North Carolina Now; Episode from 1999-07-07

It's Wednesday, July 7th, tonight lining up on both sides of the UNC Bond issue in North Carolina now. Hello, I'm Rita Matray. Welcome to North Carolina now. On this Wednesday edition of our program, we'll offer tips on how to save up that whopping some that it will cost to send a child to college in the years ahead. The president of the North Carolina Association of Certified Public Accountants will be here to offer advice. Plus, we'll look at the state fairy system as a tourist attraction and as a business and explore if it's being run as efficiently as possible, but first to the business of the General Assembly. The $3 billion bond proposal for repairs and renovations for the University of North Carolina and the Community College system continues to be met with criticism by House Republicans. Today House Minority Leader Richard Morgan held a second press conference in a week to voice concerns about the plan. House Republicans are publicly challenging Democrats to support a public referendum on the bonds.

Sonya Williams has a report on today's developments. We recognize that the University System and Community Colleges have needs and we want to help provide those needs particularly for repairs and renovation and particularly for new construction that's needed. But we do feel even more so than a week ago that the people of North Carolina ought to have a vote on the University bonds and the bonds for Community Colleges. With many House Republicans and other party officials by his side, Minority Leader Richard Morgan challenged House Speaker Jim Black and other Democrats to support a public referendum on the $3 billion bond proposal. I really believe that if the University can validate the need, identify their needs and this package can be committed to a vote of the people that the people in North Carolina are smart enough to figure it out whether it's something that needs to be done or whether it's not.

Representative Carolyn Russell agreed and said that allowing the public to have a say might help change the way lawmakers fund capital projects for the state's public universities and community college system. Russell says that historically the general assembly has underfunded repairs and renovations for the higher education system and that it's not fair to expect the taxpayers to pay for legislators' mistakes. You do not need a system whereby you come in and the universities come in with their priority lists etc that legislators go in the back room and look at it and divvy out whatever is there. And sometimes what they choose to fund is not really what the universities wanted and that should not be the way it works.

If you've got a bunch of buildings, you need to have adequate funding and a part of money somewhere for the upkeep of those buildings. And we have not done this. Now by putting this to the people, by not putting it to the people, we're saying that we as legislators participated in a very flawed system that was unfair to the community colleges and to the universities and we're going to make somebody else pay for it. We need to get our act cleaned up. Representative Morgan outlined the options some lawmakers and university officials have been privately discussing. They include the general assembly appropriating money over the next two years for emergency needs and discussing the entire bond package later. Another option is not taking up the bond proposal at all this session or including a public referendum in the plan. Morgan says the Republicans remain committed to a public vote and while they rallied support for their stand, House Democrats met privately to try and reach a consensus on their approach. There's a serious proposition and it just disturbs me that we made it to political football. We need to take care of this serious need and take care of it immediately.

We need to be waiting 18 months to start this. It costs us $80,000 a year, $80 million a year to repair these dilapidated buildings. That is terribly wasteful. We need to get on with this project at this time. The House Democrats are still deliberating the bond issue. The House is a very deliberative body and we have 120 members and about 120 various ideas about how to deal with the bond issue. We're still working through the numbers and expect to have a bill in the finance committee by Friday morning and we expect to pass a bill in the next 30. Speaker Black says he remains committed to passing the original $3 billion bond plan in its current limited obligation form. The state of North Carolina began running the state's ferry system in 1947. Since then, it's grown into the second largest ferry system in the country and some lawmakers think it may be time to put the ferries back into the hands of private business owners.

But as John Arnold reports, the idea of privatization is getting a cool reception from ferry administrators who say the system is running more efficiently than ever. For tourist Rick Monninghoff and his daughter Katie, a day at the beach means a couple of hours on the Cedar Island ferry. It's the most enjoyable and quickest way to get from Hatteras Island to Cedar Island. Because otherwise you'd have to drive all the way back up the man here and take the long way around. I think the kids enjoy riding on the ferries more than they would sit in the car all day long. That's what ferry administrators want to hear. For the past six years, they've been trying to change the way people view ferries in North Carolina. And this is the man who's been leading that effort. We're the second largest ferries system in the country behind Washington State. Last year, we transported a million 30,000 vehicles. It's almost two and a half million passengers. The boom in ridership may be a result of Gaskell's efforts to make the ferry system run more efficiently. When he took the helm at the ferry division six years ago,

