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California Capitol Hill Bulletin

Volume 10, Bulletin 10 — April 11, 2003    [or see pdf version]  [or jump to the previous bulletin]


Delegation Gathering Signatures For Letter Urging Increased SCAAP Funding

Budget Accord Reached, Postpones Tax Issue

House Education Committee Begins Renewal of Disabled Education Law

House Nearly Completes Work on Comprehensive Energy Bill; Final Votes Expected Friday

Senate Environment Committee Approves Ethanol Mandate

Ridge Identifies Homeland Security Agency Progress Since Inception; Supports Change in Formula for First Responder Funding

Manufacturing Extension Letter Garners 45 California Signatures

“Medical Marijuana Federal Trial Defense” Bill Introduced

Implementation of Several Agricultural Bills Examined

Senate Subcommittee Examines ESA Critical Habitat Designation

CSU Leaders Seek Support for System Priorities in Washington

California Not Largest Winner, According to Report on Earmarks

Pacific Council Releases San Francisco Bay Area Economic Report

To expand communications between Washington and California, the California Institute provides periodic faxed bulletins regarding current activity on Capitol Hill which directly impacts our state. Bulletins are published weekly during sessions of Congress, and occasionally during other periods. The e-mail edition is made possible in part by in kind donations from Sun Microsystems and IBM Corp.

Delegation Gathering Signatures For Letter Urging Increased SCAAP Funding

The bipartisan California Congressional Delegation will be sending a letter to House Appropriators urging an increase in SCAAP funding to $750 million for FY 2004. SCAAP, the State Criminal Alien Assistance Program, partly reimburses state and local governments for the costs of incarcerating undocumented criminal aliens.

In last year’s Omnibus bill, SCAAP funding was drastically cut, from $565 million to $265 million, resulting in a $126 million loss for the state of California and its counties. The letter states that "because of this reduced SCAAP allocation, far fewer resources are available at the State and local level for other priority programs, including critically-needed homeland security-related efforts."

Similar letters supporting increased SCAAP funding have been sent over the past several years signed by all members of the bipartisan delegation. This year’s letter, to Chair and Ranking Member of the House Appropriations Subcommittee on Commerce, Justice, State and Related Agencies will be delivered on Friday, April 11. The bipartisan delegation’s co-chairs, Rep. David Dreier (San Dimas) and Sam Farr (Carmel), are circulating the letter.


Budget Accord Reached, Postpones Tax Issue

Late on Thursday, April 10, the House was poised to vote on a $2.2 trillion Congressional budget package, though it would postpone final resolution between the House and Senate budget totals for tax reduction. The House’s FY 2004 budget would provide $626 billion in tax reductions, whereas the Senate version’s cuts were $350 billion. The Senate was expected to act Friday.


House Education Committee Begins Renewal of Disabled Education Law

On Thursday, April 10, 2003, the House Education and the Workforce Committee approved H.R. 1350, a bill to reauthorize the Individuals with Disabilities Education Act (IDEA), which is scheduled to expire on September 30, 2003. The action follows approval by the Subcommittee on Education Reform on April 2. The Senate is expected to begin drafting a reauthorization bill later this year, and allocation changes are possible during that process and in conference.

The initial bill as approved does not substantially change the funding formula Congress devised in 1997. IDEA calls on schools to provide "free and appropriate public education" to all students, regardless of disability, and it provides federal funding to help school districts pay for some of the special services required to do so. Advocates of special education have long held that Congress promised to pay for 40 percent of those services when it passed the initial federal special education law in 1974.

In recent years, a bipartisan cross-section of Members of Congress have placed a priority on moving toward that 40 percent federal share, charging that requiring schools to perform services without providing commensurate funding amounts to an unfunded mandate. Whereas several years ago, the federal contribution to special education expenditures was less than 10 percent, the current figure is thought to be roughly 18 percent.

During Subcommittee and full Committee markup, supporters of H.R. 1350 expressed their commitment to move toward the 40 percent level in the near future. Following changes reportedly agreed to by budget conferees, an amendment by Rep. Jon Porter (NV) significantly raised the increases already proposed by the bill. With the new figures, the authorization for IDEA would increase by $2.2 billion in FY 2004 and by $2.7 billion in FY 2005. If enacted and if funding is appropriated, the 2004 federal spending level would represent 21 percent of the nation’s disabled education expenditures, and the funding levels for the future would increase IDEA to represent a 40 percent share within seven years.

