TheCube presents HPE Discover 2022, brought to you by HPE. Greetings from Las Vegas, everyone. Lisa Martin here with Dave Vellante. We're live at HPE Discover 2022, with about 8,000 folks here at the Sands Expo Convention Center. First HPE Discover in three years, everyone jammed in that keynote room, it was standing here only. Dave and I have a couple of exciting guests, proud to introduce you to. Please welcome back to theCUBE, John Schultz, the EVP and General Counsel of HPE. Great to have you back here. And Kate Berth, Butterfield, the head of AI and machine learning at the World Economic Forum. Kate, thank you so much for joining us. Thank you, it's an absolute pleasure. Isn't it great to be back in person? Fantastic. John, we were saying that last time you were on theCUBE, it was theCUBE virtual. Now here we are back. A lot of news this morning, a lot's going on. The Edge to Cloud conference is the theme this year. In today's Edge to Cloud world, so much data being generated at the edge. It's just going to keep proliferating. AI plays a key role in helping to synthesize that, analyze large volumes of data. Can you start by talking about the differences of the two, the synergies, what you see? Yeah, absolutely. And again, it is great to be back with the two of you and great to be with Kay, who is a leading light in the world of AI and in particular AI responsibility. And so we're going to talk a little bit about that. But really this synergistic effect between data and AI is as tight as they come. Really data is just the raw materials by which we drive actionable insight. And at the end of the day, it's really about insights and that speed to insight to make the difference. AI is really what is powering our ability to take vast amounts of data. Amounts of data that we've never conceived of being able to process before and bring it together into actionable insights. And in simplest form, right, AI is simply making computers do what humans used to do. But the power of computing, what you heard about frontier on the main stage today, allows us to use technology to solve problems so complex that it would take humans millions of years to do it. So this relationship between data and AI, it's incredibly tight. You need the right raw materials. You need the right engine that is the AI. And then you will generate insights that could really change the world. It's okay, there's a data point from the World Economic Forum which really caught my attention. It says 15.7 billion of GDP growth is going to be a result of AI by 2030. 15.7 billion added. That includes the dilutive effects where we're replacing humans with machines. What is driving this in this incremental growth? Well, I think obviously it's the access to the huge amounts of data that John pointed out. But one of the things that we have to remember about AI is that actually AI is pretty dumb unless you give it nice, clean, organized data. And so it's not just all data, but it's data that has been through a process that enables the AI to gain insights from it. And so what is it? It's the compute power, the ever-increasing compute power. So in the past, we would never have thought that we could use some of the new things that we're seeing in machine learning. So even deep learning. You know, it's only been about for a small length of time but it's really with the compute power, with the amount of data, being able to put AI on steroids for want of a better analogy. And I think it's also that we are now in business and society being able to see some of the benefits that can be generated from AI. And, you know, listening to Oakridge talk about the medical science advances that we can create for human beings, that's extraordinary. But we're also seeing that across business. That's why I was gonna add, as impressive as those economic figures are in terms of what value it could add from a pure financial perspective, it's really the problems that could be solved. You know, if you think about some of the things that happened in the pandemic and what virtual experience allowed with a phone or with a tablet to check in with a doctor who was gonna curate your COVID test, right? When they invented the iPhone, nobody thought that was going to be the use. AI has that same promise, but really on a macro global scale, some of the biggest problems we're trying to solve. So, huge opportunity, but as we're gonna talk about a little later, huge risk for it to be misused if it's not guided and aimed in the right direction. Absolutely. How's it okay? Can you talk about that? Well, I was just going to come back about some of the benefits, you knew. California's been over the last 10 years trying to reduce emissions. One wildfire absolutely wiped out all that good work over 10 years. But with AI, we've been developing an application that allows us to say, tomorrow at this location, you will have a wildfire, so please send your services to that location. That's the power of artificial intelligence to really help with things like climate change. And that's a, is that a probability model that's running somewhere? Yeah, absolutely. So I wanted to ask you, a lot of AI today is modeling that's done and the edge, you mentioned the iPhone, with all this power and new processors, AI inferencing at the edge in real time, making real time decisions. So one example is predicting, the other is actually something going on in this place. What do you see there? Yeah, so I mean, yes, we are using a predictive tool to ingest the data on weather and all these other factors in order to say, please put your services here tomorrow at this time. But maybe you want to talk about the next edge. Yeah, yeah. Well, and I think it's not just grabbing the data to do some predictive modeling, it's now creating that end-to-end value chain where the actions are being taken in real time based on the information that's being processed, especially out at the edge. So you're ending up, not just with predictive modeling, but it's actually transferring into actual action on the ground that's happening, we like to say auto-magically. So to the point where you can be making real time changes based on information that continues to make you smarter and smarter. So it's not just a group of people taking the inputs out of a model and figuring out, okay, now what am I going to do with it? The system end-to-end allows it to happen in a way that drives a time to value that is beyond anything we've seen in the past. In every industry. In every industry. Absolutely, and that's something we learned during the pandemic, one of the many things. Access to real time data to actually glean those insights that can be acted on is no longer a nice to have for companies in any industry. You've got to have that now. They've got to use it as their competitive advantage. Where do you see when you're talking with customers, John, where are they in that capability and leveraging AI on steroids, as I said? I think it varies. I mean, certainly I think as you look in the medical field, et cetera, I mean, I think they've been very comfortable and that continues to up. The use cases are so numerous there that in some ways we've only scratched the surface, I think, but there's a high degree of acceptance and people see the promise. Manufacturing is another area where automation and relying on some form of what used to be kind of, analog intelligence that people are very comfortable with. I would say candidly, I would say the public sector and government is the furthest behind it. It may be used for intelligence purposes and things like that, but in terms of advancing overall, the common good, I think we're trailing behind there. So that's why things like the partnership with Oak Ridge National Laboratory and some of the other things we're seeing. That's why organizations like the World Economic Forum are so important because we've got to make sure that this isn't just a public sector, a private sector piece. It's not just about commercialization and finding that next cost savings. It really should be about how do you solve the world's biggest problems and do it in a way that's smarter than we've ever been able to do it before. It's interesting you say public sectors is behind because in some respects they're really advanced but they're not sharing that because it's secretive. That's very fair. So Kay, the other interesting stat was that by 2023, this is like next year, 6.8 trillion will be spent on digital transformation. So there's this intersection of data. I mean, to me, digital is data, but a lot of it was sort of, we always talk about the acceleration because of the pandemic.  Now are people stepping back and saying, okay, what can we actually do? And maybe being more planful, maybe you could talk about sort of that roadmap. Sure, I think that that's true. And once I agree with John, we also see a lot of small, a lot of companies that are really only at proof of value for AI at the moment. So we need to ensure that everybody, we take everybody, not just the governments, but everybody with us. And one of the things I'm often asked is, if you're a small or medium-sized enterprise, how can you begin to use AI at scale? And I think that's one of the exciting things about building a platform and enabling people to use that. I think that there is also the fact that we need to take everybody with us on this adventure because AI is so important and it's not just important in the way it's currently being used, but if we think about these new frontier technologies like Metaverse, for example, what's the Metaverse except an application of AI? But if we don't take everybody on the journey now, then when we are using applications in the Metaverse or building applications in the Metaverse, what happens at that point? Think about if only certain groups of people or certain companies had access to Wi-Fi or had access to cellular or had access to a phone, right? The advantage and the inequality would be manifest, right? We have to think of AI and supercomputing in the same way because they are going to be these raw ingredients that are going to drive the future. And if they are not, if there isn't some level of AI equality, I think the potential negative consequences of that are incredibly high, especially in the developing world. Talk about it from a responsibility perspective. Getting everybody on board is challenging from a cultural standpoint, but organizations have to do it as you both articulated. But then every time we talk about AI, we've got to talk about its use responsibly. Kay, what are your thoughts there? What are you seeing out in the field? Yeah, absolutely. And I started working in this in about 2014 when there were maybe a handful of us. What's exciting for me is that now you hear it on people's lips much more, but we've still got a long way to go. We've still got that understanding to happen in companies that although you might, for example, be a drug discovery company, you are probably using AI not just in drug discovery, but in a number of backroom operations such as human resources, for example. We know the use of AI in human resources is very problematic and is about to be legislated against or at least be set up as a high risk problem use of AI by the EU. So across the EU, we know what happened with GDPR, that it became something that lots and lots of countries used and we expect the AI act to also become used in that way. So what you need is you need not only for companies to understand that they are gradually becoming AI companies, but also that as part of that transformation, it's taking your workers with you. It's helping them understand that AI won't actually take their jobs. It will merely help them with re-skilling or working better in what they do. And I think it's also in actually helping the board to understand. We know lots of boards that don't have any clue about AI and then the whole of the C-suite and the trickle down and understanding that at the end it's