Gaskell implemented a number of cost-saving policies. For example, all ferry captains were ordered to reduce the number of RPMs on their ship's engines. A measure that reduces the amount of fuel used and in turn saves the ferry division about $100,000 a year. Administrators also launched an aggressive marketing campaign, which includes everything from a 1-800 number to ferry souvenir stores. The idea is to make the ferry system more than a way to get around. Ferry officials want it to be a tourist attraction in and of itself. I think that's just a whole culture of ferry division. State government changed. Jerry came from private industry and I came from private industry. Some of the other management people came from an environment of private industry where you had to run a business cost effectively. You had to promote it. You had to put out a good product. You couldn't get away any longer. We just put the boats on the water and run it from.8 to.b. We made a conscious effort to change the ferry division from a mode of transportation to a tourist attraction. We wanted to draw people down here.

The strategy appears to be working. Ferry traffic has increased by 40% over the past six years. This despite the fact that the agency is using fewer employees and hasn't seen a budget increase since 1992. So when lawmakers in Raleigh suggested earlier this session that it might be more cost effective to privatize the ferry system, agency administrators were caught off guard. It came as a shock to us. We've always believed that we're doing a good job and we have the numbers to back it up. But numbers and statistics are relative, says John Hood. He's president of the John Locke Foundation, a conservative think tank in Raleigh. There is no magic number. The following number makes us good. If we don't meet that number, we're no good. If we make that number, we're good. The only question is whether you do a better job than a competitor. That's the only way to evaluate efficiency and effectiveness. Hood says the issue is not whether the ferry system should be privatized, but whether bids from private companies should at least be accepted.

In fact, John Hood thinks it would be good public policy to accept and examine private bids for a number of state-run services. If a private operator can come up with a plan that will deliver a high-quality service at a lower cost, take them up on it. If on the other hand, private bidders do no better than the current public employees, public agency, then you don't take the bid. What you shouldn't do is stop short of taking bids. Issue a study of whether you should take bids, issue a study of whether you should study whether to take bids. These are all delaying tactics. What commissioning a study for privatizing ferries is exactly what some members of the General Assembly want to do. Representative Mary McHallister is sponsoring a bill that calls for such a study. She did not return our phone calls. And ferry division officials say they have yet to hear from any member of the General Assembly about the possibility of privatization. We would appreciate the opportunity any time to go up and discuss the idea with them and explain to them our point of view and to help them in any way come to a decision.

As for the passengers, most we spoke with were satisfied with the service they were getting and were content to keep the system under government control. It's a theory that's likely to draw both agreement and criticism. If and when lawmakers begin debating the fate of the ferry system. The House bill calling for a study of privatization would require the legislative research commission to release its findings during next year's regular legislative session. Well, still ahead on North Carolina now. Advice on the overwhelming task of saving for college. But first here is Mitchell Lewis with this statewide news summary. Thanks, Maria. Good evening, everyone.

After hours of debate, the state house has given approval to a bill aimed at reducing air pollution. The measure calls for the sale of low sulfur fuel and the expansion of emissions testing in cars. Currently, only nine counties are required to perform emissions testing. The proposal would expand testing to nearly half of the state's 100 counties by 2006. The sale of low sulfur gasoline would be required by 2004. A bill to broaden welfare support services to working poor families has been given approval in the state Senate. The measure seeks to extend eligibility status to include families earning up to 200% of the federal poverty level. The new limit would make eligible a family of three making $27,000 a year. The state's current limit sits at 150% above the federal poverty line. Supporters of the measure say services would include childcare and transportation assistance to families who have stopped receiving cash welfare payments. The state house has not yet taken up the measure. Parents in North Carolina are facing tougher penalties if their child makes a bomb threat at school.

