Wednesday, June 5, 2013

Bulk of 4-K funds to public or private schools in SC?

The budget battle at the State House this week won’t be over whether to expand 4-year-old kindergarten but who should get most of that money – public schools or private schools.

The state Senate’s $22.7 billion spending plan includes an extra $26 million to expand 4-year-old kindergarten into 17 additional school districts, where at least 75 percent of students qualify for government-paid health insurance, or free or reduced lunches. In the Midlands, those districts would include Richland 1, Lexington 2, Lexington 3 and Fairfield County.

But S.C. House Republican leaders have another plan. They see the 4-year-old kindergarten idea as a chance to pass tax credits and vouchers for private education.

The Senate plan – blessed by minority party Democrats – would give 85 percent of the money to public school programs with 15 percent going to private school programs.

However, House Republican leaders introduced an amendment – scheduled to be debated Wednesday – that would flip those percentages, giving 85 percent of the money to private schools and 15 percent to public schools. The House plan also would give half of the $26 million to a voucher program for low-income parents to send their 4-year-old children to the preschool program of their choice.

“The goal would be if you are going to do 4K, you make it available to a lot more people,” said state Rep. Brian White, R-Anderson, chairman of the House budget committee.

The Senate version spends all of the money on the Child Development Educational Pilot Project, run by the Department of Education. The House version, if it passes, would split the money evenly between that project and the ABC Child Care Program, run by the Department of Social Services.

White said the new money for the ABC program would give vouchers to parents of 4-year-olds that only could be used in programs that provide educational as well as child-care services.

The House’s Republican leaders did not originally include money to expand 4-year-old kindergarten in their budget. But in the Senate, where Democrats have more influence, the added money for education was a key part of a deal to secure enough votes to pass a budget.

House Republicans said they do not want to expand the 4K program, but they see a chance to provide vouchers and tax credits for private schools, a longtime goal of many Republicans.

“For all the pieces of the budget to work, I’ve been told (rejecting 4K expansion) is not an option,” said state Rep. Shannon Erickson, who teaches at private preschools in Beaufort County, which would not get added state money. “So, I’m making lemonade.”

White said the budget amendment “does the exact same thing this body (the House) passed in the school-choice bill” last year, including giving tax credits to people who donate to organizations that grant scholarships for disabled students to attend private schools. While the House passed that bill last year – the first time a school-choice bill ever has passed a body of the S.C. Legislature – it died in the Senate.

House Republicans are scheduled to vote Wednesday on the budget amendment, which could be changed again. It’s unclear how Senate lawmakers would receive the amendment. House and Senate leaders plan to meet over the weekend to begin working out a budget compromise.

But some House Democrats said the amendment was unacceptable.

State Rep. Gilda Cobb Hunter, D-Orangeburg, said students in many poor school districts do not have private-school options, so it does not make sense to give more money for private schools.

“It’s always about access. And, unfortunately, in some of our communities they don’t have access,” she said. “We’ve tried this dual-system before. It was called segregation. It didn’t work then, and it’s not working now. Can we please focus on public schools for a change? The state will benefit long term if we do.”

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Monday, April 15, 2013

The meteoric rise and the compromises of the SACP

MUCH has changed in the internal balance between the African National Congress (ANC) and the tripartite alliance in the five years that Jacob Zuma has led the ANC. The ANC since Mangaung is more united than it has been for some years and, despite the inevitable messy contest for power at all levels of its structures, it has succeeded in its goal of wresting control of policy away from technocrats in the government and putting it in the party’s hands.

The greatest beneficiary of these shifting internal dynamics has been the South African Communist Party (SACP), which has positioned itself to play a role that was unthinkable in the Thabo Mbeki era. The party can now count four Cabinet ministers and four deputy ministers in its top leadership structure, the central executive committee. The rest of the committee is mostly made up of people in provincial government leadership, revealing a successful population of SACP members throughout the government.

The rise of the SACP in influence and in numbers — it is now three times bigger than it was five years ago, with 150,000 members — is worth remarking on not because of the old "reds under the bed" fear but because the party has become a power base from which to build a political career and a constituency that ANC leaders must take seriously.

While the SACP does differ from the ANC in ideology and its policy outlook, its vision is for a generous form of social democracy in which the state dominates the economy but where private enterprise continues to exist. The most important part of this would be the removal of the market in providing services and commodities that satisfy basic human needs, such as health, education and basic services. This is spelt out in its vision, The Road to South African Socialism.