you've got tools, you've got data and you've got people and they all need to be working together to create that functional responsible AI layer. When we think about it, really, when we think about responsible AI, really think about at least three pillars. The first off is that privacy aspect. It's really that data ingestion part which is respecting the privacy of the individuals and making sure that you're collecting only the data you should be collecting to feed into your AI mechanism, right? The second is that inclusivity and equality aspect. We've got to make sure that the actions that are coming out, the insights we're generating, driving, really are inclusive. And that goes back to the right data sets. It goes back to the integrity in the algorithm. And then you need to make sure that your AI is both human and humane. We have to make sure we don't take that human factor out and lose that connection to what really creates our shared humanity. Some of that's transparency, et cetera. I think all of those sound great. We've had some really interesting discussions about in practice, how challenging that's going to be given the sophistication of this technology. When you say transparency, you're talking about the machine made a decision. I have to see how, understand how the machine made a decision. Algorithmic transparency, go ahead. Yeah, algorithmic transparency. And the United States is actually at the moment considering something which is called the Algorithmic Accountability Act. And so there is a movement to particularly where somebody's livelihood is affected. So for example, whether you get a job. And it was the algorithm that did the pre-selection in the human resources area. So did you get a job? No, you didn't get that job. Why didn't you get that job? Why did the algorithm? A mortgage would be another thing. And John was talking about the data and the way that the algorithms are created. And I think one great example is lots of algorithms are currently created by young men under 20. They are not necessarily representative of your target audience for that algorithm. And so unless you create some diversity around that group of developers, you're going to create a product that's less than optimal. So responsible AI isn't just about being responsible and having a social conscience and doing things but in a human-centered way. It's also about the bottom line as well. It took us a long time to recognize the shared interests we have in climate change and the fact that the things that are happening in one part of the world can't be divorced from the impact across the globe. When you think about AI and the ability to create algorithms and engage in insights that could happen in one part of the world and then be transferred out, notwithstanding the fact that most other countries have said we wouldn't do it this way or we would require accountability, you can see the risk. It's what we call the race to the bottom. If you think about some of the things that have happened over the time in the industrial world, often businesses flock to those places with the least amount of safeguards that allow them to go the fastest regardless of the collateral damage. I think we feel that same risk exists today with AI. So much more we could talk about, guys. Unfortunately, we're out of time but it's so amazing to hear where we are with AI, where companies need to be and it's the tip of the iceberg. Very exciting. Kay and John, thank you so much for joining Dave and me. Thank you. Thank you. Pleasure. We want to thank you for watching this segment. Lisa Martin with Dave Vellante for our guests. We are live at HPE Discoverer 22. We'll be back with our next guest in just a minute.


Good day, fellow investors. My name is Senkali and today I'll explain how boring old utilities can make you rich. Very rich over the long term with low volatility, so low risk. We'll discuss how to invest in utilities, what are the pros, what are the cons, where to find the best utilities around the world, what we can expect from US utilities and what we can expect from other utilities. And how do defensive utilities fit a normal portfolio? So why investing in utilities? First, whatever happens in the economy in your life, this evening you're going to turn the light on or if it's hot like it is now in the summer here in the northern hemisphere, you're going to turn your airco on. So whatever happens electricity will be consumed. So that's one. Secondly, there is always something called inflation that investors have forgotten about, but it's always present and takes off a little bit of our returns every year. Electricity, utility and other utilities are allowed to increase their prices in line with inflation, so they give protection against inflation, which is very, very important. So that's two. Three, utilities can be growth companies, especially if they reinvest their earnings. For example, if there is a country with good economics, good demographics, a utility can be very, very good, safe, long-term investment. Four, there is less competition in the utility business. If you build one transmission line, there is no point that the competitor builds the second one next to it, because then nobody would make money. So the ones who are there, who have been a utility in a certain area for the past five decades, they are pretty set, safe businesses and there are very few things that will disrupt them. So that's the case for utilities. On the negative side, each utility is again very different. There are some utilities who would like to take lots of debt, they over expand, usually buying distressed assets, which are distressed for a reason, and then if they run into troubles of not being able to pay their debts, they go bankrupt. The latest example is energy future holdings that's now in bankruptcy court and Buffett made a bid of 9 billion to buy their taxes on core energy. So Buffett knows, okay, this is good, I'm investing there, I will get my 10% return if I invest in utilities and Berkshire Hathaway Energy is heavily investing in utilities. So it's interesting to see whether we should invest too. Now let's start with taking a look at US utilities, what they offer and what are the risks. As you can see, valuations are from 17 to 26, depending on the company, debt ratios are almost equal, dominion 80%, while a conservative Berkshire Hathaway Energy has only 42% of assets financed by debt. So all others are very, very leaning towards that. That's logical because of the current low interest rates and if interest rates increase, utilities will also increase their prices, so they're pretty hatched there. What you can see the lower than market valuations are due to low growth per year. Utilities can grow if they make an acquisition or invest in new infrastructure, so the growth is relatively low and especially low because they pay out a lot of their earnings into dividends. Payouts range from 50% to 100%. Berkshire Hathaway reinvests as they are buying on-core with the money they're reinvesting, thus they are growing. Different perspectives, you have to see which one is the best for you. Now on the risk side, we have seen dividend yields around 4%. Current federal funds rate is 1%. Ten-year treasury is 2.0. And dividend yields on utilities are 4%. If the federal funds rates increase to let's say 3%, the 10-year treasury yield will be 5% and the expected return from utilities will be 7%. Stock prices would go down. That's something inevitable. And that's the risk of utilities. However, until that happens, you have a nice dividend to enjoy. So just a quick example. Southern company stock price is 47.36, the dividend is 2.32. The current dividend yield is 4.89%. If interest rates increase, the expected yields will go, for example, to 7.5%. Given the stability of the company and their earnings, stock price would drop to $30.93 because then it has an expected yield of 7.5%. Thus, if interest rates increase, all these stocks have run a risk of a 35% decline. If higher interest rates hit their debt costs, then the decline can be even larger. So there is risk, especially now with low interest rates. I don't see much higher interest rates because that would trim the economy. So in the long term, there is risk. But if stock prices drop, your dividends will be higher and you can reinvest more. Thus, your long-term returns will be higher because you bought more stocks on the chip, also a reward. So there is plenty of weighing around utilities. Another significant thing is that utilities constantly increase their dividend. Even if they don't grow that fast, they rationalize increased prices little by little, lower cost. And as you can see, Southern Company here has increased its dividend for the past 17 years. Slowly, steadily, thus you can expect higher dividends in the future. Now, these are US utilities.  Much lower price earnings ratio, much higher growth potential from emerging market economies, for example, does a very interesting, very attractive investment opportunities. For example, Coppel, Energy Company of Parana, has a price earnings ratio of just 5.7. It's a Brazilian utility. The same in Brazil, whatever happens, people are going to use electricity. Price to book 0.4, dividend yield 3.5. Now, when investing in foreign utilities, you have to invest in countries that are going to grow, are going to have positive demographics, because you want to be exposed to a positive, strengthening currency trend. And in the meantime, get a nice dividend. So Brazil is one idea. Good dividend. When the situation stabilizes, when the real strengthens, your dividend will go from 3.5 with economic growth to probably even 7%. So that's very interesting, very tempting scenarios. If you're not so keen on Brazil, let me show you what's going on in Australia. So the Aussie dollar has really weakened in relation to the US dollar in the last five years, due to the slumping commodities, and hasn't really appreciated much as commodities recovered. Thus, if the Aussie dollar recovers, you can expect an additional return from an investment in Australian utilities. I'll make a special video about Aussie dollar and how to invest in Australia. But let's see what do we have in Australia. We have, in this case, selected four big utilities. You can see that dividend yields are above 4% and above 5%. So while you wait, you can get 5%. If your Aussie dollar strengthens, and I think we are at the bottom now, as I said, make a special video about it, then your yields can be 7%, 8%, 9% if you are a European or US investor. If you're an Australian investor, then look for emerging markets. Don't invest in Europe and the US, because long-term trends are here and we can't avoid them. So emerging market currencies will probably be stronger in the very, very long term. Thus to conclude, utilities are stable, safe, income-yielding investments that you know will be there in the long term and we can take advantage of them. However, depending on your risks, your currency risks, if you want to look around the globe and then rebalance accordingly, invest more when something is cheap, you can make huge returns and utilities can really make you rich. So depending if you are such a bit more defensive, these are very, very interesting things to invest in. I especially like them because they give me a margin of safety, because I know people are going to use electricity whatever happens and when there is a crisis, like there was last year in Brazil, I was heavily invested in a Brazilian utility company. I'll make a video also about Brazilian utilities and Brazilian investments. So it's very interesting to see what's going on. I'll take a deeper look also at Australian utilities. Very interesting situation there. Thank you for watching, don't forget to subscribe, click like if you liked the content, leave your comments, share your ideas, let's create here a community of value profitable investors. Thank you and I'll see you in the next video.


