California school districts face huge debt on risky bonds

Two hundred school districts across California have borrowed billions of dollars using a costly and risky form of financing that has saddled them with staggering debt, according to a Times analysis.

Schools and community colleges have turned increasingly to so-called capital appreciation bonds in the economic downturn, which depressed property values and made it harder for districts to raise money for new classrooms, auditoriums and sports facilities.

Unlike conventional shorter-term bonds that require payments to begin immediately, this type of borrowing lets districts postpone the start of payments for decades. Some districts are gambling the economic picture will improve in the decades ahead, with local tax collections increasingly enough to repay the notes.

DATABASE: Bonds by district

CABs, as the bonds are known, allow schools to borrow large sums without violating state or locally imposed caps on property taxes, at least in the short term. But the lengthy delays in repayment increase interest expenses, in some cases to as much as 10 or 20 times the amount borrowed.

The practice is controversial and has been banned in at least one state. In California, prominent government officials charged with watching the public purse are warning school districts to avoid the transactions.

One sounding the alarm is California Treasurer Bill Lockyer, who compares CABs to the sort of creative Wall Street financing that contributed to the housing bubble, the subsequent debt crisis and the nation's lingering economic malaise.

"They are terrible deals," Lockyer said. "The school boards and staffs that approved of these bonds should be voted out of office and fired."

Most school bonds, like home mortgages, require roughly $2 to $3 to be paid back for every $1 borrowed. But CABs compound interest for much longer periods, meaning repayment costs are often many times that of traditional school bonds.

And property owners — not the school system — are likely to be on the hook for bigger tax bills if the agency's revenues can't cover future bond payments, Lockyer and other critics say.

Several financial consultants who advise school districts on CABs declined to comment, as did the chairman of their trade group. Education officials acknowledge some drawbacks with CABs, but argue that the bonds are funding vital educational projects.

The Newport Mesa Unified School District in Orange County issued $83 million in long-term notes in May 2011. Principal and interest will total about $548 million, but officials say they are confident they can pay off the debt.

The bonds "have allowed us to provide for facilities that are needed now," said the district's business manager, Paul Reed. "We could not afford to wait another 10 years."

Overall, 200 school systems, roughly a fifth of the districts statewide, have borrowed more than $2.8 billion since 2007 using CABs with maturities longer than 25 years. They will have to pay back about $16.3 billion in principal and interest, or an average of 5.8 times the amount they borrowed.

Nearly 70% of the money borrowed involves extended 30- to 40-year notes, which will cost district taxpayers $13.1 billion, or about 6.6 times the amount borrowed on average.

State and county treasurers say debt payments of no more than four times principal are considered reasonable, though some recommend a more conservative limit of three times.

"This is part of the 'new' Wall Street," Lockyer said. "It has done this kind of thing on the private investor side for years, then the housing market and now its public entities."

The Poway Unified School District, which serves middle-class communities in north San Diego County, is one of the school systems faced with massive CAB debt payments. In 2011, it issued $105 million in capital appreciation bonds to complete a school rebuilding program.

Because the recession had depressed property values and tax revenue, Poway district officials realized that using conventional bonds might jeopardize a promise to district voters to limit the tax rate.

So on the advice of an Irvine-based financial consulting firm, they turned to the long-term notes. Under the deal, the school board could keep construction moving, avoid reneging on its pledge to voters and stay within the legal limits. And it would not have to repay the bonds for decades.

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Mercedes Rolls Out the Future of the SUV

LOS ANGELES, California – Geländewagen. It’s not an Austrian insult or some obscure epithet from the Eastern Bloc; it’s Mercedes-Benz’ iconic SUV. Originally crafted with a ruler and a chisel for military use, it eventually went on sale to civilians in 1979 and hasn’t changed much during its 30-plus-year run. Until now.

Mercedes knows that the G-Wagon will have to be updated at some point, and the Ener-G-Force concept gives us an indication of what the crew from Stuttgart is thinking for its next big and brash ‘ute – in the year 2025.

Like its forebear, this new G was originally envisioned by its Advanced Design Studio in Carlsbad, California, to be the mother-truckin’ ride for the Highway Patrol, and then toned down for use by Hollywood soccer moms and oil-rich Middle Easterners.

