressed in greater detail at a global posture review, however, the important point for this hearing 1 the u.s. defense posture in asia where we are to maintain pos char in northeast asia is shifting to one that is more geographically sustainable. while the focus on the implementation of relocation of air station is intense, the united states and japan are working closely on frf and guam. it is important to note the government of japan confirmed the importance of the u.s. alliance, of the u.s. marine corp. having forces and moves forward with the september replacement facility. indeet, events in the region conspired to remind us all of the importance of the necessity of forces and the vital roll in detouring conflict and responding to crisis played by u.s. forces in japan including the third marine forces. this capacity to respond quickly to regional challenges both traditional and nontraditional challenges rests in no small part on the maintenance of ground forces in the region. we look forward to continuing to work with the government of japan to move forward with the full implementation of the realignment road map. the region is one where america has deep roots and enduring interests. as the united states lookings tots challenges, threats, and opportunities of the future, the department of defense is focused on protecting american interests and ally p against the range of threats and challenges we face together in the 21st century. thank you for your time, your indulgence, and i look forward to engaging more deeply on the questions you raised, and let me turn to my colleagues for their comments. >> thank you, and we appreciate your expertise. he did exactly the opposite of what i'm asking you guys to do. i know it's comfortable to hang on to those prepared remarks, but we've read those. what we want you to do is try to address the readiness issues, and general, maybe you're the perfect person to do that. general, if you would please see if you could address those remarks and throw the written remarks away. we just want your expertise. we can put them in the record, but the time we've got, how with reprepared? are we redty to meet -- ready to meet the challenges? >> all right, i'll keep remarks brief. i ask the written remarks i've submitted be included. >> we're including them. thank you for preparing them. >> chairman and ranking member thank you for the opportunity to discuss the readiness challenges here in the pacific. i want to acknowledge before i continue with my responses here my con doll lenses to japan as was mentioned during the ongoing trial here with the great earthquake and tsunami. the u.s. pacific command is doing everything in our power to assist the japanese people in this hour of need. i extend best wishes in representative giffords and mark and hope she's back soon fulfilling her duties as a member on the committee. talking about china and the rise of china as, you know, we consider the rise of china, and i want to emphasize as i had a conversation previously about the importance of dialogue between the chinese and the u.s. sides. both myself and mr. schiffer participate in dialogues with the chinese, usually with the pla's who we talk with, and i think the dialogues are beneficial, yes, they are scripted in a certain degree. there is a degree that we tend to hear the same points coming back from the chinese, but the fact we're able to meet and actually have a dialogue together is important. one of my responsibilities is to function on the maritime consultant agreement, a meeting with the chinese to discuss operational safety in the international air space and off the coast of china and in the international waters, and i think i would comment that i have seen effect out of that dialogue. it has done much to ensure that tensions when u.s. and chinese forces interact remain low, and i think there's great benefit in the overall dialogue between the two sides even if at some time it appears to be an exchange of talking points, nevertheless, it's an important interchange that we have. turning to the topic of the question on the air-sea battle, i'd like to point out a few things about that. it is, as you noted, mr. chairman, an attempt to address access denial. i would point out it's a concept that is broader in thinking than just looking at the chinese situation. we're looking at this more broadly across the globe on how countries are attempting to deny access to u.s. forces and how this might address it. i think there's are significant and effective work going on currently with near term initiatives. we have met on several occasions. recently with the secretary of defense for atnl, mr. carter, and he has made substantial progress in addressing the antiaccess issues in the current defense program. just as a list of a few items here, there's modernization efforts underway at the tune of $4.5 billion in the f-# 2 to leverage radar and technologies coming out of the jsf. we have $1.6 billion for the f-15 radars to address electronic attack and warfare issues they have in the environment. there's efforts underway with the e-18 growler, am-ram weapon systems, quip ships, and submarine capabilities to address these challenges. i think there's been great progress made in the departments here. they are moving forward rapidly, and i'm encouraged by what i've seen. .. and to be that stabilizing influence that the u.s. has been in asia for over 60 years. thank you. >> thank you, general. madam secretary? who >> thank you, mr. chairman. congresswoman, distinguished members of this committee, i appreciate the opportunity to appear before you today. i will focus my comment on the realignment in guam specifically to the question of are we ready, and that will begin with the recognition of the strategic importance of guam. the marine corps relocation with the other defense department alignment's what to guam represents a unique opportunity realign the future posturing in the pacific for the next 50 years. we need to get this right. and this time last year we were still working on the environmental impact statement for the realignment. we had some 10,000 comments we were working on since then. we have moved forward. we have issues on the final in their little impact statement. the official record of decisions we have made decisions in certain areas of removing the facilities to guam. we have deferred the decision on the aircraft carrier and the ranges were as the congresswoman pointed