L.A.'s next mayor will face stark budget problems

Brad Smith used to consider himself a Los Angeles booster. But lately, the 48-year-old grows melancholy when he drives around the San Fernando Valley where he grew up.

The parks look worn-out. The sidewalks are broken. Street trees go untended. And don't even get him started on the sorry state of the Granada Hills pool.

"Every place I used to go as a kid, it's tired, it's old, it's beaten up," said Smith, a project manager at an engineering firm who made a losing run for City Council two years ago out of frustration. "Other cities manage to maintain older facilities. I'm not really certain why Los Angeles can't do a better job."

As Los Angeles voters head to the polls to pick a successor to Mayor Antonio Villaraigosa, Smith's question, or some version of it, is being asked over and over again in neighborhoods across the city.

Here's the short answer: To stay afloat financially, the city cut hundreds of millions of dollars out of everyday services and ongoing maintenance.

But the deeper causes are more complex, and include costly, ill-timed spending commitments at City Hall and a failure to adjust to the region's weakening economic foundation.

A Times review of the city's finances found:

• Just before the recession hit, city leaders agreed to add hundreds of police officers to the payroll and give much of the city's civilian workforce 25% raises over five years. The twin decisions — supported by mayoral candidates Eric Garcetti, Jan Perry and Wendy Greuel — added major stress to the budget as the downturn began.

• Over the next five years, officials slashed 5,300 positions, or nearly 15% of the city workforce, and scaled back services ranging from sidewalk repairs to 911 rescue units. Despite the cuts and additional concessions by employee unions, the city's salary costs remain the same as when the economic crisis began: $2.7 billion a year.

• The city faces even more service cuts if it fails to achieve what critics say are optimistic predictions of pension investment returns in coming years.

The next mayor will have to confront how and whether to restore services and keep police staffing at a historic high. Paying for it all will require either new revenues, or new concessions from city employees, or new approaches to running vital city programs.

The top mayoral candidates tend to sidestep specifics on these questions, describing "growing the economy" as their primary solution. Other city leaders are hoping for passage a half-cent sales tax increase. That tax is warranted after so many tough decisions, said Miguel Santana, the top budget official at City Hall.

"We can see the light at the end of the tunnel," he said.

Community activists say the next mayor needs to break the cycle of decreasing services and raising fees, fines and taxes to offset rising personnel costs. "What the city has done for the last five years is ... tread water," said San Pedro resident Doug Epperhart, a city commissioner overseeing Los Angeles' network of neighborhood councils.

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Underlying Los Angeles' current troubles, according to many economists, are well-documented, long-term shifts in the region's economy.

After half a century as one of the nation's wealthiest and most technologically important cities, the Los Angeles area began to falter after the end of the Cold War. Since 1990, the nation's total employment has grown 23%, while the number of local jobs has shrunk 7%, according to the UCLA Anderson Forecast, which tracks economic trends.

The situation appears to have worsened recently, UCLA economist William Yu said. The great recession hit Los Angeles especially hard and since then, its recovery has been weaker. "The economy is not healthy at all," Yu added.

Over the past two decades, Los Angeles lost almost every sector that mattered to the middle class: automobiles, steel, shipbuilding and, of course, aerospace. In all, 56% of manufacturing jobs, or nearly half a million positions, have disappeared.

The change is reflected in income statistics for that period. Nationally, personal income has increased by 2.4% per year, adjusted for inflation. Locally, it grew at half that rate.

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The Saturday Profile: Pavel Astakhov: The Man Behind U.S. Adoption Ban

Mikhail Metzel/Associated Press

Pavel A. Astakhov at a news conference in Moscow last month.

MOSCOW — Long before joining the federal government as Russia’s child rights commissioner and, more recently, becoming the leading force behind a ban on the adoption of Russian children by Americans, Pavel A. Astakhov transformed himself into a celebrity lawyer with mass market appeal — no small trick in a country where encounters with the legal system are as desirable as a tooth extraction.

There was “The Hour of Trial with Pavel Astakhov,” a courtroom reality television show casting him as Russia’s Judge Judy along with a radio program of the same name. There was a second radio program called “Advocacy Defense Techniques of Pavel Astakhov”; a series of books titled “Your Attorney: Pavel Astakhov,” with installments on housing, property rights, inheritance, pensions and family law; several legal-thriller novels fashioned in the tradition of John Grisham; a seminar series called “Pavel Astakhov’s School of Advocacy Skills”; and a law firm named the Pavel Astakhov Moscow City Law Bar.