The scene of the crime is presented by Billy Johnson Jr. Attorney-at-Law. On February 4th, 2017, Clancy Adkins, who had recently entered remission from cancer, was found shot dead in his home here on Coon Branch in the Island Creek community in Pike County. I'm Clancy's older sister. I was the oldest one in the family. Clancy's the baby.   They sent him to Cabell Huntington and they told us down there that he was leukemia. And he stayed down there for about a year in the hospital. About six months before I think they got killed, he was, you know, he had went in remission and, you know, he was doing pretty good, you know.  But he was doing pretty good when he got killed. He came down on Christmas and that was last Christmas, you know, that he spent with us. What exactly happened that day remains a mystery.    That's all she talks about. And it's just hard, you know, not knowing who done this.  You know, it might mean something. If you or anyone you know has any information regarding the case of Clancy Adkins, please contact Detective Jason Murlow at the number on your screen. Reporting in Pikeville, I'm Polly Hopkins for EKB News.


Yes, can we start now and I'm so happy that at least now because yesterday when I came here everyone was just in this mode and I'm happy at least now you're utilizing the objective of the workshop and you're sharing your concern and I know there are two or three points for which even at present even I don't have a solution and those are good points just as I raised here two or three are very good points. Let me work on it. We have a solution. Let me find out. I'll give it to you. A point because I'll share it a bit. Second point which came up during a discussion was about service tax. See taxation is not my field still. I'll check that service tax point and get back. Third, the query was about if any item is less than 5000, can we charge to income expenditure? Earlier, yes, there was a rule in company's act. Now, once I start the presentational pick, I will not go into theory part. I'll pick the major major points which are relevant for us. So, even though 5000 limit B have scrapped, then there was one point. Sir, if we get it approved from the management, then what happens? Sir, I agree. I have to discuss with Bakshi sir because it needs to be changed or revised or amended. Maybe in future, I'll give my suggestion. I agree with me. I don't deny that. I'm just sharing that was given under the company's act. Should be charged to profit loss account. Sir, I'm denying it. I'm giving you a suggestion. Government has designed a performance. We can only say that these are the points which you might want to change in the future. I can only give you points. I know government has designed it but sir, government has designed it. Won't it change even if it is covered with a piece of paper? I don't know sir. If any session is given, then it will change. When the government had made the format, it was made before 2013. So, what did they do? They took the company's act and put it in its provision. That is valid, no sir. Sir, we will have to agree. Why we should change? We should not change. Sir, I'm not talking about change. What I'm saying is that it came from the company's act. So, baby in future, if it comes, I'm just sharing the knowledge with you. Sir, I'm not saying that already if it is less than 5,000, like a pen drive. People even show pen drive also as an asset. Because it is used for the future. But generally what happens when it is a small amount, we have a small amount here, why to create a balance sheet heavy, with small, small items, anything up to 5,000, remove it. In AS 26, I will share it, it is written up to 25,000. Because software is expensive. So, up to 25,000 is written there, charged to PNL account. In intangible. Sir, I'm not changing any format, sorry. I'm not here to change the format. I'm not here to change the format. That is just the knowledge I'm sharing. Let's come into the, I will not go for the meaning part. First thing which generally arises, what are the assets? Because this was a point yesterday as well, whether it is a part of current asset, appreciable asset, fixed asset, tangible asset or not. The appreciable asset has only three criteria, only three. Which is to be used for more than one year. Which is to be used for production or administration. And which is not for resell. Simple. Which is a very common point, everyone knows it. So anywhere if you feel, because there were a lot of queries which were asked during the break also, whether we should charge it, take the example people were asking about e-journals. There was one query from one institution, e-journal, once they take it. They have to renew it every year. Let's suppose I have taken e-journal subscription today. Next year, to get the e-journal subscription again, I will have to pay the money. That was a query from the institution. Then the query was, should we charge that amount as an asset? Should we charge as a deferred revenue or what? I was very clear, even though it's a one-year part. Logically, not from more than one year, right? It will, then I ask one query, can you sell it to anyone? They said no, you can't transfer it. I'm just sharing a bit that point which was asked yesterday. The point was, if let's suppose I have taken for 13-14, then 12-13 archive is given to me. If I pay 14-15, then 13-14 is given to me. Agreed. But for 13-14 amount, I've already paid. There are two types of contract. One is 13-14 only readable. The other is readable and archival. So if 13-14 is both, archival and readable? Agreed. If 13-14 is both, let's say, right? If it is both, are you using it for more than one year? Yes, you're using it. But all assets, all assets have minimum sale value. Can you transfer it? Can you sell it to someone else? No. Any capital expenditure? First of all, we always look at this point, whether it has a saleable value or not. Take the example of a chair. No matter how much a chair is scrapped, still at least you can sell it for 10 rupees. Or 5 rupees. Apart from the criteria of saleable value or whatever, there is another point that out of grants, when we purchase assets out of grants, it is basically whether the grant is for capital asset. Sir, it will come. So for example, if we are purchasing, say, which you are just discussing, out of allocation, the allocation is out of plan grant for books and journals, for example. Right. And the library is maintaining archives. Right. Okay? Now the subscription is on calendar year basis. Right. Okay? So one point is that while making payment for subscription, say for year 2014, a certain part will fall in the current year. Okay. That's not the point. The main point is that over the period, the journals, subscription to journals, which was normally for hard copies, now they have moved to e-journals. Right. Now while making payment for subscription of e-journals, the payment is for, is a form of license to use. Right. It's not that you are, sometimes the license is only for reading only, or whatever. It could be condition. The point is the journal has been subscribed out of plan grant, which is capital grant. The grant allocation of the sanction. You come to your right specific point. Yes. I know what you're talking about. It's a license fee. The point is the allocation or the grant is a capital grant or a non-lickering grant, out of which the decision is making payment for subscription for one year, which has to be taken as a recurring expenditure in the recurring expenditure account. So, the non-lickering grant is used for recurring expenses. The auditor have a valid objection. This is a... One thing I want to tell everyone, that the plan non-plan that we get from the ministry, if we don't connect it with the revenue capital, then there will always be confusion. The plan is always for capital only. Remove this from your mind. We also give salary from the plan. Which capitalizes. So, decide by looking at nature and expenditure. Never keep confusion in the plan non-plan. Sir, if out of plan grant, a certain allocation is made for... Sir, let me tell you two things first. Revenue capital is equal to non-plan. Revenue capital is equal to non-plan. Okay. So, my point is... There is no misallocation. No, sir. The point is, if allocation of certain grant is for creating creation of asset. Okay. That's books, for example. And while utilizing that grant, we come across subscription of journals, which we are archiving. I mean, archiving is maintained, so we are going to capitalize it. We are making... Subscription of journal annual? Yes. Why you will capitalize? We are... No, no. That will not be capitalized. We are making... We are maintaining an archive, the library maintains an archive, and it's maintained over the period. The journals are subscribed by library, which is maintaining an archive. So, we are capitalizing it along with books. Sir, that doesn't happen. I'll come great point. Okay. All right. Okay, I've been saying... No, that's your matter clear. But let me tell you one thing. I've been watching annual accounts for four years. So, plan non-plan. Revenue capital has never been matched. It will always confuse us. Sir, my point is not that. My point is... A non-plan, we always have revenue expenditure. It is not necessary. It is not also correct. We create capital from non-plan. Yes. Sir, that is not my point. My point is, if the allocation is for... for creation of asset. In allocation, where is the asset? In allocation, where is the asset? In allocation, where is the asset? In allocation, where is the asset? In allocation, where is the asset? It is not written. In the plan, the teacher's salary comes. Which asset is created? There are books and equipment in the plan. No, no. You do it there. Okay, I'll tell you. In the plan, it will necessarily create capital. It is not necessary. Sir, you are very good. Thank you. Yes. I am Arula from TIPLA ITM, Iwaliya. Government intention for separating this plan and non-plan is both expenditure that is recurring expenditure and the capital expenditure. Both we can done from plan. The government intention is plan expenditure is only meant for creation of the assets. Whatever assets we are creating, if any salary is paid for the creation of the assets, if the salary is paid for the security staff for looking after the that building which is under construction, that is to be charged to the plan expenditure. This is the intention of the government. That recurring expenditure which is used to be used for the creation of the capital assets, that is to be Don't worry. Plan expenditure. We are here to discuss the point and discuss the point. I'll cover it. Please, sir. Planning commission has already released a classification of expenditure. In that, it says that if any new scheme comes in the plan period during the one planning period like the 5-year plan period if any new scheme is conceived by the government of India then all expenditure related to it whether it is for revenue nature or capital nature all expenditure will be generated in the plan itself. The plan will be charged. This is the intention of the government. Sir, it is like new IIT. Like new IIT is new IIT. Sir, their problem is not related to the plan and non-plan. They have raised a question. Sir, wait a minute. The expenditure heads in the plan are for different buildings for books and journals recurring expenditures. In its bifurcation there is a deal called books and journals. In that, I think it is said that books and journals are given to show in the capitalization non-recreation expenditure. If we take it in the balance sheet in the P&L, in the recurring expenditure then the utilization certificate will be mismatched. Maybe this was it. So clear this. Sir, it is very simple. If you got any grant for books and journals in the plan funds then logically you used it in the plan funds you purchased it from it. But please understand government intention is that you are using it for some purpose. But plan fund and the accounting can never correlate. We have to go by the regulations accounting standards and the concepts. It is very simple. You have taken let's suppose I have taken a land out of plan funds. 