North Carolina Now; Episode from 1999-08-03

It's Tuesday, August 3rd, tonight trying to beat the deadline for a federal mandate Hello, I'm Rita Matray. Welcome to this Tuesday edition of North Carolina now. At a time when the cost of a college education is increasing nationwide, more and more parents are overwhelmed with the task of saving up for that tuition bill. Tonight's interview guest is with the North Carolina Association of Certified Public Accountants and she has some advice on how to save for college. Also on tonight's program we'll profile the city of Asheville and its growing popularity as a place to call home. But at first tonight, the federal government's push for a new broadcast technology. Television stations across the nation including UNCTV are preparing to make the transition into digital broadcasting. For many stations,

the conversion to digital will cost millions of dollars and years of work. Tonight Shannon Vickery takes a look at the FCC mandate governing the changeover to digital and what it means for television providers. All television, although many people in the Tar Heal State may have first heard this term only within the past year. Work on this new television concept has been ongoing in our nation's capital for more than a decade with the first congressional hearings on digital television in the mid-1980s. Everybody was interested in clarity of picture and what the viewer would see. But some look beyond that as well to see what kind of information would actually be transported, not only the video, but access to information that could really enrich what you saw. Out of the congressional hearings came a call for television broadcasters to prepare for a new television age. In response, the Federal Communications Commission started its own investigation into digital television. In December of 1996, the FCC established the digital

transmission standards that would guide the digital revolution. These changes came as no surprise to broadcasters. There has been a great convergence over the last ten years of various technologies. And TV is just one of those. Another major component is the computer industry. Another component is direct broadcast satellite. A lot of these technologies are now converging. So, therefore, to continue to make free over-the-air television a viable option, it was time to move to a technology which will keep free over-the-air television available to the viewing public. But that December decision was just the beginning. In April of 1997, the FCC released this document, its fifth report in order on digital television. In 156 pages, the FCC outlines not only how the digital conversion will take place, but why it's important. In its very

first paragraph, the FCC states that television has played a critical role in the United States in the last half of the 20th century. And that digital television will be the breakthrough, which will allow TV to meet the challenges of the next century. With its 1996 and 1997 decisions, the FCC set up a timeline for the digital conversion. The first stations to go digital did so voluntarily in November 1998. Then this passed May. The four largest networks including ABC, CBS, NBC, and Fox in the top 10 television markets turned on their digital signal. In November, the top four network stations in the top 30 markets, including those in Raleigh and Charlotte, will begin digital broadcasting. All other commercial television stations must go digital by May 2002. And non-commercial television stations like UNCTV must have digital capabilities by May 2003. TV stations will broadcast both

the regular analog channel and the new digital channel at least until 2006. Then in markets where 85% of the television households have the capability of receiving a digital signal, the old analog channel will be cut off. In North Carolina, two television stations are already broadcasting a digital signal, W-R-A-L-H-D in Raleigh and W-B-T-V-D-T in Charlotte. What we're actually doing is building a second television station. So our situation by no means is unique. Our tower was able to handle the extra load of the antenna and the transmission line. There are other facilities which could be a problem. The cost estimates have been anywhere from 2 to 3 million up to 15 million depending on how elaborate a build out one wants to do.

And for networks like UNCTV, which has to convert 11 television stations to digital, the cost are even higher. So given the cost of the digital transition and the concern that a full digital conversion would never be completed, the FCC has mandated this change over a rather short timeline. I think there has to be some sense of certainty. Whenever you think about the risk, the digital conversion will cost public TV stations, $1.7 billion nationwide. And for the UNC Center for Public Television, our cost is going to be about $62 million. So when you think of that kind of money and that kind of experience and where do you get it, there has to be some definite that the system will start this way that we will do this. And make no mistake about it, this is a vast, vast change over what we have now. It is a tremendous advance. The FCC's decision to convert to digital is an unfunded mandate. As of now, no federal money has been allocated for the transition. That means all television stations must cover

the cost of the conversion. As for public television, that brings us here to the General Assembly, where UNCTV has asked state lawmakers for help. It will cost an estimated $61.6 million over a four-year period to convert UNCTV's 11 station network to digital television. One thing is clear, conversion to digital television is not a matter of choice for television broadcasters. Congress specified a certain date, certain by which the transition must be completed, and then the FCC will reclaim the analog bandwidth that has been surrendered by the existing television industry, and will auction that spectrum off to other uses. There are currently no estimates on how many millions of dollars would be produced by the auction of the analog channels, but all the money would go into the federal government's general treasury, making the digital revolution a high-stakes move for all involved. This is a evolutionary process. Some of us are old enough to remember when we had a black

and white set. I can remember my family when we went to color. I can remember when we went to enhanced audio. I can now see these TV sets that I can only imagine. They're so large with these screens and things like that. This is an evolutionary process, but never have we combined. We have converged so many technologies through the format of digitization that really gives us a wonderful potential for education that we've never used before. Never had the opportunity to use it. And despite the challenges and cost, it's most often the opportunities of digital television that broadcasters like to focus on. So the future is really all about possibilities, those that we know about now, and those that are yet to be discovered. The inability of the General Assembly to reach agreement on the UNC bond proposal has brought into question UNC TV's ability to meet the federally mandated conversion deadline of 2003. UNC TV management says $12 million is needed immediately to begin the process of conversion. Whereas close to $65 million is needed in total appropriation to fund the