The lines and proportions are inspired by the original G, with an upright fascia, bulging wheel arches (housing 20-inch wheels and ultra-all-terrain tires) and flat roof. The LED headlamps form a perfect “G” in a nod to the concept’s heritage and the faux spare wheel well on the hatch opens up and extends outward to reveal a safety kit, tool box and other assorted off-road survival equipment.

As for the powertrain, we’ll have whatever Mercedes’ design team is smoking. Individual electric motors power each wheel – not that far-fetched – but a “hydro-tech converter” fueled by recycled water stored on the roof is transformed into hydrogen, which powers the space-age G for a claimed 500 miles of emissions-free motoring.

Less sci-fi is the roof-mounted “Terra-Scan” 360-degree topography scanner, which tracks the terrain ahead and automatically adjusts the spring and damper rates of the suspension to provide a silky smooth ride no matter what you’re driving on. Mercedes is actually working on a stereo camera-based system for future models that does just that, but the chances of it coming to the G-Class are about as good as the Ener-G-Force ever reaching production.

All photos: Alex Washburn/Wired

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“Anger Management,” “Justified” return dates set by FX

LOS ANGELES (TheWrap.com) – FX released its early 2013 premiere schedule Wednesday, including dates for the second season of Charlie Sheen‘s sitcom “Anger Management” and the fourth season of the Timothy Olyphant lawman drama “Justified.”

The premiere schedule kicks off with “Justified” on Tuesday, January 8 at 10 p.m. The season will find Olyphant’s character, U.S. Deputy Marshall Raylan Givens, picking up a 30-year-old cold case, unraveling a riddle that echoes all the way back to his boyhood and his criminal father’s bad dealings.

The premieres go into high gear on January 17, with the return of “Anger Management,” “Archer” and “Totally Biased W. Kamau Bell,” as well as the series premiere of the new offering “Legit.”

“Anger Management,” which received a 90-episode order after the success of its first season, will premiere with consecutive episodes at 9 and 9:30 p.m., with the animated series “Archer” premiering its fourth season at 10 p.m.

The new series “Legit,” which stars Jim Jeffries as a foul-mouthed Australian comedian struggling to legitimize his life and career in Los Angeles, will begin its 13-episode maiden season at 10 p.m., while “Totally Biased W. Kamau Bell,” which features comedian Bell riffing on politics, culture and other topics, will start a new cycle of episodes at 11 p.m.

TV News Headlines – Yahoo! News

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Well: Weight Loss Surgery May Not Combat Diabetes Long-Term

Weight loss surgery, which in recent years has been seen as an increasingly attractive option for treating Type 2 diabetes, may not be as effective against the disease as it was initially thought to be, according to a new report. The study found that many obese Type 2 diabetics who undergo gastric bypass surgery do not experience a remission of their disease, and of those that do, about a third redevelop diabetes within five years of their operation.

The findings contrast with the growing perception that surgery is essentially a cure for Type II diabetes. Earlier this year, two widely publicized studies reported that surgery worked better than drugs, diet and exercise in causing a remission of Type 2 diabetes in overweight people whose blood sugar was out of control, leading some experts to call for greater use of surgery in treating the disease. But the studies were small and relatively short, lasting under two years.

The latest study, published in the journal Obesity Surgery, tracked thousands of diabetics who had gastric bypass surgery for more than a decade. It found that many people whose diabetes at first went away were likely to have it return. While weight regain is a common problem among those who undergo bariatric surgery, regaining lost weight did not appear to be the cause of diabetes relapse. Instead, the study found that people whose diabetes was most severe or in its later stages when they had surgery were more likely to have a relapse, regardless of whether they regained weight.

“Some people are under the impression that you have surgery and you’re cured,” said Dr. Vivian Fonseca, the president for medicine and science for the American Diabetes Association, who was not involved in the study. “There have been a lot of claims about how wonderful surgery is for diabetes, and I think this offers a more realistic picture.”

The findings suggest that weight loss surgery may be most effective for treating diabetes in those whose disease is not very advanced. “What we’re learning is that not all diabetic patients do as well as others,” said Dr. David E. Arterburn, the lead author of the study and an associate investigator at the Group Health Research Institute in Seattle. “Those who are early in diabetes seem to do the best, which makes a case for potentially earlier intervention.”