On a party-line vote of 22 to 26, the panel rejected an amendment by Lynn Woolsey (Petaluma) to convert IDEA to a mandatory entitlement program, longer be subject to the annual appropriations process, and ensure funding rose to the 40 percent level by the end of the decade. A second amendment by Rep. Woolsey, which also was not adopted, would have speeded the growth to the 40 percent federal share level over five years. The approved Porter amendment raised funding levels but retained the program’s discretionary nature.

Also during the markup, a successful amendment by Susan Davis (San Diego) clarified that a teacher’s seeking the advice of a specialist regarding a student doesn’t necessarily trigger the evaluation as a special education student.

Total funding in FY 2003 will be $8.9 billion, with funds used to educate 6.5 million disabled children nationwide. California receives slightly more than 10 percent of the nation’s IDEA funding. The state’s percent share of the nation’s funding is expected to rise somewhat, as a 1997 formula change continues to take effect. Until FY 1999, funding for the program was allocated based on state-reported counts of disabled children — a process that led to some states allegedly overidentifying children as disabled and thus as eligible for federal funding. Under the formula change, IDEA funding above the FY 1999 level is allocated based on objective counts of population age 3 to 21 (85%) and of school-age children in poverty (15%). California represents more than 12 percent of the children in each of these categories. If the funding levels proposed by the committee-approved bill are appropriated, more than half of FY 2004’s IDEA funds will be allocated according to this new formula.

Only one discussion during markup dealt with issues related to funding allocation, though it was not technically a formula change. The initial bill drafted by committee leaders sought to prevent over-identification of students as disabled by limiting a state to funding for no more than 12 percent of its children. That provision reportedly would have impacted seven states now and seven states in the near future. (California was not among them, as the state currently identifies between roughly 10 percent of its students as disabled.) During markup, Rep. Rob Andrews (NJ), supported by Rep. Rush Holt (NJ) unsuccessfully attempted to strip entirely the 12 percent limitation, and the Committee later agreed to raise the level to 13.5 percent, which reportedly will impact only two states.

Noting that HR 1350 was introduced only a few weeks ago, Rep. Woolsey expressed concern that the committee was moving forward too fast with the IDEA reauthorization bill, and that more feedback was needed from stakeholders. The sentiment was echoed by a number of Committee Democrats. Significant discussion was devoted to discipline issues. Rep. Woolsey disputed the bill’s provision allowing special needs students to be suspended or expelled for violations of student code of conduct, and she supported an amendment by full Committee Ranking Democrat George Miller (Martinez) regarding discipline. The bill requires that funding for state-level activities would grow by no more than the rate of inflation.

After approving a Committee leadership substitute amendment on a 26-22 vote, the bill was passed by a martin of 29 to 19. Our thanks to Education Legislative Services for assistance regarding some markup details. For more information, see .


House Nearly Completes Work on Comprehensive Energy Bill; Final Votes Expected Friday

On Thursday, April 10, the House of Representatives nearly finished the omnibus energy package, completing work on 17 of 22 amendments, before turning to debate on the FY 2004 federal budget package. The energy bill is expected to be completed on Friday, April 11.

The energy bill encourages oil and gas exploration and the use of alternative fuels, and provides roughly $18 billion in tax incentives for energy development. The bill also gives authorizes the Federal Energy Regulatory Commission to regulate the location of electric power lines if states do not do so, and it would extend FERC authority to public power entities. The bill allows FERC to create standard rules for a national wholesale electricity transmission market, which has come to be know as "Standard Market Design." It would also authorize $3.4 billion for the LIHEAP program. Hotly contested amendments included measures to tighten vehicle fuel efficiency standards, revamp the bill’s electricity provisions, and permit exploration in the Arctic National Wildlife Refuge. Democrats’ amendments to alter the bills provisions on these topics were all rejected in roll call votes. The bill requires doubling the use of ethanol as a gasoline additive, a move that critics argue will cause gas price increases and supply shortages.

