Sunday, July 14, 2024

State Treasurer Dale Folwell relishes the chance to stir it up

Photos by Christer Berg

Dale Folwell has put himself in collections. It’s not that the North Carolina state treasurer necessarily objects to paying the charges he incurred for a checkup at a Winston-Salem hospital; it’s more that he wants “to see exactly what a person goes through when they don’t pay their medical bills.” 

The amount is small, a few thousand dollars, but the objective is big: bring yet more attention to what he says is the “weaponization of credit” on the part of the hospitals and the damage this inflicts on those at the lower rungs of the economic ladder. This, he says, can be ruinous. 

Folwell’s antipathy for large hospital systems is well documented. It appears to be reciprocated if a July 2019 email from a Cone Health executive in Greensboro to the State Health Plan is representative. Characterizing state plan executives, including Folwell, as “sorry SOBs,” the writer suggested that they “burn in hell.” To date, Folwell’s quest to establish better transparency in hospital pricing has had a certain tilting-against-windmills quality to it, but it’s hard to doubt his sincerity. In late May, he upped the ante again and backed a N.C. House bill intended to “limit the ability of large medical facilities to charge unreasonable interest rates and employ unfair tactics in debt collection.”

The North Carolina Healthcare Association avers that it has moved on. The trade group’s lobbyist, Cody Hand, says, “We’re not bothered by what the treasurer does or doesn’t say about us,” he says. “We would be happy to work with (him) to design a plan of care that puts the state employees and retirees in the driver’s seat.” 

The little guy

The collections matter shines a light on what appears to be a key element of Folwell’s approach to running the treasurer’s office. He tends to view things filtered through personal experiences, whether it’s his mother’s job on a hospital switchboard or his years spent collecting garbage in Winston-Salem. His sympathies lie with the little guy. It is, he says, in his Quaker blood to be “fair and just.”

Folwell has racked up some notable successes during his nearly 20-year career in state government. He cites his role in helping improve the state’s workers’ compensation program finances while serving as assistant commerce secretary under Gov. Pat McCrory. During his tenure, the system went from a deficit of about $2.5 billion to a surplus of $1 billion in part by levying a surcharge on employers and more closely scrutinizing payouts. Other major achievements he invokes include his efforts to expand organ donation awareness and a bill moving the cutoff date for children entering kindergarten from October to August.

The lifelong Republican has been elected treasurer twice, both times by about 5.5 percentage points, even as Gov. Roy Cooper, a Democrat, won at the top of the ballot. In 2016, he defeated Dan Blue III by about 244,000 votes out of 4.45 million cast. He won again in 2020, beating Ronnie Chatterji by 275,000 votes, this time with 5.35 million votes cast.

Of his current position, he likes to say, “We’re in the check-writing business,” referring to the 950,000 or so North Carolinians who depend on the state for health care and retirement benefits. 

Here again, he has taken this responsibility personally, traveling the state and handing out payments from North Carolina’s Unclaimed Property Division, which is part of the treasury. In March, he delivered $2,593.04 to the United Way in Montreat. More recently, he delivered  $9,900 to the March of Dimes in Wilmington.  

Ask me anything

The treasurer’s office is located in a nondescript building in an office park just north of downtown Raleigh. The place suggests someone who is frugal with the public purse; there is a standard-issue conference room flanked by a warren of offices and cubicles. This day’s agenda includes the weekly Council of State meeting, with Gov. Cooper, Attorney General Josh Stein, Secretary of State Elaine Marshall and others. This week it is being held via Zoom. Folwell dials in from a windowless room via a computer sitting atop three volumes of the general statutes of North Carolina. When it’s his turn to speak, he recognizes the work done by bank tellers and calls out an individual teller for flagging an instance of check “whitewashing” (erasing and overwriting the name of the original recipient in order to divert funds). 