Both the state house and Senate have approved a bill that would hold parents liable for a maximum of $25,000 in damages if a threat is made. And up to $50,000 if a bomb is actually detonated. Any student convicted of making a threat would face a 365-day suspension from school or could lose their driver's license for up to a year. In order to collect damages, a school would have to prove that the parents of a child knew or should have known that the child was going to make the threat and did nothing to stop it. And now for a look at tomorrow's weather, highs across the state will range from the lower 80s to mid-90s. Skies in most areas will be partly cloudy with mostly sunny conditions along the coast. In Business News, the House Appropriations Committee has endorsed a proposal to put a large portion of tobacco settlement money into a fund for farmers and quota holders sooner rather than later. During the first seven years of the settlement, 45% of the money the state receives would go into such a fund. Another 45% would go into a trust fund for health programs. 10% would go into a foundation to assist tobacco manufacturing workers and tobacco-dependent communities. The proposal is being debated in the House this session, but Senate leaders don't plan to consider it until next year.

And now for a look at what happened on Wall Street today. If you're a parent or a grandparent and are agonizing over how you'll pay for that child's college education, then this interview is for you.

Here to offer some tips on how to set aside those tuition dollars is Heather Smith-Linton. She is the president of the North Carolina Association of Certified Public Accountants. Ms. Linton, welcome to the program. Thank you. It's great to be here. This is an interview I haven't had to do a whole lot of preparation for because I have got questions for you about how to say for college. But first let me ask you about how can you calculate exactly how much money you're going to have to be saving? Well, it's hard to calculate the exact number because the numbers will be changing, but it's a good idea to get a feel for the type of university of college you'd like to send your children to, whether it's a public university or a private university. Find out what that costs in today's dollars and then you can make some projections based on the inflation rate and so forth to see what it will be costing when they're ready to go to school. So assuming a child is born today, how much money should a person be setting aside in order to send that child to college 18 years from now?

Well, again, it's going to vary depending on the school, but roughly speaking, if you want to send a child that's born now to a public university in North Carolina, we suggest that you should set aside around $300 a month and you should have a good part of that college education paid for. Now, you have a list of common mistakes that people make when saving for college educations and we have those listed on a graphic that we'll put up on the screen and have you take me through them. The first one we see up there is letting the numbers scare you. Well, the idea there is that you don't want to be scared so much that you think this is beyond my means and not save anything. On the other hand, I think it's a good idea to be scared a little bit so that you start saving as soon as possible. And the second one is not starting early enough. This is a big mistake that a lot of people make. It really is and I think that's the biggest problem because as we talked about earlier, I think a good college education is within reach of most people if they just start saving. And when a child is born, it's certainly the earliest time you might want to start saving, but you really can build quite a nest egg if you save on a regular basis.

Investing too conservatively is another mistake that people make. And this is because particularly if you do start early enough, you really have a very long time horizon. For instance, 18 years or at least maybe 10 to 15 years to save. And in that time period, historically, the stock market really has outperformed everything else and is one of the only things that has consistently outperformed inflation. So if you really only put your savings in money markets or CDs or just in your regular savings account, you're really not going to be able to build up the same amount of money as if you had a more diversified portfolio and put at least some of the money if not a good portion of them in stocks. And in that diversification range, we usually do recommend maybe going with some mutual funds that are already diversified and have a money management component already built into them. The next mistake that people make, I know it's something that my parents did when they were saving money to send me through college and that was putting their money in my name.

And they did it because they wanted to get around some tax laws. I hope nobody from the IRS is listening. It was a long time ago. Getting around tax laws that way is actually a good idea. There are some tax savings to be had by putting the money into the child's name. However, children under the age of 14 over a certain minimal amount, their income is taxed at the parents highest rate anyway. And so then you're really only looking at that period between say 14 and 18 where there's going to be a significant tax advantage. But the main problem I see with putting money in the children's name is really the lack of control. That money really is the child's money. So if at 18 the child decides not to go to college but they'd really like a car and a trip around the world, that is their money. And there really is not the flexibility to use it for other children or if a child goes to a more or less expensive university than another child. So I think just the control factor and really being able to diversify the investments and time them a little bit better is helpful when you invest in the parents name.

And the next common mistake kind of goes along with this and the thinking that saving for college might be counterproductive and that the more money you save, the less likely you are to get a scholarship. And that is really not true. It is a good idea to save. This is another reason why if you put the money in the child's name though, colleges and financial aid people will look at what is the savings in the child's name and usually take at least 33 to 35. In the first year for college, however for parents they really look more at income than they do in the savings and of course they really don't look at some retirement plan savings. So it still is a good idea to save as much as you can and I don't think that that is going to unduly affect your ability for financial aid. Your income is more likely to be a factor. The next two mistakes they're worth mentioning and that is not learning all you can about financial aid. You should certainly do that and you should not ignore private scholarships.