out earlier. we have made some progress just this week. we signed the programmatic agreement which allows us to move forward, completing the section 106 for the national historic preservation act process. with that we are now able to start with the contracts and beginning the military construction associated with the realignment. i should point out what that a long-term positive relationship with the people love guam to the marine corps' mission in the pacific. with this we have laid out what we call the four pillars of working with the community in guam. what and we will work towards one guam in other words outside of the base and on the base will be of the same community who we will pursue agreeing in guam and environmentally preferred based and help with their renewable resources. and we will make sure that access to the cultural flights, specifically would be protected. in addition in recognizing the amount of land of the department of defense already consumes on guam, we will commit to making sure we do not expand and that we reduce the footprint on guam. we believe that our commitment to these pillars will allow us to work with what the government and the people of guam. we worked with the governor in trying to gain access to the land we will need for the training for the marines training and that's a really critical element of the are we ready. we need to be ready to train the marines when they come to guam and so we are focusing our attention on getting the land that we are going to need for the training resources. this is an important to a year for the guam realignment, the start of construction is eminent and additional contracts will be rewarded to the next weeks and months. building on the project from the fy ten and fy e. levin, we are seeking additional funding for fy 12 to begin when construction will and to allow with workers. also this year we will continue the discussion with the government and the legislature and private landowners to begin an agreement in principal for the land that we need for the rangers. it's multifaceted, and can never with many component parts. successful execution will be the key to the department's success in the pacific. we continue to work with partners in guam and japan and the commonwealth of the northern to develop solutions to the challenges we are facing. thank you for the opportunity to address today. i look forward to continuing to work with you and am available for questions. >> thank you, madame secretary and all of our witnesses for their comments. normally i would defer my question until the end but i'm going to start because i'm going to come back with their three questions i asked at the beginning to see if anyone is willing to address them and let me say in the context for you there was a sunny summer day that took place before i was born when they were just beginning to wake up in the morning. most of the people who had been out doing what they were doing on a saturday night were still sleeping in. there were a handful of people that were policing the area. if lead was making its way up to the northern portion of of law who and it was sailing inside of the rain squalls taking place outside of the commercial plane so the shipping could take them up, the planes couldn't pick them up. as the cut to the northern portion, they launched three planes. the torpedo planes. as they came in when the sun came up and they were ready to see their targets and battleships were all lined up and battleship valley. they did all the things they were supposed to do by the time the fighters could scramble and get up the had already gone. they landed back on the airfield and the next thing that happened as soon as they landed another wave came and that was successful. he would think that what people harbor as many of you know that was not parole arbor that was a game we did in 1932, ten years before. and that part of defense through it out because they basically said it was not fair to attack on sunday and nobody would attack on sunday. if we had seen that ten years before we would have been been there and become better prepared ten years later. now i say that because i come back to looking at the scenario when we are asking if we are ready we are not just asking what our goals are and what are their philosophies are. we are trying to ask are we ready when those conflicts come. we know that there is a strategy by the chinese we hope that doesn't happen but all of us want to have the dialogue, but it is the antiaccess areas. they told me that. they've told many of the members here. they write about all the time. if we deny this strategy, let us know. but if there is a strategy there we had the secretary say a year ago we were going to create this concept. my question for any of you today is we have the concept, not are we making progress, but do we have that concept today, and if we don't have the concept today, when can we expect to have that? anybody can take a tackle on this. >> tire will try to take that question, mr. chairman. as we talk about the hirsi is an evil and operational concept. but the important point, and this is something that general allyson gough at is that the air see concept needs to be put inside of the larger framework that we are undertaking to contact the to denial challenges, not just as it might relate to china, but as the general said. the globally wherever those challenges may ocher. we take as a predicate the necessity for the united states to maintain its ability to project power across the globe and maintain the integrity of the u.s. alliances and partnerships and to achieve what that would objective and make sure that the antiaccess in areas of the threats and capabilities will not in fact slow the deployment of the forces into a theater or prevent u.s. forces from operating in a particular theater. >> i don't want to cut you off but -- >> i'm going to be getting into the enumeration -- >> there are a number of things that we are currently engaged in. there are who procurement activities that include the new penetrating bomber and pressing for the mass production of the m 35. we are expanding the procurement who of the cruise missile systems. we are looking to procurement of robust through network that will prevail against the improvement attacks. we are upgrading the bomber would and modernizing our fourth generation fighters with new sensors, electronic protection and modernized missiles and injuring resiliency