One of the strengths of the new study was that it involved thousands of patients enrolled in three large health plans in California and Minnesota, allowing detailed tracking over many years. All told, 4,434 adult diabetics were followed between 1995 and 2008. All were obese, and all underwent Roux-en-Y operations, the most popular type of gastric bypass procedure.

After surgery, about 68 percent of patients experienced a complete remission of their diabetes. But within five years, 35 percent of those patients had it return. Taken together, that means that most of the subjects in the study, about 56 percent — a figure that includes those whose disease never remitted — had no long-lasting remission of diabetes after surgery.

The researchers found that three factors were particularly good predictors of who was likely to have a relapse of diabetes. If patients, before surgery, had a relatively long duration of diabetes, had poor control of their blood sugar, or were taking insulin, then they were least likely to benefit from gastric bypass. A patient’s weight, either before or after surgery, was not correlated with their likelihood of remission or relapse.

In Type 2 diabetes, the beta cells that produce insulin in the pancreas tend to wear out as the disease progresses, which may explain why some people benefit less from surgery. “If someone is too far advanced in their diabetes, where their pancreas is frankly toward the latter stages of being able to produce insulin, then even after losing a bunch of weight their body may not be able to produce enough insulin to control their blood sugar,” Dr. Arterburn said.

Nonetheless, he said it might be the case that obese diabetics, even those whose disease is advanced, can still benefit from gastric surgery, at least as far as their quality of life and their risk factors for heart disease and other complications are concerned.

“It’s not a surefire cure for everyone,” he said. “But almost universally, patients lose weight after weight loss surgery, and that in and of itself may have so many health benefits.”

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United Is Struggling Two Years After Its Merger With Continental

Nam Y. Huh/Associated Press

A United 787 Dreamliner at O’Hare International Airport in Chicago. United lost $103 million through the third quarter of 2012.

CHICAGO — It was supposed to be a moment for celebration: United Airlines observing the delivery of its second Boeing 787 Dreamliner with a flight from Seattle to Chicago earlier this month for a select group of employees, while senior officers, including Jeffery A. Smisek, United’s hard-charging chief executive, served Champagne and took lunch orders.

Jad Mouawad/The New York Times

Jeff Smisek, the chief of United Airlines, served champagne on a flight to celebrate delivery of a Boeing 787 on Nov. 15.

But before the flight took off that morning, a computer glitch in one of the airline’s computer systems delayed 250 flights around the world for two hours.

So it goes at United these days. The world’s biggest airline, created after United merged with Continental Airlines in 2010, promised an unparalleled global network, with eight major hubs and 5,500 daily flights serving nearly 400 destinations. As an added benefit, the new airline would be led by Mr. Smisek of Continental, which was known for its attention to customer service.

But two years on, United still grapples with a myriad problems in integrating the two airlines. The result has been hobbled operations, angry passengers and soured relations with employees.

The list of United’s troubles this year has been long. Its reservation system failed twice, shutting its Web site, disabling airport kiosks and stranding passengers as flights were delayed or canceled. The day of the 787 flight, another system, which records the aircraft’s weight once passengers and bags are loaded, shut down because of a programming error.

United has the worst operational record among the nation’s top 15 airlines. Its on-time arrival rate in the 12 months through September was just 77.5 percent — six percentage points below the industry average and 10 percentage points lower than Delta Air Lines. It had the highest rate of regularly delayed flights this summer, and generated more customer complaints than all other airlines combined in July, according to the Transportation Department.

The airline even angered the mayor of Houston, Continental’s longtime home and still the carrier’s biggest hub, when it unsuccessfully sought to block Southwest Airlines’ bid to bring international flights to the city’s smaller airport, Hobby. 

The United-Continental merger is weighing on the company’s finances. It took a $60 million charge in the third quarter for merger-related expenses, including repainting planes. It also took a $454 million charge to cover a future cash payment to pilots under a tentative deal reached in August.

While most large airlines reported profits this year, United has lost $103 million in the first three quarters of 2012, with revenue up just 1 percent to $28.5 billion. Its shares are up 7 percent this year compared with a 12 percent gain for the Standard & Poor’s 500-stock index and a 24 percent gain for Delta.

