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Police fees shore up budgets in many towns

Wed, 2015-03-11 08:50

Thomas Jackson, the police chief in Ferguson, Missouri, resigned Wednesday, exactly one week after a scathing report from the Department of Justice criticized the city's use of law enforcement as a revenue generation tool.

Ferguson City Manager John Shaw stepped down on Tuesday.

Last Wednesday, Attorney General Eric Holder said Ferguson officials pressured police to generate revenue through aggressive tactics and ticketing. City officials exerted "overriding pressure," Holder said, using "law enforcement not as a public service, but as a tool for raising revenue."

Beth Colgan, a law professor at UCLA who has been studying the issue of municipalities and their use of fees, says there's evidence that a lot of local governments are using law enforcement and court fines to shore up budgets.

"If you look at the criminal and civil codes in any county or state," says Colgan, "as a general matter, the use of fines, and fees, and costs, is something that's pervasive around the country."

In Chicago, for instance, red light cameras reportedly generate $70 million in fines every year. There is now debate between mayoral candidates about whether those cameras should remain, and if not, how to replace that revenue.

The tiny town of Randolph, Missouri, got into trouble a few years ago when the state learned the town's budget came almost exclusively from highway traffic fines.

Knowing whether local governments' reliance on fines has become a national problem or not is difficult, says Brian Jackson, because of a lack of empirical research examining the issue nationwide.

Jackson, who heads the safety and justice program at the Rand Corporation, says there is no question that fines and fees became prominent revenue sources for many local governments, especially after the financial crisis. 

"As a business model, funding through fine revenue does reduce the amount of taxes that have to be levied to pay for public safety, because it's another funding stream," Jackson said. 

But while many municipalities are relying on fines and fees from law enforcement, few have considered the potential implications, Jackson says. 

"The problem here is one of incentives," he said. "The question comes down to how much is too much, and at what point does that start distorting the decisions of individual officers," or their superiors. 

The bigger question, he says, is whether voters are willing to fund services their local governments provide through taxes instead of fines and fees.

How does the strong dollar affect U.S. consumers?

Wed, 2015-03-11 08:49

The ol’ dollar just isn’t what it used to be. It's actually worth quite a bit more.

The value of the dollar has been rising steadily compared to other currencies. On Wednesday, the value of a euro fell to $1.05 -- below $1.06 for the first time since 2003. Tuesday, the dollar hit its highest value against the Japanese yen in nearly eight years.

What does that mean for U.S. consumers?

For Bill Kendrick of Davis, California, it means cheaper supplies for his 1983 Atari computer. He has his eye on a cartridge that’s 20 percent cheaper than a similar one he bought several years ago, thanks to a better exchange rate.

American retailers who buy goods abroad will see a similar discount, but they might choose to pocket the savings instead of passing them along to their customers, says Dan Morris of TIAA-CREF Asset Management.

Now would also be a good time to vacation in Europe, says Boris Schlossberg at BK Asset Management. He said he has been surprised by the speed at which the dollar is rising, but he cautions that what goes up will eventually come back down. Today’s discounts won’t last forever.

Japan struggles to build a new electricity network

Wed, 2015-03-11 08:48

Four years after the earthquake and nuclear plant meltdown, Japan has gone cold turkey on nuclear energy. For now, zero reactors are currently in operation.

Solar energy has sought to fill some of that void. Thanks to subsidies and affordable, efficient solar panels, Japan’s solar market has grown tenfold in the last two years. Then, utilities controlling the grid pushed back, and refused to take additional solar energy.

There are technical trade-offs, says engineering professor Massoud Amin at the University of Minnesota, that can cause brownouts and blackouts.

There are fixes, a complex assortment of solutions often referred to as a smart grid. But that requires an enormous investment, that Paul Scalise of the University of Duisberg-Essen in Germany says raises a fundamental question: Who pays for it?

This is a clean-energy issue that doesn’t just face Japan. Germany, Spain, Australia and California all confront questions of grid reliability and upgrade. While it may be in the interests of some utilities to resist change — and hold off direct competitors in the power generation space — inaction in the case of Japan comes with its own trade-off: the environment. Without nuclear energy, the country increasingly relies on imported fossil fuels.

Why sales of packaged or processed foods are declining

Wed, 2015-03-11 08:00

Packaged food manufacturers are grappling with some big shifts in consumption trends. Sales of some of the top brands at General Mills, Kraft and the Campbell Soup Company have been slumping. 

As Campbell’s chief executive Denise Morrison recently acknowledged at a conference, many Americans are turning away from foods whose ingredients aren't "fresh" or "natural."