by hardening the ki logistics infrastructures building the dispersal reading locations and creating redundant resilient commanding control networks with increased bandwidth. we are also pursuing an addition to these investments new concepts of operations. including the new horizons and powered by integrity the presence of the navy whiff of the global reach of the air force which is the essence of what about all concept of operations is all about. and we are pursuing new technologies. new technologies that allow us and type of access in the developments, specifically their investments in the ballistic missiles, counter space and cyber capabilities. and we are examining such technologies as the key to the least people to precisely strike time tell you how sensitive -- time since it if the targets. when you put that together as a package i think it provides a fairly robust response to the threats and challenges that you outlined. >> thank you. general, do we have the concept? >> the concept is in the development. which is why we are currently giving and the navy and air force are currently in the process of doing. and, you know, they started that work over the past year or so. i think extending beyond a year is in development and there are many enabling pieces of that once we have it finally developed. so i think as mr. shivers saying, it is defaulting in its development. it's at the point -- it's not a point i'm assuming to deliver a pamphlet on the air seattle conflict. it's something we are developing. >> you have any idea when we might expect it? >> candidly i would have to ask the services and come back to you on that. i would be speaking out of turn and we will have an actual time line for the. >> madam secretary, question on guam. if we lost that fuel capacity, how long would it take us to replace and where would we have to get energy from? >> mr. chairman, i will have to get back to you on the date. i do know that there are other fuel sources in the pacific and that we would be perhaps in fact the general can be more specific on where that would come from. >> general mabey -- >> i would say that i can address the specifics. the specifics are classified. >> there are alternative fuel sources in the pacific we would leverage. there's a concern about the vulnerability of the above-ground facilities. there is a resiliency effort going on by the air force from $300 million but against that. i'm not sure of the exact time to address some of the vulnerability issues we are going to have in this and i access denial when firemen. so i think that we are looking at that and looking at the actions we need to take to make those facilities better protected. but i think also as described earlier, we talked about this briefly in the office this morning as it is more than just a single piece. a single system -- what it's more than hardman. it is as the air-sea battle is addressed it needs to address the in the chain of operations. so it is complex and its broad in its nature. >> before we go, mr. kissel has a follow-up. >> a quick question here. we talk about the fuel capacities, you know, on guam and other such places. specific location. one of our colleagues in the last congress said what about getting the tools to the ships themselves because you wouldn't want the ships to have to come back to a set location. what about the refueling capacity in the midst of the battle, we have the ships that can do that? >> i'm not aware -- i'm not aware of any shortages that we have in a refueling the fleet. that one is best i can address so we need to address the need. >> last question, a very quickly. if we had a protracted battle with high-intensity operations, do we have the industrial base here to sustain that? and if so, for what purpose of time to think? >> candidly i don't think i'm qualified to answer that. >> mr. shifrin, any idea? >> i would have to also plead when it comes to speaking of the industrial base of the united states i'm not qualified to answer that we would be happy -- >> if you could get that information and now michael again different from guam, ms. bordallo. >> i would like to ask my first question to secretary schiffer and that is the concept of tangible progress. with regards to the construction of the new facility, and what that means for the realignment on guam. what exactly is tangible progress and when tangible progress occurs when will that allow the united states to accomplish? and further, what must the united states be doing currently has the government of guam or the government of japan works through its process these? to reach the tangible progress in okinawa? >> thank you. as we look to the tangible progress on the replacement facility, we see it as not one with a single specific event but rather a series of steps roughly in parallel between japan and the united states as spelled out in the realignment road map in guam international agreement and other bilateral agreements. it will allow one us to move forward with the government of japan as the progress is made on the fr to take steps we have to take. on guam. there are a number of different indicators that we are looking at. starting with the decision on the runway configuration for the frf that we expect in the upcoming two plus two meeting with japan and then other issues we expect to come down the line including the issuance of the land fill permit construction of the sea wall and progress on the land fill itself. you understand, is the preparation on guam needs to begin well in advance of actual construction on the ground for the replacement facility at the camp. and that relocation of the marines from okinawa would be faced with completion of suitable infrastructure on guam. sequenced in such a way as to maintain unit cohesion and operational range. and that's why this entire process has to move in lockstep and why we need to look at all the different indicators as we go along including one other item to offer japanese financing for infrastructure improvements on guam as part of this continuum that comprises tangible progress and will enable us to relocate from the station to the replacement facility and relocate the marines from okinawa to guam. -- before, mr. secretary. i have one more quick question, mr. chairman. this is for the secretary. as you know, last year's defense authorization bill contained a provision that gave the department of defense the permissive of doherty to integrate the water and