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REGION’S BUSINESS
PHILADELPHIA EDITION
A JOURNAL OF BUSINESS AND POLITICS
WHO WILL STEP UP TO SAVE
THE SCHOOL DISTRICT? There’s an education crisis in Philadelphia. Who or what can save our schools?
REMEMBERING THE LIFE OF WILLIAM SCRANTON JEWELER’S ROW SHOP SEES RISING SPENDING
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CONTENTS
Who Will Save 15 Philadelphia Schools?
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State Budget Secretary Gives Statement On $45M For District Who Will Be The Modern Day Abraham Lincoln? YEAR OF THE INNOVATOR
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$3.2M Old World, Modern Devon Home
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Mixed Use Development For Francisville In Fall
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Sixers Coach Search Comes To An End
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Lucidity Aims To Fix Problems With Health Data
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Are Interest Rate Swaps Right For You?
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After Recession, Safian and Rudolph See Spending On The Rise
PRESIDENT AND PUBLISHER James D. McDonald MANAGING EDITOR Terrence J. Casey ASSOCIATE EDITOR Rich Coleman CONTRIBUTORS Brandon Baker, Eric Boehm, Christine Fisher, Charlie Gerow, Tim Holwick, Don Lee, Juliana Reyes, Sandy Smith, Matt Stringer PROOFREADER Denise Gerstenfield ADVERTISING DIRECTOR Larry Smallacombe DIRECTOR OF BUSINESS DEVELOPMENT Deirdre Affel
Copyright 2013 Independence Media Corp. All rights reserved. Use of material within without express permission of publisher is prohibited. Region’s Business is published weekly on Thursdays and online at www.regionsbusiness.com. The published makes no representations or warranties regarding the advertising appearing in its pages or its websites.
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DEALBOOK
Endo Announces Sale Of HealthTronics Laboratory Solutions To Metamark Endo Health Solutions, of Malvern, announced Tuesday that its wholly owned subsidiary, HealthTronics, Inc., has entered into a definitive agreement to sell its anatomical pathology business, HealthTronics Laboratory Solutions, Inc., (HLS) to Metamark Genetics, Inc., for an undisclosed amount. As previously announced Endo Health Solutions is pursuing strategic alternatives for HealthTronics, Inc. and believes the sale of HLS creates progress in this process. The HLS pathology labs are located in Georgia and Pennsylvania and provide laboratory and diagnostic services to urologists throughout the U.S., with
client practices in 41 states. “HLS is a recognized national reference lab providing specialized pathology services to the urology community with a reputation for quality,” Shawn M. Marcell, president and CEO of Metamark Genetics, said in the release. “We believe joining forces with HLS will be instrumental to our success.” Kelly Huang, PhD, President of HealthTronics, said in the release, “Metamark has strong ambitions for growth, shares our commitment to improved patient outcomes and is dedicated to continue to serve the needs of urologists and the patients for which they care.”
MEDIAREAL ESTATE
Postgreen Bringing Large 31-Unit Mixed-Use Development to Francisville For Fall 2013 Postgreen Homes might best be known for the $100k House, the bestknown project from Philadelphia’s energy-efficient real estate development company. Determined to continue making an impact in Philly’s neighborhoods, Postgreen announces the launch of a new project in Francisville: Folsom Powerhouse, with partner Equinox. The project is being developed at 18th and Folsom streets on a site awarded by the Philadelphia Redevelopment Authority (PRA). And based on the visuals, the project looks to be a game changer for the Francisville neighborhood. In total, the new development will bring a 31-unit mixed-use development program occupying the majority of the 1700 block of Folsom Street. The groundbreaking is expected in the fall of 2013. This article was originally published on the Philadelphia Real Estate Blog at Blog. PhiladelphiaRealEstate.com
15 AUGUST 2013
REGIONSBUSINESS.COM
WEEKLY BREIFING EXECUTIVE BOOKSHELF
WHO TO FOLLOW
@_robin_sharma
Robin Sharma Robin Sharma is the author of the bestselling book “The Leader Who Had No Title.” He’s regarded as one of the best people to follow on Twitter for his expertise in business leadership and insightful blog posts and quips. RT @_robin_sharma: Less gossiping, more learning. Less complaining, more excelling. Less walls, more bridges. Less fear, more courage. RT @_robin_sharma: “19 steps to a victim-free company”: bit.ly/122emSv
How To Combine Story And Action To Transform Your Business Today’s most successful businesses are storydoers and Ty Montague, former president and CCO of J. Walter Thompson, brings his knowledge on “storydoing” with his new book. True Story: How to Combine Story and Action to Transform Your Business is filled with examples of how forward-thinking organizations—including Red Bull, Shaklee, Grind, TOMS Shoes, and News Corporation—are effectively using “storydoing” to transform their organizations and drive extraordinary results.
MUST-HAVE APP
Commercial Break Nobody likes sitting through commercials. Whether it’s flipping to another channel or hitting the mute button, almost everyone has their own method for skipping out on the commercials. Believe it or not, there’s now an app that can tell you exactly when commercials are over for the program you’re watching. Simply pick the channel and program you’re watching and a notification will pop-up when it returns from commercials. It also works with sports timeouts. Commercial Break (free, iOS) is in the very early stages. It works with 10 channels in New York City, six on the east coast and three nationwide (CNN, ESPN, ESPN2). However, the app announced plans to expand the availability of channels in 2014, along with an Android version. At$0, it’s not a bad investment. Check it out.
Doing what counts for your business. At Susquehanna Bank, we’re doing what counts to offer competitive financial products and services, local decision-making and outstanding customer service to build lasting relationships — with people like you. Susquehanna combines the strengths of a community bank with those of a diverse financial services company. Thanks to our regional structure, we have local leaders with lending authority and teams who are committed to providing personalized service. Plus, we have the resources to provide funding ranging from small business loans to complex financing packages. Call 800.311.3182 or stop in to talk about what we can do for you.
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RESTAURANT ROUNDUP
Two Philly Chefs To Compete On Top Chef Starting October 2, Philadelphians can watch two of their own compete on the hit Bravo show Top Chef. Jason Cichonski, chef at Ela, and Nick Elmi, formerly of Rittenhouse Tavern, will be two contestants on season 11 of the show, which pits star chefs from around the country for a cash prize and household-name status. This season, the contestants will be competing in New Orleans. According to a press release, guest judges will include Jon Favreau, Lea Michele and Philadelphia’s own Questlove, from The Roots.
