BY KENT GARDNER

The Rochester community confronts problems that will test the mettle of our leaders in coming decades. Our core challenges persist and others will emerge, yet help from external sources will become scarce. We are thrust back on our own devices, thus on the ability of our leaders to forge community solutions to community problems.

The City of Rochester will continue to struggle with its central economic problem: too many school dropouts and too many graduates who are ill-prepared for further schooling or a career. There is no challenge more difficult or more important.

• Students who leave school without the tools to earn a living for themselves and their families face a lifetime of struggle.
• The economy trades a contributor for a dependent.
• The city's economic vitality will be limited by an ill-trained workforce and a crime rate that is fueled by desperation, resentment, and disillusionment.

While our state leaders seem not to have noticed, the loss of much of New York City's finance sector has diminished the state's ability to support big-ticket investment. Moreover, the balance of political power has shifted irrevocably downstate, leaving Rochester unlikely to find salvation in the halls of the state capital. State largesse supporting our universities and civic projects will become rare. We're now a less influential community in a less affluent state.

• Downstate has long shouldered a disproportionate share of the state's financial burdens. New York City largely pays its own way, and its suburbs - Westchester, Rockland, Nassau, and Suffolk counties - pay much more than their share of the population. By many standards of equity, much of the cash that has flowed Upstate ought to go to New York City, not Buffalo, Rochester, and Syracuse.
• With more political clout, New York City will keep more of Downstate's wealth.
• The reflex to look to Albany as financial savior - deeply ingrained in Buffalo - is relatively new to Rochester. It is time to expect less, not more.

Our nation is poorer, too. The federal capacity to support local initiatives is dramatically less than it was only a year ago. The financial crisis we now confront has robbed us of much of our wealth and forced us to assume unprecedented debt as we strive to reverse our current slide.

• The stimulus funds now flowing from Washington's borrowers-in-chief are a one-time event, unaffordable again in the near future. The cost of servicing the debt we'll have incurred by the end of this crisis will tie the hands of the most activist Congress and president.
• The cost of borrowing from global capital markets could rise sharply if the dollar loses its luster as the world's safest currency. That may usher in an era of cuts and could push the economy back into recession.

Big business in Rochester is less likely to plug the gap. Business leadership has shifted from corporate royals at Kodak, Xerox, and Bausch & Lomb to the leaders of firms without their international brand equity.

• We live in a post-Kodak era; the company that was the source of George Eastman's fabulous generosity and influence grows ever less significant to the local economy. The recession hit Kodak hard, just as the company seemed to have regained its financial footing in the digital world. The company just announced that parts of the motion picture business would relocate here. Yet the announcement is bittersweet, as motion picture is the last large piece of the film empire that has not yet fallen to the digital barbarians massed at the gate.
• Twenty years ago, a handful of CEO's oversaw the bulk of Rochester's workforce. Corporate power is far more diffused today. This could lead to more ideas and better ideas - but consensus is more elusive and bold action more difficult to organize. Moreover, our claim on the philanthropy of corporate giants has dramatically declined.

This is, I confess, a sobering assessment of our current state of affairs. Yet we need not slowly slip to insignificance. We are not a poor community and can do great things without massive cash infusions from Albany, Washington - or Kodak. We have cultural assets that surpass those of all but the largest cities. In a knowledge economy, we are full to overflowing with knowledge factories, our colleges and universities. The list of home-grown brand-name firms may have shrunk since 1975, but we have grown and attracted skilled entrepreneurs who have built hundreds of successful companies, leaders who are generous with their insights and cash, just like George Eastman.

What can we do? More than anything else, we need to take ownership of the challenges that confront us. Urbanist David Rusk has long argued that the future of suburbs is firmly linked to that of their center city. Frankly, I disagree. It is entirely possible for places like Webster and Victor to prosper while Rochester languishes. Nor do I think that Rochester is doomed to a slow decline. Yet we are stronger together.

• The teaser on service sharing/consolidation has long been lower cost. In our experience at CGR, these gains are modest; it is no surprise that few communities find the "juice worth the squeeze." Nonetheless, do any of us believe that funds for expensive public services like education, public safety, and infrastructure maintenance can't be better deployed when coordinated across arbitrary municipal boundaries?
• We have more than an economic interest in the future of the City School District. We have a moral obligation, too. Do any of us believe that better coordination among the urban and suburban school districts can't lead to better outcomes for all? Consider the Urban-Suburban Program. While laudable, it serves a small group of families - about 600 students each year - and in only one direction. It's the UrbanèSuburban Program. What would it take to make it the UrbançèSuburban Program? Magnet programs like School of the Arts, School Without Walls, Edison Tech, and the International Baccalaureate could attract from the suburbs, too. Oh, I know this might run afoul of the School Board's efforts at maintaining racial balance, but we live in an imperfect world.
• Perhaps we can renegotiate our relationship with New York State. If we're going to expect less cash from Albany, maybe we can extract a reduction in micromanagement. Most of the cost of local government is the cost of public employees - yet many decisions about pensions, labor negotiations, and conditions of work are decided in Albany, not here. It is hard to hold our elected officials responsible for costly public services when their power to bargain with the public-sector workforce rests in the state capital.

Since Kodak's employment peaked in 1982, Rochester has made a steady transition away from an economy built on a few large firms. With that transition largely behind us, our economy is positioned to expand on the strength of our robust knowledge sector, innovative business leaders, and superb quality of life. But we will have to do it on our own. The leaders of our community must seek common ground and be true leaders, marshalling a broad coalition to join their power and their money to tackle common problems.

Kent Gardner is president of the Center for Governmental Research. A native of the Chicago area, he joined CGR as chief economist in 1991 and was named president in 2005.