waste water lines on guam. i long believed that the navy in deed all services should be out of the business of being a utility provider. and that said, i continue to believe that the power on guam provides the right model for the utility integration. in that case, madam secretary, guam took over the control of the navy's our system but did so after agreeing to reach certain performance milestones. additionally, there was a third-party experts that helped oversee the integration process and to ensure that the agreed upon milestones were met. however, this was done at no cost to the ratepayers on guam. would you agree that this is a model that should be used for the consolidation of the water and wastewater system on guam, and would you also agree the consolidation of the utilities should occur without burdening the ratepayers on guam? >> thank you, congresswoman bordallo. we are working with the guam water authority to interconnect with their lines and some of the money that will come from the japanese financing for infrastructure used to improve the infrastructure for the water facilities and the water on the base, and those will be interconnected. now, as i understand the agreement in who the with ndaa about the integration sets the conditions for meeting a performance standard before there could be such a thing as integration. and that is what happens with power. and so, my suggestion is that we continue to work for meeting the standards that would work for the needs of the department of defense as well as the guam water agency. >> madam secretary, i noticed in the agreement that they are saying that the navy should have a boarding member on our utility board. can you indicate where else in the united states the navy is a voting member on the utility board or any other local governing body? isn't is a cumbersome requirements for the needy or any service? and introduce it to the state federal local relationship? >> i don't know of anyplace where it would be, but i believe that the requirement is based on this need to make sure that certain operational standards are met, and i believe that was one way that that could be done. >> so your answer is that nowhere else in the united states? >> none that i know of. >> thank you. thank you, mr. chairman. >> thank you, mr. bordallo. the gentleman from new jersey. >> thank you and all of the witnesses for coming out. general alles, talking about readiness in the current light with how the pacific command is engaging with our international partners over there to address her for some, you have elements of indonesia, south east asia that are obvious threats. how are our partners coming together and, you know, do we need more resources and or funding to accomplish this and to be ready for that? >> thank you. that is being addressed at multiple levels. let me talk of the kind of current events. as you are probably aware, we had a joint special operations task force operating in the southern philippines of around 600 u.s. personnel. it's been there a number of years and continues to be effective in addressing terrorist issues that were occurring in that part of the philippines i think very effectively. so that's one specific instance. we are also concerned as we look at the south asian region with the l.e.t. terrorist group that operates out of pakistan but his presence in nepal and bangladesh and we are concerned about how that is -- let me backtrack for a second. as you are aware, the l.e.t. is responsible for the mumbai attacks where so many people lost their lives. so we are very concerned about the interaction l.e.t. is having on india and the effect that the compression of fact that you have that in the two nuclear powers when there is an attack in india from the l.e.t.. so we are concerned about that very much in the south asia area. we are attempting to address that by focusing not only on india but also bangladesh and nepal to ensure that we work on the facilitation networks. and more important, how we address building the capacity of the partners to in fact address those internal issues so they can secure their borders and so they have developed networks for intelligence they can develop intelligence on things that might be occurring inside of their country. and also how they might law enforcement and actual counterterrorism operations. so this another line of our operation. we facilitate that mainly through the theater for the cooperation plan which addresses each of the countries in the pacific, and one of the ones of our of specific concerns for terrorist activities clearly a big part of that tcp capacity to address either in the neck or military issues that are causing those situations to occur. >> probably kind of in the same realm to diffuse the tension is also with south china's -- the taiwan strait. does that seem kind of the same ankle you're taking with that or is it a different game? >> i'm not -- the building capacity partner of this - gays in a different sense. when we interact with the chinese it's a different interaction than we have with our allies and partners if that's when you're asking. >> i was just curious we know there's a lot of tension specifically in that type of thing and how we are dealing with the moving forward. >> and i think again, and mr. schiffer may also want to comment, i think the importance of the interaction, military to military between ourselves and the chinese is of prime importance. and we do remain concerned of the nation of the interaction tends to be at the best. >> thank you very much. i yield back. >> thank you. now the submarine expert from connecticut, mr. courtney. >> thank you, mr. chairman. to follow-up on the question, the test of that military to military relationship was the sinking of the cheonan, which again, there was exhaustive forensic investigations that it was inescapable and was completely unprovoked attack by a north korean minisub, and yet we were unable to get china's acknowledgment of, again, something that was just totally black and white. that north korea was responsible for this. and, you know, in terms of just, you know, the prospect of protective military-to-military relationship even government to government relationship, i mean, to not -- to be able to even succeed in terms of getting a basic baseline of what actually happened there and in terms of just what impact that is going to have in terms of transit traffic, both commercial and military in that part of the