The law banning adoptions by Americans was not named after him, but it might as well have been.

In the weeks before and after the law was approved by Parliament and signed by President Vladimir V. Putin, Mr. Astakhov was its loudest and most visible champion, insisting that Russia take care of its own orphans and not sell them to foreigners.

And it was Mr. Astakhov who this week stoked a furor over the latest death of an adopted Russian child in the United States, Max Shatto, with a post on Twitter that said: “Urgent! In the state of Texas, an adoptive mother killed a 3-year-old Russian child.”

Investigators say the circumstances of that death remain murky, and Mr. Astakhov has backed away from the murder accusation — but only slightly. At a news conference, he equated the boy’s mother, Laura Shatto, with two adoptive fathers, Miles Harrison of Virginia and Brian Dykstra of Iowa, who were acquitted of killing their toddler sons.

“Well, the presumption of innocence, you know how it is — sometimes it becomes so rigid,” Mr. Astakhov said.

Referring to the acquittals of Mr. Harrison and Mr. Dykstra, he declared, “For everyone it was completely clear that in one way or another they were guilty for the deaths of their children.”

In frequent television appearances, Mr. Astakhov denounces international adoptions in general as a sinister, profit-driven business, and he is pushing to extend the ban to all countries. He has been advocating that since 2010 after a woman in Tennessee put her 7-year-old adopted son on a flight back to Russia alone, with a note saying, “I no longer wish to parent this child.”

THIN, impeccably dressed and telegenically handsome with perfectly coifed hair that occasionally glints with an unnatural shade of bronze, Mr. Astakhov delivers nearly every statement that he makes with the silver-tongued flair of a courtroom closing argument.

“Don’t present me as an America-hater,” Mr. Astakhov, who holds a Master of Laws degree from the University of Pittsburgh, said after a recent news conference. “I am a fighter for the rights of Russian children. I am fighting with those who violate children’s rights.”

He added: “I am only saying that it’s a shame that Russia is giving away its children. America does not give away its children, does it?”

But he also often peppers his remarks with references to abusive American parents who he says have mostly escaped proper punishment, calling them “bastards” and “pedophiles.”

In response to his aggressive promotion of the ban, critics have denigrated his nationalist statements as hypocrisy, noting that the eldest of Mr. Astakhov’s three biological children attended private schools in England and the United States, while the youngest was born in 2009 in the same private hospital in Nice, France, where Angelina Jolie gave birth to twins.

A magazine spread showed Mr. Astakhov; his wife, Svetlana; and their children posing in luxurious surroundings in France where they spend the summers, and in an accompanying article he marveled at the prenatal care that his wife received, saying that while pricey it was still cheaper than elite maternity hospitals in Russia.

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Danica Patrick Opens Up About Dating Competitor Ricky Stenhouse, Jr.

By Dahvi Shira

02/22/2013 at 07:25 PM EST

Danica Patrick and Ricky Stenhouse Jr.

Tom Pennington/NASCAR/Getty

Danica Patrick knows mixing business with pleasure isn't wise, but it's not stopping her.

"I don't think it was a good idea. [But] there was nothing I could do about it," she tells menshealth.com of getting into a relationship with fellow NASCAR racer, Ricky Stenhouse, Jr., 25. "You can't tell your heart who to like and not like. It just happened."

Patrick, 30, isn't worried about running into a future ex-boyfriend on the racetrack.

"I know I'm setting myself up for that," she says with a laugh. "But I choose not think about that possibility right now. I'm going to be positive."

For now, the competition is friendly between the history-making superstar – who announced her split from husband Paul Hospenthal in November – and her new beau.

"Ricky and I have always had that situation where we give each other room [on the track]," Patrick says. "We respect each other on the track. I don't see any reason for that to change."

But despite the relationship, business is still business, and if something happened to her man mid-competition, she'd leave his care to handlers and continue on with the race.