“And along with this, as all of you know, comes a mounting distrust of so-called “Big Food”, the large food companies and legacy brands that millions of consumers have relied on for so long,” she told a room full of food industry analysts.

One of the people presenting a challenge for food companies is 23 year-old Nick Neylon. He says the pejorative phrase “Big Food” is part of his vocabulary.

“I would also use a term like evil and the devil and Lucifer,” he says.

I found Neylon stirring a pot of homemade polenta at a Minneapolis event called "Eat for Equity." People raise money for charities while sharing a big, healthy meal. A mushroom and fennel ragout filled the air with a rich, tomatoey scent. Neylon says that's his kind of grub. He avoids packaged and fast foods.

Nick Neylon dresses a salad at a Minneapolis event called “Eat for Equity.” 

Annie Baxter/Marketplace

“If someone else made it, don't eat it,” he says. “Generally you'll be happier if you cook all your food from scratch.”

Neylon's age may have something to do with his eating habits. Food and beverage analyst Darren Seifer with the NPD Group says the millennial generation is making a shift towards fresh fruits, vegetables, and meats. Seifer traces the change to the Great Recession — young people ate out less often because they were broke. And instead of cracking open, say, a can of Chef Boyardee, some learned how to cook.

“A lot of it has to do with how millennials got used to their kitchens sooner than we expected them to,” he says.

Food analyst Alexia Howard at Bernstein says women are playing a big role, too.

“Over the last several decades, really since the Second World War, heavily processed or packaged foods — more convenient foods — were embraced by moms-at-home and women wanting to get into the workforce,” she says.

But Howard says a few years ago, sales of products like Jell-O and TV dinners declined noticeably. Her theory: Moms were spending more time on the internet reading about what goes into food and got turned off by additives and preservatives.

Heidi Stark, who's 37, is a case in point.

“When you start reading what's actually in the packages, no one wants it,” she says.

Stark says gut problems prompted her to start eating super healthy over the past year. Now she plans out her menu and buys lots of fresh fruits, veggies and meat. On a recent trip to Lakewinds Food Co-op in Minneapolis, she bought the ingredients for a recipe involving pork chops, apples and shallots.

“That sounds gross!” her seven year-old son Anderson complained.

But his mom says he’ll eat it anyway.

Packaged food companies are trying to woo back consumers like Heidi Stark with some fresh products — like baby carrots from the Campbell Soup Company or protein-packed items, like a Kraft snack pack with meat, cheese and nuts. Some are also appealing to the growing interest in simple, organic ingredients — think General Mills' acquisition of Annie's, which makes organic macaroni and cheese.

Stock analyst Alexia Howard says even if these products sell well, they're still a small part of the companies' overall business.

“The margins on these new products are a lot lower,” she says. “The growth in these new products, rapid though it is, they're starting from a much smaller base than the bigger, established brands.”

While these big food companies struggle to meet the needs of millennials and moms who want fresher foods, Howard says we could see more cost-cutting — and even consolidation.

Quiz: How effective are Teach for America teachers?

Wed, 2015-03-11 07:45

Mathematica Policy Research examined the effectiveness of Teach for America teachers after the nonprofit received a $50 million federal grant in 2010 to put more of its teachers in classrooms.

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PODCAST: Farm bill comes up short

Wed, 2015-03-11 07:27

The dollar is on a 12-year high driven by the potential for high interest rates, but what does that mean for the markets? We check in with Payden & Rygel chief economist Jeffrey Cleveland. Next, GM announced this week it’ll give shareholders $5 billion in dividends and a $5 billion stock buyback. That’s good news for investors, and for GM, which managed to avoid a major clash with hedge fund interests on the board. But when the company opens negotiations with the United Autoworkers Union this summer, it could be tough to argue for keeping a lid on wages. Finally, Washington lobbyists and think tank-types are tearing apart the Farm Bill, trying to figure out how far Congress was off in budgeting for the subsidies that were ushered in by the subsidies it ushered in.

Big change to farm subsidies

Wed, 2015-03-11 06:41

Washington lobbyists and think tank-types are tearing apart the Farm Bill, trying to figure out how far Congress was off in budgeting for the subsidies the new bill ushered in.

“For major crops like corn we would expect payments to be double what they expected: $6.5 billion" says Vince Smith, an economist at the American Enterprise Institute and Montana State University.   

Farmers used to get the same, direct payment every year. Now they’re offered a choice of two subsidies. One kicks in when their revenues per acre drop, the other is tied to crop prices. If the price of, say, corn, falls below a target the government makes up the difference. 