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REGIONSBUSINESS.COM
WEEKLY BREIFING
POLITICS
Corbett Names New Secretary of Legislative Affairs Governor Tom Corbett named Katie True, of Lancaster County, as Secretary of Legislative Affairs. Ms. True, who served 16 years in the state House of Representatives, has worked for the past two years as commissioner of the Bureau of Professional and Occupational Affairs. “Katie True is an experienced advocate for Pennsylvania’s working families,” Gov. Corbett said, “We look forward to having her on the team as we work to enact our legislative agenda in the fall and beyond.” SPORTS
Brett Brown Comes On As Sixers Coach Sports Illustrated reports the Philadelphia 76ers have signed Brett Brown as head coach for a four-year guaranteed contract. Mr. Brown was previously with the San Antonio Spurs as an assistant coach for the last seven years. RESTAURANTS
Brewpub Planned For Chester County Victory Brewing Company, located in Downingtown, announced it has signed a lease with Kennett Square Realty and is committing to develop an upscale brewpub, with on-premise brewing and a takeout beer component, in Kennett Square, Pa. The nation’s 26th largest craft brewery, Victory’s second brewpub location will occupy all 8,234 square feet of the bottom floor of a four-story, luxury apartment building in Kennett Realty Group’s latest upscale townhome, apartment and retail community, Magnolia Place. Victory at Magnolia is targeted to open in the second quarter, 2014.
State Budget Secretary Gives Statement On $45M For District Budget Secretary Charles Zogby issued the following statement Tuesday, August 13, about the $45 million that was allocated to the Philadelphia School District in the 2013-14 state budget: “As required by the law that was duly enacted by the General Assembly, any additional state funding, including the $45 million in one-time state funds included in the 2013-14 state budget, is only to be released to the district when the Secretary of Education certifies the district has begun to implement fiscal, educational and operational reforms. “A new collective bargaining agreement with the Philadelphia Federation of Teachers that makes substantial progress toward achieving the fiscal savings and academic reforms set out by CEO William Hite and the School Reform Commission must be in place before any new funding is released. “This year, Pennsylvania taxpayers are slated to invest more than $1.3 billion into the district. Before making any additional state investments, it is critical that the fiscal savings and academic reforms CEO Hite and the SRC have said are essential to the long-term sustainability and viability of the district be in place. “The time has come for the leaders in
Corbett On AFLCIO’s List For 2014 Governor Tom Corbett received some unwelcome, if not exactly unexpected, news today. His re-election defeat has been identified as one of the top goals of the nation’s preeminent labor group, the AFL-CIO. It’s certainly not a surprise that the AFL-CIO would oppose Corbett’s re-election as the organization generally supports Democratic candidates and endorsed the Governor’s opponent in 2010.
Superintendent William Hite
the City of Philadelphia to do their part. By acting to extend the sales tax they cannot only provide additional funding for this year’s school opening but fix in place another key piece to the district’s longterm sustainability.” This statement comes on the heels of last week’s press conference held by Superintendent William Hite on Thursday, August 8. During the conference, superintendent Hite said the school district needed $50 million in order for schools to open on time. For more on the school district crisis and superintendent’s press conference, read our cover story on page 15.
Artisan Expands With More Features For App Builders KeystoneEdge.com reports that Old City’s Artisan is releasing new features that turn app design into a science. T hrough Optimize, businesses can perform “advanced targeting,” a practice that used to be exclusive to websites. “We want to give users the ability to really understand what’s happening on their app,” says CEO Bob Moul. “Small changes can really make a big difference
ELECTION
in click-through rates.” One Optimize client improved their app’s click-through rate by 50 percent simply by changing the location of a button. In its first quarter since releasing Optimize, Artisan (formerly known as AppRenaissance) has hired 10 new employees — rounding out a team of 25 — and expects to add up to 15 more within two years. They have also received a total of $7 million from FirstMark Capital and angel investors.
The more serious problem for Corbett is that, according to a recent story by Politico, the labor group is focusing most of it’s infrastructure on the gubernatorial elections in the next midterm and they identified Corbett as one of six GOP governors who are at the top of their list. The switch in focus is, according to AFL-CIO Political Director John Michael Podhorzer, in response to the fact that the Senate and House will likely be decided by races in red states where labor’s influence is less strong. The Pennsylvania state AFL-CIO represents 900,000 workers and they have over 1,400 local chapters spread out across every one of the state’s 67 counties. While labor’s increased focus in no way dooms the governor, it does add another obstacle to overcome in order to stay in Harrisburg for another four years. POLITICSPA.COM
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15 AUGUST 2013
POLITICAL COMMENTARY
REGIONSBUSINESS.COM
William Scranton Was A True Patriot
Charlie Gerow is CEO of Quantum Communications, a Harrisburg-based public relations and issue advocacy firm.
CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.
As this issue of Region’s Business hits the streets, dignitaries from around the world will be gathered in Scranton, the city former Governor William W. Scranton’s family founded, to celebrate his life. Governor Scranton, who passed away in late July at age 96 will be remembered for the truly remarkable life he led. The nation has lost a leader and Pennsylvania a legend. Although he left office nearly half a century ago, Governor Scranton remained a force in state and national political and business affairs. He was instrumental in the Constitutional Convention of 1967-68, the state’s last. He also went on to serve in a variety of high-level posts in the Nixon, Ford, Carter and Reagan administrations, including as the United States Ambassador to the United Nations. Another former Pa. Governor, Dick Thornburgh, who served at the U.N. years later still found great memories of Governor Scranton. “He was remembered as a man of great diplomatic tactics and skills,” recalls Governor Thornburgh. In addition to his public duties Governor Scranton also served on the boards of some of the nation’s largest companies including Pennsylvania giants Bethlehem Steel, Scott Paper and H.J. Heinz. As governor, Bill Scranton brought hundreds of new businesses to the state and cut unemployment in half (from 7.5 percent to
3.6 percent) a feat even more impressive since he did it in four years (He was one of the last governors under Pennsylvania’s old one-term restriction). He helped the state’s business community dramatically increase the paychecks of working Pennsylvanians. He built the community college system. His record of success as governor of a large northeast state led opponents of Barry Goldwater’s bid for the 1964 Republican nomination to coalesce around him as an alternative. The acrimonious battle between the Goldwater and Scranton forces at Cow Palace that summer is political legend. The culmination of the fight came in a letter signed by Gov. Scranton dismissing what he called “Goldwaterism” as “a crazy quilt collection of absurd and dangerous positions.” The impact, even in the heat of political battle, on Goldwater loyalists and detractors alike cannot be overestimated. Some intimates of Governor Scranton have subsequently said he didn’t approve of the letter but had it foisted upon him by over-zealous aides. What is remarkable was the view from the other side. J. William Middendorf, one of Goldwater’s top lieutenants, wrote in his memoir of the ‘64 campaign that the moves were “in desperation.” What he wrote next is truly astounding: “Incredibly--to us--Goldwater was leaning toward Scranton as his running mate. Barry had been Scranton’s commanding officer in
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the Air National Guard and was one of the first people to encourage him to run for the governor’s office.” Paul Harvey’s signature line “the rest of the story” would highlight the fact that Bill Scranton had remained in the Air National Guard during his service in Congress and that his commanding officer--and friend--was General (also Sen.) Barry Goldwater. The fact that then Congressman Bill Scranton had to be talked into running for governor is well established. But the equally well established Pennsylvania narrative that the persuasive voice came from former President Dwight Eisenhower in a meeting at his farm in Gettysburg may not be the whole story. Several insiders have repeated the story that another general, General Goldwater, had pushed hard for Scranton to run. Ronald Reagan would tell us “it doesn’t matter who gets the credit,” and he’s right. While it’s an interesting look behind the curtain of history, ultimately the important thing is that Bill Scranton said “yes.” He won election in a landslide carrying 62 of Pennsylvania’s 67 counties. It all came down to a four-letter word — ”duty” — according to President Eisenhower. Duty, service and love of country were the hallmarks of the life of William W. Scranton. Our state and our nation are better off because of him.