Following the meeting, Folwell returns to the conference room to host his monthly  “Ask Me Anything” call with the media. (No other statewide elected official has a similar event.) One subject of inquiry this day is his effort to recoup an $80 million hit to the pension plan as a result of Russia’s invasion of Ukraine and the subsequent freezing of trading in Russian assets shortly after the start of the war. Folwell hosted a conference call with 27 state treasurers (or their representatives) with the goal of challenging federal laws on sovereign immunity that make it impossible for states to sue to recover the loss. 

In North Carolina’s case, the assets are held in its public equity portfolio, split between index and actively managed funds. Though the $80 million is practically a rounding error in a plan with $113 billion in assets, Folwell sees a principle at stake.

Wall Street has been another target for the treasurer, who came into office vowing to reduce the fees paid by the state’s pension plan. By his count, he’s saved about $250 million over the course of his tenure. But critics question if it’s been a penny-wise, pound-foolish approach. 

Andrew Silton, who served as chief investment officer for the state plan from 2001 to 2005, notes that the S&P 500 more or less doubled from 2015 through December 2021. Over that time, cash held in the plan was as high as 10% of overall assets, well above the 1% target in the plan’s investment policy documents. Holding cash proved wise as the S&P 500 Index swooned about 20% in the first six months this year, but the longer-term impact of too much cash on the plan has been significant, according to Silton. 

“As of Dec. 31 (2021), I estimate the opportunity cost of not having invested in equities to be about $11 billion,” says Silton, against the $250 million savings in fees. “His own (Folwell’s) investment policy calls for the plan to have 1% cash. It calls for 42% equities. He has consistently run the equities somewhere in the mid-30s.”

In response, Folwell points out that he inherited the investment policy with its 1% cash cap, along with $14 billion in uncalled capital commitments made to various alternative
strategies that would need to be funded. New plan documents raise the cash limit to 5%. While not directly addressing the question of opportunity costs, he notes that the “plan had $89.1 billion (in assets) as of December 31, 2016 and has $114 billion in early June, 2022,” even as it paid out $33 billion between 2017 and 2021.

The plan’s annual return totaled 7.78% during the five years ending March 31, encompassing most of Folwell’s tenure. This exceeded the 6.5% assumed rate of return put in place on December 31, 2020 but trailed the long-term policy benchmark of 8.46%.

Another aspect of Folwell’s stewardship of the pension plan has drawn praise, including from Silton. Unlike many peers, the treasurer has systematically overseen the reduction of the plan’s anticipated rate of return from 7.25% to the current 6.5%. This rate dictates the amount of money that has to be set aside to meet future pension obligations to retired state employees. The higher the assumed return, the smaller the contributions that governments and plan participants need to make to meet actuarial requirements. 

Politics tends to steer plan administrators toward an optimistic view of the markets. This, however, has the effect of pushing problems into the future. If the plan fails to achieve the projected return, it can come up short on cash to pay beneficiaries. North Carolina’s state pension plan has historically been well funded. The Pew Charitable Trust reported last year that the plan was 88% funded, using 2019 data, placing North Carolina ninth among the states. By comparison, the plans in Illinois and New Jersey are around 40% funded.

“It sends the right signal,” says Silton of the lower assumed rate of return. “It’s more realistic.” 

Folwell is one of only two N.C. treasurers who have reduced the plan’s assumed rate of return over the past 60 years and, as he says, “I’ve done it two times in four years.” 

Dale Folwell is North Carolina treasurer
▲ More transparency in health care pricing would make the state more attractive to business, Folwell says.

The bigger picture

Later at a meeting of the Local Government Council, a considerable amount of energy was spent on the financial problems of Spring Lake in eastern North Carolina, a town with a population of 12,000 and a budget of about $13 million. Among other things, a state audit earlier this year reported that about $430,000 was missing. The former Spring Lake finance director was charged with embezzlement, bank fraud and identity theft in June. 

The LGC, which is chaired by Folwell, oversees about 1,100 local governments around the state. It assumed control of Spring Lake’s finances last October. Under Folwell’s direction, the commission is putting the town back on a sustainable financial footing. Perhaps a minor matter in a state with a $25 billion annual budget, it’s emblematic of the nuts-and-bolts philosophy of government that appeals to the former motorcycle mechanic. 