But critics like say the targets were set too high. They say prices are falling more than Congress expected, and don’t have to fall much, for the subsidies to kick in.

“They look like a safety net even though they’re more like a trampoline, when you really stop and think about it,” says Scott Faber of the Environmental Working Group, or EWG.

Plenty of people in Washington have been thinking about it.  But the nation's capital can be something of a bubble.  I wanted to break through the bubble, and hear from someone who’s actually living with the new subsidies I head to Robb Ewoldt’s farm, in Eastern Iowa. 

I meet him in his repair shop.

“We grow corn and soy beans.  We grow alfalfa grass, alfalfa hay and kids,” he says, laughing. (Ewoldt is a father of two.)

He thinks taxpayers will actually save money under the new subsidy system. Before, he got a government payment even if he was selling his corn at record prices. 

“I think this will be a little bit more fair for the taxpayer because the money’s going to come when we are in pretty tough shape," he says. "When we need it.”

Ewoldt says most farmers are independent. They don’t like taking the subsidies, but they need them to get through the tough times, he says.

Drones have still got a long way to go

Wed, 2015-03-11 05:30

Could drones solve some of Africa’s infrastructure problems? Afrotech, a Swiss company, seems to think so.

Transporting smaller cargo through the skies via drones, for instance, could be cheaper than investing in railways or roads right away.  So starting next year the company will test cargo drones that can carry small packages across 50 miles.

The idea isn’t that unusual, says Matthew Wall, a technology and business reporter for BBC who's covering Afrotech. “There are already these quadcopter drones ... These are these helicopter-style drones which can carry small packages.”

They can also be programmed to pick up small packages, he added.

But, it would take a while for this to happen over long distances. For one, we don’t have the battery technology to power drones for more than 50 miles. And the drones themselves aren’t strong or light enough to transport most cargo.

“That’s going to take some ten years at least I think before we see these things across the skies,” said Wall.

Banks prepare for round two of stress tests

Wed, 2015-03-11 03:01

Each year, the Federal Reserve puts the nation’s biggest banks through stress tests. It wants to make sure they can keep lending even in scenarios where home prices plummet and unemployment spikes. Thirty-one banks passed a round of tests last week. 

“The results last week were purely quantitative. How the banks do under each of the scenarios,” says Karen Petrou, managing director with Federal Financial Analytics.

The next round takes a more qualitative look at the individual banks and their capital planning—how they plan to distribute capital to shareholders through, say, dividends, and whether that leaves them with enough of a capital buffer to cover potential losses.

Petrou says some banks might fail this time.

“The Fed looks at the bank and says no, your mortgage loans are a lot riskier than other bank mortgage loans and you should know that,” Petrou says.

The Fed could tell those banks to keep more capital on hand. Duke University law professor Lawrence Baxter says that could mean share buybacks and dividends are forbidden. Stock repurchases benefit stockholders, because they increase the value of an individual share, but they cut into capital.

“The view is that if they don't maintain sufficient capital to deal with these adverse circumstances, the rest of us are exposed,” he says.

Social and emotional learning emerges at SXSWedu

Wed, 2015-03-11 02:08

Marketplace reporter Adriene Hill has been in Austin this week, covering SXSWedu with the LearningCurve team. She spoke with Tech's Ben Johnson about the emergence of social and emotional learning as a trend at this year’s event.

Hunter Gehlbach, associate professor at Harvard Graduate School of Education, says "human skills" are a trending topic at SXSWedu because, “at our core, we are fundamentally social creatures," he says.

"So if students are preoccupied with this fundamental need that they don’t feel like they belong, that they’re being bullied, those kinds of things, there’s no way that they’re going to pay attention to what’s going on in the classroom," Gehlbach says.

More research is finding that strengthening social and emotional skills can help kids learn. The focus stems from digital citizenship, and a desire to encourage kids to take a step back from their constantly connected, tech-infused, app-filled world.

Mindfulness instructor and former teacher Erin Sharaf says social and emotional learning can look different depending on how students learn best:

“It might look like students sitting on the floor doing postures that look like yoga; it might look like a bell ringing and their task right now is just to listen to the bell. It might look like eating a raisin, and really being fully present with that raisin, and actually noticing what it tastes like instead of thinking about the math lesson that they have to do next or the fight that they had at home before they came into the classroom,” she says.

Erin Sharef / Hunter Gehlbach

But there are applications of technology in this social and emotional space as well. Gelhbach brings up a virtual reality project in the works that allows kids to experience multiple perspectives of a bullying situation, and says tech is helping researchers like him get better data — and use it in better ways — to help show these social skills can improve learning.

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