15 AUGUST 2013
POLITICAL COMMENTARY
REGIONSBUSINESS.COM
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Per Diem Gravy Train Must Be Shut Down Whether they are working hard or hardly working, we’ll let you decide. Either way, state lawmakers are lining their pockets every time they drive to Harrisburg. As part of their overall compensation package, the 253 members of the General Assembly are entitled to so-called “per diems.” These are meant to cover expenses like transportation to-and-from Harrisburg, meals while they are Eric Boehm is bureau here and other miscellaneous costs. chief for PA Independent, But unlike most jobs in the private sector a project of the Franklin — and the rules governing many other state Center for Government and lawmakers expense reimbursement plans Public Integrity — the lawmakers here do not have to turn in receipts or show how they spent the money. All they have to do is show up to work, claim a per diem ranging from $50 to $180 for the day’s work and tuck the money into their pocket. CONTRIBUTE For 2013, PA Independent has been tracking Send comments, letters the per diem payments made to lawmakers and essays to feedback@ each month. Since we’ve run the tallies for regionsbusiness.com. January through June, we decided to take Opinions expressed by guest a look at the first six months of the year as a writers do not necessarily whole. You know, just for fun. reflect those of Region’s The numbers are somewhat startling. Business. Through the first six months of 2013, lawmak-
ers collected more than $1.2 million in per diems. The top recipient was state Rep. Mark Longietti, D-Mercer, who collected more than $16,000 in just six months. Not bad, considering it was on top of a base salary of $83,000. Of the $1.2 million in total payments, more than $1 million went to members of the state House. There are 203 lawmakers in the House and only 50 in the state Senate, but even with that discrepancy the state House collected an outsized share of the daily non-receipt reimbursements. Nine of the top 10 recipients of per diem payments were members of the House Democratic caucus, but members of both parties make out quite well from the system. Democrats collected $703,000 during the first six months of the year, while Republicans took home $520,000. And there were 31 lawmakers — all in the state House — who claimed more than $10,000 in per diems. The point is not that lawmakers should not be reimbursed for their expenses while in Harrisburg. Even the state constitution says members of the General Assembly shall be paid to cover their travel costs.
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But can any average Pennsylvanian – earning an average Pennsylvanian salary of $48,000 – look at these numbers and conclude that nothing is wrong? Most lawmakers claim reasonable per diems, and some even go so far as to submit receipts for all their expenses despite not having to do so. We did not include those members in our calculations, by the way. But the ones who abuse the system make it look bad for everyone else. And any hope for self-imposed restraint has long since faded. The only way to curtail the per diem gravy train for state lawmakers to change the expense reimbursement system to require receipts. It’s a simple step, and one that should have been taken long ago. Opponents of that plan say it will actually increase costs because the state would have to hire additional accountants to sort through the lawmakers’ receipts and determine which expenses are payable and which are not. But that’s a price taxpayers should be willing to pay in order to limit the abuse of the reimbursement system and will increase transparency on how taxpayer dollars are being spent.
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REGIONSBUSINESS.COM
Lucidity Aims To Fix Data Problems For Health Providers Business: Lucidity Founders: Jake Halpert Contact: jake@lucidityhealth.com
BY BRANDON BAKER After successfully earning the faith — and money — of DreamIt Ventures and Independence Blue Cross in the past year, Lucidity is ready to step up its game and launch a comprehensive and locally standardized data information system for health providers and insurers. “We figured out, during about an eight-month period, that one of the biggest problems facing providers and insurance companies is data. There are key pieces missing from doctors’ workflow, and missing from insurance databases, and that [data] could be beneficial to everybody,” said Jake Halpert, founder and CEO of Lucidity. “Coordination is what has yet to happen.” That coordination will come in the form of Lucidity’s in-development system architecture that will effectively notify both health providers and insurers when a patient has been a d m i tt e d to another healthcare facility. Presently, providers only have access to in-house records without the aid of insurers. “There’s a lack of sharing, and an opportunity to connect the dots with something that is critical for doctors who are taking on risk now,” Mr. Halpert said. “With the Affordable Care Act, if their patient doesn’t do well, they don’t get paid. They get a penalty if they’re readmitted within 30 days of their visit … We’re able to tell health systems faster when a patient has been [readmitted] post-discharge. Even with mortal-
Lucidity founder and CEO, Jake Halpert, presented a demonstration of Lucidity at last month’s DreamIt Demo Days on Wednesday, July 24. SUBMITTED
ity, they don’t know if patients are dying. Lucidity, which has nine employees, intends to partner with University of Pennsylvania Hospital to launch its system within the next three months. By next summer, the company is targeting $1 million in revenues and an expansion to six facilities in Greater Philadelphia. Because it is partnering with Independence Blue Cross, it anticipates 70 percent of incoming patients will be impacted by the information system, with a potential escalation to
85 or 90 percent if the company can bring companies like Aetna on board to share information. And though Mr. Halpert originally came as a temporary transplant from New York City, he expressed his intention to stay in Philadelphia now that his run with DreamIt’s accelerator program has come to an end — if not because of his funders, then because of his growing list of Philadelphia mentors. Lucidity will permanently locate to University City later this fall.
Steadily, but almost quietly, Philadelphia has become a hotspot for entrepreneurs. The combination of great ideas, available capital and a welcoming environment have set the stage to make 2013 a breakout year for innovation and new businesses. To Learn More ... For more information on sponsorship opportunities or to suggest story ideas, call our main office at 610-940-1656. The web: RegionsBusiness.com Facebook: Facebook.com/regionsbusiness Twitter: @RegionsBusiness Sponsored by
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2013: YEAR OF THE INNOVATOR
REGIONSBUSINESS.COM
DIARY OF A STARTUP
VenturePact’s Startups See Development In Key Areas VenturePact is a bit of an anomaly in the tech world: It’s a startup that, essentially, fosters other startups. It’s also a venture firm, but doesn’t actually provide capital — instead, it offers up a team of engineers to develop products for aspiring entrepreneurs. It’s an uncanny idea that, despite being unconventional, has evolved into a sound business model for founders and recent Wharton graduates Randy Rayess and Pratham Mattal. In May, VenturePact was honored with the Wharton Dean’s Award for Innovation, marking its potential as the two journeyed off into a post-collegiate world. Here, Randy Rayess documents VenturePact’s progress as it joins the cast of Region’s Business’ “Diary of a Startup” innovator series. In his words: Last month, we at VenturePact launched the new version of AirCare and SmartyPal. We added new functionality to the AirCare application in preparation for its demo day at DreamIt Health. AirCare helps hospitals prevent readmissions, improve nurse efficiency and improve patient satisfaction through customized checklists, risk segmentation, caretaker involvement and telenursing. Another portfolio company, SmartyPal, was envisioned by the founders as a series of interactive children’s books designed for the iPad generation. Along with the SmartyPal team, we launched the first story of the SmartyPal app called ZooPal — a Gift. These two companies align closely with VenturePact’s core mission of enabling startups to create impact as they focus on improving healthcare and education. On the operations side, we have hired new developers, project managers and modified our lean development process for startups. We found that standard development processes that have existed in the past don’t work for startups. Building a development system that is lean that allows startups to fail fast and iterate has been our focus. Feedback is key to what we do. To optimize our development cycle we have incorporated feedback from our portfolio companies, developers and project managers. This is very much like our own portfolio companies that require customer feedback to decide on how to iterate and improve their own product. When incubating our startups, we focus on putting together a system that leverages user data and customer feedback to inform future product decisions and iterations. The customer feedback is worth much more than any business planning you can do prior to having a product in your hand so we made sure to build a process that focuses on feedback and rapid development.