world i guess i would ask you to comment on that, mr. schiffer, in terms of it seems like using that as a test the relationship is not really doing that well. and maybe it is just episodic as the right way to describe it. the second question in terms of readiness is just that the pressure parts show that there was clearly a gap in terms of sonar technology in terms of being able to detect that many subs, and when you gave your list of investments and help the we are giving to our allies in that region, the was one of the items -- i didn't hear it and i was wondering if you could address that because clearly 46 sailors lost their lives because they didn't see that submarine coming or that attack. >> let me address part of the question and then also turn the floor to the general alles. i guess i would note first that when the cheonan incident occurred, our military-to-military relationship with the peoples of china was in one of its periodic, and from our perspective a very unfortunate periods of sustention, because the chinese had suspended the relationship in january of last year following our announcement of the arms sales package to tie one. so we were unable at that point in time to have any discussions with the chinese in the military channels about the cheonan. i'm not sure that would have made much of a difference frankly, and much like que, we continue to be somewhat mystified by how the chinese have approached what seems to us to be very clear evidence culpability in the cheonan incident. we hope now we have resumed military-to-military relationship with china, that we are going to able to put it on stable and reliable footing and that in so doing we will be able to read this misunderstanding communications and misapprehensions' and perhaps have some real discussions with them about the larger strategic issues in the region including how we if you and approach north korea, and that is certainly something that when secretary gates was in china this past january he engaged on. and in so far as their readiness issue off that you identified before turning things over to the general alice i will note that the list that i offered was by necessity given the open nature of this hearing not complete and obviously will be happy to brief any member of the committee that is interested in a closed session more fully what -- foley on the list we are seeking to develop. but i certainly can say in this open setting that as you or no dhaka where we have undertaken a series of very robust exercises with our ally since the sinking of the cheonan including a number of exercises and the sea, on both coasts of korea, and those exercises have been intended in no small part to increase the capabilities and increase alliance capabilities precisely so that we are better postured to be able to respond to these sorts of provocations of the future. >> thank you, sir, mr. schiffer. i would make a couple of comments of cheonan. one is the nature of the attack was unexpected. it was provoked an expected, so from that standpoint, it was a surprise attack and a surprise to the koreans. as was indicated, a lot of our focus here at the near term has been increasing the capacity of the south koreans in terms of asw exercise is to increase capability in those areas. i did the chinese remain concerned with the stability of north korea in general, and i think that is in large part is a large calculus and how they respond to these situations here. to us has already we expect our mystified on given the evidence we salles for the cheonan that wasn't attributed to the north koreans. thank you. >> thank you, mr. courtney. to let everybody know, we have three votes that have been called. our witnesses have graciously agreed to wait until we go over and to those. i want to try to get one more set of questions, so i would like to turn now to the gentleman from alabama, mr. rogers. >> general allan might understand the department is reallocating its position stocks as a part of the secretary gates efficiency duals. we are already beginning to see the reductions in the 2012 budget the secretary submitted. it was taken on the part of this evaluation of the strategy? >> yes, sir we were a part of the devaluation. i would note we have calculated the effect of that as it is booked against the operations plans to ensure the plans remain viable and execution and the hour from our standpoint. so i can't address the whole world wide postured. that is beyond my scope from our standpoint and sourcing our plans and addressing the difficult time distance equation we have in the pacific theater we are currently satisfied. >> and you feel that is going to be adequate in the near future? >> given what happened with the recent natural disaster in japan and what is in the volatility of north korea, it seems to me that bringing those position stocks down is risky, and you are saying you don't think this is true? >> we address -- that was one of the concerns we addressed to the department was to ensure we were looking beyond just the near term at the five-year and beyond the horizon because of course the dynamic security posture of asia is changing as we consider the rise of the power in asia itself so the was a part of our calculation there and part of our response to the department to ensure we had adequate stock for our operations plans. >> understand that we need to get every dollar, get use out of every dollar by want to make sure we are ready and i have concerns about these reductions. we know that the readiness posture is - by the ongoing military operations in iraq and afghanistan now buy humanitarian assistance in japan. how significant is the shortage of forces and equipment required to effectively deal with the broad range of security situations and he,'s area of operation? >> so, i would comment that for our day-to-day security cooperation operations i think we are adequately resources. and i had this conversation with the admiral willard, my boss. there is a significant presence of u.s. forces from paycom in afghanistan and iraq and effect of those forces there's a long term affect about the strategic expression having the force is out year after year after year we do have to address our operations and i think the long-term equations we need to continue to look at that. it's having though probably a different effect you may not be aware of as the ground forces have gone to iraq and afghanistan we are relying more on our air and