IN THE SP0TLIGHT

Wally Beyer
Retired Administrator
USDA Rural Development
Rural Utilities Service







At the end of 1999, North Dakota native and life-long cooperative leader Wally Beyer announced he was retiring from his post as administrator of the Rural Utilities Service (RUS) of USDA Rural Development. He was the first rural electric cooperative borrower-manager to head up the system. But after six years of service, Beyer and his wife, Patsy, decided it was time to head back home to the Northern Plains to begin a new chapter in their lives. Beyer, 69, stays active with personal and business trips, work on statewide political campaigns, volunteer work, and family activities in North Dakota. It's hard to catch him at home in Bismarck, but we did, and on the following pages he discusses the state of rural electric coops in the United States.

RC : How did you begin your career in the"cooperative business world?
Beyer. It's all a matter of timing. I began my career with a consulting engineering firm. I worked with rural electric cooperative (REQ associations and municipal electrical systems throughout the Upper Midwest, until Verendrye Electric Cooperative needed help. Verendrye Electric the REC that served our family's farm in central North Dakota was advertising for two people. They needed a member services manager and an engineer. I wanted to work for the rural electric co-op because I wanted to serve my community, serve the people in North Dakota, in some capacity. Three years after I joined the local REC as an engineer, the board let the existing manager go and hired me. I had no idea I was going to work in management when I joined the cooperative in 1963. But I stayed for 30 years before I was named administrator of the Rural Electrification Administration (now the Rural Utilities Service).

How did you go from being an REC manager to RUS administrator?
North Dakota is a small state, and everyone knows everyone. There's only about 640,000 of us here. I was involved with state rural water and rural development activities and with Democratic Party politics. With a change in the administration in Washington, D.C., I guess my name kept popping up. I got a call asking if I'd be interested in working as administrator of the Rural Electrification Administration. Patsy and I talked about it, and we decided it was a once-in-a-lifetime opportunity to participate in some needed and far-reaching changes in government.

What observations and changes did you make during your tenure there?
One of my first days in the office, three women came in with these shopping carts full of loan documents that I needed to sign - a two-hour session with their help! Then came my secretary, who wanted me to sign what I called a "paper-clip purchase order." I decided then that we needed to take care of business differently. I started to talk to my people to find out what they thought about the system in place and how it could be changed to make RUS more "user-friendly" and agency-efficient. We implemented a major change in the agency delegation of authority. For example, now program people can sign loan documents up to $50 million after a due diligence process and committee reviews. I think that sent a good message to RUS employees that "I trust you." The benchmark of all human relationships is trust. As a user of the system for 30 years and somewhat familiar with how REA worked, being suddenly responsible as administrator to implement changes to help the agency streamline its operations was an interesting process. Congressional reorganization called for major changes at the Department of Agriculture. USDA has gone from 43 agencies down to 29, cutting the work force by some 11,000 full-time employees, and is in the process of closing 1,100 field offices. This will save taxpayers $3.6 billion. In RUS, we were able to reduce the regulation and oversight by 40 percent.

What advice would you have for leaders in such positions?
Delegate, delegate, delegate! Trust people. Provide constant communications! I was constantly counseling my staff to ensure that the agency was providing timely, reliable assistance to rural electric, telecommunications and water/wastewater systems.

What is important to safeguarding our nation's rural electric infrastructure?
Rural electrification is one of the greatest engineering, financial and human endeavors of the American experience. Critical in the future will be to maintain an adequate supply of capital to finance growth and technology changes. RECs have a network of generating and transmission (G&T) systems that are owned and controlled by the member-owners. These G&Ts are invaluable in providing the rural electric energy delivery system with reliable, reasonably priced energy into the 21 st century. These G&T systems are energy treasures for rural America. I'm proud to say that America's REC systems are in very good shape. As America's electric systems enter the future of electric restructuring, open access and customer choice, they must stay together and work together for strength in leveraging. RECs' collective strength in working in the democratic process at every level of our democratic society is critical to continued success.

What threats lie on the horizon for rural America's electric power co-ops?
The rural electric infrastructure sustains and develops quality of life in rural America. Available financing at reasonable interest rates for rural infrastructure is a critical issue. In fact, in the beginning in the mid-1930s, securing financing to serve high-cost rural areas was the principal issue. There would not have been an electric power infrastructure in rural America without the investments made by the federal government. Availability of reasonably priced capital into the future of the "infrastructure revolution" is probably the most critical issue we face, with our aging systems and the need to reinvest in these changing times. These last few years have been the "golden age of financing" for electric and telecommunications cooperatives. Cooperatives today have good ratings on Wall Street. Federal credit support necessary to leverage private investments for a rural infrastructure will remain critical into the future. Restructuring of the electric and telecommunications systems are also of grave concern. There will always be high costs to serve areas in rural America, requiring the federal partnership. The administration's support for the REC family is demonstrated by a budget that proposed more than $1 billion in loans and loan guarantees for our electric program. That federal investment was also used in new ways to support and leverage private capital. For every federal dollar RUS contributes to rural electric infrastructure, three additional private-sector dollars are leveraged. On average, over the past five years, the public/private partnership has resulted in some $4 billion invested annually in rural electric infrastructure - one-third of this investment being government loans and loan guarantees. The federal program is now the minority lender. President Clinton, Vice President Gore and Secretary Glickman understand the importance of quality infrastructure in the rural American economy. A strong nation is built on an abundant supply of food and energy. Investments in basic infrastructure, transportation, energy, telecommunications, water, education and health care are critical to modem societies. Rural America must be connected to the information superhighway. Private investors are not going to put the money into high-cost rural areas. Public support will be critical to rural systems to make investments so that rural America is connected with quality, high-tech infrastructure. While we are proud of our accomplishments, we know that our work is not done. Rural systems are simply more expensive to operate and maintain. Plant improvements remain expensive. Capital investment will always be more expensive on a per-consumer basis for rural systems than for high-density urban areas. As we look to the future, we know that the public/private partnership must continue. In a competitive marketplace, the RUS credit support and leveraging of critical investment capital will be more valuable than ever.