"We both understand that this is a dangerous sport," she says. "We know that things will happen, and we have faith in the safety of the cars and the tracks and the medical staff. If something did happen to him, there's nothing I could do to help. I'd just have to remember that everything that needed to be done to make him safe was being done."

Patrick, meanwhile, is set for the coveted pole position for her second turn in the Daytona 500 Sunday.

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FDA approves new targeted breast cancer drug

WASHINGTON (AP) — The Food and Drug Administration has approved a first-of-a-kind breast cancer medication that targets tumor cells while sparing healthy ones.

The drug Kadcyla from Roche combines the established drug Herceptin with a powerful chemotherapy drug and a third chemical linking the medicines together. The chemical keeps the cocktail intact until it binds to a cancer cell, delivering a potent dose of anti-tumor poison.

Cancer researchers say the drug is an important step forward because it delivers more medication while reducing the unpleasant side effects of chemotherapy.

"This antibody goes seeking out the tumor cells, gets internalized and then explodes them from within. So it's very kind and gentle on the patients — there's no hair loss, no nausea, no vomiting," said Dr. Melody Cobleigh of Rush University Medical Center. "It's a revolutionary way of treating cancer."

Cobleigh helped conduct the key studies of the drug at the Chicago facility.

The FDA approved the new treatment for about 20 percent of breast cancer patients with a form of the disease that is typically more aggressive and less responsive to hormone therapy. These patients have tumors that overproduce a protein known as HER-2. Breast cancer is the second most deadly form of cancer in U.S. women, and is expected to kill more than 39,000 Americans this year, according to the National Cancer Institute.

The approval will help Roche's Genentech unit build on the blockbuster success of Herceptin, which has long dominated the breast cancer marketplace. The drug had sales of roughly $6 billion last year.

Genentech said Friday that Kadcyla will cost $9,800 per month, compared to $4,500 per month for regular Herceptin. The company estimates a full course of Kadcyla, about nine months of medicine, will cost $94,000.

FDA scientists said they approved the drug based on company studies showing Kadcyla delayed the progression of breast cancer by several months. Researchers reported last year that patients treated with the drug lived 9.6 months before death or the spread of their disease, compared with a little more than six months for patients treated with two other standard drugs, Tykerb and Xeloda.

Overall, patients taking Kadcyla lived about 2.6 years, compared with 2 years for patients taking the other drugs.

FDA specifically approved the drug for patients with advanced breast cancer who have already been treated with Herceptin and taxane, a widely used chemotherapy drug. Doctors are not required to follow FDA prescribing guidelines, and cancer researchers say the drug could have great potential in patients with earlier forms of breast cancer

Kadcyla will carry a boxed warning, the most severe type, alerting doctors and patients that the drug can cause liver toxicity, heart problems and potentially death. The drug can also cause severe birth defects and should not be used by pregnant women.

Kadcyla was developed by South San Francisco-based Genentech using drug-binding technology licensed from Waltham, Mass.-based ImmunoGen. The company developed the chemical that keeps the drug cocktail together and is scheduled to receive a $10.5 million payment from Genentech on the FDA decision. The company will also receive additional royalties on the drug's sales.

Shares of ImmunoGen Inc. rose 2 cents to $14.32 in afternoon trading. The stock has ttraded in a 52-wek range of $10.85 to $18.10.

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Eric Garcetti's role in L.A. budget fixes is in dispute

Pressed in the race for mayor of Los Angeles to say how he would fix a persistent budget gap that has led to the gutting of many city services, Eric Garcetti urges voters to look at what he has done in the past.

The onetime City Council president claims credit for reforms that he said cut the City Hall shortfall to just over $200 million from more than $1 billion. He sees "tremendous progress," principally in reducing pension and healthcare costs, and asserts: "I delivered that."

But the truth is in dispute. Although there is not a singular view about any aspect of the city's troubled finances, most of those in the thick of recent budget fights depict Garcetti not as a fiscal hard-liner but as a conciliator who used his leadership position to chart a middle ground on the most significant changes.

Mayor Antonio Villaraigosa, city administrative officer Miguel Santana and one of Garcetti's rivals in the mayoral race, Councilwoman Jan Perry, were among those who pushed for bigger workforce reductions and larger employee contributions toward pensions and healthcare. Labor leaders and their champions on the City Council, including Paul Koretz and Richard Alarcon, sought to cushion the blow for workers.