But I wanted to move on to the last point because I know that this is something that is really hitting baby boomers and that is neglecting to save for retirement. We're finding people now that have waited to have their children until later in life and now they are faced with putting a child through college and retirement all at the same time. That's right and again this goes hand in hand with starting to save early for both of these objectives but really it's very important to not neglect retirement savings and particularly take advantage of all the tax advantaged retirement savings. For instance 401ks or self-employed retirement plans or any kind of company sponsor retirement plan because you're not only saving tax dollars upfront but the money really is growing much quicker because it's not being taxed. It's not being taxed while it's in the plan and now there's a new Roth IRA that actually can have some benefits for college education funding as well because if the money is kept in the plan at least five years and people are eligible to put in $2,000 a year just like a regular IRA not deductible on the front but if you leave it in at least for five years you can take out your contributions tax free. And that's something people really need to look into because Roth IRAs to use for that purpose are relatively new.

That's correct and usually it still is a good idea to think of those for retirement but it would be a source of being able to tap into at least the contribution amount without any income tax or penalty. So that's something to keep in mind as well as saving for your own retirement. Ms. Linton, thank you so much for the information. You have left me with a new determination. Thank you. And if you would like more information about saving for college or other important money matters the North Carolina Association of Certified Public Accountants has a website and that address is NCACPA.org. Music Woodcarving takes a very special talent and temperament.

There is a man in Shelby who has spent half a century whittling away anything from wildflowers to walking canes and he's received statewide recognition. Mitchell Lewis takes this to Shelby to meet Frank Barrow. My grandfather was a whettler. Anything to do with wood. He was almost a master of it and as a young boy around 10 or 12 years old I used to hang around him quite a bit and I picked up some of his techniques that way. Deep in the basement of his Shelby home Frank Barrow continues the woodworking tradition of his grandfather. He has been a wood cover for nearly 50 years and has developed a unique eye for the craft. For example what seems to be a stick to many of us Barrow looks upon it as a beautiful flower literally. Barrow says he became interested in making flowers by watching his mother make floral arrangements. Some of the flowers Barrow creates are his original designs. Barrow's canes are another Barrow specialty.

My canes are made out of different type of wood. If it's straight and if it's a beautiful piece of wood and finished I'll use it. Use that to look for a sassy phrase. I can make them out of hickory also. And normally dogwood I mean became that a dogwood. Those canes are in high demand. It usually takes him three to four hours to finish one cane if he's not working on anything else. Some of Barrow's walking sticks have the distinction of being on display at the North Carolina Museum of History. I feel proud because something that I want to do is share with other people. Something that it's a God gift talent and so often people have a talent they don't use it. And so this is one way I can use my talent by letting everybody know that I have something contribute to the state of North Carolina and the people who come to visit it. Carving figurines and busts are also part of Barrow's repertoire. He says many of his carvings are everyday people and animals. A favorite piece of Barrow's is one he began working on and noticed the face looked like that of baseball great satchel page. So he kept it and lovingly named his creation satchel.

Barrow has never taken an art class and his techniques are highly original. He also has a unique way of producing rich color in his artwork. This is tan shoe polish here. I just rub it in just like your product. Rub it in your shoes and make sure it's all the wood is covered and then let it dry and just get a brush and buff it. Then maybe put about two or three coats on just keep buffing it and it come out looking beautiful. Barrow says he'll try to carve anything although it may take him a while. The price for Barrow's work ranges from 20 to 200 dollars depending on how much time he spent on the piece and how much detail has gone into it. Someone's sick in the hospital. I just give a flower. But when I'm out with my booth everything I put my prices on and that's what I expect. But sometimes I get told then. If you would like more information about Barrow's wood carvings you can give them a call at 704-482-4905.

And as we head out of here tonight we urge you to stay tuned for a special UNC TV one hour broadcast coming up next. The program is titled DTV and You and will give you tremendous insight into the coming digital television revolution and promises to change the way that we deliver and you receive television in the very near future. Thank you for all of us here from North Carolina now. Have a good night. Thank you.