In arguing in favor a substitute amendment for the energy bill’s electricity title offered by Rep. John Dingell (MI), Rep. Henry Waxman (Los Angeles) commented that California has lost $40 billion due to energy company actions and mismanagement, and a national energy bill should ensure that what happens in California never happens again in another state. Defending the leadership bill, Rep. Joe Barton (TX), chair of the subcommittee that had originated the bill, argued that the bill does many things that the Dingell substitute did not. Rep. Darrell Issa (Vista) lauded the bill’s provisions that provide FERC authority over public power agencies.

The House bill combines legislation from four Committees: a base bill from the Energy and Commerce Committee, an $18.7 billion energy tax bill from the Ways and Means Committee, a $31.7 billion energy research and development bill from the Science Committee, and and a bill from the Resources Committee permitting energy development on public lands.

On the Senate side, the Energy and Natural Resources Committee continued work on their version of an omnibus energy package, approving measures to promote nuclear power plant construction, including a government loan program, and a variety of other measures. The Senate is scheduled to address electricity market issues on April 30.


Senate Environment Committee Approves Ethanol Mandate

On Wednesday, April 9, the Senate Environment and Public Works Committee favorably reported by voice vote S. 791, one component of the proposed Senate omnibus energy bill. The bill would establish a Renewable Fuels Standard that requires gasoline refiners to increase their use of ethanol and other renewable fuels to five billion gallons by 2012.

S. 791 would also phase out MTBE (methyl tertiary butyl ether) over four years, and would authorize $250 million annually for fiscal years 2004 through 2007 to assist MTBE producers to shift to other fuel additives.

The House Energy bill, H.R. 6, also contains a 5 billion gallon ethanol mandate but stretches out the phase-in period through 2015. (See, Bulletin, Vol. 10, No. 9 (4/4/03)).


Ridge Identifies Homeland Security Agency Progress Since Inception; Supports Change in Formula for First Responder Funding

On April 9, 2003, Homeland Security Department Secretary Tom Ridge testified at a Senate Commerce Science and Transportation Committee hearing on the issue of transportation and border security. Secretary Ridge discussed the progress made by the Department since its inception last year, the status of programs under the Department’s purview, and the priorities and challenges in the coming months ahead for homeland security.

Committee members raised a number of concerns for Sec. Ridge’s consideration in their opening remarks, including increased border security along America’s northern and southern borders, increased funding for the Coast Guard to fulfill it’s homeland defense mandates, the need for stronger privacy promotion representation within the agency, fund distribution equity, and the current assessment of homeland defense implementation across each mode of transportation.

In his testimony, Sec. Ridge spoke of security enhancements he hoped would ease the fears of American travelers. Air travel security improvements were illustrative of the strides made by the Department, according to Sec. Ridge, as he noted the installment of hardened cockpit doors, the adoption of a pilot arms training program, and the installment of baggage screening technology at airports to boost passenger safety. Furthermore, Ridge provided examples of state, local and private action to provide added security, including assessment programs and strategies at ports and along waterways, and at mass transit and railway facilities.

Taking note of the numerous deaths and destruction of property brought about by the illegal smuggling of people and drugs from Mexico and Central America, Chair John McCain (AZ) inquired about efforts underway by the Department to adopt military surveillance strategies and technology to better monitor the 200 mile border shared with Mexico. Sec. Ridge said his agency is currently reviewing Sen. McCain’s recommendations to improve border security highlighting the potential use of Unmanned Aerial Vehicles (UAV) as surveillance instruments.

Sen. Ron Wyden (OR) expressed concern over the agency’s inaction in appointing a privacy officer, someone tasked with monitoring and upholding civil liberties within the department. Sec. Ridge assured members of the Committee they would be "well satisfied" with the individual whose name, he said, would be submitted to the Senate within two weeks to take up privacy protection responsibilities, although he did not reveal the name of the candidate in question.

Responding to concerns of fairness in the distribution of federal funds for homeland defense from Sen. Frank Lautenberg (NJ), Sec. Ridge conceded the flaws in the uneven distribution formula system designed by the Office of Domestic Preparedness (ODP). He went on to say that the issue of funds distribution to the states was an opportunity for Congress to fashion a more equitable distribution system that would better factor in disparate levels of threat and vulnerability across the states to bring about greater fairness in the distribution of formula funds.