Project Liberty: Knight Foundation Awards $345K
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TECH
CardConnect Acquires SmartPay Tech From OnSharp CardConnect, the King of Prussia payment processing firm, acquired SmartPay, an online billing tool from a North Dakota agency for an undisclosed amount, according to a release.
Publisher Bob Hall introducing Interstate General Media’s new headquarters, where the Project Liberty Incubator is housed. TECHNICALLY PHLLY/MICHAEL WIRTZ FOR THE DAILY NEWS
BY JULIANA REYES
$250,000 grant that the Project Liberty partners received in 2011 to run three classes of After its third class wraps the incubator. Project Liberty partners up, the Project Liberty Digital Incubator will return, thanks include Interstate General to a $345,000 grant from the Media, Benjamin Franklin Technology Partners, DreamIt Knight Foundation. The incubator, housed at Ventures and Drexel Univerthe Market East headquarters sity. of Interstate General Media, It’s not clear yet what the the parent company of the increase in funding will bring, the Philadelphia Inquirer, the whether it’s more cycles of the Philadelphia Daily News and incubator or support for more Philly.com, is now accepting startups — the first Project applications from startups. Liberty iteration supported There had been some ques- eight startups throughout tion as to what was next for three cycles. Representatives from Interthe media incubator, which rebounded somewhat after a state General Media and Projshaky start in connecting the ect Liberty did not respond to companies it incubated with a request for comment as of its media business. press time. The Knight Foundation This article was originally grant is a nearly $100,000 published on Technically increase of the initial Philly at Technical.ly/Philly.
Comcast May Start SalesDriven Anti-Piracy Campaign Comcast is in talks with internet service providers and content owners to create a real-time system that would display pop-up sales messages whenever someone is downloading a television show illegally, according to a report
from Variety. Full details aren’t yet clear, but the plan would represent a major change in the online piracy debate. The argument would begin treating piracy as a pricing problem, rather than a criminal one.
CardConnect, which relocated from Cleveland to King of Prussia more than a year ago, will make SmartPay available to its more than 50,000 customers, which include Adobe, General Electric and the New York Times. CardConnect acquired at least three firms in 2012, when it was called Financial Transaction Services and still based in Cleveland. These firms include payment processing companies in Pittsburgh and Princeton, N.J. The company’s CEO, Jeff Shanahan, actually cited the East Coast acquisitions as reasons to relocate to Philadelphia.
GED Test Now Available Only On Computer Starting in January in Pennsylvania, the GED test will only be available in computer format, according to a release. Pearson VUE, who runs GED testing with the American Council on Education, found that GED test takers were getting through tests faster when taken on a computer rather than on paper. GED test centers have been offering the tests in computer format since January 2012. TECHNICALLY PHILLY
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2013: YEAR OF THE INNOVATOR
REGIONSBUSINESS.COM
Are Interest Rate Swaps In Your Company’s Best Interest?
Nicholas Speers is a Certified Public Accountant at Citrin Cooperman, an accounting, tax and business consulting firm. He can be reached at nspeers@citrincooperman. com
Interest rate swaps have been prevalent in big business for many years now, but recently banks have begun increasing their marketing efforts for these products to small and middle market businesses, many of whom lack the financial experience required to fully understand the transactions they are entering into. The typical example may go as follows: A business owner contacts a bank seeking a fixed rate loan. The bank responds that they may be able to provide a better rate if the business agrees to a variable rate loan and uses an interest rate swap to fix the interest payments. The bank goes on to explain that the combined payments under the variable rate loan and the swap will be fixed exactly as they would be if the business owner has entered into a fixed rate loan and the combined payment will be lower than the bank can offer on a similar fixed rate loan product. After being presented with the above scenario, many business owners might make the seemingly obvious choice — the interest rate swap option with the lower combined monthly payment. In many instances this may in fact be the right choice, but it’s important that the business owner entering into the transaction fully understands the additional risks. Failure to fully understand how an interest rate swap works and the associated risks can be extremely costly.
Interest Rate Swaps — The Basics
CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.
In very simple terms, an interest rate swap is an agreement between two parties to make payments to each other for a set period of time. Party A agrees to make a fixed payment to Party B. Party B agrees to make a payment to Party A that varies based upon changes in a market index, such as US Treasury rates or LIBOR. The transaction is structured in a manner such that the payments are equal at the inception of the agreement. However, the payments then vary with changes in interest rates. For example, if interest rates fall, Party B’s calculated payment will be lower than Party A’s and the net of the two payments will result in Party A making payments to Party B. So let’s go back to the business owner’s (in this case, Party A’s) original request, a fixed rate loan. The idea behind combining the swap and variable rate loan is that if Party A enters into a variable rate loan with identical or similar terms at the same time as entering into the
swap arrangement, the combined terms and payments are very similar to those due under a fixed rate loan agreement. This holds true because no matter what direction interest rates move, Party A stays in the same net place economically. If rates rise, Party A incurs additional expense under his fixed rate loan but benefits by receiving payments under the interest rate swap arrangement. If rates fall, Party A pays less under the variable rate loan, but incurs additional costs under the interest rate swap. In essence, Party A’s economic position is fixed.
