Ensuring prosperity through our Bicentennial

Since its birth in 1836, Texas has fostered a culture

of bold, creative, and enduring people who have

seized the opportunities this special land offers…

to build lives, communities, and an economic engine

that powers prosperity.

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Texas has outperformed the US economy for the last quarter century.

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Texas Prosperity

Source: Bureau of Economic Analysis

400

OIL PRICE COLLAPSEEMERGING MARKETS

TAKEOFF

US HOUSING CRASH

GLOBAL FINANCIALCRISIS

LOW OIL PRICES

MID-1990sEXPANSION

2000s EMERGING MARKETS BOOM

POST CRISIS

19780

2.1%

3.1%

STAGFLATION & CRISES

3.1%

5.4%

3.2%

350

300

250

200

150

100

1982 19 86 1990 1994 1998 2002 2006 20 10 2014

Texas CAGR (%)

Real GDP in Texas and the US, Index 100 = 1977

4

Texas ProsperityIndividual Texans and their families have benefited from rising wages and a low cost of living.

Source: BOC: CPS, Missouri Economic Research and Information Center

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OIL PRICE COLLAPSE

EMERGING MARKETS TAKE OFF

US HOUSING CRASH GLOBAL FINANCIAL CRISIS

LOW OIL PRICESMID-1990sEXPANSION

2000s EMERGING MARKETS BOOM

POST CRISIS

1984 20141988 1992 1996 2000 2004 2008 2012

52

51

50

49

48

47

46

45

44

43

42

0

Real Household Median Incomes in Texas and the US, 1984-2015

Texas CAGR (%)

1.0%

2.0%

0.2%

1.4%

Cost of Living Index

10092

in $

1,0

00

Vast naturalresources

Large, employableworkforce

Infrastructure to supporteconomic expansion

Business-friendlyenvironment

5

Texas ProsperityTexans have enjoyed decades of economic growth & prosperity made possible

by:

Warning SignsWhile Texas is still strong, our quality of life and

economy are at risk.

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Significant population growth and demographic shifts will occur over next two decades,

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THE CASE FOR ACTION

Source: Steve Murdock

Population Growth by Ethnicity

Per

son

s

45M

40M

35M

30M

25M

20M

15M

10M

5M

02010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036

Non-Hispanic White Total Black Total Hispanic Total Other Total

Significant population growth and demographic shifts will occur over next two decades,

THE CASE FOR ACTION

Must add 4.5 - 7.8 million new jobs by

2036 to maintain today’s rate of 4.3%

unemployment

Roughly the equivalent of the number of jobs in DFW & Houston

metro areas today

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Source: Bureau of Labor Statistics, non-farm employment, November 2017

necessitating substantial job creation.

of Texas students earn a certificate or 2- or 4- year degree

Yet the current talent pipeline is insufficient,

9

23%

of jobs will require a certificate or 2- or 4- year degree

77%

THE CASE FOR ACTION

Source: Georgetown Center on Education and the Workforce; Houston Endowment

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Grade/Subject Texas’ US Rank2015

Texas’ US Rank2017

Change inRanking

4TH READING 40th 46th 6

4TH MATH 11th 19th 8

8TH READING 39th 41st 2

8TH MATH 23rd 24th 1

State Rankings On National Assessment OfEducational Progress (NAEP)

Yet the current talent pipeline is insufficient,and educational outcomes are slipping.

THE CASE FOR ACTION

Source: National Assessment of Educational Progress; Education Week

Category Texas’ US Rank2018

Overall 41st

K-12 Achievement 29th

Chance for Success 42nd

School Finance 41st

Quality Counts ReportState Rankings

Healthcare costs are rising, crowding out investments in other priorities.

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$49Bin total state HHS spend

Growth in health and human services (HHS) costs will outpace tax base growth going forward…

6%

annual healthcare

spend increase

2%

growth of tax base (to fund costs)

STATE HEALTHCARE EXPENDITURES

while Texans struggle to access appropriate care,

and poor outcomes persist.

50th

in uninsured rate

45th

in primary care physicians per capita

200+counties have mental

health physician shortage

40thin obesity

ranking

43rd

in maternal health outcomes

33rd

in mental health outcomes

THE CASE FOR ACTION

Source: Texas Comptroller Data, America Health Ratings, 2016 Annual Report

Transportation Infrastructure needs and costs12

THE CASE FOR ACTION

Cost of congestion per auto commuter by metro area (non-truck),

USD (2014)1

Vehicle miles traveled and revenue from gas tax,

(actuals through 2017, projected 2018-2036)

are increasing while funding falls short.Since 2000, congestion costs in Texas have risen 1.7% per year while falling in the

US overall, reducing one of Texas’s historical advantages

2030

240

220

200

180

160

140

120

100

80

2035 20401995 2000 2005 2010 2015 2020 2025

Texas2000

2014

$999

$1166

US2000

2014

$1223

$1189

Source: Texas Transportation Institute, Moody’s, TXDOT, Texas Comptroller

+16.7%

-2.8%

State government must be equipped to perform well in an age of increasing scale and complexity.

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THE CASE FOR ACTION

of state IT resources are dedicated to maintaining current systems80%

Percent of State Agencies with Substantial

Data Analytic Capabilities

LACK

Substantial

Analytic

Capability

Substantial

Analytic

Capability

$500M-$1B $1B-$5B $5B+

state contracts 108 over $100M totaling $136B

The largest contract is more than $16 BILLION

Source: Legislative Budget Board; Texas Department of Information Resources

Preface, Texas 2000 Commission Report

Rather than yield the future to a course of events imposed from outside, we are confident that Texans will choose to rely on a great, long-standing asset:

the determination to shape their own destinies.

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An Approach for Systemic Change

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Systemic change requires a disciplined approach of incremental

changes, over short-term cycles, that align to achieve long-term goals.

It takes deep commitment sustained over time.

3 Key Elements

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Creating a Strategic Plan with Performance

Indicators

Building Support with Focused Policy Agendas on Biennial Legislative Cycle

Tracking Progress, Measuring Accountability

& Reporting

Setting a Long-Term Vision with the 2036 Strategic Plan

Focusing on 6 Pillars to influence policy at the state level

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Education & Workforce Health & Human Services Infrastructure

Natural Resources Safety & Justice Government Performance

Drive change across 2-year cycles with targeted recommendations per legislative session

Make decisions informed by data

Create a statewide network of influencers to advocate for implementation of legislative

recommendations that will impact their own communities

Focusing on Short Term Advocacy

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Continuously Measuring Progress

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Monitor performance indicators

through implementation

& adjust course

Use insights to

shape policy

Extract business

intelligence from

state data

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Insights for Action: dataplatform.texas2036.orgA first-of-its-kind Texas data platform for informing policy- and decision-making

2036 is achievable if we act now

Our optimism is rooted in the belief that we can

influence our future before trouble comes… creating

the future for our children and grandchildren to live

the Texas dream.

#TX2036

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T.R. Fehrenbach

Out of the frontier experience, certainly, came much of the characteristic empirical, hard, non-ideological, & belligerent mentality.

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