“United remains at a challenging point,” analysts from Barclays wrote last month, and they forecast that the carrier would not begin to see the benefits of its merger until late in 2013 and into 2014. Still, while airlines initially struggle, mergers increase revenue eventually, as the example of Delta’s acquisition of Northwest Airlines demonstrated two years ago.

Mr. Smisek, taking a break from serving coffee halfway through the maiden 787 flight, acknowledged that things were not going as fast as expected, particularly given the aggressive targets he set two years ago. Back then, Mr. Smisek said the merger would be wrapped up in 12 to 18 months. He has since learned to be patient, he said.

“It is still a work in progress,” he said. “The integration of two airlines takes years. It’s very complex. If you look at where we were two years ago, we’ve come a long way.”

Admittedly, the process is complicated. Airline mergers mean combining different technologies, often old computer systems, as well as thousands of procedures used by pilots and flight dispatchers, gate agents, flight attendants and ground crew.

Setbacks are common. Like United, US Airways experienced a breakdown in its booking technology after its combination with America West in 2005. Delta’s on-time performance fell sharply in the year after its purchase of Northwest.

But today, Delta is a leader among big airlines in on-time performance. US Airways had a record third-quarter profit even though it still lacks common work rules for its pilots seven years after its merger.

United has completed many of its merger tasks, particularly as far as passengers are concerned. It has received its single operating certificate from the Federal Aviation Administration, allowing it to run a combined fleet. Despite all the problems this summer, it claims to have finally merged the reservation and technology systems.

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Alleged WikiLeaks source says he was illegally punished in jail

A key pretrial hearing for Pfc. Bradley Manning, accused of giving classified material to the website WikiLeaks, which then made it public, began Tuesday in a case that highlights the government’s resolve to keep war and diplomatic material secret.

Manning, who has been charged on 22 counts, faces life in prison if convicted of aiding the enemy, the most serious charge. His court-martial is scheduled for February.

A former intelligence analyst in Baghdad in 2009 and 2010, Manning is accused of sending hundreds of thousands of logs about the wars in Iraq and Afghanistan and more than 250,000 diplomatic cables to WikiLeaks.

The hearing at a military court at Ft. Meade outside Baltimore is scheduled to run through Sunday. Manning is expected to testify at some point. It would be the first time he has spoken publicly about the case and the conditions of his detainment since his arrest in 2010.

The defense will argue that all charges should be dismissed because Manning was subjected to “unlawful pretrial punishment,” according to a post on the website of his supporters, the Bradley Manning Support Network.

Manning will get a chance to testify about his treatment. His lawyers argue that he was illegally punished by being put alone in a cell for nine months at the Marine Corps brig in Quantico, Va. Military judges can dismiss all charges if pretrial punishment is particularly egregious, but that rarely happens, though the time in incarceration can be credited toward the sentencing.

“At this extremely important hearing, Bradley’s lawyer David Coombs ... will present evidence that brig psychiatrists opposed the decision to hold Bradley in solitary, and that brig commanders misled the public when they said that Bradley’s treatment was for ‘Prevention of Injury,' " his supporters said.

Manning has offered to take responsibility by pleading guilty to reduced charges. The military has not ruled on that offer.

Manning was in the brig from July 2010 to April 2011. The military argues the treatment there was proper since he classified as a maximum-security detainee. He was later moved to Ft. Leavenworth, Kan., where he was reevaluated and given a medium-security classification.

A United Nations investigator called the conditions of Manning's imprisonment cruel, inhuman and degrading, but stopped short of calling it torture.

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Sprint, Chrysler Link Up With 'Velocity' In-Car System

The latest contender in the battle for your dashboard is Sprint’s Velocity, the telecommunications company’s first comprehensive in-car infotainment and telematics architecture aimed at automakers.

Sprint is unveiling Velocity this week at the Los Angeles Auto Show, which is billing itself as the place for hot new automotive tech introductions. Sprint’s lined up Chrysler as its first partner, and we got our hands on the all-new UConnect system featured in the Ram pickup truck and Dodge Viper. But the telecom plans to infiltrate the rest of Chrysler’s line-up and form partnerships with other automakers.