Fixed Rate versus Interest Rate Swaps So now that we understand how an interest rate swap works and why it is similar to a fixed rate loan, let’s examine the differences. Let’s start by examining the banks motivation for encouraging borrowers to pursue a variable rate loan packaged with an interest rate swap instead of a fixed rate loan. One of the many risks that banks manage is interest rate risk. Simply stated, interest rate risk is the risk that changes in interest rates that will cause loans a bank has made to lose value and/or become unprofitable. For example, say a bank makes a fixed rate loan to a business at a rate of six percent and at the time of the loan it must pay depositors approximately two percent for the use of the funds, leaving a spread of about four percent. If interest rates rise after the loan is made and the bank has to increase rates paid to its depositors, its profit margin is compressed because the bank cannot pass this cost on to its fixed rate loan customers. If interest rates fall after the loan is made, the bank’s margin may expand for a short period of time, but it won’t be long before the business owner comes back and refinances the loan. This refinancing of fixed rate loans in times of falling interest rates is what banks refer to as prepayment risk. What the bank has done is taken the interest rate risk and prepayment risk that they are exposed to in a normal fixed rate loan and transferred them to others by structuring the transaction as a variable rate loan with an interest rate swap. In our scenario, Party B has absorbed all of the interest rate risk by bearing the risk of changing payments due to interest rates. Party A, our business owner, bears all of the prepayment risk. In this scenario, Party A, who bears the
prepayment risk, is prevented from benefiting if interest rates fall. If Party A had gone to the bank at a time when interest rates were seven percent and gotten a fixed rate, five-year loan, the loan could be paid off at any time during the five years or it could be refinanced to a lower rate without penalty. However, under the scenario where Party A has taken the variable loan with an interest rate swap, only the variable rate loan can be repaid. The remaining payments on the interest rate swap must continue to be made until its term is over, or a lump sum termination payment must be paid. In the situation described in this example, the termination payment varies inversely with interest rates. Thus, as rates fall (which motivates many to refinance), our interest rate swap termination payment will increase, thus making refinancing economically neutral. Business owners should also be aware of the accounting and covenant compliance issues that interest rate swaps create. Accounting rules require interest rate swaps to be “marked to market.” This means that the fair value of the interest rate swap must be recorded as an asset or liability on a company’s balance sheet each reporting period, with changes in the fair value being recorded to earnings. Because this fair value varies with interest rates, this asset can be tremendously volatile and can have a material impact on a company’s earnings. It is possible to prevent changes in the fair value of an interest rate swap from impacting earnings by following the hedge accounting rules, but it requires significant attention to detail and the financial expertise of a seasoned accountant. Because of the impact on earnings, interest rate swaps can also create a covenant compliance problem. As a result, it is critical when considering an interest rate swap that business owners negotiate all financial covenants to exclude the impact of mark to market accounting for such swaps. Interest rate swaps are tremendously complex financial instruments. They may be beneficial for some businesses depending on the circumstances, but businesses should make sure they fully understand the transaction and the risks prior to using such instruments. As with all things, if you don’t understand the transaction, consult with an advisor who has your company’s best interest in mind.
15 AUGUST 2013
2013: YEAR OF THE INNOVATOR
REGIONSBUSINESS.COM
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Jeweler’s Row Business Sees Spending On The Rise BY BRANDON BAKER
for a specialization in diamond gemology. Still, his first instinct upon taking over Wandering about Jeweler’s Row in the the store was to use his unique IT assets 1950s, passersby would have stopped to bring the store into the 21st century. “Coming from that background, I came in their tracks, catching a peripheral glimpse of a blindingly bright diamond here and put up a new website, and I just shining from the indoor showroom of recently launched an all e-commerce site Seventh and Sansom streets’ Safian and where people can, for the first time, buy Rudolph jewelry boutique. Sixty years all of our products online,” Mr. Goldberg said. “Beyond that, I’ve also brought a later, not much has changed. “There’s a lot of history here, and we try new level of networking to the business really hard to maintain that,” said Richie that we hadn’t done before — I’m very Goldberg, third-generation president of active in different business organizations Safian and Rudolph. “We want to be the [like The Union League], and I’ve done family business that’s a block away from a lot of external relationship-building, as the Liberty Bell — we love being a part of opposed to sitting in a store and waiting history, as opposed to just being another for customers to come.” Though business has, admittedly, been shop that feels like a more generic mall slow to rebound since the 2008 “Great store.” Mr. Goldberg didn’t originally start Recession,” Mr. Goldberg emphasized out as the shoe-in inheritor of the family that the shop has been bouncing back business; he graduated with a bachelor’s as of late, as gift buyers — namely, men degree in IT, but was convinced to take buying anniversary-gift jewelry — are over the store by his father and grand- increasingly returning to the store. “People are, of course, still getting father, eventually going back to school
Safian and Rudolph used technology and networking to rebound from the 2008 recession.
engaged and married — that’s a constant. But the gift-giving aspect of it had slowed down, and that’s coming back much stronger,” he said. “Even in the bridal category, where maybe people weren’t spending as much, that’s starting to come back.”
Mr. Goldberg is currently planning a complete remodeling of the boutique’s showroom, to be completed in the months ahead. The showroom has, notably, not been redone since the 1970s. “We plan to be here for years to come.”
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November 14, 2013 Is your company a catalyst for change? Have you pushed the boundaries in your industry? Is your innovation helping to boost Philadelphia’s growing economy? Marcum LLP and Region’s Business are in search of Greater Philadelphia’s top innovators, and we want to hear from you. The Inaugural Marcum Innovator of the Year Awards will honor businesses of all sizes that are pioneering new advancements in the fields of Health/Biotech, Technology, Business Management, and Energy. Three winners will be named in each category, based on company size. Tell us about your break-through innovation and what makes your company a leader in our region by emailing a 500-word summary to innovation@regionsbusiness.com. Submissions must be received by September 1, 2013. Winners will be announced at a Gala Awards Ceremony at the Franklin Institute on November 14, 2013. Don’t miss out on this spectacular opportunity to join our region’s business leaders in recognizing and celebrating the spirit of innovation in and around Philadelphia. For complete details including nomination criteria, please call Jacki Hallinan at 484.270.2715. Ben Franklin may have been Philadelphia’s first and most celebrated innovator, but he did not have a corner on the market. Who knows? You could be Philadelphia’s next Innovator of the Year! For tickets to the event, please call 610-572-7112 ext 102. If you are interested in sponsoring this event, please call Deirdre Affel at 610-572-7136. Marcum LLP is a top national accounting and advisory services firm.
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ADVISORY
15 AUGUST 2013
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WHO WILL SAVE PHILADELPHIA’S SCHOOLS? There is a crisis in Philadelphia. Last week, the superintendent of the city’s school district made it plain: Our schools may not open. Since the layoffs occurred earlier this summer, everyone is wondering who or what will save our schools. But the real question may be this: Can Philly’s schools actually be saved?
