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Friday, May 24, 2024

GOP treasurer candidates differ on investing state money

With North Carolina voters electing the first new state treasurer in eight years in November, a different approach to the powerful post appears likely.

State Treasurer Dale Folwell is stepping down as he seeks the Republican nomination for governor. His tenure has been marked by well-publicized campaigns to reduce fees paid by the state for investment management services; to force N.C. hospitals to provide more transparency in their pricing; and to stop the healthcare industry’s rapid consolidation.

Brad Briner

Brad Briner and Rachel Johnson, who are running in the Republican primary for state treasurer in March, both praised Folwell’s efforts on healthcare.

Democrats Wesley Harris and Gabe Esparza are seeking the Democratic nomination for the post. A later story will describe their campaigns.

Johnson asked to answer questions via email, while Briner did a phone interview. Another candidate in the GOP primary, A.J. Daoud, did not respond to questions sent via email.

Rachel Johnson

Johnson says she’ll work “with lawmakers to find common solutions that bring down the costs of healthcare.” Briner praises Folwell’s efforts to make hospital pricing more available to consumers, noting that he didn’t understand the industry’s antipathy to the concept.

“There seem to be current incentives for hospitals to get fined rather than publish their prices” as required by law, he notes. He also said Folwell has “done a great job running the State Health Plan,” which represents more than 750,000 state employees, retirees and dependents.

But the issue of retirement system investing clearly divides Briner and Johnson.

Briner was a key overseer of billionaire Michael Bloomberg’s personal investments for a dozen years before leaving his post in December. He notes the founder of Bloomberg LP has a net worth somewhat comparable to the asset size of the N.C. pension funds.

The Dallas native came to North Carolina in 1995 to attend UNC Chapel Hill. Except for two years earning a Harvard MBA and one year in New York, his personal residence has been in Chapel Hill ever since. Briner typically spent four days a week in New York City for his Bloomberg work.

He contends Folwell’s conservative investing approach is costing North Carolina’s retirement system about $3 billion a year, when compared to the performance of Virginia and other top-performing state pension funds. That equates to about 10% of the annual state budget, he notes.

Briner says North Carolina should assemble a team of three to five senior in-house money managers to assist the treasurer in running the fund, which is a typical model in other top-performing states. It’s one of only three states that has a “sole fiduciary” model that entrusts the treasurer with investment control, he adds.

“I’m not advocating gambling,” he says. “I’m talking about taking smart, sensible steps to achieve the 6.5% to 7% annual returns that the system requires.” He notes reports on fund performance show N.C. investments in private equity deals have done notably well, albeit with higher management fees than traditional stock and bond investing.

In her email, Johnson says, “I will continue Treasurer Folwell’s good work of protecting and improving the N.C. retirement system.” She adds, “there’s always a temptation in this role to flex and try to make a risky play. It’s gotten a few folks in trouble over the years. The people of North Carolina deserve an experienced candidate who will enter the job completely independent of previous ties to Wall Street and the elites of New York finance.” She pledged to answer “only to the people of North Carolina.”

Johnson’s campaign website notes “early in her career, Rachel worked in retirement services.” It notes she has “also spent time on the regulatory of financial services.” She “ran a small, family-owned business in Davie County in recent years.” She does not have a LinkedIn account.

Her husband, Mark, was state Superintendent of Public Instruction from 2017-21, a statewide elected office. He didn’t seek re-election. He lost in the Republican primary for lieutenant governor in March 2020.

Briner says his campaign is being advised by the Differentiators, a Raleigh-based advisory firm led by Jim Blaine, a former chief of staff to Sen. Phil Berger and among the state’s best-connected political consultants. Blaine and Briner both serve on the UNC Chapel Hill Board of Trustees. Briner was appointed to the board last year after seeking the post for many years because of his passion for UNC, he says.

Briner says he’s always been a Republican and that he decided to run eight days before the end of filing after N.C. Rep. John Bradford of Mecklenburg County stepped away from the race to instead run for Congress. With his youngest child in middle school, the time seemed right for the job, which pays about $146,000 a year – a fraction of what New York money managers earn.

With little name recognition, Briner says he expects to rely on digital media to get his message out before the March primary.

Johnson says she’s been traveling across the state for campaign events, noting she attended many GOP meetings in support of her husband’s campaign. She and Daoud, a  small business owner and veteran GOP activist, “are not strangers to grassroots voters, and we’re not hoping to win this race by being a faceless keyboard cowboy,” she said via email.

(The author of this story formerly worked for Bloomberg News. He did not know Mr. Briner or interact with him until he announced his candidacy in December.)

David Mildenberg
David Mildenberg
David Mildenberg is editor of Business North Carolina. Reach him at dmildenberg@businessnc.com.

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