100 rupees land and 100 rupees grant. And if I am following a net approach which is given in AS-12 government grant to treat the grant income approach or capital approach. I will be covering it. If I am following an income approach means land 100 grant 100 I will pass a simple entry. Right. Land account debit to capital fund 1 rupee 1 rupee. Finish. Finish. Net. No depreciation even the building, computer anything. I want to say the question was whether the subscription for e-journal or database subscription will be capitalized or not in the accounts. Yes. I can share my experience what we are doing in I am Calcutta is that we see whether the e-journal or database subscription that we are subscribing from the vendor is perpetuity or not. Perpetual or non-perpetual. Perpetual means if the subscription is closed even if we can you know see the back balloon then it becomes a property of the institute and we are capitalizing it. But if it is a non-perpetual kind of thing because for example in the next year if I do not pay the subscription then they will not give us the password and we cannot access the software. In that case we charge it to the revenue. This is our approach. I will take 2-3 examples here. We will come ahead but once you have raised the point let me take 2 or 3 points. One more small supplementary then you can clarify. Under plan and non-plan allocation we receive both kind of components. Capital as well as revenue. The point raised by him is that the allocation for the books is made under capital. Am I right? That is the confusing area. If the allocation is under capital and subscription is for one year only whether that capital fund can be booked under revenue. Please understand. I am just telling this is the confusion. Why? See I agree it was given for purpose of books. Are they ever specifying books has to be for one year, two year nothing? But sir I am telling you capital funds cannot be utilized on revenue item. Sir I agree even I know it but let's suppose when they are giving it to you now you would have an issue. I will take 2-3 examples here. 2-3 examples. Especially in educational institutions nowadays recorded lectures. Recorded lectures are also purchased by both institutions. Along with the e-book if I am purchasing e-lectures e-lectures are also given by number of hours you can view it. If those number of hours are over by one year then logically you cannot show in balance sheet. Reason balance sheet means it has to be a perpetual use. It can be used again and again if any e-journal. Let's suppose I have taken a subscription for any e-book. Right? I have taken through Kindle. Kindle may be free or purchased. I have taken a lot of books for one year. Logically after one year I have to pay again. Take the example of Quickheal. It's a license you get it. They never give you a new CD to renew that license. You have to pay the fees again next year so that money which you have paid doesn't become your asset. But if you have paid let's suppose for a project I am taking example. We have just taken a tally and it's a five year project. The tally, the money was given by the World Bank through the grant. It's a five years. So logically now for five years you can treat it as a like a deferred income also because AS12 permits that. Why you are calling it as a capital? You simple if you want to show in the balance sheet. Show it is a balance sheet. Show e-journal, e-books, library in the balance sheet. Don't use our word capitalization because you can treat it as a deferred income after four years, five years you will have to pay it again. Let's suppose archive ma'am you are talking about archive. You are not paying the fees again for archive. You can use it a number of times that money came from the grant. Certainly it means that now it has become your property. Simple. If you follow the AS12 approach that is a gross approach. Gross means whatever you paid it for a book let's suppose 100 rupees show 100 year. Simple. And it will be depreciated over the years. If you feel that depreciation should be provided but if you feel that no it is a perpetual life like a land. No, don't provide depreciation that. But if you feel no archive is available only for three years it's like a misleading expenditure. Amortize it for three years. Simple logic. So I agree the planned fund is to be used for capital. I agree with it. But if you have purchased it for a book what is capital revenue? Capital revenue is very simple. Revenue is that money which has to be incurred again and again. Every month let's say that's the revenue expenditure. That's the revenue expenditure. I agree sir. Both. But if the plan has books and you have purchased the books and you have to pay the subscription of the book for the next year then even then if the book which will not be usable next year is being shown in the next partnership only because the money from the plan has come it's a wrong treatment. You take as any auditor of CAG they will immediately raise the point. Yes. From plan grants, e-books procurement of e-books for five years or six years now most of the university are procuring e-books. Agreed, I agree. I'll take out very simple part. Right? When we get the grant right? We get 100 rupees grant let's say let's say planned fund. Agreed? That's a simple approach of AS12 which even Anand will take it but you have raised the point I'll be taking it here. Bank and plan funds. Now this bank goes for that you have purchased the e-books. That's like a balance sheet I'm talking about. Simple. Fund will appear at 100. Fund will continue to appear at 100. But what is the logic of fund?  Right? This is a gross approach. Gross means you are not charging the depreciation. Now let's suppose in this year you say no I want to charge 20 rupees depreciation. The depreciation has to be charged to income expenditure. Over the period of five years it goes. But as ma'am is saying it's archive part so you can use it perpetually. Am I right? Perpetually means it can be used again and again. Again and again. If it can be used if it can be used and again and again logically it is your asset. It should appear but the problem is why you want to show it in 100? The purpose is what? To show the value or to show the asset? Show the asset? As even yesterday Mr. Shyam mentioned the logic is not to show the value here. The logic is to show the asset so that at least if someone comes you can say we have ten archives. That you can say. But over the period of five years, six years any money goes obsolete. Appreciate it. So you want to show it after five years, six years the best approach is always the net approach. First you receive the grant. You pass the entry bank to grant under it. It will show in your balance sheet and like this. Then you purchase the book. You write the entry e-book to bank. e-book. Agreed? Now if you want to charge a depreciation on it you take it five percent, ten percent whatever rate you want to take. Should we charge depreciation on it? Why? Depreciation is what? Whose value will be less? See, how are you reducing the value of the archives? The content will be the same. It will be the same. It is not depreciation I have just mentioned just see the definition of it. Please don't see we are doing this practice. This is a definition of depreciation. Let's see measure of wearing out it's not wearing out. Please you have to being an accountant you have to apply the words also sometimes. Consumption consumption means which you have consumed it cannot be used again or other loss of value. Archive means which has a indefinite life. It means if I have taken one subscription which can be used n number of times it can be used my videos are available on C A Club India if any student purchase it they can only purchase for two years so guarantee two years is a definite curve but if I give the right use exclusively entire life so logically life will be infinite why do you charge depreciation? So books that depreciation income tax that we recover the reason there are many books which are revived changed in all the libraries income tax book is changed every year your I take example I am part day book of financial management you can't publishing always go for revise edition new edition you have a whole edition also available there but tell me if a new edition is available does a student takes the whole edition then what will be the use of this old edition yes if it is not useful then logically that book should be removed but journals are useful even the old articles are referred in PhD and research journals are have a life but not the books if that book e-book you have taken e-book of I am part day right and next year a new edition comes will you take the new edition or not will you take the new edition old edition automatically goes waste and what is the logic of showing it at 100 rupees immediately remove it that is the best approach I am telling you in grants the best approach is never to show on the gross I hope Anand takes that point because if you take the net approach it is the best way your tension of depreciation will be removed and in my presentation it will be covered now now tell me this I will take a very simple example here let us suppose and this guaranteed you guys must be facing it if let us suppose suchiness purchase of Ferrari I have taken a very simple figure suchiness purchase of Ferrari for rupees 100 on 1st January 14 it came to Bombay port and for custom duty he paid 50 rupees on 15 January now it was transferred to his house on 31st January and he paid transportation charges 20 rupees then at his house he installed some accessories of 100 rupees on 15th February car was ready ready for use on 1st March but he used it for the first time there will be many doubts he used it for the first time on 31st May I am again repeating he purchased on which date 1st January amount 100 then it was custom duty was paid 15 January then it was transferred to his house 1st March it was ready to use on which date 1st March he used it for the first time on 31st May in some of the annual report I was looking at it in the accounting policies it is written depreciation has been charged for the full year where the addition is made at any time it is written the policy is somewhere I agreed I am not commenting I am just sharing the points please we are here to discuss so that at least our confusion ever removed now my query is which has in everyone's mind depreciation on which cost 1 is 270 full value full value sir up to 1st March very good it means this year cost concept basically total expenditure very good brilliant my next query depreciation should be charged from which date 31st May very good sir I am not saying yes no please okay 1st March 31st May how many of you are saying 31st May 1, 2, 3, 4 perfectly fine ma'am I agree very good 6, 7, 31st May very good and how many of you are saying 1st March ma'am it should be from 1st March I will tell you wait for 5 minutes wait for 5 minutes you purchase you purchase your AC at your home during the winters because it was economical salesy you got it you use it for the first time in the summers depreciation will be charged because depreciation is about loss of the value it is always charged from the date when the asset is ready to use income tax may allow a please never mix income tax with accounts the basic mistake maximum of us do it we mix income tax with accounts income tax profit is never same as accounts profit cannot be because of the rebate, deduction, exemption can never be same take one more example if I have taken a house on rent and my agreement is from 1st May and I have requested my landlord that I will come back after 20 days will he charge the rent from 1st May or 20th May agreement dated ready to use on a lighter side because the atmosphere has become very hot let me take out on a lighter side a very good joke in this G.P. Sharma ji manager is here and he went with his wife after 3 days 4 days when we checked out from the hotel