Garcetti and his supporters say he moderated between those extremes. His critics said he worried too much about process and airing every viewpoint rather than focusing relentlessly on shoring up the city's bottom line.

"It was through the mayor's persistence and steadfast position that we got ongoing concessions," said Santana, the chief budget official for Los Angeles. "It was in collaboration with the council leadership that we finally reached agreements with labor."

The $1-billion-plus deficit Garcetti speaks of shrinking refers not to a single year but to the total of budget gaps that confronted Los Angeles over four years if no corrective action had been taken. The city's fiscal crisis worsened during that time because Garcetti and his fellow council members — including Perry and mayoral candidate Wendy Greuel — approved a city employee pay raise of 25% over five years just before the country stumbled into the recession. (Greuel left the council in 2009 when she was elected city controller.)

Although Garcetti focuses on his role, a portion of the financial improvements were outside his control. The state's elimination of redevelopment agencies in 2012 returned millions to L.A.'s general fund. Tax revenue also ticked upward with the economic recovery.

Garcetti's position as council president from 2006 through 2011 did put him at the center of debate about annual shortfalls that ranged to more than $400 million.

In 2009, he supported an early retirement plan that knocked 2,400 workers off the payroll. "I really pushed that through," the councilman said in an interview. Two participants in confidential contract talks at the heart of the deal had diametrically opposed views. "He made it happen, period," one said; the other offered: "I wouldn't say he was a major mover."

The plan saves the city a maximum of $230 million a year in salary and pension reductions in the short run. But Los Angeles borrowed to spread the costs of the program over 15 years, with current employees and retirees expected to shoulder the cost of the early exits.

The early retirements are expected to do nothing to resolve the long-term "structural deficit" — the $200 million to $400 million a year that Los Angeles spends above what it takes in. And early retirements could even be a net negative in the long run if, as city revenue recovers, new employees are put in those 2,400 empty positions too quickly.

In 2010 the city completed a budget fix that did attack the structural imbalance.

Garcetti's initial proposal called for upping the retirement age for new city employees to 60 from 55 and requiring workers to contribute a minimum of 2% of salary toward their retiree health care.

Budget chief Santana offered a markedly tougher plan. It required a 4% retiree health contribution, halved the health subsidy for retirees and capped pension benefits at 75% of salary instead of 100%. Santana's plan, also for new employees, became the basis of the reform.

Some who served with Garcetti on the council committee that leads employee negotiations pushed for even greater sacrifices. But Garcetti fought against ratcheting up demands on workers, saying it would be useless to approve a plan that would not survive subsequent union votes.

The councilman's greatest contribution may have come after city leaders set their position on pensions. Garcetti took the unusual step of visiting groups of workers. Some employees booed. Some asked him why city lawmakers, among the highest paid in the nation at $178,000 a year, didn't cut their own salaries.

"There was a lot of anger," said a labor leader who spoke on condition of anonymity because that union has not endorsed in the race. "But Eric talked to people as if they were adults and stayed until he answered all their questions. People appreciated him ... taking that kind of heat."

Matt Szabo, a former deputy mayor who helped negotiate with labor, said Garcetti deserved "every bit of credit" he has claimed for deficit reduction. "He knew he was running for mayor, and he was doing the right thing, but it was something that was going to cost him later" in terms of union support, said Szabo, who is running to replace Garcetti on the council.

Most of the employee groups that have endorsed thus far in the mayor's race have come out for Greuel. One political advantage for the controller: She left the council in 2009, before the city began making its toughest demands on workers.

Garcetti found himself stuck the middle again with another 2010 vote, this one over the elimination of 232 jobs — most of them in libraries and day care operations at city parks. Garcetti voted for the layoffs. Later he voted to reconsider, though he said recently that he intended only to re-air the issue, not to keep the workers on the job.

Labor leaders faulted Garcetti for giving the appearance he might be ready to save the jobs when he really wasn't. The reductions remain a sore point, because a "poison pill" in the contract required that any layoffs be accompanied by immediate pay raises for remaining city employees. Fierce disagreement remains over whether the layoffs saved the city any money.