what advice would you have for helping rural areas compete in a global marketplace?
Certainly we live in rapidly changing times - the information age, global trade and commerce, E-commerce, deregulation and restructuring of basic infrastructures and industries. The forces of technology are driving national and international competition for the consumer dollar. Legislative and social actions are providing consumer flexibility and purchasing options. Everyone is demanding more for less. For rural America to compete in this global marketplace, we need to develop niche markets, diversify our economies and create new wealth at every opportunity. Basic to all growth creating new wealth and new jobs is an abundant supply of reasonably priced, reliable energy and state-of-the-art telecommunications that erases time and space. Rural America must be connected to the information superhighway. RECs and RTCs must provide active local leadership in new wealth and job creation. We need to embrace change, work together, stay together to manage the systems of the future!

It seems the Dakotas have especially embraced new-generation cooperative development. What is it about the spirit of Dakotans and the economic realities of that region that make the people more willing to consider so many different and creative possibilities?
I think Dakotans are driven by need. When there's a need, people respond, they're willing to try things, willing to invest. During the 1980s, we lost 25 percent of our farm families in my home county in North Dakota. Out of that experience came a need to grow new wealth and take advantage of new opportunities. A lot of people are struggling out here again, and that breeds innovations. North Dakotans have always been willing to try alternatives in creating new wealth. Value-added cooperative processing activities have been ongoing for a couple of decades -- sugar-beet plants, pasta plants, slaughter plants, potato processing, to name a few. From the producers to the supermarket, adding value benefits the local folks on the land.

Some people question the ongoing need for USDA's Rural Utilities Service. Based on your experiences, how important is the service?
The rural America local/federal partnership is the envy of the world. People around the globe are studying this partnership model for infrastructure development. Rural America would be a very different place without the USDA/RUS federal/local partnership. Together, it provides the necessary infrastructure investment capital needed to serve rural areas. A safe, affordable, modem utility infrastructure is a key component of economic competitiveness and a fundamental building block of economic development. The 65-year-old federal/local partnership must continue providing critical credit support and direct loan funds for America's rural systems serving in high cost rural areas. All Americans have benefited from this partnership between the federal government and the rural electric and telecommunications families. The needs of rural electric and telecommunications systems are very different today from what they were in 1935. Simply put, RUS is not your father's REA! RUS must continue accommodating system efficiency activities, mergers, consolidations and aggregation of electric plants. RUS is working with local cooperatives, providing assistance as they prepare for open access, competition and customer choice. The reformed RUS has become a partner to local activities, not a parent and certainly not a policeman. Local people must continue to determine the value of RUS and the role they want the federal government to play to benefit rural America's future. In his book "Mister Speaker," Tip O'Neill stressed that all politics are local. From my rural experience, I'm convinced that "all development is local." State and federal governments can and should assist in basic infrastructure and rural development, particularly in high-cost rural areas. However, local folks must decide what's best for them in providing quality infrastructure, new wealth and job creation. RUS needed to move from the 44one size fits all" policy to recognizing regional and local differences in rural America.

What new roles do you believe rural utility cooperatives should take on?
Many local RECs are very active in local development activities, creating new wealth and much-needed jobs in their local communities. Many rural development programs are available from USDAs rural development mission area. At every opportunity, I have encouraged, and continue to encourage, local RECs to actively involve their cooperative organizations in local development activities. But much more needs to be done.

Even though you're officially retired from USDA, no one ever really retires. What projects are you planning to remain involved in?
Patsy's parents (Grandpa is 90 years young and Grandma is 85) and my mother (who's 88) are still around and need our help from time to time. And we have three children - in Minnesota, North Dakota and Colorado whom we like to visit. The richest blessing in life is the gift of contribution to others. Our family has been richly blessed with many opportunities to contribute. We love the Great Plains and are thankful for the opportunity to serve rural America.

Streamlined USDA utilities program draws plaudits
On behalf of USDA's RUS program, Vice President Gore's National Partership for Reinventing Government presented RUS Adminitrator Wally Beyer with a Hammer Award before he retired in 1999. RUS received the award for its work to steamline agency procedures, reduce red tape and target resources while continuing to improve the quality of life in rural America. Following are RUS's program reinvention activities during Beyer's tenure as administrator: