Calculated Influences

If Sonoma County's water supply dwindles, or energy costs double, how would it impact your job?

The answers to those questions are being calculated by a Philadelphia-based group of economists hired to design a highly detailed economic model of Sonoma County.

The publicly funded project is intended to inform policy makers, businesses and educators on how changes in various factors such as graduation rates and annual rainfall affect economic growth in the county.

It is the most detailed analysis undertaken for a county in California, and perhaps even the nation.

"If it's successful, it will serve as an example for all California counties," said Paul McIntosh, executive director of the California State Association of Counties. "I find it exceptionally refreshing that a county is doing it, and I applaud the effort."

But a good idea doesn't necessarily deliver good news. Early results from the model are sending shock waves through Sonoma County's business community. For instance, educational attainment levels are falling among Latinos -- a trend that will cost the county's economy $1.5 billion in lost productivity over the next five years, according to the model.

The initiative marks a new approach to economic planning for the county, which in the past relied on forecasts that did not keep pace with changing economic conditions.

In contrast, the economic model allows people to tweak various inputs as they change. If energy costs increase, or the county wants to raise taxes, the model can be used to project the likely impact -- often expressed in dollar signs or lost jobs. It runs on a powerful software program, which makes updating the forecast easy.

So, for instance, if Latinos can achieve higher levels of education than current trends suggest, the model can be updated and will forecast a more prosperous future for Sonoma County.

The report comes at a time when the economy is grappling with a recession. But the project is focused on the future: What challenges will the economy still face when the current slowdown is over?

Early results

The economic model is being developed as part of a 10-year planning effort spearheaded by the Sonoma County Board of Supervisors. The model is expected to be completed by the end of March, and the final 10-year report will be presented to supervisors at the end of the year.

"This is the kind of tool we need when creating policies that will have a broad impact on the community, and specific impacts on business sectors," said Paul Kelly, who pushed for the economic model. "It's information for everyone to use."

The $150,000 project is being funded by the county and other public agencies, and contributions from private businesses such as PG&E.

A 46-page draft report was released Jan. 24, and is available on the Economic Development Board's Web site, www.sonoma-county.org/edb/reports.htm. It details how the model is expected to work, and it includes some initial forecasts. A 35-member group, dubbed the Innovation Council, was formed to help shape the model and the 10-year planning report. Its members range from City Council members and the director of a local environmental group, to the superintendent of the county's public schools and corporate executives.

Steve Cochrane, an economist with Moody's Economy.com in Philadelphia, was hired to develop the model with a team of Moody's economists.

"The economy of Sonoma County is at a crossroads," Cochrane wrote in the report.

The county's next 10 years is pockmarked with pitfalls, and the region isn't expected to experience anywhere near the economic growth of the late 1990s.

Personal income growth is expected to drop significantly, as is overall economic growth.

"I found the numbers to be very alarming," said Mike Hauser, president of the Santa Rosa Chamber of Commerce. "There are a lot of people who join me in our concerns about the health of the economy."

During the prosperous years of 1997 through 2000, the economy grew by an average 8.45 percent annually. The forecasted growth rate for the next 10 years is 2.5 percent.

The county's water usage is fast approaching its capacity, which might further slow economic growth. Global warming, and the effort to combat it, could potentially raise energy costs and weigh down the economy, too.

The first wave of baby boomers are beginning to retire, and it is unclear who will replace them. Many American-born workers are moving to more affordable areas, while the immigrant work force -- largely from Latin America -- is struggling to learn English and educate themselves and their children.

Latinos in work force

Many of the issues mentioned in the draft report were already known. But by calculating the dollar cost, it affixes a price tag to these looming issues.

One of the stand-out concerns is the falling percentage of Latinos with college degrees, which has been decreasing since 1990, according to the report.

In part, the percentage is dropping because Latino immigrants and their children are arriving in Sonoma County with less education than Latinos who have been in the region for generations. Also, Latino high school students have lower graduation rates and test scores than non-Latino students -- two critical factors that determine a student's readiness for college.

The draft report predicts the county's $18.5 billion economy would grow a half-percentage point faster every year if Latinos graduated from college at the same rate as non-Latinos. That would pump an extra $1.5 billion into the local economy over a five-year period.

These Latino arrivals are expected to be a huge component of Sonoma County's future work force, which would actually contract if not for immigrants. Latinos' role in the labor force will expand rapidly in the coming decade, as they move from comprising 22 percent of the population to nearly 40 percent in 10 years.

Percy Brandon, general manager of John Ash & Co., may be a role model for how Latino immigrants can prosper with proper education and, importantly, by learning English.

After emigrating from Peru, Brandon got a job common to Latino immigrants who don't speak English: He was a dishwasher.

Brandon worked hard to learn English, and he attended college in Canada. He ascended from dishwasher to become the well-paid general manager of a posh hotel and restaurant. It is a centuries-old American story, one based on the journey undertaken by millions of other ethnic immigrants from Ireland to Egypt.

"I moved through every level of the hospitality business," said Brandon, who is on the Innovation Council. "When you don't speak English, that is what you've got to do."

Brandon encourages all his employees to learn English and continue their education.

"It's a handicap if you don't speak the language," he said. "But everything is possible if you learn it."

Two other Innovation Council members are working hard to increase English proficiency and educational attainment among Latinos. Carl Wong, superintendent of public schools, and Hauser both have made it a priority.

For Hauser, it is an economic imperative. The chamber is working with businesses and nonprofits to set up 15 English learning centers across the county aimed to help working adults.

"This is an opportunity to take a part of our community that has demonstrated a great work ethic, a strong sense of family, and give them the English skills they need," Hauser said.

With shrinking budgets, the county's K-12 school system is facing a major challenge as the composition of its students rapidly change. The number of Latino students who are learning English as a second language has nearly doubled in 10 years. And a whopping two-thirds of Latino students in Sonoma County are not proficient in English, according to the county's Office of Education.

"If you are proficient in English, you have a much better probability of success," Wong said. "But the achievement gap is not just an economic imperative, it is a moral imperative."

Scarcity of resources

The 2007 water shortage underlined the economic challenges of limited natural resources.

The Sonoma County Water Agency has taken an active role in developing the economic model, and participating in the 10-year forecast.

"We wanted them to look at the constraints on natural resources such as water and energy and the impact on future economic growth," said Tim Anderson, government affairs coordinator for the agency. "We don't see much expansion of our water supply before 2015. So we need to plan our economic growth based on those limitations."

The Sonoma County Economic Development Board is managing the project. Its executive director, Ben Stone, said the results will help everyone make more informed decisions.

"We are kind of flying with instruments now," he said.

You can reach Staff Writer Nathan Halverson at 521-5494 or nathan.halverson@pressdemo

crat.com.

CHOICE ASSISTANCE

County officials hope new 10-year plan will offer more detailed economic data than before to help industry leaders with decisions / E6

ON THE WEB

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PERCY BRANDON, general manager of John Ash & Co.