"That became part of the negative picture" of Garcetti, said one labor leader, who asked not to be named out of concern about alienating a possible future mayor. The candidate said in an interview that he frequently found himself hewing a middle ground between some colleagues "who simply hope more revenue would come in" and others who wanted to use an "ax," making indiscriminate cuts. He added: "To me, both views were equally unacceptable."

Critics find Garcetti too malleable, ready to shift to the last argument he has heard. But others appreciate his quest for the middle, saying the fact he sometimes irritated both budget hard-liners and unions showed he had taken a reasoned approach.

"The criticism of Eric is also sort of the good news," said one of the union reps. "He has this very process-y, kumbaya, can't-we-all-get-along style. It drove us all crazy. But now I really miss it because it seems to be all politics over policy."

james.rainey@latimes.com

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The Lede: Police Brutality, Catalyst for Egypt’s Revolution, Continues Under Morsi

More than two years after tens of thousands of Egyptians took to the streets on Police Day to demand the resignation of Hosni Mubarak and an end to impunity for the security forces, activists report that civilians continue to be raped, tortured and killed in police custody.

As one of the protesters who marched that day, Adel Abdel Ghafar, recalled in a post for The Lede last year, anger over routine police brutality was a catalyst from the first day of Egypt’s revolution. “Several groups were mobilizing on this day, including fellow members of the Facebook page We Are All Khaled Said,” Mr. Ghafar wrote. “Khaled Said had been brutally murdered by policemen in Alexandria on June 6, 2010 in broad daylight, and it disgusted me how the Mubarak regime had so blatantly tried to cover up his death.”

On Thursday, Sherief Gaber, a member of Cairo’s Mosireen film collective, drew attention to a harrowing new video report from the group, presenting vivid testimony from minors about the violence they endured and witnessed after they were arrested during recent protests.

A Mosireen video report on the violent abuse of minors by the Egyptian police.

Later on Thursday, the Egyptian activist Wael Eskandar posted a link on Twitter to a compilation of graphic, disturbing video clips documenting incidents of police brutality since the election of President Mohamed Morsi last year put the security forces nominally under civilian control. Mr. Morsi, who was in jail on Jan. 25, 2011, is a member of the Muslim Brotherhood, an Islamist group whose members endured brutal treatment by the police during the Mubarak era.

A summary of the most important police violence clips under #Morsi’s regime in #Egypt lest we forget http://t.co/nSxyc0WKmv

— Wael Eskandar (@weskandar) 21 Feb 13

Last weekend, as the rights activist Hossam Bahgat noted, police officers beat a suspect to death at the funeral of a colleague they accused him of killing.

Egyptian police publicly beat to death man suspected of killing officer http://t.co/t1zA568O via @ahramonline

— hossam bahgat (@hossambahgat) 16 Feb 13

After listening to Mr. Bahgat describe some of the continuing abuse documented by the Egyptian Initiative for Personal Rights, in an interview this week on a private television channel, the journalist Rawya Rageh was moved to ask what the point of Egypt’s revolution had been.

In over a decade I have not seen as many cases of male activists fully raped in police custody as in the past few weeks #Egypt

— hossam bahgat (@hossambahgat) 16 Feb 13

@hossambahgat to ONTV: I have no faith there’ll be genuine police reform #Egypt

— Rawya Rageh (@RawyaRageh) 19 Feb 13

Listening to all the cases of police brutality, torture in detention – is this really a post-revolution #Egypt? What was the point really?

— Rawya Rageh (@RawyaRageh) 19 Feb 13

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Cressida 'Cress' Bonas: 5 Things About Prince Harry's New Squeeze

By Simon Perry

02/21/2013 at 07:50 PM EST

Prince Harry and Cressida Bonas

Bauer-Griffin; Splash News Online

It's love on the slopes for Prince Harry – who has been spending some of his downtime since returning from Afghanistan rekindling his relationship with society gal Cressida Bonas.

With breathy excitement, tabloids have splashed pictures of the couple embracing in Verbier, where they have been vacationing this week. As a friend tells London's Evening Standard, "It's early days, but they are having fun together and enjoying spending time together.”

Here's five more things to know about her:

1. Knows How to Move
Just like Harry's last longstanding girlfriend, Chelsy Davy, she went to Leeds University, where she got a 2:1 (just under a first-place ranking) in dance.

