Treasurer outlines state’s fiscal status
BY COREY DAVIS
Rocky Mount Telegram
Friday, May 18, 2018
Funding the state’s pension plan and a “medical arms race” that is driving up costs are among the challenges faced by the North Carolina Treasurer’s office, according to its top official.
N.C. State Treasurer Dale Folwell on Tuesday stopped by Rocky Mount on his tour across North Carolina and spoke about 20 minutes at the Upper Coastal Plain Council of Governments Board of Directors meeting at Word Tabernacle Church’s Impact Center.
Folwell, a Republican who took over as state treasurer in 2017, discussed the financial position of the state and the status of the state and local government retirement system.
As the state’s chief financial officer and “keeper of the public purse,” Folwell said the meeting was a good opportunity to discuss some of the challenges the treasurer’s office faces and how it affects northeastern North Carolina.
Folwell said the state pension plan is one of the top-five funded pension plans in the United States, while the state’s health plan is one of the five most insolvent plans in the country.
“The biggest challenge is I work on the invisible and these are things that are impacting our state mainly associated with the pension plan, which has not earned its assumed rate on return on average for 20 years,” Folwell said. “In some of these rural communities, the biggest check that comes into those counties on a monthly basis are checks that come from the treasurer’s office.”
Folwell said he is spending $750 million every 30 days for active and retirement state employees. In northeastern North Carolina, Nash County has 2,819 retirees with the state spending $57 million, Edgecombe County has 1,430 retirees with the state spending $28 million, Halifax County has 1,812 retirees with the state spending $33 million and Northampton County has 745 retirees with the state spending $13 million.
Folwell touched on how he and the state health plan recently announced that Blue Cross and Blue Shield of North Carolina has been directed to cut the plan’s medical provider rates on major contracts being negotiated this year by at least 15 percent. Blue Cross North Carolina negotiates rates with health care providers to establish the cost of medical services at health care systems across the state.
Potential savings for the plan could be close to $1 billion in the next three years. The 15 percent reduction is expected to generate $300 million a year in savings for North Carolina taxpayers. Folwell indicated that those savings will be used to lower family premiums and address the state’s $34 billion long-term health care liabilities for retirees.
“We’re going to be asking a little from a lot of people and a lot from a few,” Folwell said. “Many believe that medical providers can achieve at least 10 percent in savings. I believe it’s more. I’m asking medical providers in the state to help us sustain this plan for the future. We’re in a medical arms race that is driving up costs, and we need partners to work with us to reduce costs for all.
Folwell also pointed out how the state has maintained a AAA bond rating, making North Carolina one of only 12 states in the country to obtain a unanimous top-tier evaluation.
“Although it’s not a direct impact to your community, the fact the state has a AAA bond rating is really important,” Folwell said. “We want to make sure you all are financial solvent so that you can borrow money at the lowest rates of interest.”