“Sprint Velocity is a whole new platform we built specifically for the automobile industry,” Tom Nelson, director of global wholesale and solutions marketing, told Wired. “It’s a global, end-to-end solution that simplifies the ability for manufacturers and consumers to connect devices to their cars.”

That’s a key development, because only about 4 percent of vehicles worldwide have the ability to connect with mobile devices that drivers bring into their cars. Machina Research expects that to hit 90 percent by 2020. Sprint wants a big piece of that pie.

What Velocity provides to automakers is the core technology on which to build infotainment and telematic systems. That includes remote locking and unlocking, vehicle start, 911 assist and creating a rolling Wi-Fi hotspot through an embedded modem or a tethered smartphone with a data connection. Infotainment and streaming music also is part of the puzzle, along with cloud-connected voice-activated controls for everything from navigation to texting.

Additionally, automakers are increasingly interested in getting information about customers’ cars for diagnostic and repair purposes, adding a more convenient connection between the automaker, the dealer and the driver.

“In the past, automakers had to stitch together all this stuff to create a connected technology in the vehicle,” says Nelson. With Sprint Velocity, “it’s an agile, adaptable and scalable platform.”

The scalability and — more importantly — upgradeability of an embedded system is of particular significance because the consumer electronics world moves at a much faster pace than the systems developed and deployed by automakers. One day you’ve got the latest and greatest in in-car connectivity; the next, you’re stuck with an outdated system that barely recognizes your shiny new smartphone or tablet.

Nelson insists Sprint Velocity is device-agnostic, although only two mobile operating systems came up during our conversation: iOS and Android. While Apple and Google’s operating systems dominate the mobile arena, being agnostic allows consumers to bring any device they choose into the car. That’s been an issue for every automaker trying to make a play in the connected-car space.

Further, we’re not hearing anything from Sprint about apps or courting developers, although when asked, there was mention of an SDK. However, that decision will be left to Sprint’s automotive partners to decide, as both security and safety concerns are paramount.

On the plus side for developers, having a new, standardized architecture underpinning a large swath of the automotive world would alleviate some issues about which platforms to focus on. They have to build apps for fewer operating systems, saving time and money.

While this all sounds impressive, it’s important to note that Sprint isn’t the first telecom to play the embedded telematics and infotainment game. Verizon has had a decades-long partnership with General Motors for its OnStar system, and Big Red recently acquired Hughes Telematics — a major player in the in-car connectivity space — to expand its footprint inside vehicles.

“[Sprint is] eager to play a bigger role in this segment as the telcos are looking for new growth segments in an increasingly flat market for traditional mobile phone services,” said Gartner automotive and mobility analyst Thilo Koslowski.

“The money opportunity for the automotive industry lies in providing unique customer experiences regarding consuming, creating, sharing and enriching digital content in the vehicle,” says Koslowski. “This can only be successful if the automotive industry embraces collaboration with technology companies like Sprint.”

But there’s a strong line between a partnership and ceding total control to an outside company, and automakers are intent on maintaining their own branding, ecosystems and user-interface designs. Automakers have to find their own space within these growing mobile ecosystems, and nobody – massive automakers or ambitious telecos – has cracked the code. Sprint Velocity is a step in that direction, but it all hinges on widespread adoption.

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Judge bows out of ‘pink slime’ suit over ABC ties

SIOUX FALLS, S.D. (AP) — A federal judge has recused himself from presiding over a $ 1.2 billion defamation lawsuit against ABC because his daughter-in-law works as a producer on one of the network’s morning shows.

Judge Lawrence L. Piersol recused himself from hearing the defamation lawsuit filed by South Dakota-based Beef Products Inc. against ABC because his daughter-in-law works as a producer on “Good Morning America.”

The case has been reassigned to Chief Judge Karen Schreier.

Beef Products Inc. sued ABC in September over its coverage of a meat product called lean, finely textured beef. Critics have dubbed the product “pink slime.” The meat processor claims the network damaged the company by misleading consumers into believing the product is unhealthy and unsafe.

Entertainment News Headlines – Yahoo! News

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Global Update: Investing in Eyeglasses for Poor Would Boost International Economy

BSIP/UIG Via Getty Images

Eliminating the worldwide shortage of eyeglasses could cost up to $28 billion, but would add more than $200 billion to the global economy, according to a study published last month in the Bulletin of the World Health Organization.