2. Sister's Royal Connection
The daughter of an "It Girl" of the '60s, Lady Mary-Gaye Curzon, Bonas has a half-sister, Isabella Anstruther Gough-Calthorpe – who was once linked to Harry's brother, Prince William.

3. Family Name Games
Her other siblings have deliciously aristocratic and colorful names: Pandora Cooper-Key, Georgiana and Jacobi Anstruther-Gough-Calthorpe. And they have wonderfully eccentric nicknames, to boot: Cressida is "Small" or "Smally"; Isabella is "Bellie"; Jacobi is "Cozy"; and Pandora is "Baba," it's been reported.

4. Oh, Yes, She Matters
With her well-connected family, and links to the most eligible bachelor in the world, she was recently ranked by the society glossy magazine Tatler as 27th among those people who "really matter."

5. Funky Style
She is said to like music festivals, hippy-style clothes, favors sneakers over heels and is now taking a dance class in Greenwich, southeast London.

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CalPERS plans 85% rate hike for long-term-care insurance

Dailey Mayo received some stunning news in the mail this week: an 85% rate increase for the long-term-care insurance he has had for 15 years from the California Public Employees' Retirement System.

The retired sales manager in Pasadena said his monthly premium of nearly $400 would jump to $738, or about $8,850 annually, under this plan. "I'm 82 now and I might need this care soon," he said. "It really ticks me off that they are doing this."

More than 110,000 CalPERS policyholders are receiving similar news this week after the pension fund's board approved the changes late last year. CalPERS said the hefty rate hikes won't take effect until 2015 and are necessary to keep this $3.6-billion insurance fund intact for future claims. This CalPERS program, like other plans sold by private insurers, has been plagued by higher-than-expected claims, lower investment returns and poor pricing.

"We understand people's anger and frustration," said Bill Madison, a CalPERS spokesman. "It's not something the board wanted to do, but it's necessary so benefits are available to people when they need it. We know these rate increases can be a financial hardship."

Insurance regulators in California and other states say insurers too often underestimated the cost of care and the number of customers who would hold on to these policies. These plans typically help pay for nursing-home stays, home-health visits and other residential care that's generally not covered by Medicare.

Many insurers have stopped selling the most generous, unlimited policies, and some companies have left the business entirely. All this comes as millions of baby boomers enter retirement and weigh difficult decisions about what type of financial protection they may need against future medical expenses.

CalPERS, which runs the nation's second-largest long-term-care plan, after one for federal government employees, said it would offer affected policyholders several ways to adjust their benefits to avoid these premium increases.

For instance, customers can drop the option of having benefits that automatically increase with inflation or they can forgo lifetime benefits in favor of a finite period or amount. CalPERS said it would ask policyholders to make a decision on any changes by June 30.

Overall, the agency has more than 148,000 policyholders in its long-term-care program. Some policyholders will see a 5% rate increase this year, while most will see the bigger 85% increase starting in 2015. The 85% increase primarily affects about 110,000 people who purchased the agency's policies from 1995 to 2004 that provided lifetime benefits.

The giant pension fund said it is taking numerous steps to shore up the struggling program. Thursday, the CalPERS board of administration approved plans to reopen enrollment by the end of the year and to offer newly designed long-term-care policies aimed at fortifying the program with new premium dollars. Enrollment has been closed since 2009.

Large rate hikes have become the norm for many of the nation's 8 million long-term-care policyholders.

John Hancock Life Insurance Co. received approval for 40% rate increases on certain policies sold in California late last year, according to the state Insurance Department. A unit of CNA Financial Corp. has sought increases of 45% for some California policyholders, but state officials said they are still reviewing that request.

California lawmakers approved a law last year that imposed new requirements on insurers wanting to raise these rates, and it bolstered other consumer protections.

Industry officials say pricing long-term-care policies accurately has been a long-standing challenge as people continue to live longer and medical costs keep rising. CalPERS and private insurers have also been stung by historically low interest rates that have contributed to lower investment returns, which are used to pay claims.

"Long-term-care insurance is probably the most complex insurance product imaginable," said Jesse Slome, executive director of the American Assn. for Long-Term Care Insurance in Los Angeles. "You have to predict correctly 20 years into the future what economic conditions will be like and what health conditions will be like."

