NC treasurer candidates debate how to keep health plan afloat, pension plan growing
The two candidates vying to become North Carolina’s next state treasurer debated Tuesday night at Greensboro College, laying out their vision on how the state’s health plan, pension plan and billions in state taxpayer funds should be managed and invested.
Republican Brad Briner laid out a vision that was more narrowly focused on cutting liabilities and growing investments. Meanwhile, Democrat Wesley Harris also called for focusing on economic policy, in addition to the treasurer taking on a more active role advocating for state employees and laying out an economic vision for the state.
This race should matter to “every taxpayer,” because “the treasurer’s office consumes a large and growing share of our state budget every year, a number that continues to accelerate as we deal with the unfunded liabilities of our state pension plan and our state Health Plan,” Briner said.
“If we elect an experienced investment professional, we will consume a smaller share of the state budget, which will allow us to invest in roads, salaries, tax reduction, all the above,” he said.
Briner is a retired financial investor who previously managed the philanthropic assets of former New York City Mayor Michael Bloomberg. He also serves on the UNC-Chapel Hill Board of Trustees. He has a master’s in business administration from Harvard University
Harris is a former economic consultant and has been a state representative from Mecklenburg County since 2019. He has a PhD in economics from Clemson University
Harris spoke on his background growing up in rural North Carolina, saying “we didn’t have a lot, but I was so blessed that we had a state that invested in me, and I had great teachers, and I had a great public school system, and I had great treasurers that took care of them for my parents, so that I was able to have those opportunities.”
This position “is about the future of North Carolina, making sure we’re investing in our people and this knowledge,” he said.
North Carolina’s state treasurer manages the state’s pension plan and the State Health Plan, which provides medical and pharmaceutical benefits to more than 750,000 current and retired public employees.
The debate, hosted by the NC Institute of Political Leadership in partnership with Spectrum News, lasted for an hour and spanned various topics. It was moderated by Spectrum News 1 political reporter and anchor Loretta Boniti.
Here are four highlights from the debate.
Local recovery efforts following Hurricane Helene
The Department of State Treasurer approves debt issuance for local governments and assists them with fiscal management via its Local Government Commission. The treasure heads that commission.
Asked how the treasurer’s office would help local recovery efforts in Western North Carolina, Harris said local finances need to be solid.
Citing a bill in the General Assembly that would be released Wednesday morning providing $273 million in state funding for recovery efforts, Harris said “that’s just scratching the surface.”
He said “we have to be serious about making sure that we’re making the investments on the state level, because these counties in the western part of the state are going to take years to recover.”
He said he thinks it’s a responsibility of the treasurer’s office to make sure people around the state understand local finances and that if a local government cannot make investments — such as for recovery efforts — “it’s because the state is simply not doing their job.”
Briner said Harris’s answer “has nothing to do with what the state treasurer does” as the state treasurer is not “involved in economic development.”
“We need to grow the assets of our state, deliver checks to our beneficiaries, make sure their health care is in place, and really stay in our lane to make sure that all the services the State Treasurer’s Office are provided to all of the people in the western part of the state,” he said.
Investment approach for the pension plan
North Carolina’s state treasurer manages the state’s pension plan.
The North Carolina Retirement Systems — which administer the pension plan, as well as the other supplemental retirement plans — returned a net 5.3% for the fiscal year that ended June 30, 2023. This was below the plan’s benchmark’s for a 6.5% return. The Retirement Systems returned a net 8.2% for the fiscal year that ended in June, according to a quarterly investment report.
The state’s pension fund, which is among the largest public pensions in the country, was valued as of June 30 at $123 billion. It has a 88.3% funded ratio, which means it can cover a large part of accrued benefits owed with assets.
Yet the current state treasurer, Republican Dale Folwell, who is not running for reelection, has been scrutinized for his investment approach, with some saying he is too averse to risk and keeps too many assets in cash. Both candidates honed in on this, but their suggested investment approach differed.
Folwell took office in January 2017 and was reelected in 2020. This year, he ran unsuccessfully for governor in the Republican primary, meaning he could not run again for treasurer, leaving the seat open.
Harris said “we have one of the best-funded pension plans in the country, but we also have the worst performing pension plan in the country,” due to the plan being cash-heavy. He said the treasurer’s office needed to take advantage of the “good times in the stock market” for investments and lower the cash balance to get higher returns. This would allow the state to give state employees a cost of living adjustment (COLA), he said.
Briner said the state needs to have a more “assertive” investment strategy to give COLAs to state employees without needing to increase taxes and crowding out other state funding priorities. To do this, the pension plan needed to hit a 6.5% return and investments would need to go not toward stocks but toward assets like mortgages, Briner said.
Sole fiduciary responsibility model
North Carolina is one of few states where the state treasurer has sole fiduciary responsibility for making investment decisions for the pension fund. Most other states delegate that authority to boards or investment experts.
Asked whether this should change, Briner said it should, and that “if we keep the current sole fiduciary governance model, it matters entirely who the treasurer is. Everyone else is just an adviser.”
Harris said he “fundamentally” disagreed with Briner and that the treasurer should remain the sole person accountable to North Carolinians.
“If you take that power away from the treasurer, you are giving it to the legislature,” he said.
This power will go to the legislature by allowing it to appoint experts, who in fact will be political appointees who will be “doing the will of the political leadership,” he said.
State Health Plan solvency issues
The State Health Plan is facing financial strains, according to Folwell, who has cited rising health care costs, inadequate state funding and more as reasons for this.
The plan is projected to have a cash balance at the end of the calendar year of $591 million. But during the State Health Plan’s most recent board of trustees meeting in July, the plan’s staff forecasted the plan to be $816 million in the red by calendar year 2027, with the plan “likely to be unable to pay bills in fall 2026.”
Also facing strain are retiree health benefits, which are facing a $26.65 billion liability, according to a June 2023 report from The Segal Group.
Both Harris and Briner said they would be able to fix the liability.
Harris said because the State Health Plan is “broke” the state is “having to cut benefits,” such as cutting access to popular weight loss drugs like Wegovy and Saxenda.
“That’s making us make short-term, financially necessary decisions” to stay solvent but will lead to higher expenses in the future, Harris said. Because of this “we have to pressure the General Assembly to fund this” and hold elected officials accountable, he said.
This would allow the state to improve compensation and benefits for state employees, which would help recruit more state employees, including younger employees who would improve the risk pool for the health plan, he said.
Briner said “we have to get creative” to make “our dollars go further – whether it’s (investing) in preventative care,” or another solution.
“We have to have a better method going forward than just going back to the legislature every year asking for more and more money,” he said.
Throughout the debate, Harris also cited the importance of prioritizing preventative care measures.
Both Harris and Briner said they wanted to get GLP-1s, the popular weight loss drugs, covered again.
