Gov. Ed Rendell told Penn State students yesterday that his campaign was going to avoid niche issues and concentrate on "real stuff" -- including health care and education.

Rendell spoke to an audience of more than 200 students yesterday afternoon in the first-floor lounge of the HUB-Robeson Center for about an hour, taking questions after he spoke. Rendell will face Republican Lynn Swann in the 2006 gubernatorial election.

"There's a culture in America that says government spending is bad," Rendell said. "We believe that government has a role in creating opportunity."

Rendell said social security and Medicare are the two largest government social programs, and they are still extremely popular. He said the government has a "moral obligation" to protect disadvantaged citizens.

The governor said he was opposed to the spending caps that Republicans had proposed because some items, like health care costs, were out of the government's control.

"I didn't become governor of Pennsylvania to cut people off of health care," he said.

Rendell said it was also important for Pennsylvania to invest in education because of growing international competition for "knowledge worker" jobs. He said he supported testing students every year, but he said the No Child Left Behind Act was a "farce" because it provided money for testing but not for improvement.

The governor also said Pennsylvania's economy was creating many jobs and the unemployment rate was lower than the national average for the first time in almost a decade.

"Pennsylvania's economy is the best it's been in a long time," he said.

When College Democrats President Alex Smith mentioned Rendell's support for increasing the state mini-

mum wage from $5.15 an hour to $7.15 an hour, many audience members applauded.

Rendell said Republicans had limited "moral values" to the issue of gay marriage and abortion. He said issues like fighting poverty also involved moral values.

"We're the party that's made those things part of what we do and who we are," he said.

Answering a question about property taxes after the speech, Rendell said he supported a plan that would cut property taxes by between 35 and 100 percent for seniors and by about 20 percent for everyone else.

He said revenues from gambling and the lottery would also help decrease taxes. He said he supports increasing the income or sales tax to pay for a decrease in property taxes, but the move needed more Senate support.

Rendell said $75 million had been added to Pennsylvania Higher Education Assistance Agency grants during his term in office. He said he liked the idea of pegging appropriations increases to increases in education costs, but it would have to be applied to all state-related schools, not just Penn State.

Rendell said he thought Democrats lost races for senator and governor positions because Republicans voted more frequently than Democrats in elections that did not involve a presidential race.

"We don't vote well enough. When we vote, we win," he said.

College Republicans President Seth Bender asked if Rendell was proud of signing a pay-raise for legislators.

Rendell said he was not proud of that bill, but he supported it because it pegged future salary increases to the federal salary increases, it increased salaries for trial judges and it helped maintain his support in the legislature.

The pay raise was eventually repealed after a statewide grassroots campaign organized against it.

Bender said he thought Swann was a better alternative to Rendell.

He said Rendell had not cut property taxes and did not discuss controlling spending increases.

"He's clearly not getting anything done," Bender said.

Smith said the College Democrats would be working with the state party to support Democrats in the gubernatorial and Senate races.