More equitable distribution of homeland security funds could benefit California if greater consideration is given to the state’s status as a commercial gateway, as well as a potential terrorist target. Currently the state is slated to receive only $45 million out of a $566 million pot for first responders, which is only 8 percent of available funds. Under the formula used to distribute that money, California received only $1.33 per capita, while Wyoming received $9.78 per capita. See, Bulletin, Vol. 10, No. 8, (3/27/03). California’s state and local government representatives are working to change the formula to reflect the potential threat to the state, as well as its large urban population.

The President signed the Homeland Security Act on November 26, 2002 creating a new cabinet level department consisting of 22 homeland security related federal agencies under one umbrella. Soon afterwards Secretary Ridge was approved as Secretary of Homeland Security to lead the agency and implement the structural changes mandated by law. For more information on this hearing please visit the Committee on Commerce, Science and Transportation website at .


Manufacturing Extension Letter Garners 45 California Signatures

Forty-five members of the California bipartisan delegation signed an April 4 letter to House Appropriators urging the inclusion of $110 million in the FY04 Commerce, Justice, State Appropriations Bill for the Manufacturing Extension Partnership Program. See, Bulletin, Vol. 10, No. 7 (3/20/03). The letter was circulated by Reps. Sam Farr (Carmel) and Ken Calvert (Corona).

The letter states: "For California alone, the MEP program directly results in approximately 5,360 jobs annually and $25 million in tax revenue." According to the letter, one dollar of federal investment in MEP generates $3.30 in federal tax revenue. It adds that, "as a result of the program, in FY 2002 California manufacturers reported $182 million in increased/retained sales, $41 million in cost savings, and a $39 million increase in investment."

Recent data indicate that manufacturers provide 14% of California’s employment and 21% of the state’s wages. Recent data from the California Manufacturers and Technology Association ( ) show that the state is home to 1.8 million manufacturing employees, a reduction of 6.4% from one year prior.


"Medical Marijuana Federal Trial Defense" Bill Introduced

On April 10, 2003, Reps. Sam Farr (Carmel), Dana Rohrabacher (Huntington Beach), and Lynn Woolsey (Petaluma), joined by 14 other Californians, as well as other representatives, introduced the "Truth in Trials Act", a new bill enabling a person facing prosecution for cultivation or use of marijuana to introduce evidence of the legality of the offender’s actions under state law. The bill, H.R. 1717, will allow individuals who can prove they possess, cultivate, distribute or prescribe their product only for medical use under state law to use that fact as a valid defense in a federal trial, as long as the state itself has a medical marijuana statute. Federal law does not allow for such a defense at the present time.

Speaking at a press conference announcing the introduction of the bill, Rep. Barbara Lee (Oakland) said that the bill is not aimed at reforming drug policy in the U.S., but rather intends to allow those charged with marijuana-related offenses to tell jurors why they are growing, possessing, or using the drug. Similarly, Rep. Barney Frank (MA) asserted that the fact that such evidence is not admitted in a federal trial presently serves as a form of an exclusionary rule, or a procedural point that keeps crucial information from jurors. Rep. Sam Farr also said that the bill addresses a state-federal law disconnect, and that "this is an issue of state’s rights."

Currently, eight states, including California, allow the cultivation and use of marijuana for medicinal uses. California’s statute states patients can smoke and grow marijuana with a doctor’s permission. More than 5 million Californians voted for the ballot initiative to legalize medical uses of marijuana in 1996. The Federal Controlled Substances Act of 1970 defined marijuana as a dangerous and addictive narcotic, and specifically provided that the drug has no acceptable medicinal use in treatment in the United States.

Advocates for making marijuana legal for medicinal purposes argue that this cannabis sativa plant is frequently beneficial in the treatment of AIDS, glaucoma, cancer, multiple sclerosis, and other illnesses. Opponents counter that marijuana is dangerous, and serves as a gateway drug to harder drugs.


Implementation of Several Agricultural Bills Examined

Citing mainly positive developments, Under Secretary for Farm and Foreign Agricultural Services, U.S. Department of Agriculture, J. B. Penn testified before the Subcommittee on General Farm Commodities of the House Committee on Agriculture about the implementation of the Farm Security and Rural Investment Act of 2002 (2002 Farm Bill) and the Agricultural Assistance Act of 2003.

Testifying with him on April 10, 2002 were Mr. James R. Little, Administrator, Farm Service Agency, Department of Agriculture; Mr. Ross J. Davidson, Administrator, Risk Management Agency, Department of Agriculture; and Ms. Ellen Terpstra, Administrator, Foreign Agricultural Service, Department of Agriculture.

The 2002 Farm Bill, which was developed throughout a two-year period resulting in more comprehensive and complex legislation than its 1996 counterpart, contained ten titles, and made several major changes to federal programs while retaining and creating others. The bill required more involvement on behalf of producers and more intensive internal cooperation. The 2002 farm legislation also required expansion of the training program, which made it the largest training program in the history of the department, it required new development of pertinent software and significant outreach and education efforts, and it required taking the enormous diversity of the farming industry into account. The bill also established new national loan rates, and increased overall funding, with the Conservation Title receiving an increase of 80 percent over the life of the bill.

Mr. Penn testified that the Department of Agriculture is "well pleased with the progress and manner in which the new law has been implemented." The core piece of the legislation, the Direct Payments and Counter-Cyclical Payments Programs, gave producers an opportunity to update their production history, which includes updating crop yields, making 2.1 million farms eligible for sign-up. Mr. Penn reported that to date 77 percent of producers updated their base and yield selections, which now gives them an opportunity to sign their annual contracts. Mr. Penn also described how the Milk Income Loss Contract Program (MILC), which is designed to compensate for low milk prices, is being implemented. He reported that some $1.3 billion in payments to dairy producers have been made under this program. In addition, Mr. Penn testified about the Conservation Reserve Program (CRP), which was expanded by the 2002 Farm Bill to include 39.2 million acres as opposed to the existing 36.4 million acres authorized under the 1996 legislation. Mr. Penn said more than $7.5 billion in benefits has been distributed since the Farm Bill was enacted, greatly contributing to the safety net available to farmers and ranchers. He also specified that both the Market Access Program (MAP) and Foreign Market Development Cooperative Program received funding increases, enhancing the work done by the Department of Agriculture concerning export markets.

With respect to the Agricultural Assistance Act of 2003, Mr. Penn informed the subcommittee that the Farm Service Agency is currently drafting a single regulation to implement various components of the 2003 bill. He also said that the US Department of Agriculture (USDA) launched a website ( aimed at providing producers with details and answers to frequent questions regarding disaster assistance, and for submitting suggestions for program implementation.

Rep. John Doolittle (Rocklin) questioned Mr. Penn about spending $1.3 billion since the bill was enacted in 2002 out of $1.6 billion appropriated for MILC program for a four-year period, when initially appropriators were going to appropriate $963 million. Mr. Penn responded that milk prices have been lower than what USDA used to project the expenditures when the bill was being deliberated. Due to lower milk prices, reimbursements have been higher than expected, and according to Secretary Penn, more funding will be necessary to see the MILC program through a four-year period.


Senate Subcommittee Examines ESA Critical Habitat Designation

The Fisheries, Wildlife and Water Subcommittee of the Senate Environment and Public Works Committee held an oversight hearing on Thursday, April 10 on the designation of critical habitat under the Endangered Species Act (ESA).

Witnesses before the Subcommittee included: Craig Manson, Assistant Secretary of the Interior for Fish, Wildlife, and Parks; Jeffrey Kightlinger, General Counsel, Metropolitan Water District of Southern California, representing the Western Urban Water Coalition; John Kostyack, Sr. Counsel, National Wildlife Federation; David Sunding, Associate Professor of Agricultural and Resources Economics, University of California, Berkeley; Craig Douglas, Attorney, Smith, Robertson, Elliott and Glen; and William Snape, Vice President and General Counsel, Defenders of Wildlife.

Secretary Manson, Mr. Kightlinger, and Professor Sunding all agreed that the Endangered Species Act needed to be amended to give government agencies the discretion to push the designation of critical habitat back closer to the time that a recovery plan is formulated. Mr. Manson testified that this would put the focus of the Act back on recovery and greatly reduce the need for costly and time consuming lawsuits. Mr. Kightlinger also testified in support of regulatory reform that would establish a detailed methodology for looking at the economic impacts of the ESA and improve cost-benefit analyses under the Act. Professor Sunding testified on the impact on development and consumers because of costs and delays associated with the ESA. He argued that critical habitat consultations can cost housing developers as much as $1 million/acre and those costs are then passed onto consumers, raising housing prices. He also stated that the ESA critical habitat designation can even change the shape of urban areas, by moving development farther from urban centers, jobs, and schools, and thus, ultimately increasing traffic congestion and pollution in those areas.