His view: “If we keep addressing all these little things, we’ll get to the big things.” 

There are big things to consider. The state continues to grow and compete against places like Austin, Texas, California’s Silicon Valley and other favored locations for expanding companies. While Folwell declines to comment specifically on the $1 billion-plus in economic incentives used to help attract the likes of Apple, Google, and Toyota to the state, he is generally opposed to large corporate incentives used to lure industry. 

He questions the government’s ability to pick economic winners and losers. Incentives or not, he is confident North Carolina is well-positioned to win economic development battles.

“I give us an A-plus for the business certainty for anyone who wants to relocate or expand in North Carolina,” he says. “Regulatory and tax certainty are two of the biggest (considerations). And now we’re seeing a phase-out of the corporate income tax (over the next 4.5 years), going to zero.” 

One important piece is missing in the state’s economic arsenal, he says, which brings the discussion back to one of his favored topics. In his view, North Carolina is missing a huge opportunity to lead the nation in reducing health care costs. It will be an “economic gold rush if North Carolina becomes known as the state with transparent health care,” he says. “This is the No. 1 issue for businesses thinking about starting or expanding.”

Citing research suggesting that hospital consolidation leads to higher-cost care, he’s repeatedly criticized the sale of Wilmington’s New Hanover Regional to Novant Health and Asheville’s Mission Health to HCA Healthcare. He also denounced Atrium Health’s May announcement to partner with Downers Grove, Illinois-based Advocate Aurora Health Care, which would create the fifth-biggest U.S. hospital system. He said taxpayers “pick up the tab for tax-exempt, multibillion-dollar investment companies disguised as nonprofit hospitals.” 

The hospitals say increased scale leads to better health care, more opportunities for employees and a stronger ability to negotiate pricing with large insurers.

On another big picture issue, Folwell observes that North Carolina is poised to take advantage of the global shift toward sustainability. The state consumes four times more energy than it produces. At the same time, it ranks No. 3 nationally for total solar power capacity, trailing California (by a lot) and Texas. And, as Folwell notes, there’s a lot more sunlight out there as well as wind and biomass. More fully leveraging these renewable resources could reduce energy costs for the state’s consumers and make North Carolina more attractive for businesses looking to relocate, he says.

These kinds of big ideas could potentially provide a launch pad for a run at the governorship in 2024, should he decide to drive his 890-pound Honda Gold Wing motorcycle into the ring.  

Least likely person

North Carolina is often held up as emblematic of the economic polarization that has afflicted the country as a whole, with a growing, increasingly prosperous urban population and small towns stagnating. On the one hand, there is Apple moving into the Triangle with plans to pay average wages of $185,000 a year. On the other hand, there are towns like Spring Lake. Squaring that circle won’t be easy.

Folwell seems most comfortable speaking to those places he calls the “arms and legs of the state” —  the small towns and cities that found themselves steamrollered by decades of “world is flat” globalism. He’s an advocate for better access to rural broadband, improved public education, and more affordable utilities. Like health care, he views this as a way to have a real impact on the poverty and lack of opportunities that persist in much of small-town North Carolina.

Folwell’s career has shown that there is more than one way to ascend to statewide office. As he puts it, “I’m the least likely person to be in this position.” He seems to mean both his idiosyncratic personal history and his willingness to take on the “three biggest cartels in the United States — the Wall Street cartel, the health care cartel, and the prescription drug cartel.” This has not, he says, made him popular with the powers that be. 

“First year (in office) I got 64 Christmas cards,” he says. “This year I got five, and two of those were to deceased treasurers.”

North Carolina’s treasurer has major influence, including having fiduciary responsibility for the state pension fund that provides retirement benefits for more than 950,000 people. The treasurer also oversees the State Health Plan, which provides benefits to 750,000 current and retired public employees. Unlike most states, it’s an elected position.

