State Leaders Must Prepare Now for an AI Storm

When a tornado puts you on its path or a severe blizzard is forecasted, a governor’s job is straightforward. You activate the emergency operations center. You pre-position resources. You coordinate with local responders. You level with the public. You don’t debate whether the storm is real, and you don’t leave people to fend for themselves.  When governors see an emergency on the horizon, they must prepare.   

The coming AI-driven workforce shock is an approaching storm—manmade, but no less impactful. This time, the aftereffects won’t be measured in downed power lines or unplowed roads. It will be measured in lay-offs, hollowed-out tax bases, and Americans—young and old—searching for work.  And just like with blizzards and tornadoes, the states that prepare the most will come through the strongest. 

A lot must change to manage through this coming shock: our tax codes, our social safety nets, our economic development strategies. But nothing matters more than our post-secondary education system. Universities, community colleges, and workforce training programs are where American workers gain the skills needed to earn a living.  In an AI economy, that system is our emergency preparedness system. If it fails, everything else fails with it. This is where we must start—and state leaders should lead. 

After all, workforce systems are run at the state level. Education is a state function. Governors, legislative leaders, and Superintendents of public institutions have the convening power to put employers, college presidents, and workforce boards in the same room and demand alignment. They control the licensing rules, the funding formulas, and the tax incentives that actually change behavior. And they can act in a single legislative session while partisan dysfunction ties up Washington for another decade. If this is an emergency—and it is—states are the first responders.  

Let’s start with a sobering scorecard. Each year, the federal government spends roughly $112 billion on higher education, state and local governments spend another $150 billion, and American households spend an additional $210 billion out of pocket.  At the same time, student debt has ballooned to $1.7 trillion, and a study by the Burning Glass Institute and Strada Education Foundation found that half of recent college graduates work jobs that don’t require their degree.

The result: fewer and fewer Americans agree that a college degree is worth the cost.

If the system we have wasn’t fit for purpose before AI, it’s a profound liability in an AI-infused economy. 

The good news is that we already know a great deal about what works.  The evidence for solutions such as employer-informed curriculum design, apprenticeships, short-cycle and stackable credentials is strong. U.S. Department of Labor research shows apprenticeships increase earnings by nearly 50%. A RAND study found that more than 70% of students who stacked credentials over time while working were making a middle-income wage within six years. 

If AI impacts the labor market as experts predict, millions of American workers will need new skills this decade. But pilot programs won’t cut it. They are the policy equivalent of stacking sandbags while the hurricane is lashing the coast.   

So how do we address the crisis at hand, at scale? 

First, we build strong connections between employers and educators. Employers are the first to see which tasks AI is automating inside their own businesses. They have real-time visibility into which roles are disappearing, which are changing, and which are emerging. That intelligence should flow directly into what community colleges and universities teach—not be filtered through ceremonial advisory boards that meet biannually.  

Second, we must fund outcomes, not enrollment.  For decades, many state funding formulas for higher education have paid schools for filling seats without guarantees that they are producing results. That needs to end. Schools that graduate students into good, AI-resilient jobs should be rewarded. Programs that train students for jobs that are disappearing must evolve.  

These are not partisan ideas. Republican and Democratic governors have put them into practice. In 2023, Texas passed legislation that tied 95% of state community college funding to measurable outcomes—credentials earned, transfers completed, and placements in high-demand fields.  After one year, Texas community colleges getting results received an additional $43 million in funding. In Colorado, the Opportunity Now program, launched three years ago, has awarded $89.5 million in grants to employer-education partnerships and already placed more than 8,000 workers in good-paying jobs.  

I will admit bias here.  As governor of Indiana, I launched a program that used industry input to identify high-demand sectors, and then helped workers train for jobs in those fields. Since its launch in 2017, the program has helped more than 33,000 Hoosiers through tuition-free Workforce Ready Grants.

That foundation is now being reinforced by something remarkable. In late 2025, the Lilly Endowment committed up to $500 million to its Artificial Intelligence in Higher Education Initiative—the largest private philanthropic investment in AI-readiness in American higher education.  Thirty-five Indiana institutions have already received planning grants to assess employer needs, rewire curricula, and build AI-native programs.  

That’s the kind of pivot and propellant every state now needs. This is what AI preparedness looks like: programs that harness employer insight, investment at a historic scale, state and university leaders rowing in the same direction. 

Here’s what I would recommend to my fellow governors: declare AI workforce preparedness a state priority with the same seriousness as disaster preparedness. Create a council with employer co-chairs. Rewire your higher education funding formula around outcomes. Require active employer input on curriculum as a condition of state funding. Use state grants, tax incentives, and matching funds to get employers to put skin in the game. Make the case to the legislature and philanthropy alike.  

I spent eight years as governor watching workers, employers, and schools struggle to keep up with technology that kept accelerating. And I come from a part of the country that has seen what happens when economic change outruns public institutions. The Midwest was not alone when policy made offshoring manufacturing irresistible, dislocating nearly three million workers, while the country did far too little to help workers find a bridge to new livelihoods. The lesson for states was clear: those that invested in workforce readiness were better positioned to attract new industries, while those that did not are still trying to catch up. The disruption ahead could reach far more people. This time, the gap between the prepared and unprepared will be even wider.  

This is exactly why state leaders must prepare now—before the storm touches down in full force.