a very big bill came there was a huge bill which was given to him after 3 and 4 days and the bill was of 2 lakh rupees he was surprised in 4 days a bill of 2 lakh rupees what we have done in 4 days he as the manager manager came manager showed the details of the bill in the bill it was written 80,000 rupees only for AC air condition he said we have come to Ladakh we don't need AC manager said sir see switch it on AC is ready to use you have not used it put to use it but it was ready to use I will charge G.P. Sharma ji said don't worry you are discussing with the CA he immediately took out his letter head and said Mr. manager you are supposed to pay me 20 lakh bill manager got stunned 20 lakh why you have stayed for 4 days why I should pay 20 lakh G.P. Sharma Mr. G.P. Sharma said you have if T is my wife manager got stunned sir I have not touched it G.P. Sharma ji said ask her she is ready to use so always remember its charge from ready to use never put to use ma'am I have taken at least 4 or 5 examples make sure even if you don't use it there was a query from one of the institution that we have not used the asset for 2 years you don't use it its market value will go down there is a loss and depreciation never only means usage loss even if a loss due to time take the example of iPhone if anyone has purchased iPhone now the value is almost like half even if you don't use it even if you don't use it I still remember when I purchased Blackberry I purchased for 25,000 after one month when I went for exchange they said 7,000 rupees I use it only for one month usage say never link depreciation with usage that's the wrong concept sir we get the construction through CQWD the time that the CQWD takes to settle the bills its very long time more than a year or two though the building is ready to use or put to use but they don't hand over the building so normally the ready to use is when the document is transferred when the building is actually transferred to the university but by then the building is already put to use so now depreciation starts at what time maybe sir simple ready to use means when you can shift there until unless all clearances you get it until you can see clearance certificate completion certificate you should not charge it but practically the building is put to use before it is transferred sir agreed it's put to use but it's very simple legal formality it's not like that that's what it takes more than a couple of years to transfer it no problem sir if it's a query but what would you ask for the CQWD clearance for the building just tell me without clearance if you are using it it is basically usage before the construction of the asset it means if you are using it before the transfer then logically it should not be transferred from this from that date I'll take example if you take a car and that car is transferred to your name after one month then you are not the owner you become the owner only after one month no mere saab says it should be charged after one month but how you do it because as statutory audit is putting objection on this they say that though the building is not transferred but since you have already put to use it should be depreciable from the date when you have put to use till the completion certificate will not come it will stay in work in progress and if the completion certificate comes then it will be transferred one thing there is one more logic with it that no maintenance can be repaired even if it is completed then the completion certificate will not come till then there is no repair it is CWIP it is capital work in progress sir our state and work has said that there are 200 casted beams poles 200 casted poles that has to be disposed of because now there is no value means they have shown the book value as zero how we ask that how this book value of the 200 poles be zero they said that because we have designed we have for some experimental work we have designed and now we have to disposed of so it how the depreciated value calculated for these things sir this is revaluation you have to immediately go for the revaluation right now the point is it is exactly same point which in Uttarakhand they have done it if you have taken let us suppose an asset of 100 rupees now if it has to be scrapped demolished immediately then the depreciation concept doesn't apply even immediately have to revalue the asset if they are saying revaluation has been done at 2 rupees 98 is a loss immediately that loss is charged to profit loss account AS6 talks about I will come into it that is the revaluation that generally happens take one more example in 2008 and 2009 Kasab came here right Taj hotel building was almost destroyed so for that period they cannot charge a normal depreciation they immediately check the balance of Taj in that year they have revalued a new building to the actual value because in that year they have incurred a huge expenditure to again manage to again create a new building so in that year it was revalued that revaluation loss was charged to profit loss account and AS6 permits a revaluation permits a revaluation so whenever it is an exceptional case it is never the depreciation you immediately revalue your asset or we are going to revalue it please sir is the computer near about 50 lakhs and its delivery will happen in 30th after that 30th month that is not possible and it is good to use in the month of after that that is going to be that your problem after this related let me take one example the project which I am doing it in that in world bank has given computer to 34 cities but with the condition contract the supplier will installed in all the 34 cities he has installed everywhere but he will right get the money only when he get the certificate of completion from the ULB you have charged make the payment asset is you can start using the asset not installed not installed if not installed then how it will be ready to use take the example of split AC split AC I have got from my home right I have made the payment split AC is lying in a box because the mechanic will come he will put up pipe he will put up fan only then it will be ready to use no there is nothing with the payment sir take the example of LED you have taken an LED for your home one week there was a strike and the mechanic did not come you can't use it ready to use does not means a box it means you should be able to start it sir that completion point we also we central minister Tamil Nadu also facing a similar problem we have been using hostels constructed by CPWD and we are getting hostel fees for the last two years and no details like my other colleague told no details we have received and without the value we are not ready to capitalize so we are showing it as work in progress and it has become a audit query that CAG audit they have written that it is not correct so if completion certificate doesn't we are not we don't have confidence of getting completion ready for at least next two years so still that till that point of time I think we will be able to show it as work in progress in that case it's not reflecting the substance over form actually the real thing is it is a completed building but based on money measurement we don't know the value exactly what is electrical portion or building portion we don't know how to go about this and similarly one more thing is one some DG sets kind of it they have supplied and we are using it for the last four years no invoice nothing has been given so since we have made advance payment as deposit so we are showing it as deposit whereas assets are laying in our permission and we are using it for long so completion certificate if we are not able to get it what will happen I think that is a documentation process I agree going by substance over form what is to be done sir agreed as it's a documentation point and still a statutory auditor is raising the point if I go by the accounting principles logically till you do not get the clearance it should not be capitalized or transferred to asset but if still the audit objection is arising my advice will be as a CA take the approval from the Board of Governors as an exceptional case right as documentation is being getting delayed getting delayed and show the communication that you have at least followed up many times get the approval due to that we are capitalizing it but accounting principle wise unless clearance comes you cannot you cannot that corresponding revenue is there hostile fee we are getting but it is not capitalized without without capitalizing the building we are getting the it's not necessary that is not written by A.G. I agree but it's not necessary that you get the revenue only from the constructed asset even the under construction asset gives you the revenue I can give you a rent even if the partially even the partially rent in AS10 it's clearly written I'll take an example I am getting a building it is under construction right someone comes to me please give me that building for rent for one month I say what you will do he says I just need to as a store house and I said it's not ready he said don't worry I'll pay you money 2 lakh rupees that is what the reply we are given to tackle the A.G. audit right it's clearly given in AS10 any internally generated revenue before acquisition is subtracted from the cost but can we do the best judgment some estimation of the value based on that can we get place the A.G. auditor will never rely on the estimation if till date you have incurred 10 lakh and you are getting a revenue of 2 lakh they will clearly say subtract from your cost subtract the revenue from your cost it means at present if you have not get the clearance till now if you have incurred 101 crore rupees and after 2 years you get the clearance then in 2 years if you get a revenue of 10 lakh in your cost will not be 1 crore that DG set also is not reflected in our fixed assets sorry that DG and other assets what we are using for the last 4 years it is not shown in the fixed assets we are showing it as deficit 2 CPW as per the accounting rules it cannot be and I am telling you show them AS10 I will give you the paragraph the problem is as an auditor when we are not able to justify as a accountant I take an example I was getting the audit done in this ministry itself the C and DG auditor came and they were arguing on the 1 and D for J they were saying no this should be the previous rate I said no that is the rate just see the act they said yes even we are not updating about the service and the income tax rates then they change the paragraph so if you have the justification you show to them yes this is justification still if they make the paragraph I cannot help out but I can only say the right approach the right approach is this that until unless the clearance comes you cannot capitalize it also you see if you will agree but I agree I respect your point because of the audit query you are using it I take one more example most of you must have read in the newspaper in Noida super tech there are two buildings of super tech which has been in which construction has been held by the Allahabad Eye Court now if until clearance comes if the entire building is there let's suppose they have even given the possession also but until clearance comes ownership cannot be transferred ownership cannot be transferred can never be transferred as per accounting rule it is very very clear they have even given in AS 10 that is internally generated revenue that is internally generated revenue actually the possession got transferred sir how you can say its activity is transferred how because it is put to use by the client that is our university sir it is not they are not holding there only documentation detail they are not I will take an example let's suppose sir you sell your house to me you sell your house to me we are friends you say to me please go and ship to my house but the registration process takes 3 months so I will be owner not from today I will be owner only from the third after 3 months in daily DDA allows the flat they have just given the flat and they have given the condition before 10 years you cannot dispose it off if let's suppose my friend has given that flat to me and said you leave it for 10 years I will not be the owner for 10 years owner only when it given to the paper and auditor always goes by the paper sir sir for last session you had told us that we are following the accrual system and on 1st March as we got the assets delivery bill accrual we booked the assets and created the debtors accrual accounting is applicable only for the revenue transaction but sir if we put the deficit on fixed assets accrual accounting is that revenue is earned and cost is incurred so what should we do on fixed assets we should book the payment not payment sir when all the documentation is completed the documentation is completed when the deficit is charged it is the slots 1st April to 30th September and 1st October to 30th March so why we are concerning on the debt issue the slots are given there and half deficit is charged sir what you are saying is only given in income tax income tax act says if you have purchased the asset on or after 1st October charge 50% appreciation if it is purchased on 1st April charge fully depreciation generally we are following the debt system in last 2-3 years yes the problem is sir we follow the income tax approach ma'am rightly said income tax is only relevant we are relying on income tax approach but depreciation is a time based concept sir depreciation comes out month wise day wise if you purchase the depreciation on 15th April so logically for the entire year you will charge it just correct me that depreciation is not time based but I agree in some accounting policies it is written if it is purchased on after 1st October half year depreciation sir income tax is section number 32 we are following the income tax rate generally I mean mainly students are following income tax rate for depreciation we take one as a base and we try to follow everything of that income tax act just for a couple of rates that does not mean you will follow everything of that because otherwise in that we are talking about put to use or income tax profit or accounts profit we are not profitable organization why depreciation is more important to us only for fair value so in the balance sheet so why we are considering on the rate dates and other sir no fair value and if let us suppose 100 rupees is the depreciation cost and you have purchased on 1st April and you should charge for entire year if still you are charging it for half year if you have purchased on 1st July you should charge for nine months if you are still charging it for entire year it is wrong you are showing your higher profit a simple example is your 100 rupees asset you have purchased on 1st April you have charged 100% depreciation I have purchased on 1st July even I am charging 100% depreciation then logically I should have charged for nine months you should have charged for one year if I have purchased even on 30th September still I am charging for one year is it right and you are purchasing on 1st April tell me about house rent you purchased on 1st April I have taken house on 1st September will that rent will be same it can't be but sir last previously we have made the balance sheet 3-4 years back CAJ comes and they have got it on 1st April to 30th September and on 1st October to 30th March sir I you know the problem we take this we have been doing it I agreed you have been doing it I am not saying you are not doing it the purpose of workshop is not what you are doing the purpose of workshop is atleast what are the corrective measures you can take it I know we have been doing it we have been doing it for 20 years 30 years even we have been doing it for last 100 years there was one institution was more than 105 years back load maker I think who came here now right sir please 105 years if they have been following some practice that doesn't mean you won't change it right now if today law gets changed suppose the income tax gets changed do you say this I was paying income tax rate at this rate why a new rate we never say that this is the reason sir the right approach you said fair value why not fair value sir if you take 1st April or 1st September it will change favorably I hope I am clear sir actually all the newly started and other organizations are getting a plan grant it consists of 3 main portions one is capital other one is salary and other one is recurring but non-salary but recurring so entire fixed assets generated by construction of buildings or lab equipment and other things are purchased out of the grant given to us so will it make any difference because according to grant fixed assets purchased out of grant to be shown as 1 rupee value one minute let me just take that


So the biggest challenges I would say for a safe and secure supply chain are definitely what I would call the unknown. So it's everything that is inserted in the supply chain which is undeclared, mis-declared or sometimes on purpose declared wrongly. And the problem that we have is the visibility in the supply chain. So according to the WCO, IKO guidelines moving air cargo globally, we should look at reducing the burden on the airports at providing all the security measures and safety measures as well. And we have to look at providing the service upstream, which means that all the actors in the supply chain are responsible and accountable for safety and security. The problem faced with the unknown is that we rely on other parties to provide us with reliable data. That data today is submitted in electronic messages peer-to-peer and unfortunately the quality of the data is sometimes lacking. So what we expect in the future is in partnership with the WCO and the UPU to come up with a solution which is more data centric instead of peer-to-peer model. It would be just real-time information provided by the owner of the data accessible in real-time to the persons, to the organizations that actually really need the data.


ed a bit in the state legislature the last couple years by incentivizing some of our higher eds to get some of the credential programs more streamlined I had a bill a couple years ago that the governor did in fact sign which allows for a teacher to get a degree in education so we can incorporate some of that training into that four year experience which I think is very positive but also it's also quality and where does the quality front come I think that internships getting teachers in the classroom potential teachers in the classroom as early as possible because I can tell you even as a teacher myself I should have spent more time learning my craft before I walked in that room and had command of my own classroom thank you let's see one other question from the audience what research and this might be for Heather or Rucker is needed to inform policy to scale and sustain California's rating and improvement system quality counts in California so I think one of the things that we I think are moving with greater understanding is holistic measures of outcomes including socioemotional development behavioral outcomes and not just this kind of narrow and myopic focus on short run test scores and when studies have done this with kind of integrated systems that look at health and social emotional well being as well as test scores in high school graduation rates and grade point average they found that students behavior and teacher success than test scores are and moreover that teachers who help students improve their behavior were 10 times as effective at improving their students graduation rates and grade point averages as those teachers who focused on test scores alone so I think that kind of informs the kind of systems of measurement and evaluation that have to be holistic and looking at what's working and how we define success I completely agree with regards to early childhood where the QRIS is situated I think we have to be cognizant in the development of the system and the development of the data system there's lots of simultaneous things that are happening here we have to be cognizant about what our goals are across these multiple dimensions so that as we're building the system and the data to measure it we're actually capturing all of the information that we're trying to assess no if we're meeting the goal that we're intending to with the system okay we're getting the sign for just a couple minutes left so for all of you as you look ahead at the next two to four years what policy moves that maybe we haven't talked about yet or that you want to reinforce will be key to continuing California's progress towards equity and excellence so a quick list for me would be focusing in on and it's been lifted up for building capacity of systems to engage community in a real way to kind of meet them more than halfway which is really the responsibility of systems also focusing on early care and education and making sure that equity is built tightly into that roll out as it needs to be with everything else that we're doing and so to again think about the ecological view of equity and the last thing I would mention is focusing in on more supports for dual language learners as such a huge population of our student base in California I think one thing that I would add is we have a huge communications challenge in this state and we've talked about this in a number of different ways but we collectively are about over the next few years I expect that we'll go to voters and ask them for more money we have some plans on the table but we don't have as broad support across our state for some of the investments that we need to be making PACE had a poll last month that showed not super strong support for early childhood investment and I think that that's to large degree because the public maybe doesn't understand how critically important that investment is and why that's great for our state and so we need to make that case not only that we need more money but also that we're going to make good use of money if we put it into the system because there's not universal trust in all of the local schools and systems that more money would actually result in the kind of changes that we believe and hope that it can with the right capacity that's built into that investment so as we go forward with this we all have a case to make and I would just echo that as Heather was just saying that until recently California even though we're a relatively high tax state ranking among the 8 to 12 you know highest tax states children receive among the bottom quartile of state tax dollars as a proportion relative to other states so that's just important to keep in mind I guess I will close with just re-centering our attention to the importance of teacher quality and our valuation of teachers and the way we support them because it's still the case that our least experienced teachers our least experienced principals are disproportionately allocated to the lowest performing schools and that kind of suboptimal allocation of quality is a clear risk factor for us fulfilling the promise of equal opportunity excellent it's multiple things in particular we've talked about you had mentioned in Oakland right now so we see what's happening with the labor issues that are happening in our state right now and what we know is that if you have labor issues if you have governance issues you're not getting that instruction so something has to be done about that and we have to address what those issues are and we can't ignore those anymore so I think we have to really be thinking about this I also get quite a bit of folks in the field who are who are struggling a little bit that we have this loose tight system I think we've all talked about the old system was very tight it was we command, we told people what to do, we didn't really believe in local control there's some folks that think that's a little bit too loose on where we've come and where we struggle and I will tell you where I lose sleep at night in particular with those districts that are really really struggling is thinking are we doing this quick enough there are kids that are suffering in those districts and there should we be doing more what more can we do and then recognizing there isn't more that we can do that's going to make a change tomorrow it takes time so I think continuing to invest in the system is important but then also looking at there's some folks where there's some things within the system I think we need to tighten up a little bit so we can make sure that we are where those kids are really suffering providing some more resources and some more opportunities to help them not going back to the old system of going and telling folks what to do but really being actually going and assisting them and helping them with some of the resources what you heard, I thought it was interesting in the earlier panel you heard the superintendent talking about these great practices around where he brought in art and music teachers and he knew the importance of collaboration so we also understood the importance of the arts so he did some great things to do that to free up the time so teachers could come together and then he was pretty systemic about how he approached it and the other teacher said I need more time I would love to meet more of my colleagues one district doing this another district not doing something that we know is a good practice we've got to figure out ways and I really feel like it's part of the role that we can play is how do we make sure that folks are aware of what we're doing actually is the right thing you've heard the resources and the financial piece too strong believer that we need more resources but I've never believed that money was the only answer because what I've seen in some of our districts is they're spending money but sometimes they're spending money not in the right ways or not in the right things from a legislative perspective my priorities will be treating Proposition 98 as the floor not the ceiling yes and you play a role in that too so educate your legislators because it's basically treated hey there's Prop 98 there's your bucket of money education when we can go beyond what we're legally obligated to give to schools it will also be the teacher pipeline we also have quality teachers CTE, CareerTechEd is a big deal to me as a high school teacher I saw many a student fall off high school success because they weren't engaged because there just wasn't anything there for them and CTE will engage many of those kids and also when we talk about systems one of the tools we use to assess schools not the only tool is the SBAC test I think we need to reboot that test take a look at it so it's more teacher friendly remember I bring the teacher perspective good I like that and what do I mean by that it is summative in nature now the end of your test it should be a more formative tool and if you look at the original code section when it originally contemplated and passed it spoke to a formative tool so one of the pushes I'll be making this year is to develop that formative tool because it's a very practical tool a teacher can use in the classroom on a daily basis what do I mean by that a teacher can go in and type in some standards and get some examples of what they might have on the SBAC test so the teachers can kind of not teach the test necessarily but understand where this might come up in the testing scheme and better prepare students through a better tool for teachers in the classroom okay well we're going to give you the last say there and I just want to underscore what we've heard from these panelists in the prior panel that there's a practice challenge there's a policy challenge but we also heard there's a communications challenge that we all play a role in elevating those but I think it's important to remember as well so if you join me in thanking the panel thank you all and we're going to take a few minutes to shift the conversation to your tables we've had a lot of diverse perspectives here across our panels there's a lot of diversity in the audience as well so we want to harness some of that so if you haven't yet talk to your neighbor and introduce yourself and then use the next 10 minutes as we're getting lunches served to the tables perspective where have you seen emerging strengths in education over the past 8 years and where do you still see challenges and what policy moves should happen next thank you so much so we're going to ready to wrap up the day Linda Darling Hammond is going to come up we've talked a lot about how far we've come some of the challenges that we're still facing and Linda's going to talk to us a little bit about sort of next steps and where we're going Linda Darling Hammond thank you I really appreciate everyone sort of hanging in there with this very intense amount of thinking and information and reflection on where we've been and where we're going it's such a key moment I want to both for continuity and for change and I study states and nations that have undergone educational reforms there are some places that have really climbed to the top of equity and excellence rankings in both our country and elsewhere and one of the key things is that they've had a continuous process over 20 years sometimes 30 years or 40 years of continually improving of building on what they know rather than having the pendulum swings that we have so often experienced in our country and in our state so I think this is a key moment for both continuity and change I want to recognize how massive the changes have been what Jerry Brown and Mike Kirst and others accomplished I saw Rick Simpson here he was part of dreaming up this set of reforms that we have obviously Tom Trolloch and Glenn Price in the department and all of the folks from CDE who worked on it and in the state board here in staff Walters is here she was growing in that boat Mary Sandy at the CTC Jenny Johnson I mean there's so many folks who are here I could probably name almost everyone here who has contributed to getting us where we are today and I also want to recognize the genius of the reforms that are underway so I want to put a little perspective on it you know John Merrow did that film from first to worst which described California's descent from sort of the 1970's when we were thought to be one of the highest performing states in the nation and the US was one of the highest performing states educationally in the world probably the highest Prop 13 which we've heard a lot about you know the steady decline in funding the you know the issues in the Williams lawsuit I know John Ethel is here and others from public advocates who are part of that litigation when it got to the point where we had 50,000 teachers on emergency permits where we had huge inequality among districts there was a 3 to 1 ratio of spending between rich and poor districts that was you know part of the sort of spillover effects of the proposition we were low spending we were unequal in our spending the places that had the greatest needs including many of our cities Los Angeles and places like Compton and Oakland were spending below the state average even though they had students with greater needs there were districts going bankrupt there were massive layoffs, there were cuts it was pretty bad and when you look at how low we had gotten in fact on every achievement marker you know we were 48, 47, 49 thank god for Mississippi is what people would say when the results came up and then Mississippi surpassed us on some of those measures so now here's where we are since 2011 the local control funding formula is actually one of the most progressive funding systems in the country there's a document that's put out every year called is school funding fair and the states are ranked about their amount of spending and the fairness of their funding we used to be at the very bottom we're now in the top 10 the progressiveness of the spending clearly there's not enough money in the system everybody's made that clear but as Mike first put it we went from somewhere around 48th in state spending to about 25th but our cost of living is so high that if you take that into account we're still back down at around 41st or whatever the number is but we have made huge strides and although Williams settled this governor did that without a lawsuit requiring it and that's an extraordinary thing if you look across the country I mean every state has been battling the inequalities of funding that are built into the American local property tax system for many many many decades there are more than 40 states with that kind of litigation every state has its state flag its state bird and its state school finance its state law suit and we had a leadership team that had the determination and the courage and the vision to really turn that around and give us a base on which to build that is very very very rare another piece of this that is so important are the eight state priorities we went from we before the feds changed to allowing multiple measures which they did in part because California had already done the eight state priorities we as part of the LCFS process identified the fact that kids deserve basic services they deserve certain kinds of resources they deserve opportunities to learn that we would measure curriculum access we would measure school climate we would measure suspension rates we would look at people outcomes in a broad course of study people engagement, graduation rates etc. we began to build a framework for a whole child vision of what schools should be doing and accomplishing and in the college and career ready indicator that's still somewhat under construction we'll be looking at what kids get access to in terms of the kind of course work and the kinds of opportunities to learn and to engage in career ready education but also civic engagement so we've begun to actually say that school is about more than just producing a test score on a multiple choice test in which there's one answer out of five that you're looking for that actually had a ripple effect across the country I know because I was one of the people talking to other states and talking to people in Washington about the fact that multiple measures could propel schools to look at more of the right things and that had a contribution to us having a new federal law there was a huge change in the way we define accountability accountability for a long period of time was setting targets and goals for student test scores and then punishing schools, teachers and kids who didn't meet the targets there was nothing to do with investing it didn't have a sense of what's the state accountable for to teachers and to parents and to kids and it was in many cases and certainly in California a situation of testing without investing where we were measuring but and trying to quote drive scores with various kinds of interventions and sanctions but not really investing in the improvement process the capacity building process not paying attention to what kids are getting as well as what they were able to do as a result so we redefined accountability and I think the kind of accountability that we are now working with is one in which if you can imagine a triangle we're focusing much more on meaningful learning what do kids really need to know to do well in the 21st century in school how do we build professional capacity to allow schools to provide that kind of education and then where's the resource accountability for making the investments in wise and thoughtful ways for that to happen and that's another part of the brilliance of the California approach the LCAP you know for many of you if you're in districts or county offices or so there's a bit of a pain in the neck you've got to fill out these forms in there long and there's a lot of pages and there's a lot of questions and a lot of indicators but what it's doing also along with all of that is asking us to look at these eight state priorities really figure out how are we going to invest in ways that allow kids to progress along those dimensions along all of those multiple measures educators, parents, community groups doing that regularly and asking that the budget will follow our goals budgets used to be completely dissociated from educational goals