navy forces so that requires more basic steaming days or operations out of those forces which is more where and tear on the aircraft and ships and affects maintenance schedules and also the long-term viability of those and in other words, we are using those assets because we are relying on them more with our ground forces out of theater. cynical would you like to see this committee or this congress do to help you with that we're and tear in that problem? the you just described. >> on one sense as we continue the continuing resolution that's going to affect maintenance schedules for the ships and aircraft because of funding levels they don't have. that's one aspect of it. i think also we have to look at the long-term equation of the shipbuilding program looks like. >> great. as a last point, i want to go back to this praepostor stock -- repositioned stock. when i ask you if paycom had been involved in the evaluation did you feel any pressure from the secretary's office or administration to tell them what they want to hear on that issue? >> no sir, we had a robust dialogue with them and clearly expressed with our positions were. >> thank you congenital. >> we stand in recess until the conclusion and then we will come back. thank you for your patience and probably is going to take about 20 minutes i would imagine. maybe about 30 minutes. feel free to go out in the hall and do what ever you need to do. we will be back. thank you. [inaudible conversations] [inaudible conversations] >> calling the hearing back to order, and i want to thank our witnesses for their patience and apologize for us having to leave during those votes. the chair now recognizes the gentleman from north carolina, mr. kissel. >> thank you to the witnesses for being here. mr. chairman, i couldn't help being a test will history teacher i couldn't help but enjoy your story this morning about pearl harbor. when i was teaching, i will start of every semester by reading the preamble to the book, and i believe that it was fly boys but don't quote me on that, it was about the japanese surprise, the fleet called them into the harbor in december and the end result of the battle was the son call the fleet. and i would tell my students if you can tell me where the have and i will give you an a for the semester and you don't have to come to class. you can do what you want. all of them would raise their hands and of course they thought was pearl harbor. the next line in the books as president roosevelt wrote a letter to the japanese and congratulated them on their great victory. and that stopped a little bit. it was 1905. we had a great capacity to think we have all the answers come and we have to keep looking for the things that may surprise us. the reason i ask the question, general, earlier about the supply ships, gene taylor was one of our former colleagues who was very knowledgeable about these things, and i remember one session he was very concerned about how we resupply the oil when we are on the seas in the battle and to we have enough oil, and he had concerns whether we did or not. and i will follow up with this with a question and you can to get off the record. my question being this: if we are in a prolonged engagement in the western pacific, do we have the resources to -- you know, the chairman asked to be have the industrial resources. well, this, not answering that, but do we have the resources, the capacity, whether it be ships, airplanes, whatever, to get what we need on a continuing basis to where the engagement mabey? >> and whoever -- feel free. i encourage you to be brief because i have a couple other questions. >> i can't get obviously into the classified discussions. i would need to answer specifics of the record. but generally, i would say yes, we do have the capacity is that we need in terms of the resupply for the plans i have booked right now. >> okay. good. one country we haven't specifically mentioned, even though we said in the general area is vietnam. where do we see the yen on the emerging, or do we see an emerging in terms of the military, of where we see an emerging political, especially as it relates to our relationship with china? >> and once again, whoever wants to jump at this one. >> i think as a general statement we have been extraordinarily pleased by the progress we have made in our relationship with vietnam over the past number of years since the normalization, and we certainly look to deepen and strengthen the relationship we have between the united states and vietnam in the years ahead. >> as china do that as a threat? because historically that's, you know, those two countries have been at odds. >> i wouldn't speak and couldn't speak about beijing's threat perception. but certainly as you know china and vietnam have had a rocky history of their own, and uncertain that there are those in beijing who probably view our relationship with vietnam in a less than favorable way. from our perspective, but a hour deepening and a strengthening relationship with the vietnam and our desire to enter into a genuine partnership with vietnam is a relationship that we pursue in and of itself. it's not about -- it's not about china. it's about the united states and vietnam. but i should also note, you know, we don't have any illusions, even our own history with vietnam about the future of their relationship either. there are issues that we have to continue to work out. there are human rights questions that we still have in terms of how vietnam treats some of its own religious minorities that we still need to be built to cycle through russell. >> thank you. thank you once again for your patience. >> thank you, mr. kissel. now the subject near and dear to her heart, the gentle lady from alladi. >> thank you. thank you, mr. chairman. i don't believe we can discuss readiness out of context of what has happened with the context of what happened, the devastation and the catastrophe in japan. having said that, i would like to know, japan is considered like our anchor partner in terms of our securities defenses in the pacific. what impact is the tsunami and the earthquake having on what ever strategic locations we have in japan? mr. secretary, you can answer that. >> certainly. i mean, to begin with, i would say that it would be speculative at best at this point to comment on anything in the longer-term implications of the earthquake and the tsunami. but i would note that certainly i think the assistance that we