Like the communist parties of old, its aim remains to be a vanguard party and to populate both the state and the ANC with its members, maximising its influence. Since the demise of Mbeki — who had brazenly pushed an anticommunist line, causing many in the alliance to believe it was his aim to provoke a split — the party has done amazingly well in extending its influence in this way.

While the SACP is never likely to enjoy the same influence it did in its heyday of the 1970s and 1980s, when every member of the politburo was also either an ANC national executive committee member or a member of the ANC’s political military council, it again now provides a stepping stone into the upper echelons of ANC and, hence, state power.

What difference does the rise of the SACP make to our politics?

On policy, the SACP’s successes have been mixed. The grounding of industrial policy in state policy and the steady gains made by programmes that promote industrialisation are the biggest policy gains the left has made in the Zuma era. Among these are the sector incentive programmes mainly aimed at improving competitiveness and efficiency; the use of government procurement to promote industrial policy objectives; and the revitalisation of the idea of special economic zones. Also in development is a focus on the mineral beneficiation, another approach the left has strongly advocated. These programmes are expanding and becoming entrenched in the economic policy framework.

A second victory was the embracing of the concept of National Health Insurance, a policy with its origins in the SACP, by the ANC. Although the National Treasury has not yet come out with a proposal for how this will work, the general direction of imposing a payroll tax to fund free healthcare at the point of service, which was the SACP’s proposal, is where things seem to be heading.

The SACP would probably also count the toning down of inflation targeting by the Reserve Bank, which followed the finance minister’s letter to the governor in 2010, as being among its victories. Since then, the left believes, the Bank has taken a broader approach, taking growth and the effect on employment into account.

But this is where the policy successes of the SACP end.

On fiscal policy, which it believes should be more expansive, there has been no change. To the SACP’s frustration, Zuma pays close attention to the advice of Finance Minister Pravin Gordhan, who, the party privately complains, is time and again elevated to the status of super-minister.

On the decommodification of public services, which is an essential plank of the SACP’s future socialist state, there has been a reversal. The government’s determination to go ahead with e-tolls, which extends the principle of paying for public services to a new area, counters the SACP’s principle that the state should provide public services. The e-tolls matter has placed the SACP in a quandary: as part of a Cabinet that has endorsed the collection of user fees and also as part of an alliance with the Congress of South African Trade Unions (Cosatu), which on principle rejects them, the party has been caught in the middle. Its solution was imperfect: it participated in the march against e-tolls with Cosatu, arguing that it opposed not the principle but the way in which e-tolls were imposed. However, it also informally sent emissaries behind the scenes to persuade Cosatu to drop its campaign.

Its presence in the government could also see it compromised in other ways. The ANC’s wholesale endorsement of the National Development Plan at Mangaung, which the SACP believes should not be "cast in stone", is already having the effect of reshaping plans at government level. And, while the SACP likes to see itself as a champion against corruption — it was the party that coined the term tenderpreneur and was the first to stand up against Julius Malema — it has not made a clear statement on the spending on the presidential compound at Nkandla, other than to imply that this is again the work of unscrupulous tenderpreneurs.

By far the most important political spin-off of the closing of the gap between the ANC and the SACP has been the corresponding widening of the rift between the SACP and Cosatu or, more accurately, between the SACP and the non-SACP factions of Cosatu. The relationship between the ANC and the SACP was further cemented in Mangaung, where several top Cosatu leaders who also occupy leadership positions in the SACP were elected to the ANC’s national executive committee.

Cosatu — which began the Zuma era extremely united — is now split along SACP lines, with the SACP faction lining up in opposition to Cosatu general secretary Zwelinzima Vavi in what amounts to a high-stakes game to remove him. As Vavi has just been popularly re-elected by workers at Cosatu’s September congress, it is hard not to see the campaign to remove Vavi by SACP-aligned unionists as an attempt to win what they did not at the Cosatu congress.

This is under way at present with a committee of three independent people established to hear and mediate Cosatu’s internal problems, including hearing political and administrative complaints about Vavi. While several anonymous sources have told journalists the process being led by the committee is about proving Vavi is corrupt, the bulk of its work will be political. It will have to judge whether Vavi’s oppositionist public posture constitutes a break from what is acceptable in the ranks of the national democratic movement. If that is the case, the SACP is in the process of making the biggest compromise of all for being close to power: fighting for a tamer labour movement and a less outspoken labour leader.

Monday, March 25, 2013

Cyprus secures international bailout, avoids bankruptcy, but large bank depositors face losses

Cyprus secured a 10 billion euro ($13 billion) package of rescue loans in tense, last-ditch negotiations early Monday, saving the country from a banking system collapse and bankruptcy that could have destabilized the entire euro area.