STORY BY DAN MCQUADE ILLUSTRATION BY DON LEE
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BY THE NUMBERS
OUR STUDENTS ARE THE MOST IMPORTANT PART OF THIS EQUATION AND IT IS BOTH SADDENING AND FRUSTRATING TO BE IN THE POSITION OF TELLING THEM AND THEIR FAMILIES THAT I DO NOT KNOW WHEN THEIR EDUCATION WILL RESUME. THEY DID NOT CREATE THESE CIRCUMSTANCES, YET THEY WILL BE IMPACTED.’ —SUPERINTENDENT WILLIAM HITE
2001
The year of the state takeover of the Philadelphia school district
3,783
School district employees laid off in early June
30
Philadelphia schools have closed
$304M
School district budget gap
FLICKR.COM/VERSAGEEK
The state takeover of the Philadelphia School District in December 2001 was not popular. Then-Philadelphia Mayor John Street took a defensive tone in the press conference announcing the deal. “We want to assure the students of this city we have your best interests at heart,” Mr. Street said at the time. The public needed that reassuring. Protesters flooded the intersection outside Street’s joint press conference with thenGov. Mark Schweiker announcing the deal. The Philadelphia Federation of Teachers condemned the decision, vowing legal challenges. The interim head of the school district, Philip R. Goldsmith, resigned. But there was some reason for optimism, at least, that schools would be funded. The city and the state had been wrangling over budgets for years. The district faced a $216 million budget deficit. Some schools would be privatized; Edison Schools (now EdisonLearning) would end up with an $11.8 million contract to run 20 schools. Schweiker promised an additional $75 million for the next five years and one million new textbooks. “I believe we will give rise to the finest urban school system in the United States,” he said. It’s been almost 12 years. The 2013-14 school year is scheduled to begin on Sept.
9. The district still has a budget deficit. School Superintendent William Hite says, if the district does not get $50 million in additional funding from the city it had expected, schools may not open. Parents are not happy. [HELEN GYM?] Things have gotten so heated the school district scrapped public meetings over a school evaluation system overhaul after just the first one. A lot has happened since the school district took over: The Sept. 11 attacks, the financial crisis, the housing bubble’s burst and other factors have damaged the country’s economy extensively. But, in early June, the district laid off 3,783 employees, citing a $304 million budget gap. Thirty schools have closed. Many schools don’t have full-time nurses, librarians, music and art education. Twelve years of state control and the school district is essentially in the same spot, still facing the same questions: Who will fund Philadelphia’s schools? School Superintendent Hite did not look happy at the podium last Thursday, August 8, as he set an ultimatum. He had been asking for the money for months. And now, he had a drop-dead date. If the school district does not get $50 million by tomorrow, August 16, all
schools will not open on time. “Our students are the most important part of this equation and it is both saddening and frustrating to be in the position of telling them and their families that I do not know when their education will resume,” Hite said. “They did not create these circumstances, yet they will be most impacted by any delay.” Superintendent Hite said the $50 million is the cost of extra staffing: Adults to supervise students going through the halls, counselors available to meet with students, support staff that frees up principals to attend to school matters. “No principal can run a 3,000-student high school — much less a 400-student elementary school — on their own,” he said. “They need support, and we have an obligation to provide them with the staff and resources they need.” “Just imagine in any venue in America you have 3,000 teenagers and one adult,” Northeast High School principal Linda Carroll said. The deadline does not definitively mean that no schools will open on Sept. 9. Hite said some schools, ones that he feels are properly staffed, can open, or schools may be able to open for a half day. Still, the situation seemed surreal, with the superintendent of the school district
676 307
Teachers laid off
Secretaries laid off
283
Counselors laid off
1,202
Noontime aides laid off
769
Part-time support services assistants laid off
$50M
Needed to open Philadelphia public schools on time, according to Superintendent William Hite
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threatening to not open schools on time. Things got more surreal later Thursday afternoon. The mayor held a press conference at City Hall not too long after Hite’s presser. “Two hours ago, we all heard one of the most chilling statements that I’ve ever heard a... superintendent make,” Mayor Michael Nutter said. “We must use the tools that we have at our disposal right now so that our schools can open safely and on time.... our children deserve better, our parents deserve better, our taxpayers deserve better.” A little backstory: Facing a $304 million budget shortfall in June, the School Reform Commission announced a plan quickly dubbed the “doomsday budget.” Having already borrowed $300 million this year, the district was facing a $304 million budget shortfall. Nearly 4,000 employees laid off included 676 teachers, 307 secretaries, 283 counselors, all 127 assistant principals, 1,202 noontime aides, and 769 supportive services assistants, part-time employees who help out as needed. To stave off this budget, the district asked for $120 million from the state, $60 million from the city and $133 million in concessions from the teachers’ union.
The state responded on June 30 when it passed the budget. It included a $16 million basic funding increase and the one-time release of $45 million in federal funds to the city. It largely left funding to the city otherwise: It approved making the sales tax hike permanent, which would add “up to $120 million” for schools every year. That $45 million and the sales tax hike would only come into effect if the state certified that the school district made certain requested operational and fiscal reforms. As state law requires municipalities to keep a steady stream of funding for schools year in and year out, Pennsylvania’s budget this year permanently increases the share the city has to spend to fund its schools. There are competing plans for how the school district can get that $50 million, which Superintendent Hite says would allow the district to rehire about 1,000 laid off staffers. At his press conference, the mayor said that “we must work with what we have,” outlining the money the city had already given the district, including $28 million from enhanced tax collections. Mayor Nutter wants to borrow the $50 million, with the intention of paying the loan back with the future sales tax revenue. “Other ideas have been
THE DOOMSDAY CUTS WILL TURN OUR SCHOOLS INTO GLORIFIED DAYCARE CENTERS, DEPRIVING STUDENTS OF THE PROPER EDUCATION THEY DESERVE.’ —DONNA COOPER, EXECUTIVE DIRECTOR OF PUBLIC CITIZENS FOR CHILDREN AND YOUTH
FLICKR.COM/JROGUEANTHRO
offered and we’ve explored them... unfortunately, they just don’t work with the time allotted,” he said. City Council president Darrell Clarke has another idea. As a third press conference last Thursday, Clarke unveiled his plan to get the district that $50 million: He wants the district to give it unused properties to the Philadelphia Authority for Industrial Development to sell in exchange for $50 million to open schools on time. The district budgeted $28 million in revenue for these properties, but Clarke’s spokeswoman Jane Roh says PAID will be able to get more for them. Clarke says the city would eventually make its money back by selling the properties. Clarke is in favor of the permanent sales tax hike, but wishes to split the proceeds between the schools and the city’s beleaguered pension fund. The main crux of the state’s plan for the district is to take on the Philadelphia Federation of Teachers: It wants $133 million in concessions from the teachers’ union. The district unveiled its proposal earlier this summer, calling for salary reductions of five to 13 percent, elimination of pay bumps for advanced