have been able to offer the engagement of the u.s. military and the u.s. government across-the-board in response to this crisis has helped strengthen the bond we have between our two countries and help make the case i think for the logic of why we have the deployed presence in the asia-pacific region including the basin footprint we have in japan. >> i understand that part, mr. secretary. i guess my question is what role does japan play, if any, and our readiness posture in the pacific, and how was it now going to be affected by what has happened? >> japan is the cornerstone of our approach to the security issues in the asia-pacific region, and there is a reason why we determine it that way, and it's not just rhetoric. japan is an incredibly important ally. the contributions they bring to the alliance including the ascent footprint in japan is absolutely critical to our enduring presence in the asia-pacific region. i have absolutely no reason to believe that anything that is transpired in the past few days following the earthquake and the tsunami will undermine the commitment of the debt and the strength of the u.s.-japan alliance. as i noted i think just the contrary we will emerge, japan will emerge with this with a closer and better and cheaper relationship. >> one of the issues we are aware is the japanese government structure has changed. we've gone from 1965 when the liberal democratic party actually had control of their parliament. and now we have the democratic party, japan. and i don't believe necessarily the democratic party of japan fell as strong as our military presence as the liberal democratic party. do you feel somehow that structure is going to be effective as well? >> i would offer that we have been extraordinarily happy to be working with dbj government over the past few years. as i noted in my opening statement, the prime minister, defense minister, foreign minister, chief cabinet secretary, the senior members of the dpj have made strong statements about the value of the alliance and the u.s. military presence in japan and about the commitment to move forward with of the realignment roadmap and frf. so we view them as a good and strong partner. >> understand what you're saying. but isn't it true the reality is the transfer that japan has yet to come up with approximately 6 million -- 6 billion of the 10 billion price tag, and given the disaster, given the catastrophe, what are the probabilities that they are going to pay for the move for guam? >> again, i think that would be highly speculative. i guess i will note japan has offered 415 -- 415.5 million of funding for guam infrastructure improvements in the japan fiscal year 2011 budget that's already been approved by the lower house. we expect it to be fully approved, and we are not aware of any effort or any voices in the past few days that would suggest that funding is not going to go forward. >> have you heard an affirmation that even if they've got this critical situation where they are going to be rebuilding a huge part of the nation that they are still going to continue with the commitment to the united states? >> the discussions we've been having with the government of japan the past few days have been held to respond to the immediate humanitarian crisis and the situation that the power plant. once we have managed to deal with the management of the immediate consequences of the thousands of people that have died, the hundreds of thousands that are internally displaced and the ongoing situation with the nuclear power plant, i'm sure we will have those discussions and i am fully confident that the government of japan will continue to be positively engaged. >> thank you. thank you, mr. chairman. >> to follow along with the gentle lady from hawaii was asking, mr. schiffer come in you and general alles have both talked about the importance of our allies working in a partnership fashion for us to be able to do the type of defense that we need in the pacific. have there been any thoughts about perhaps selling some export version of the f-22 to japan or any of our other allies given the fact that we are concerned perhaps that the russians may be selling their pact to other players across the world? and if we did that, and i'm not suggesting we do, just asking for thoughts, but there's arguments that would bring the cost of the f-22 down. have there been any discussions about doing that? >> i think secretary gates is very clear where he is on the f-22 program. i didn't bring a copy of my letter of resignation in my backpack that will be the entirety of my remarks on the issue. [laughter] >> will play. we will want you resigning either. >> no, i will leave the f-22 to mr. schiffer, but i just commented we have had discussions with the japanese about their needs are in terms of aviation requirements. we think the f35 weeks a logical fit for them. i think it is with the are exploring currently, so it makes eminent sense to us in many ways considering i think more adequately -- more adequately addresses the defense of japan. i think another aspect of this back to our allies and partners in the region has an north east asia region we are seeing increased levels of cooperation between the government of south korea and japan even the recent tragedy shows the degree of cooperation between them in terms of assistance. so we are encouraged by that and by the trilateral cooperation we are having between the sides. >> i'm going to use light on that question. we are going to go to miss bordallo. spaghetti would bear with me i have a number of questions to ask. i just want to get answers for the record and so if the witnesses could make it very brief, first, mr. secretary, now that the program at the agreement has been signed, when can we expect the issues for the contract awardees, and when will some initial construction efforts be underway on guam? >> congresswoman, we will be issuing contracts and notices to proceed on several contracts very soon. we have some that have actually contract set already been rewarded and we will be able to issue notices to proceed on those on a number of others we have specific dates that we are ready to go on them. >> very good. regarding the the trading ranges, i hope that general alles can help answer this. the key our address is training in the pacific. general, can you address the challenges to training in this region, and also are there any efforts to lead the comprehensive approach to