"We've put an end to the uncertainty that has affected Cyprus and the euro area over the past week," said Jeroen Dijsselbloem, who chairs the meetings of the 17-nation eurozone's finance ministers.

In return for the bailout, Cyprus must drastically shrink its outsized banking sector, cut its budget, implement structural reforms and privatize state assets, he said. The country's second-largest bank will be shut down immediately, with all bond holders and people with more than 100,000 euros in their bank accounts there facing significant losses. The measures are likely to deepen the recession in Cyprus and lead to more job losses.

The cash-strapped Mediterranean island nation has been shut out of international markets for almost two years. It first applied for a bailout to recapitalize its ailing lenders and keep the government afloat last June, but the political negotiations stalled. After a botched agreement last week, the European Central Bank moved forcefully to focus leaders' minds, threatening to cut off crucial emergency assistance to the country's banks by Tuesday if no agreement was reached.

"It's not that we won a battle, but we really have avoided a disastrous exit from the eurozone," said Cyprus' Finance Minister Michalis Sarris. "A long period of uncertainty and insecurity surrounding the Cyprus economy has ended."

The eurozone finance ministers accepted the plan, reached after more than 10 hours of negotiations in Brussels between Cypriot officials and the so-called troika of creditors — the International Monetary Fund, the European Commission and the ECB.

"We believe that this will form a lasting, durable and fully financed solution," said IMF chief Christine Lagarde.

Without a bailout deal by Monday night, the tiny nation of about 800,000 would have faced the prospect of bankruptcy, which could have forced it to become the first country to abandon the euro currency. That would have roiled markets and spurred turmoil across the entire eurozone of 300 million people, analysts said, even though Cyprus only makes up less than 0.2 percent of the eurozone's 10 trillion euro economy.

After the eurozone's finance ministers' approval, several national parliaments in eurozone countries such as Germany must also approve the bailout deal, which might take another few weeks. EU officials said they expect the whole program to be approved by mid-April.

Under the plan, Cyprus' second-largest bank, Laiki, will be restructured and holders of bank deposits of more than 100,000 euros there will have to take losses, Dijsselbloem said, adding that it was not yet clear how severe the losses would be.

"This will have to be worked out in the coming weeks," he added, noting that it is expected to yield 4.2 billion euros overall. Analysts have estimated investors might lose up to 40 percent of their money.

Savers' deposits with all Cypriot banks of up to 100,000 euros will be guaranteed by the state in accordance with the EU's deposit insurance guarantee, Dijsselbloem said. Laiki will be dissolved immediately into a bad bank containing its uninsured deposits and toxic assets, with the guaranteed deposits being transferred to the nation's biggest lender, Bank of Cyprus.

Large deposits with Bank of Cyprus above the insured level will be frozen until it becomes clear whether or to what extent they will also be forced to take losses, the Eurogroup of finance ministers said in a statement.

Dijsselbloem defended the creditors' approach of making deposit holders take heavy losses, saying the measures "will be concentrated where the problems are, in the large banks."

The international creditors, led by the IMF, were seeking a fundamental restructuring of the country's outsized financial system, which is worth up to eight times the Cypriot gross domestic product of about 18 billion euros. They said the country's business model of attracting foreign investors, among them many Russians, with low taxes and lax financial regulation had backfired and needed to be upended.

The drastic shrinking of the financial sector, the wiping out of wealth through the losses on deposits, the loss of confidence with the recent turmoil and the upcoming austerity measures all mean that Cyprus is facing tough times.

"The near future will be very difficult for the country and its people," acknowledged the EU Commission's top economic official, Olli Rehn. "But (the measures) will be necessary for the Cypriot people to rebuild their economy on a new basis."

Cypriot banks have been closed this past week while officials worked on a rescue plan, and they are not due to reopen until Tuesday. Cash has been available through ATMs, but long lines formed and many machines have quickly run out of cash.

Amid fears of a banking collapse, Cyprus' central bank on Sunday imposed a daily withdrawal limit of 100 euros ($130) from ATMs of the country's two largest banks to prevent a bank run by depositors worried about their savings.

The Cypriot government also approved a set of laws over the past week to introduce capital controls, in order to avoid a huge depositor flight once banks reopen.

To secure the rescue loan package, the Cypriot government had to find ways to raise several billion euros on its own. The bulk of that money is now being raised by forcing losses on large deposit holders, with the remainder coming from tax increases and privatizations.

The creditors had insisted that Cyprus couldn't receive more loans because that would make its debt burden unsustainably high. The IMF's Lagarde said Cyprus would now reach a debt level of about 100 percent of GDP by 2020.