degrees, an increase in the length of the school day — teachers would work eight instead of seven hours — an elimination of step increases and the right to outsource PFT positions. Additionally, principals would be able to assign teachers to non-instructional duties (glorified hall monitor jobs, essentially) before, during and after school. It gets stranger: As part of the proposal — which, no doubt, is simply a first shot in negotiations — the district would no longer have to provide desks, water fountains, parking lots, telephones, filing cabinets that lock and lounges for teachers. Teachers would no longer be able to use “reasonable force” to defend themselves. “The doomsday cuts will turn our schools into glorified daycare centers, depriving students of the proper education they deserve,” said Donna Cooper, executive director of the school advocacy group Public Citizens for Children and Youth. Additionally, the fight against the teachers may be written into law: The “certification” requested by the state includes the teachers accepting some sort of reduced contract. The state desperately wants to eliminate seniority — and perhaps move to merit pay — so
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older, higher-paid teachers can be axed and replaced by less-experienced, cheaper ones. But what about the future? There are more ideas floating around: Some seem dead for now, but all of them could be revisited in the future. Last year, consultants hired by the school district (and funded by the William Penn Foundation) released a blueprint for Philadelphia education. Portions of it fell apart after public pressure, but the plan is still out there: Close more public schools and open charters, and re-organize the district into smaller “achievement networks” headed by nonprofits or other educators. The idea is that outsourcing district management to private entities would save money, while breaking the district into smaller pieces would improve schools. Previously, the mayor had previously tried to raise sin taxes instead of the sales tax: A $2-a-pack increase on cigarettes and a liquor-by-the-drink tax. Restaurant owners and the public killed the liquor bill, but City Council passed the cigarette tax. The Pennsylvania legislature has to authorize such a move, though, and the city didn’t get approval from the state in the recently-passed budget. Though remaining open to the ideas, Mayor Nutter’s office is no longer pushing for either tax hike. Another plan is to acquire money from lawsuits. Don’t laugh: This is Philadelphia. The district filed 25 lawsuits on July 29 against various architecture, consulting, design and engineering firms seeking damages for “deficiencies in the drawings and specifications” in work the companies did for the school district, according to spokesman Fernando Gallard. “The school district anticipates recovering up to $2 million as a result of these suits,” Gallard said in a statement. “The district intends to pursue these actions aggressively.” Two million would only add a fraction to the school district’s budget. But another plan could provide a windfall: As first reported by City Paper, the school
district is considering suing big banks for their role in the Libor scandal. The city of Philadelphia has already sued several banks for their roles in manipulation of the benchmark. Since British Bankers’ Association member banks falsified their reported average borrowing rates, the thinking goes, large institutions who have lost money to interest rate swaps have a shot at winning financial concessions in court. The district says 12%, or $280 million, of its budget for fiscal year 2014 is devoted to debt service. That’s in part due to credit swaps the district took out when floating bonds. The district took out 10 fixed-to-variable credit swaps in 2004, then paid just under $90 million to banks to cancel nine swaps in 2010 and 2011 after the crisis hit and Libor plummeted. The Pennsylvania Budget and Policy Center, a lefty think-tank, estimated the school district lost $161 million in all on the deals. And then, of course, there are casinos. The idea has some precedent: The Pennsylvania Lottery has funded programs “for older Pennsylvanians” since it drew its first numbers in 1972. Pennsylvania’s casinos were originally a solution to lower property taxes across the state (and, in Philadelphia, the city wage tax). Penn National Gaming wants to add schools to that list. The Wyomissing, Pa.-based company — which owns or operates about two dozen casinos, including the Hollywood Casino at Penn National Race Course outside of Harrisburg — is one of six bidders for a second Philadelphia casino. (Philadelphia’s first casino, SugarHouse, opened in 2010.) Penn National’s casino plan is unique among the bidders: Ownership of the Hollywood Casino at 700 Packer Ave., adjacent to the sports complex, would be divided into thirds. Penn National would control one-third of the casino; the other two-thirds
would be owned by a newly-created nonprofit, the Philadelphia Casino Benefit Corp. The Philadelphia Casino Benefit Corp.’s profits would be directed toward the Philadelphia School District and the city’s pension fund. Penn National took out ads on Philly.com and other sites asking for support of their bid earlier this year. The company expects the nonprofit would pay out $115 million over the first 15 years of the casino. The sum would only be $2 million a year in the casino’s first eight years, however, so this is no short-term money solution. The plan — which has been deemed legal by the state’s Gaming Control Board — is not merely altruistic. As an owner of a casino in Pennsylvania already, Penn National is barred from owning more than a third of a second under the state’s gaming law. The means the city may be able to negotiate with Penn National to sweeten that deal. The winning proposal could be chosen as early as this November. It would be years before the school district would get any money from this proposal. But “God knows our schools could use the help,” as Bob Brady told the Inquirer in July. “Our schools could use the help” might as well be a quote from any time over the past several decades. Lawsuits won’t bring in a lot of money. Hollywood Casino may not win the bid, and it wouldn’t be open for years anyway. The sales tax increase appears to be a steady stream of revenue, but it may not be enough. The teachers’ union is sure to fight concessions the district wants. Increasing the number of charter schools or privatizing parts of the district don’t have much support. In short: We may be right back in the same spot next year.
15 AUGUST 2013
REGIONSBUSINESS.COM
FINE ESTATES PREVIEW
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OPINION
Who Will Be The Modern Day Abraham Lincoln?
Dr. Cristina Guarneri is a writer, educator and clinical counselor. She has worked on political campaigns and provided seminars on ethics and leadership in public policy. Read more at http://christinaguarneri. blogspot.com
CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.
The potential to have ethics in government is a powerful aspect in leadership. Very few in politics have been able to withstand bureaucracy. With having the best intentions when initially entering into office, after years of power and influence we regrettably find government leaders losing sight of their ethics. History shows us that founding father George Washington needed time to know how to do the right thing. With time he became a true civil servant for the American people. However, it wasn’t until 1860 that the nation had experienced ethical leadership with the electing of the sixteenth president of the United States, Abraham Lincoln. Abraham Lincoln, otherwise nicknamed Honest Abe, was regarded as having an incredible impact on America. Even through Lincoln’s law practice, this is what primarily had won him his reputation for exacting honesty. “Resolve to be honest at all events,” Lincoln advised aspiring law students, “and if in your own judgment you cannot be an honest lawyer, resolve to be honest without being a lawyer.” With a distinctly humane personality, Lincoln believed in the ideals that all have the opportunity to succeed. Holding to the saying: keep your friends close and your enemies closer, Lincoln built a cabinet that gave him an advantage. Throughout that Lincoln never left behind or “rose above” the role of “politician,” but rather fulfilled the highest possibilities of this peculiarly honorable democratic vocation. Lincoln embraced the political life without either compromising morals at inconvenient moments or making a cipher of his politics. What he did instead, as a lifelong politician, was to realize that role’s fullest moral possibilities. With political leadership having changed since the days of Abraham Lincoln, many still wonder if such a Lincoln could exist and if it would even be possible in our political climate.