and many of you may not know that Mike started out as a budget guy and this is you know in part his you know deep insight that you want investments of money to be driven by a conversation about what are we trying to accomplish here we're the only state in the country that has this kind of continuous improvement system in this way in place and many other states are asking how do we get a continuous improvement process going this if we can continue to perfect it if we can continue to refine it if we can continue you know the efforts that are needed to make it become its best self is a really innovative and important way to get our communities working on how we improve how we invest in our children to allow that improvement to occur yes let's let's give all of ourselves a hand for having gotten this far because it's been a lot of work it's been a lot of work as we've said you know from all of the parts of the system of the last few years is that we've managed to get lots of folks working together it used to be that the state superintendent and the state board might fight there'd be a separate secretary of education and there would be CTC was sitting over there doing its own thing and community groups were fighting with educators and you know it was kind of a hot mess and we've begun to develop social emotional competencies between and among the agencies and the interest groups and so on in our state to work collaboratively in a deliberate way towards these goals and I think that's something we need and must continue I also want to say a word about the nature of learning because we've talked a lot about systems and money and all those things but it's really about what did kids get to learn the new standards that we have in place which were put in place in California in a really thoughtful way with time for educators to get used to and engage with the standards and engage in professional learning and with assessments that are better measures of those standards and are not only finding one right answer out of five but include performance tasks for kids to work on the standards really do support inquiry we are as human beings we are inquiring beings that's how we got everything that we have in our society came from human inquiry somebody saying well what would happen if I you know did this or gee we dropped the meat in the fire now it tastes better you know let's do that again sometime and you know then we got to Julia Child you know I mean so it's always a process and we got to fried chicken that was my personal celebration but the inquiring human being is what school has to be about and it's what the new standards are pointing us towards it's not just about memorizing the things you could be googling but it is also about learning to think and inquire and problem solve and so we've adopted those standards we are shifting the nature of learning in schools so that it's more appropriate for what kids are going to have to do in this knowledge based economy and society we're changing the way in which supports for improvement happen we know a lot about the sciences of learning and development and much more of what we're doing today is in line with how people actually learn than what we were doing a decade ago assemblyman o'Donnell talked about the scripted curriculum that we experienced well what was that doing it was basically saying everybody learns in the same way at the same pace we know that to be false it was saying that you could just learn by teachers talking and kids listening we know that to be false from the science of learning we know that interaction and communication is part of learning we know that kids learn in different ways and teachers have to be allowed to be responsive to that learning process we know that kids achieve at higher levels when they're learning social and emotional skills alongside and integrated with academic skills we know that kids learn better when they have access also to physical activity rather than just sitting for hours on end doing test prep that in fact we our brains develop more effectively when that's the case we know that people learn more effectively and become smarter and more intelligent in the neural pathways that they develop when they're engaged in music and learning multiple languages we're going to become a smarter state as we take up the goals for multilingualism that are now part of California's look towards the future and all of these things that are beginning to be part of the educational landscape are going to allow us to teach kids in ways that allow schools to be more engaging, more joyful and more productive for their learning as human beings so as Rucker Johnson put it it's the synergy among these things that matters it's what we teach and how we teach matters spending money on the right kind of learning and supports matters and that's been said any number of times as I've mentioned already continuity matters continuity matters for nations and for states that are doing large scale reform but it also matters in districts and in schools we are going to be bringing out from Learning Policy Institute a study very shortly on positive outliers districts that are closing the achievement gap and moving all kids forward at higher rates than would normally be expected Chula Vista is one of those districts you saw them and one of the things we find there is that continuity of staffing, continuity of leadership continuity of teachers and support for continual learning and improvement is what drives those efforts so what should we focus on? I think there are three things that are really going to be important as we move forward obviously there's change as well to refine and build on where we are and to address the things that have not yet been addressed I do think that we do need to build as much of our curriculum energy as possible around how people learn so we need to go deeper into the ways in which children learn socially, emotionally, academically to continue to build the curriculum so it is broad, rich, deep, engaging to value the experiential kind of learning, the human inquiry that drives us all in our in our activity and then to do, secondly the kind of capacity building that's been talked about today the kind of support for educators and for others who work with children in the youth development sector and in health and human services so that they're well prepared well inducted have many opportunities for ongoing learning I want us to focus on a day where every educator and everyone who works with children in California who wants to improve practice and wants to support kids should have ready access without cost to them and without looking around under rocks to try to find professional development to the kind of learning and skills that they need to succeed I mean that should be a fundamental of the of the system that we ensure that the sacred work of education of teaching and leading schools is supported by opportunities to learn in ways that allow us to meet the needs of kids that's what educators want to do that's going to mean systems have to also be addressed like special education systems and other systems that we no need to be addressed and finally in the area of resource accountability obviously we need more resources and there'll be a lot of revenue sources that are examined and looked at for building those revenue sources Rucker also mentioned that while we have a fairly rich tax base we're spending much less of it on children than many other states but what are we spending it on? Some of what we're spending it on is what began in the 1980s when Donald Reagan was the governor and we began to incarcerate rather than educate and over that period of time expenditures for prisons went from about 2% of the state budget to well over 12% of the state budget so part of what we need to be thinking about in our future is how are we going to educate rather than incarcerate how are we going to rather than spending $60,000 on a young person who failed to graduate from high school and couldn't make a living and ended up in prison how are we going to spend the $15,000 on them that would allow them to get a good education and stop being penny wise and pound foolish and finally we need to evaluate to better educate we need to be looking at all of this work that's going on as the getting down to facts studies have done and as so many other researchers have been engaged with and continue to figure out what's working how do we build on it what's not working how do we refine it tweak it change it and move it forward that's actually the primary way that and investments in educators that Finland has done its work over these years that it went from being sort of the bottom of the barrel in Scandinavia to the top of the PISA rankings so I just want to close and leave us moving forward with the thoughts of John Dewey who as I often say plagiarized everything I thought before I thought it but it's especially poignant for our state right now and I'm reminded of what John Kim was talking about the effect on children of the way in which our state began to disinvest as it became more diverse and think of this in that context as we think about our future what the best and wisest parent I want to add grandparent now that I am one once for his or her child that must the community want for all of its children any other goal is narrow and unlovely acted upon it destroys our democracy only by being true to the full growth of all the individuals who make it up can society by any chance be true to itself let us be true to the California that we are building today and thank you for all of the work that you have done to make this moment possible and the moments to come thank you thank you Linda for those concluding and inspiring remarks we're going to wrap up very soon I just wanted to encourage you all to fill out the evaluations on your table so we can engage in continuous improvement ourselves reminder there's material outside on the tables there's really terrific report that that Roberta and her colleagues put together also encourage those of you who have not signed up for Ed sources daily email and our weekly podcast this is going to feature in our podcast on Saturday this week in California education and also Linda mentioned getting down to facts which is just an incredible resource that does lay out kind of a roadmap for the way forward that's on the PACE website and also just to really express appreciation for this terrific partnership between learning policy institute and Ed source collaboration is the key whether it's in the classroom or in the nonprofit world and just a thought that I leave today really feeling convinced that we have a tremendous platform on which to build I think the key is going to be how do we continue to build on it and make sure that these reforms work because they have to work we can't go back to the voters and continue the list didn't work we're going to try something else but we have a platform to build on the governor is put another layer on the table cradle to career so that will strengthen this it seems like that we is an opportunity to build further synergy to build early education and post secondary and the workplace into this seamless pathway which I know we all believe in but the key will be to integrate that without abandoning a continuous focus on making these reforms work as Linda pointed out it's 15 to 20 years trajectory and we are not anywhere near that so and I just on a personal note I grew up in South Africa Cape Town when I was a teenager I was incarcerated in Robin Island you could see the island out there never thought I would see him but I was privileged many years later as a journalist to see Nelson Mandela actually cast his vote and to report on the end of apartheid in South Africa so if Nelson Mandela could end apartheid in South Africa I think we can achieve equity here in California it may take some time but it can be done and I know with all the energy in this room I'm feeling more encouraged than ever so thank you for being here today and look forward to further work with all of you