Slome said the federal employee program for long-term-care insurance raised rates as much as 25% in 2009 and less than 2% of affected policyholders dropped their coverage.

"Nobody likes paying more, but these policyholders will have options," Slome said. "Now is the time for people to reassess their personal situation."

CalPERS said its average annual premium for long-term-care insurance now is $2,206, or $184 a month. Since the start of the program, dementia and stroke have been the leading causes of claims, accounting for 44% of all payouts. The agency said the number of active claims increased 6% in 2012 over 2011, and total claims paid amounted to $182 million.

The fund for long-term-care insurance is separate from CalPERS' $255-billion pension fund and financially independent. As a result, that pension money cannot be used to hold down the long-term-care rates.

Richard Carter, 64, a math teacher in the Los Angeles Unified School District, got one of the letters this week about the 85% increase in premiums. Carter said he cannot afford for his rates to rise to about $5,000 a year.

"That's just not affordable on what I expect to receive in retirement," said Carter, who plans to retire next year. "And that doesn't include what I am sure will be further increases in the coming years."

Mayo, the retired sales manager in Pasadena, was able to purchase a long-term-care policy through CalPERS because his daughter worked for the state's workers' compensation bureau at the time. He said he's studying his options for changing benefits to stave off the huge run-up in premiums.

"As I get older I need some protection," Mayo said. "I am really debating whether to keep the damn thing."

chad.terhune@latimes.com

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Cyprus Trial Offers a Rare Look Inside Hezbollah

LIMASSOL, Cyprus — In a little-watched trial in a small courtroom here on Wednesday, a 24-year-old man provided a rare look inside a covert global war between Israel and Iran, admitting that he is an operative of the militant group Hezbollah, for which he acted as a courier in Europe and staked out locations in this port city that Israelis were known to frequent.

Breaking with the group’s ironclad discipline and practiced secrecy, the operative, Hossam Taleb Yaacoub, described being handled by a masked man he knew only as Ayman. He told of doing simple tasks at first: picking up a couple of bags in Lyon, France, taking a cellphone, two SIM cards and a mysterious package wrapped in newspaper from Amsterdam to Lebanon.

When he was arrested last July, he had a small red notebook with the license plate numbers of two buses ferrying Israelis to vacation spots in the vicinity.

He claimed that none of this was related to planning an attack, as prosecutors have charged. One of the plates, LAA-505, reminded him of a Lamborghini sports car, he said, while the other, KWK-663, reminded him of a Kawasaki motorcycle.

Yet, less than two weeks after he was taken into custody, a bomb blew up alongside a bus at the airport in Burgas, Bulgaria, killing five Israeli tourists and the Bulgarian driver — an attack similar to the one he seemed to be planning, experts say, and one that the Bulgarian authorities later tied to Hezbollah.

Mr. Yaacoub’s testimony offered unaccustomed insights from an active Hezbollah member into the militant group’s secret operations. But it carried potentially greater significance for the European Union, which has thus far resisted following Washington’s lead in declaring the group a terrorist organization. Experts say that a conviction here would substantially raise the pressure on the bloc for such a designation.

“Foreign ministries around Europe are watching this quite closely because many Europeans, particularly the Germans, have laid such a stress on courtroom evidence being the basis for a designation,” said Daniel Benjamin, until December the top counterterrorism official at the State Department, who visited Cyprus last year after the arrest.

Security experts also suspect that Mr. Yaacoub was playing a small but potentially deadly role in a much broader shadow war that has produced what some Israeli and American intelligence officials say were nearly a dozen plots by Iran and Hezbollah against Israel and its allies abroad.

“The evidence seems quite compelling that what he was doing was conducting surveillance for a bombing that would parallel almost exactly what happened in Bulgaria,” said Matthew Levitt, director of the program on counterterrorism and intelligence at the Washington Institute for Near East Policy and the author of a forthcoming book on Hezbollah’s global footprint.

In written testimony read in Greek by his interpreter, as he sat quietly beside her, Mr. Yaacoub described how he would be picked up in a van to meet with his handler, Ayman, and used code words to confirm his identity. “I never saw the face of Ayman because he was always wearing a mask,” Mr. Yaacoub said.