full upgrade of all 11 transmitters that make up the UNC TV network. While still ahead on North Carolina now, taking the fear out of saving for college. But first here is Mitchell Lewis with a statewide news summary. Thanks, Marita. Good evening, everyone. North Carolina tobacco growers and warehouses are trying to find a way to stop the nation's largest cigarette manufacturer from initiating a direct buying plan. Philip Morris has developed a way to buy tobacco directly from farmers. Critics say the measure would threaten the longtime practice of selling lead to the highest bidder at tobacco warehouse auctions. Philip Morris plans to begin its contract farming program during the next growing season. Carolina Power and Light is the first utility company in the nation to begin testing technology to reduce smog causing emissions from cold-burning power plants. The new technology changes the position of the burners in a cold-fired boiler and lets the cold burn for a longer period of time at a lower temperature. The process is said to produce less smog causing nitrogen

oxide. The new system is also cheaper to install than other pollution control equipment. State Labor Commissioner Harry Payne is trying to line up businesses willing to serve as test subjects for a proposed state ergonomic standard. Payne is beginning the study before legislative committee takes up the issue and possibly blocks implementation or enforcement of an ergonomic standard. Companies volunteering in Payne's study hope that an ergonomics training program will lead to fewer people being injured on the job. Thirty celebrities are flocking to the city of Winston-Salem this week for the National Black Theatre Festival. Such performers as John Amos, Robin Givens and Aussie Davis are scheduled to be in town. The festival is expected to draw 30,000 people to more than 70 shows. Officials estimate the event will bring in about $7 million. This is the 10th year the festival has been held in Winston-Salem. And now for a look at tomorrow's weather, highs across the state will range from the low to upper 80s. Skies will be mostly sunny with a few clouds along the coast.

In business news, falling stock prices and low profits have some U.S. Airways shareholders talking about a possible merger or sale. Managers of a hedge fund that controls more than 22% of the company's stock say, the current stock price does not reflect its true value. Last week, U.S. Airways stock was down about 50% from its price a year ago. Charlotte-based Bank of America is facing a lawsuit which alleges the company provided kickbacks to several title firms in exchange for doing escrow business with the financial institution. The lawsuit allegedly seeks compensation for consumers across the country who were involved in escrow transactions with Bank of America since 1980. The company has not commented on the lawsuit, which was filed in federal court last week. Another Charlotte-based Bank is facing more problems. Bill Templeton has resigned from his position as president and chief executive of the Money Store at First Union Corporation. A replacement for Templeton may be announced later in the week. Since First Union purchased the Money Store last year, hundreds of Money Store employees have been laid off as a result

of company-wide job cuts. 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. This 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 save your 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 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 were 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 that 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 sponsored retirement plan because you're not only saving tax dollars up front but the money really is growing much quicker because 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 ncaacpa.org.

North Carolinians have long heralded Asheville as a cultural haven in the mountains and the rest of the country is also starting to take notice. This time last year, Money magazine ranked Asheville in its top ten list of the best small cities in the south. Producer John Arnold recently visited Asheville to find out what makes that city so special. Looking down from a neighboring cliff, it's easy to see Asheville's picturesque place in the mountains. But to see what really makes this city special, local historian and long

time resident, Mitsy Kessie, tells us we must look up. The faces that stare from the art deco and turn of the century architecture, tell the story of a city that's gone full circle over the past century. Asheville grew as a health resort and tore some destination in the late 19th and early 20th centuries, but fell victim to the Great Depression. Merchant some residents virtually deserted downtown Asheville, it took more than 40 years to regain financial stability. But by the 1970s, dedicated citizens started putting some money and effort into revitalizing their alien city, which sparked a renaissance of sorts. And then it was a chance that money could be borrowed again to build the Civic Center to improve the streets, to build new sidewalks. And this began to bring back the entrepreneurs and so many people came back. People like John Cram, who own several downtown historic

buildings, including the Blue Spiral, Asheville's biggest art gallery. It's a pinning bag. Jeff got locked. It's a pinning up Asheville. After the Blue Spiral opened in the early 1990s, scores of other galleries followed. We're up to now, I think, almost 24 art galleries in downtown. And when we opened this gallery, there was just two to speak of. Today, the sidewalks of Asheville are lined with not only art galleries, but patio cafes, quaint shops, and a cultural mix of people from retirees to young artists. There was a new age bohemian feel here, a spiritual magnet that pulls together a diverse population. If you talk to 10 people on the street, I would say either 9 out of 10 or 10 out of 10 will tell you folks who were not born here will tell you that they were drawn here. They can't even tell you why, they can't put their fingers on it. But there's something very spiritual, very substantive,

very pleasing about living here. And Lenny Sitnik should know she's the mayor of Asheville, a former environmental activist whose goal was to embrace economic growth while at the same time nurturing the environment. And I think that we as a community really desire to grow in a sustainable fashion, so that we have great respect and sensitivity for our natural surroundings and our natural resources and build around trees, if you will, rather than over them. Today, tourism is the number one industry in Asheville just as it was a century ago. The urban trail, a self-guided tour through downtown, gets visitors a look at the city's historic landmarks. And the surrounding mountains are home to a long list of outdoor recreations. Mayor Sitnik will be the first to point out that Asheville is not without its problems. There are issues of poverty and an aging infrastructure. And some residents are apprehensive about commercial growth that sprawling on the fringes of downtown.

I can remember Asheville when it didn't even have a freeway and the mall wasn't even built. So now I'm starting to sound like an old foggy in the sense that it's getting too big. But even as the city's popularity grows, Mitsy Tessie is convinced that Asheville's character will always stay the same. People from New York say they've never met people like the people of Asheville because we stop and talk. We stay hello on the street. We stand in line in the stores. We don't push and shove and walk fast. We move slowly. For more information on Asheville, you can call the Asheville Chamber of Commerce at 1-800-257-1300. And that's our program for tonight. Thanks for joining us. We'll see you tomorrow. Good night.