develop a truly effective solution to training issues in the future? >> thank you. there is an effort on the part of paycom to start an eis which the funding is in the current budget that would address holistically issues for paycom as far as the joint training across the pacific region. so i think that addresses part of the issue on guam. we discussed earlier the siting of the rangers on guam itself and the need for the individual training of the marines in terms of small arms and those issues and where the broad degree of country urning can be directed throughout. one of our prime considerations though is we have discussed we maintain ready forces throughout the region. we think that is critical as the deterrent aspect. so very important that the combat and commander lovell we are able to train marines, soldiers, airmen, sailors across the required skills. >> secretary, i hope you can help me better understand the rationale for the firing range on guam. i've long expressed concern about the preferred alternative location for the firing range on guam. the marine requirement seems to have shifted since the beginning of the eis process in 2006. and as such, wire the individual qualifications needed to be met on guam? has the cost-benefit analysis, and i feel we talked about this earlier, been conducted to determine why the island may or may not be feasible? >> we've looked at the island, and in fact, we will be doing group training, the individual qualified training needs to be on site, close to where the marines will be. we have looked at the ability to move the marines as a would be required, to move and often to support them and move back. you end up not just with a lot of additional expense, you reduce the time they have to train. you reduce the training for them. given all of that, we have concluded the training needs to be on the island of guam, and we have sought since we have been doing the process to find a place on the island of guam that meets the needs that is sufficient size that has the least impact on the community that doesn't interfere with the business or recreation that is operationally safe, which is why we end up with the preferred alternative we are looking at. >> another question for you, secretary. many institutions of higher learning have cooperative agreements with of the dod to support the mission and provide technical studies and analysis. are you open to developing a cooperative agreement with the university of guam? and what steps are you taking to get an agreement on the cooperative agreement? >> we have the highest respect -- i personally have the highest respect for the university of guam and dr. underwood. i've met with him every time i've got guam. i believe the university is a true asset for the island. i'm not sure what the cooperative agreement is that you would be proposing, but i'm certainly open to talking about it. >> thank you. and another 1i have for you, secretary. as you know, included in the record was the decision to the cut at def program management to the division of the military buildup. however, there is still a lack of common understanding of the 8 p.m. build up. what role do you see apm playing in a move forward? >> the adaptive program management was developed as a way of slowing if necessary the activity of the buildup to keep from overwhelming the infrastructure of the island, whether it is water or waste water or power or roads or any other aspect of the infrastructure. so the idea is that as the buildup happens as construction happens, we will look continually at the logistics that are needed and slowdown or change the schedule, and the cmcc, the civilian military coordinating council, would be the body that would meet and decide whether the bill but was in fact moving too fast, whether it needed to be slowed down in some aspects. right now, we are in the process of working with the other parties would be involved in this to develop the operating charter for the cmcc. >> the follow-up on this. if a project related to the bill that is causing significant environmental impact, how will the dod adequately act given the short time frame for the buildup? >> i believe that it would defend what the impact on the area project would be. we are working with environmental protection agencies and many other resources agencies to mitigate where we can to slow down if that's what would be required. >> and i have a further question for you, secretary. throughout the course of the series of hearings on "are we ready" we have discussed the operations and maintenance. i would like to bring an element of serious risk in the acquisition strategy for the military buildup on guam. the current acquisition strategy requires each contractor provides a certain level of medical care at each worksite as well as health insurance coverage. the plan also calls for the prescreening of any guest workers of their origin. the fragmented strategy could result in seven different plans for how to care for workers. given the state of the health care system on guam, i think this plan assumes we too much risk for our overall health infrastructure. so can you detail for the committee why this strategy was settled and what steps are being taken to ensure that the deployment screening of guest workers is done to a certain standard? >> converse woman, the concern here was to specifically avoid overwhelming the medical facilities available on guam. so it became part of the contract process that the contractors would have to provide medical care for their workers. that is an important part of what determined whether they would be selected. our expectation is these workers will be able to be treated by their employers. if they need to go to the hospital for stabilization, they would do that and then they would be airlifted off. they would be able to cut the least possible and -- possible impact on the existing island facilities. in terms of screening before they came, we would have to ensure that would happen and that it would be effective. >> can i get your word on working with my office further on this detail? >> absolutely. i would be glad to do that. >> very good. one last question for you. the biosecurity plan was developed by various federal agencies to include the dod and oi to determine the risk of the terrestrial marine in a species to the microregion resulting from the buildup. can you tell me how the dod will

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