A plan agreed to in marathon negotiations earlier this month called for a one-time levy on all bank depositors in Cypriot banks. But the proposal ignited fierce anger because it also targeted small savers. It failed to win a single vote in the Cypriot Parliament.

Cyprus' bid to secure more financial aid from its long-time ally, Russia, then failed, forcing it to turn again to its European partners. Russia was expected, however, to extend a 2.5 billion euro emergency loan granted last year, also lowering the interest rate due and extending then repayment schedule.

Monday, February 25, 2013

Spokane AIDS Network’s Oscar Night Gala nets much-needed funds

Dressed in tuxedos and sequined dresses, crowds milled among artwork Sunday at the Northern Quest Resort and Casino and listened to the pre-show of the Oscars as they celebrated the 15th year of the Spokane AIDS Network’s Oscar Night Gala.

The nonprofit agency uses the gala every year to raise as much as $40,000 to pay for needs sometimes left unmet by the grants that make up the bulk of their funding sources, Executive Director Gaye Weiss said. Along with an office in Wenatchee, the agency serves about 130 HIV and AIDS patients through a variety of programs.

“It’s a blast,” said 53-year-old Joe Ready, who volunteers as the organization’s volunteer coordinator. “It’s our largest annual fundraiser. It’s really fun and just a nice evening.”

Kim Krogh attended as a 10-year corporate sponsor with Fidelity Associates, a Spokane-based insurance firm. However, Krogh said she started coming to the gala in 1998 to support the network.

“It’s a fun event,” she said. “You get to see friends and family and all sorts of wonderful people.”

And then there’s the glitz. In her case, Krogh wore a black, sequined gown.

“I’m one of those who goes to Las Vegas every year to find the right dress,” she said with a smile. “I can’t match anyone else here. That would be a faux pas.”

Weiss said the event mixes fun with the serious job of providing services to those who suffer a disease that continues to spread through intravenous drug usage and unprotected sex.

Advances in medicine, she said, have turned HIV and AIDS from sure death into what’s now known as a chronic condition, on par with heart disease and diabetes.

Clients “are living full, productive lives. We used to help people die gracefully,” she said. “Now we have 70- and 80-year-olds who are HIV-positive when they had been dying at 25.”

Yet, with those advances comes a misunderstanding among some that the problem has gone away.

“It’s gone under the radar. We sometimes have people ask us, ‘It’s still around?’ ” she said. “But Spokane County is pushing 500 HIV or AIDS patients.”

The network helps those patients ensure they have proper medical care, Weiss said. But the network also provides prevention education, mental health services, shopping and help finding housing. It also gives 85 people a hot meal and groceries every two weeks.

“They need a very-high-protein diet to keep the assimilation of their meds,” Weiss said. “We fill the gaps that no one else is doing in the community.”

Ready, the volunteer coordinator, started working at the network as a volunteer 10 years ago. The volunteers do everything from cleaning to making sure clients follow medications, which never seems as easy as it sounds, he said.

“We have three times more volunteers than staff,” Ready said. “Our agency could not operate without our volunteer team. They are so deserving. They show up every week giving of their time. They need to be recognized.”

Monday, January 14, 2013

A third of insurers risk ban for failing to comply with law

A third of Kenya’s insurance companies risk deregistration after failing to comply with regulatory requirements by the December deadline with breach of ownership limits coming top.

Insurance Regulatory Authority (IRA) chief executive Sammy Makove said that 15 insurers have failed to meet regulatory requirements including shareholder limits, financial health and integrity of directors and executives.

Insurance law limits individual ownership to a maximum of 25 per cent stake and gives the regulator powers to monitor activities of shareholders controlling more than 10 per cent of the insurers who can now be forced to sell their stake should they be found guilty of fraud and other malpractices.

The ownership of the bulk of insurance companies remains a tightly guarded secret and IRA last year hired the Institute of Certified Public Secretaries of Kenya (ICPSK) to establish the shareholding structure of the insurers.

 “We have renewed licences of 30 insurers and the rest who are yet to comply have up to March 1 to do so,” said Mr Makove without identifying the affected firms.

“Nine insurance companies have not been cleared by ICPSK. The remaining few weeks is their last chance to comply. We expect they are working on their shortcomings.”

The government has stepped up its policing of the sector in an effort to stem the instability that gripped the industry in the decade to 2005.

Analysts reckon that the withholding of the 15 licences is set to have little impact in hurting the confidence of policy holders because the issues border on corporate governance rather than non-payment of claims.