Lots of Longevity

North Carolina has had only five state treasurers in the last six decades.

Edwin Gill (1953-1977)

The Laurinburg native passed the State Bar exam and practiced law but never earned a bachelor’s or law degree. After serving in various state jobs, he was appointed treasurer in 1953 and was re-elected four times. North Carolina received its first Triple A bond credit rating during his tenure.

Harlan Boyles (1977-2001)

The Lincoln County native and UNC Chapel Hill accounting graduate won six elections as he became a widely admired expert on the state’s finances. He was known for a tight-fisted fiscal approach that limited state borrowing, earning his nickname as the “Keeper of the Public Purse.” 

Richard Moore (2001-2009)

As treasurer, Moore gained national attention for advocating for shareholder rights, earning an appointment to the executive board of the New York Stock Exchange. The Wake Forest University bachelor’s and law degree graduate expanded the treasurer’s investment management operation to include more alternative investing strategies.  After losing a Democratic primary bid to become governor in 2008, he became CEO of First Bancorp in 2012. The Southern Pines-based company has 113 offices in the Carolinas and $10.6 billion in assets. 

Janet Cowell (2009-2017)

The Wharton MBA was a Raleigh city councilor and state senator before winning two elections for treasurer. She then became CEO of Girls Who Invest, a New York-based nonprofit. In January 2021, she was named CEO of Dix Park Conservancy, a public-private partnership developing the 300-acre park near downtown Raleigh.   

Dale Folwell (2017-present)

He’s the first Republican to hold the job since David Jenkins, who had the post during the Reconstruction era from 1868-1876. He served four terms in the N.C. House of Representatives.  


Jeffrey Smith, Investment Director …. $317,750
Chris Morris, Investment Director …. 276,750
Craig Demko, Investment Director …. 263,102
Ronald Funderburk, Investment Director …. 246,727
Rhonda Smith, Investment Director …. 243,096
Frances Lawrence, Chief Financial Officer …. 242,754
William Hall, Investment Director …. 231,382
Troy March, Investment Director …. 230,626
Matthew Krimm, Investment Operations Director …. 210,533
Michael Nichols, Investment Portfolio Manager …. 207,074

About 25 department employees earn more than Folwell, whose current annual salary is $140,116.

Source: Raleigh News & Observer from state database

Does Dale Folwell want to be governor? He won’t answer the question directly, but his relentless statewide travel to address civic organizations and Republican groups and heavy media presence hint that he would relish the opportunity. 
Jumping from the treasurer’s office to the Governor’s mansion has never happened in North Carolina. A more traditional path is from the attorney general or lieutenant governor slots. And most pundits say the leading contenders to succeed Roy Cooper after the 2024 elections  are Attorney General Josh Stein, a Democrat, or Lt. Gov. Mark Robinson, who has quickly developed a strong following with conservative Republicans.

Still, Folwell could be a formidable candidate because of his “countrypolitan style” of politicking, according to Mac McCorkle, a professor at Duke’s Sanford School of Government. Countrypolitan refers to the outlying counties in a metropolitan area. They tend to be more conservative than the cities, are growing rapidly and tended to favor Donald Trump in the 2020 presidential election.

“[Folwell is] a reformer but otherwise very conservative and could have some crossover appeal in a general election,” McCorkle says.

Joe Stewart, a longtime political aide and government affairs official in Raleigh, notes that Folwell has something of a built-in constituency in the 950,000 current and former state employees who are enrolled in health care and pension plans. The State Employees Association of North Carolina, which tends to lean Democrat, has twice supported him for treasurer, citing his “experience to manage our members’ retirement funds wisely.”

Robinson’s focus on social issues and Folwell’s emphasis on lunch-pail matters provide different populist agendas. Folwell, who typically defers questions on non-pocketbook issues, has been in elective office or held a government job since 1993. Robinson had never run for office until his election in 2020.

“Folwell has a pretty strong record to point to,” Stewart says. “He’s as tenacious as any state legislator I’ve ever worked with.” ■

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