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...MANY STILL WONDER IF SUCH A LINCOLN COULD EXIST AND IF IT WOULD EVEN BE POSSIBLE IN OUR POLITICAL CLIMATE. THE FACT IS LINCOLN IS STILL WITH US TODAY’ The fact is Lincoln is still with us today. The struggle for unity, freedom, war, and civil equity; Lincoln had experienced these same issues during his presidency. What is different about today than the days of the Civil War is that Lincoln felt in all things compassion to be there for the people and to offer understanding. To be a caring citizen in times of despair and a handshake during his election years; the type of political leader that anyone could sit down with and have a cup of coffee. As a nation, we have drifted away from that type of leadership, but there is hope. With a new type of candidate that is emerging in politics that may slowly filtrate into elected offices across the nation. Something I like to call “Lincoln Leadership.” Not the usual way of thinking, this new type of candidate is looking to reach people right in their neighborhoods and communities. Beyond reaching people it is also a matter
of stricter measures of accountability and transparency. Lincoln would have found the bureaucracy in government today to be discerning. This new modern-day Lincoln that is slowly emerging in our nation is taking on the same philosophy as Lincoln did — to not make enemies when he could make friends of them. This new emerging leadership affords for those in government to reflect on their actions prior to taking them. Lincoln understood the importance that his role held to meeting the needs of the American people, an insight that the younger generation of political-minded candidates are embracing. To some degree, every American claims a part of Lincoln in their lives. He is always looking over us and preaching to us, forever his ghost remains with us. With the Declaration of Independence, the Constitution, and a new type of Lincoln Leadership developing, as a country we are fortunate enough that an Abraham Lincoln was in America. We continue to be fortunate that he’s still with us today, as we keep Lincoln in our mind, looking back to Lincoln more than occasionally with new leadership today.
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OPINION COMMENTARY FROM ACROSS THE WEB
Cruel And Usual More Americans are in prison today than at any other time in U.S. history: one in 99, according to a Pew Center on the States study. Though the United States has only 5 percent of the world’s people, it accounts for 25 percent of its prisoners. Does this mean that Americans are more criminal than other people? No, it means this country tends to lock people up even when their crimes and potential for rehabilitation warrant alternatives to incarceration. With federal prisons nearly 40 percent above capacity, it makes even more sense to reduce that population. Federal prisoners cannot be paroled, and the number of federal inmates has gone up even as the nation’s total prison population has declined. Sentencing changes could save taxpayers more than a billion dollars. Half the nation’s 218,000 federal prisoners are incarcerated for drug offenses, at an annual cost of about $30,000 per inmate. It’s time to change the costly dynamic created by mandatory minimum sentences. That doesn’t mean judges should be prohibited from issuing harsh sentences when defendants deserve them. But they should have more flexibility to give qualifying nonviolent defendants less time. That would be better for defendants and taxpayers alike. PHILADELPHIA INQUIRER, 13 AUGUST 2013
Business As Usual For Vacationing Congress Congress has begun its summer break – five weeks long, or more time than the average American gets off all year – but let’s face it: Sometimes it’s hard to tell when the House and Senate are in session and when they’re not, if you gauge the matter strictly by the work that gets done. As The Washington Post reported, “With three days left on the calendar before lawmakers leave Washington for a five-week summer break, there is still no agreement on a farm bill, no plan on how to fund the government after September and little progress on immigration reform.”
Or in other words, everything is going according to plan. You’d think Washington would be infected by a greater sense of urgency given the anemic economic growth since 2008. Sure, the recession has been over for quite some time and the stock market and housing prices have rebounded. But in the past 12 months, growth has limped along at an average 1.4 percent – and the second quarter of this year, at 1.7 percent, was little better. As members of Congress engage with constituents during this break, we hope they get an earful about the need for more initiatives that cross party lines. DELCO TIMES, 13 AUGUST 2013
Storytelling by the free library @TheOvalPHL #theoval @visitphilly @CHRISTINEEHORN
For GOP, “Ballot Integrity” Is A Myth
@Michael_Nutter
Now that the U.S. Supreme Court’s hyperconservative faction has neutered the Voting Rights Act, Republican officials around the country have re-energized their campaign to block citizens of color from voting. Florida Gov. Rick Scott surprised no one last week when he announced that he would resume a controversial and clearly partisan purge of the voting rolls, supposedly to clear them of non-citizens. You may have noticed, though, that voter suppression hasn’t helped the GOP win presidential elections in the last two cycles. Given that reality, some conservatives believe the GOP should give up its emphasis on blocking the ballot. As The New York Times’ Ross Douthat has written: “the GOP is ... sending a message to African-Americans that their suspicions about conservatism are basically correct, and that rather than actually doing outreach to blacks, the right would rather not have them vote at all.” Indeed, there is no reason for black voters to believe anything else.
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CYNTHIA TUCKER, SYNDICATED COLUMNIST PENNLIVE.COM 13 AUGUST 2013
Let’s work together Phila, we can make a bad situation better - if we all work together and resist some people’s negativity. Fund our kids! 11 AUGUST 2013
@SDPHite I will not put our children’s safety at risk by putting them into environments that are disorderly and chaotic. Students deserve better. 8 AUGUST 2013
@VisitPhilly Before summer’s over, check out the top-10 family attractions in Philadelphia: http://vstphl.ly/12szZxy 10 AUGUST 2013
@FootballExpert Hopefully new 76ers coach Brett Brown lasts longer than the 76ers coaching search. 13 AUGUST 2013
@MikeVick Riley’s my friend Our relationship is mutual respect. He looked me in
EDITORIAL BOARD CEO and President James D. McDonald Managing Editor Terrence J. Casey Associate Editor Rich Coleman
the eyes and apologized. I believe in forgiveness and I believe in him 31 JULY 2013
@DrexelNiki
Proud of @DrexelUniv students in @ USATODAY for their app that helps peers find scholarships @LeBow @DrexelEngr http://usat.ly/1cB7sJD 9 AUGUST 2013
@Wharton_EMBA Shelley Boyce (WG95), CEO of MedRisk & Chair of Wharton Entrepreneurship Board, rang NASDAQ closing bell yesterday 6 AUGUST 2013
@BenRevere9 Good win tonight for the phillies! Cole pitched a great game and congrats to the boss man Charlie Manuel for number 1000 win!! 13 AUGUST 2013
@dhm Smoke detectors SAVE LIVES! Contact 311 to have @PhillyFireDept install them in your home. If you have them, please check the batteries. 13 AUGUST 2013
HOW TO CONTRIBUTE To contribute, send comments, letters and essays to feedback@regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business. We reserve the right to edit all submissions for content, style and length.
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BY THE NUMBERS
76%
67%
Women who seek out safety features first when buying a new car, according to a Kelley Blue Book Study
Women who seek out fuel efficiency when buying a new car
61%
48%
Men who seek out safety features first when buying a new car
Men who seek out fuel efficiency when buying a new car
28%
19%
Men who seek out “rugged” vehicles
Women who seek out “rugged” vehicles
92.3%
Federal employees that believe they should continue with the current health insurance program, according to a FedSmith.com poll
2.8%
Federal employees who believe they should be required to use the health insurance exchanges
96.1%
Retired federal employees that want to continue current health insurance
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22%
Job seekers use smartphone apps for job listings, according to a survey from Right Management
25%
Generation-X employees that have done video job interviews
94%
Job seekers prefer LinkedIn as their chief job hunting tool, according to a survey from Right Management
66%
Hiring employers prefer to use LinkedIn for posting job listings
5%
Fewer job seekers own PCs
10%
More job seekers own Macs
34%
Job seekers own landline phones
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