He said he was trained in the use of weapons and had acted as a courier for the group inside the European Union; with his Swedish passport, Mr. Yaacoub was an ideal candidate for such missions. He also acknowledged staking out the locations where Israelis appeared in large numbers — a parking lot behind a Limassol hospital and a hotel called the Golden Arches.

But Mr. Yaacoub was adamant that he was not participating in a plot to kill Israeli tourists. “Even if they asked me to participate in a terrorist action, I would refuse,” he said. “I could never do that. I’m only trained to defend Lebanon.”

Cyprus has traditionally had strong ties to Israel, but even more so to the Arab world. The island was widely considered a safe place to do business, even informally viewed as something of a cease-fire zone for the region’s conflicts, said Petros Zarounas, an expert in international relations in Nicosia, the Cypriot capital.

“They considered it neutral ground where everyone will have access to Cyprus soil, to feel safe, secure, quiet,” he said.

But recently the island nation has grown closer to Israel, deepening economic ties. Like Bulgaria, Cyprus is a popular tourist destination, with nearly 40,000 Israelis visiting in 2012.

Officials in Cyprus have tried to keep the case as low-key as possible, declining in most instances to comment or to release documents. “It’s a very serious and delicate case,” the justice minister, Loucas Louca, said shortly after Mr. Yaacoub was arrested. “I don’t want to make a statement because any publicity could harm the case.”

The prosecution and the defense have both declined to comment before a verdict is reached, expected to be sometime in March. But a preliminary ruling by the three-judge panel last week found that the prosecutor had provided enough evidence to proceed on all eight counts, including four charges of conspiracy to commit a felony, two charges of participating in a criminal organization, one of participating in the preparation of a crime and a charge of covering it up.

Andreas Riris contributed reporting.

This article has been revised to reflect the following correction:

Correction: February 20, 2013

An earlier version of a Web summary on this article misspelled the surname of the defendant. He is Hossam Taleb Yaacoub, not Yaccou.

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Oscar Preview: Les Mis, Chicago Casts to Sing & Dance

By Stephen M. Silverman

02/20/2013 at 07:00 PM EST

From left: Hugh Jackman and Anne Hathaway, in Les Misérables, and Catherine Zeta Jones, in Chicago

Universal (2); Miramax

Strike up the band, for Sunday night's Oscars promise to be very musical.

In the most detailed preview yet of what is to be expected – and what isn't – the 85th annual Academy Awards producers Craig Zadan and Neil Meron tell Deadline.com that their special tribute to the resurgence of movie musicals in the past decade will star Les Misérables nominees Hugh Jackman and Anne Hathaway with costars Russell Crowe, Eddie Redmayne, Aaron Tevit, Samantha Barks, and Helena Bonham Carter; Dreamgirls Oscar winner Jennifer Hudson; and Chicago winner Catherine Zeta-Jones.

"What we don't want to do is play it safe," says Zadan about the show in general, admitting – repeatedly – that the job of producing it is "enormous."

So is the Oscar night orchestra: 60 pieces. Accompanying all those instruments will be:

• The previously announced Justin Timberlake, as well as Barbra Streisand, who's only sung on the show once before in her 5½-decade career (and that was 36 years ago)

• Golden Globe song winner Adele ("Skyfall" is up for Best Song) and "Goldfinger" diva Shirley Bassey, an Oscar newbie, who'll appear as part of the James Bond 50th anniversary tribute

• And the evening's host, Seth MacFarlane, who's been known to break into song on more than one occasion – such as when he hosted SNL.

Other reveals:

• "It's not going to be three hours but we will try to get it close to that," says Zadan. (There are 24 categories to recognize.)

• Six college filmmaking students will serve as Oscar presenters after winning a contest to be on the show.

• The 007 tribute will not feature a reunion of Sean Connery, George Lazenby, Roger Moore, Timothy Dalton, Pierce Brosnan and Daniel Craig.

• MacFarlane's opening monologue is "clever and sort of unique … like a throwback to the days of Bob Hope and Johnny Carson," says Zadan.

• Streisand's number is being kept a secret, "but we love the speculation," says Meron.

The 85th annual Academy Awards will air live on Sunday, Feb. 24, on ABC from the Dolby Theatre in Hollywood.

Justin Timberlake and Barbra Streisand

Justin Lane / Landov; Walter McBride / Retna

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