- Associated Press - Tuesday, February 3, 2015

RALEIGH, N.C. (AP) - North Carolina will collect $21.5 million from credit rating agency Standard & Poor’s in a nationwide settlement involving practices blamed for triggering the country’s financial crisis, the state’s attorney general said Tuesday.

The total national settlement was about $1.38 billion, of which half will go to the U.S. government and the other half to 19 states and the District of Columbia.

“Now, while no one company or practice can be blamed solely for the economic downturn, bad investments on shaky mortgage loans were clearly a part of it,” Attorney General Roy Cooper said at a news conference Tuesday. “This deceit cost North Carolina jobs and income.”

About $2.1 million of the amount going to North Carolina is a fine and penalty and under state law, goes to public education, Cooper said. He’s recommending that about $15 million go toward the North Carolina Teaching Fellows program and about $4.4 million for higher salaries for forensic scientists in the state crime lab and for equipment there.

Students who participate in the Teaching Fellows Program receive free tuition at some state and private universities in exchange for teaching in the public schools for four years. The last fellow graduates in May, Cooper said, adding that more than 4,500 fellows are teaching in public schools now.

Legislators began cutting money from the teaching fellows program in 2011, when Republicans first had majorities in both the House and Senate. In 2014, they zeroed out the program, which had annual funding of $13.5 million and was started in 1986.

“I believe this program needs to be saved in some form,” said Cooper, a Democrat who is prepping for a run for a governor against incumbent Gov. Pat McCrory in 2016.

The proposal is a smart one for someone who’s clearly running for governor, Democratic strategist Gary Pearce said.

“Put it this way: I think it would be a great thing for a governor to recommend,” Pearce said. “It’s a pretty smart move, politically and for education. But look, everything for the next two years is about the governor’s race.

“It’s no secret he’s going to run, and he’s made it clear that one of the big reasons is education. So it makes perfect sense for him to take an opportunity like this and say we’ve got some money, let’s spend it on a proven program that this Legislature eliminated. It’s a good way to draw a distinction.”

Unlike the teaching program, Cooper’s office oversees the state crime lab. North Carolina sometimes takes up to two years to train forensic scientists and get them certified, as the state crime lab now requires, he said. Then they too often leave for better-paying jobs, he said, adding that he’s concerned about an “avalanche of evidence at the state crime lab.”

“We know that excellent analysis of crime evidence can help us identify culprits and exonerate the innocent,” he said.

The state Justice Department has requested money to increase these salaries for years, he said.

McCrory said in a news release that he welcomes “the new attention toward a decade-old problem in our state crime labs. I appreciate the work of the Attorney General and his staff on this settlement.”

The settlement covers ratings issued from 2004 through 2007 by Standard & Poor’s, a subsidiary of McGraw Hill Financial Inc. It ends a court fight that began when the U.S. government and several states sued the company two years ago.

Under the agreement, S&P; admitted that it issued and confirmed positive ratings despite knowing that those assessments were unjustified and in many cases based on packages of mortgages that it knew were likely to default.

McGraw Hill Financial Inc. said in a written statement that the settlement contains no findings of violations of law by itself, S&P; Financial Services or Standard & Poor’s Ratings Services.

Cooper said S&P;’s decision to give good ratings to risky securities “contributed to job losses and foreclosures that hit taxpayers and businesses in North Carolina hard.” The reason, he said, was clear: The company “wanted to increase its business and therefore altered its financial analysis in order to get more business. It’s as simple as that.”

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Online:

http://www.teachingfellows.org/

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Martha Waggoner can be reached at http://twitter.com/mjwaggonernc

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