“For policy holders, the problem arises when an insurer is unable to pay out claims. For now the non-compliant insurers appear to be largely affected by corporate governance issues,” said Isaac Ng’aru, a partner with Ng’aru and Associates, an insurance consultancy firm.

The law on the significant shareholders is aimed at reducing the influence and power of key stakeholders in insurance firms and ensures that individuals of high integrity sit on the boards and executive suites of Kenya’s insurance firms.

Insurers were given three years from 2009 to comply with the shareholder rule that caps individual ownership of directors and executives at a quarter of an insurer’s shares, but companies had the window to seek a two-year extension through the Finance minister after showing compliance plans.

Some of the prominent individuals who have key stakes in insurance companies include Joe Wanjui and Chris Kirubi, both at UAP Insurance, businessman Pius Ngugi (Kenya Alliance Insurance), Peter Nduati (Resolution Health East Africa), and Baloobhal Patel (Pan Africa Insurance Holdings).

The family of the late Central Bank of Kenya governor Philip Ndegwa owns a majority stake in ICEA Lion Group, which owns ICEA and Lion of Kenya insurance companies through First Chartered Securities.

“We have written to the insurance firms telling them that they must now comply with the limit on individual shareholding,” Mr Makove said.

The quest to control shareholding has sparked deal making in the insurance sector. UAP Insurance, Resolution Health East Africa and Mercantile Insurance are some of the firms that have invited new shareholders to raise capital and dilute the holding of majority owners.

Monday, December 10, 2012

CMHC’s business shrinks amid Ottawa insurance cap

Canada Mortgage and Housing Corp.’s insurance volumes dove 37 per cent in the latest quarter from a year ago, as Ottawa seeks to rein in the Crown corporation’s growth.

The bulk of the decline stems from the government’s decision to cap the total amount of insurance that CMHC can have in force at $600-billion, a move that has forced the mortgage insurer to shrink the amount of portfolio or bulk insurance it offers banks to virtually nil. (Portfolio insurance enables banks to protect broad swaths of mortgages that aren’t required to be insured, which reduces capital requirements for the banks).

But Finance Minister Jim Flaherty’s decision to tighten up the country’s mortgage insurance rules this summer have also had an impact, cutting into CMHC’s core line of business.

Mortgage insurance is mandatory when the borrower puts less than 20 per cent down – so-called “high-ratio” mortgages. Effective July 9, Mr. Flaherty sought to make it harder for some individuals to obtain insured mortgages, in a bid to take some steam out of the housing market and rising consumer debt loads. His changes included cutting the maximum length of insured mortgages from 30 years to 25, eliminating government-backed insurance on homes above $1-million, and lowering the maximum amount homeowners can borrow when refinancing to 80 per cent from 85 per cent of the value of their homes.

In what appears to be a carefully worded statement, CMHC said in its quarterly results that following the July changes “homeowner insurance volumes are expected to be lower than originally forecasted at the beginning of the year. The specific impacts of these changes are difficult to isolate from more general economic and housing market trends.”

While the decrease in national home sales that’s been witnessed since Mr. Flaherty’s changes has been attributed by many real estate professionals to the new rules, deputy finance minister Michael Horgan said a month ago that it’s too soon to make that link.

Indeed, the changes have had more of an impact on refinancings than on new purchases.

In the three months ended September 30, CMHC saw its volumes of mortgage insurance for home buyers fall about 6 per cent from a year ago, while refinancing volumes were down 22 per cent. “The new mortgage insurance parameters that took effect in July 2012 effectively eliminated the high ratio refinance market,” CMHC noted.

In the meantime, its volumes of insurance on multiunit properties were up about 22 per cent. CMHC is the only mortgage insurer that covers multiunit residential buildings.

Volumes of portfolio insurance were 98 per cent lower than a year ago.

The Crown corporation’s total insurance in force has edged up 2 per cent so far this year to $575.8-billion, from $566.5-billion at the end of 2011. But it says that borrowers are making roughly $60-billion to $65-billion worth of mortgage payments each year on loans it insures, which will help to offset the new insurance it sells and keep it below its $600-billion cap.

The insurer’s net claims expense in the quarter was $157-million. While that’s 15 per cent higher than a year ago, it’s actually lower than what CMHC was banking on and the Crown corporation’s actual losses from claims were down (but it put more aside to cover future claims).

Mortgage insurance pays the bank when a homeowner defaults on their mortgage. The insurer recoups some of the money through the sale of the foreclosed home.

CMHC said that its arrears rate is 0.34 per cent, and has been improving in both its traditional mortgage insurance business as well as its portfolio business this year.

Total profit for the quarter came in at $381-million, down from $420-million a year ago.