Wednesday, May 22, 2024

Up front: Purse protectors

It won’t get any publicity given the Clinton vs. Trump and McCrory vs. Cooper matchups, but a key election in North Carolina is the contest to replace Janet Cowell as state treasurer.

Unlike many elected positions, treasurer is an actual job, overseeing a $90 billion pension plan, all state and local debt, huge contracts with money managers and a health plan that spends $3 billion annually on 700,000 state employees, retirees and their dependents.

The treasurer’s race has parallels to the presidential race. Democrat Dan Blue III is part of a political dynasty, though he has never held elective office. He practices law with his father, state Sen. Dan Blue Jr. The younger Blue thinks Cowell’s department is well-run. There’s one disagreement: He says she should not have accepted public-company board seats before her term ends in January. The two directorships pay about $300,000 in cash and stock. Her state salary is $125,000.

Republican Dale Folwell can’t match Trump’s braggadocio, but he is a scrappy ex-motorcycle racer, investment adviser and state representative who wants to shake things up. When he worked in the N.C. Commerce Department, Folwell oversaw elimination of the state’s $2.8 billion debt to the feds for unemployment insurance. Oversight of benefits had grown lax, and Folwell’s work impressed conservatives and enraged liberals who contend the changes gave needy North Carolinians the shaft. If elected treasurer, Folwell expects to focus on the health plan, which has an unfunded liability expected to reach $37.5 billion by 2020. “It’s a huge issue that is the result of 35 years of promises without ever putting money aside,” he says.

The plan costs too much for many younger employees and their families, so it tilts to older members who spend heavily on drugs and doctors. To avoid losses, rates shoot up. That cycle needs breaking, so Folwell suggests capping rates for four years.

Blue says the liability declined from 2010-12, when some costs were shifted to the federal government. “It’s much more like a mortgage debt than a bill at the restaurant,” he says. “Our role is to close the gap over the next 20 or 30 years and not hit the panic button.”

The two candidates disagree on the pension fund. Blue praises Cowell’s investment team. Folwell says the fund shows lackluster performance, spends too much on outside managers and isn’t transparent. The fund hasn’t matched its expected 7.25% investment return over the last 15 years, he says. Reducing the assumed rate would force lawmakers to spend more state money on the fund, rather than rely on projected investment gains that may be illusory.

Both men agree that the treasurer’s job is too demanding to spend off hours as a private-sector board member. A steady hand versus a change agent. Both thoughtful men. North Carolinians have a good choice for an office that matters.

David Mildenberg
David Mildenberg
David Mildenberg is editor of Business North Carolina. Reach him at

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