The $28 billion would cover the cost of training 65,000 optometrists and equipping clinics where they could prescribe eyeglasses, which can now be mass-produced for as little as $2 a pair. The study was done by scientists from Australia and the Johns Hopkins Bloomberg School of Public Health.

The authors assumed that 703 million people worldwide have uncorrected nearsightedness or farsightedness severe enough to impair their work, and that 80 percent of them could be helped with off-the-rack glasses, which would need to be replaced every five years.

The biggest productivity savings from better vision would not be in very poor regions like Africa but in moderately poor countries where more people have factory jobs or trades like driving or running a sewing machine.

Without the equivalent of reading glasses, “lots of skilled crafts become very difficult after age 40 or 45,” said Kevin Frick, a Johns Hopkins health policy economist and study co-author. “You don’t want to be swinging a hammer if you can’t see the nail.”

If millions of schoolchildren who need glasses got them, the return on investment could be even greater, he said, but that would be in the future and was not calculated in this study.

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A Struggling CNN Casts Its Eyes on Jeffrey Zucker

In the days to come, when Time Warner appoints a new leader of CNN Worldwide for the first time in a decade, that person will face an identity crisis unlike any other in corporate America.

Though CNN over all is on track to have its most profitable year ever, its flagship channel in the United States is seemingly rudderless, run by layers of producers and executives — many with competing visions. Its low prime-time ratings are the stuff of punch lines and a journalism school case study in the damage wrought by the digital age.

Then again, CNN also has tremendous potential, an enviably popular Web site and countless people rooting for it to succeed.

Throughout a four-month search for the person to succeed Jim Walton, the departing president, attention has centered on Jeffrey Zucker, the former chief executive of NBCUniversal, who was replaced when Comcast took over the company last year. Mr. Zucker produces Katie Couric’s syndicated daytime talk show.

Several news executives close to Mr. Zucker said this week that they believed he had been chosen to run CNN, and they expected the appointment to be announced soon. People close to the Time Warner chief executive, Jeffrey L. Bewkes, also identified Mr. Zucker. A Time Warner spokesman declined to comment.

In considering candidates to run one of the world’s best-known, but beleaguered, news organizations, Mr. Bewkes and his deputy Phil Kent have also been considering their own legacies. They are cautious about not undermining CNN’s journalistic heart and soul, even as they strive to resuscitate the channel’s prime-time lineup, according to people who have met with them about the search. That means the channel’s programming will remain nonpartisan in nature.

“They want someone who has programming and management and cable expertise; someone who can be credible to the staff and to the business community,” one person said. “They know that this is a pretty tall order.”

Mr. Zucker could check off all those boxes. As a young NBC News producer, he helped start what became a 16-year winning streak for the “Today” show. He had mixed results as he moved up the rungs of NBC, but he can point to cable programming successes even as the NBC broadcast network struggled. He did not respond to requests for comment, and people with knowledge of the search insisted on anonymity to preserve friendships and business relationships.

But many others in and around CNN spoke on the record about the challenges ahead. Getting the top-heavy 4,000-person company — spread among New York, Washington, Atlanta and bureaus around the world — to row in the same direction will be one of the toughest tasks, many said.

CNN’s many channels and sites net roughly $600 million in annual profits, through advertising revenue and subscriber fees. But the channel is leaving ad dollars on the table, as one executive put it, because its prime-time ratings are lagging, and it is putting future fee increases at risk by appearing irrelevant in the eyes of some cable subscribers.

One problem dates back to CNN’s creation in 1980: when there is a lack of news, there is a lack of viewers. Kiran Chetry, a CNN morning anchor from 2007 to 2011, said her time there was like being on a news treadmill: “We were running, sweating, doing the work, but never getting anywhere ratings-wise,” she said. This stemmed, she said, from uncertainty about “what we were, who our audience was and how we best served them.”

As Fox News and, later, MSNBC put on confrontational political programs with partisan points of view, CNN sold itself as proudly nonpartisan, but it fell from first to second to third place in the cable news wars along the way. This should have been an “up” year for the channel, thanks to the presidential election; but through mid-November the channel had drawn 412,000 viewers at any given time, down 16 percent from the previous 12 months.

Bill Carter contributed reporting.

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