Testimony of all the witnesses can be obtained from the Committee at: .


CSU Leaders Seek Support for System Priorities in Washington

California State University Chancellor Charles B. Reed and a delegation of CSU trustees, presidents, and governmental affairs experts visited Washington the week of March 31 to advance the system’s 2003 federal project and policy priorities on Capitol Hill. Participants met with numerous members of the California delegation, including House Education and the Workforce Committee leaders such as Rep. Howard P. "Buck" McKeon (Santa Clarita), George Miller (Martinez), and Lynn Woolsey (Petaluma); House appropriators, and House Democratic Leader Nancy Pelosi, and Senators Barbara Boxer and Dianne Feinstein.

Issues supported included increased funding for student financial aid and for early intervention programs such as GEAR UP and TRIO, enhanced support for the system’s community service functions with regard to the federal Work Study program, and strengthening Hispanic Serving Institutions. (Nine CSU campuses qualify as Hispanic-Serving Institutions, a federal designation that refers to institutions that have at least 25% Hispanic full-time equivalent enrollment, with at least half of those students meeting federal low-income standards.) They also sought federal dollars for systemwide initiatives in applied agricultural, biotech, and coastal research, among others, and they discussed prospects for the upcoming reauthorization of the Higher Education Act, discussed how to improve chances for success in the federal appropriations process, and were briefed on the multitude of ways Congressional action impacts California. The trip concluded with a CSU-hosted reception honoring the California Congressional delegation and staff.

The California State University is the largest system of four-year higher education in the country, with 23 campuses, nearly 407,000 students and 44,000 faculty and staff. Since the system was created in 1961, it has awarded about 2 million degrees. Its mission is to provide high-quality, affordable education to meet the ever-changing needs of the people of California. For additional information, see .


California Not Largest Winner, According to Report on Earmarks

A new report, the "Pig Book," released this week by the Citizens Against Government Waste (CAGW) analyzes 2003 federal discretionary earmark spending, labeled disparagingly by some as "pork barrel" projects. The report identifies $22.5 billion in earmarked projects within the 2003 Omnibus appropriations bill, which it calls a 12 percent increase from 2002 levels and 337 percent above the amount appropriated five years ago.

These discretionary projects are one-time spending items in appropriations bills earmarked for a specific state or local constituency to fund or supplement a project or a program. Critics view these projects as wasteful and egregious spending of tax payers dollars, while proponents view discretionary set asides as funds necessary for providing local services and programs to assist local agencies and authorities with supplemental appropriations.

Although the latest figures are not yet available, the report calls Alaska, Hawaii and West Virginia the "porkiest states" of the year, in large part due to the powerful position of their Congressional leaders. According to the report’s authors, California’s 2002 ranking is 41st among states, a drop of 6 slots from 2001, and the state’s pork per capita is $19.47, well below the national average of $32.21 and a small fraction of the $710.88 per capita flowing to Alaska.

Citizens Against Government Waste is a private, non-partisan, non-profit organization representing more than one million members and supporters nationwide. CAGW’s mission is to eliminate waste, mismanagement, and inefficiency in the federal government. For more information on the so called "Pig Book" visit the CAGW website at .


Pacific Council Releases San Francisco Bay Area Economic Report

The Pacific Council on International Policy recently released a report entitled, "Globalization in the San Francisco Bay Area: Trying to Stay at the Head of the Class." The report, authored by Sarah Bachman, argues that the region’s recent technology-led success has overburdened its infrastructure and threatened its famed quality of life. It concludes that regional action to address these problems is essential if the region is to retain its global economic competitiveness.

Among its findings is that the Bay Area’s trade infrastructure, such as airports and seaports need major upgrades, if they are not to continue to lose business to their competitors in Southern California. The report also argues that the area "must be vigilant against policies that could endanger its ability to attract the immigrants who have played such an important role in globalization by linking the innovation and money of Silicon Valley back to their homelands." The report goes on to state that: "Despite legitimate concerns about homeland security after September 11, it is important that Bay Area universities and businesses continue to attract the well-educated, entrepreneurial foreigners who account for much of the region’s success."

A copy of the full report can be obtained at the PCIP website at: .

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