BY DEBBIE PAGE
Striding across the Starbucks, Republican State Treasurer candidate Dale Folwell apologizes for being a few minutes late. Though it’s barely 11 a.m., he has already appeared at two events in Mecklenburg County before stopping in Statesville to discuss his mission to “apply for the position of state treasurer and chief financial officer" and fix North Carolina’s ailing employee pension fund and state employee health care plan.
The state treasurer is responsible for overseeing the state’s $90 billion pension plan and the state health plan for more than 700,000 teachers, state employees, retirees, and their families.
“The biggest business in the state is the state itself, so when you do something to benefit business, like reforming workman’s comp or unemployment insurance, it benefits the taxpayers too,” Folwell explained.
If elected in November, he promises to “make employees’ money work as hard as it can.” In his first three weeks on the job, he would “find out where the pension money is, who is managing it, how good they are it, and how much money are they making doing it.”
SAVING THE STATE EMPLOYEES HEALTHCARE PLAN
During his legislative career, Folwell, who is a CPA, helped pass bills that have saved the state's cities, counties, and volunteer fire departments millions of dollars. “Now I want to take that expertise and apply it to the huge problem that’s facing our state -- the unfunded teacher/state employee health plan, which has a $30 billion hole."
“Teachers have received promises that they would have lifetime healthcare, but nothing has been put aside for that like they did for pensions. They kicked that can down the road, and now that can is the size of USS North Carolina, and it’s got to be addressed,” added Folwell.
“The other tragic thing about the health plan is that we have beginning highway patrolmen, teachers, and DOT workers who have to work one day per week to make their family health insurance premiums this year -- in some cases a day and a half per week."
He is distressed that people who are so vital to the success of society -- teachers, police officers, and firefighters -- are struggling to provide heath care for their own families. Currently, 21% of the state budget goes to keep to the state employees’ health and pension plans going, he said.
“One of the first things I’m going to do is to freeze family premiums for all four years if I am treasurer. Starting their career in the state, many young employees’ families are going without health care," he said. "We are driving young, healthy families off the state health plan because they cannot afford it."
WEAK PENSION FUND PERFORMANCE AND WASTE
State Treasurer Janet Cowell’s office reports that about only .5% of the state pension fund goes to management fees, but that figure represents a nearly 1,000% jump in fees in the last ten years, said Folwell, citing a recent WRAL report.
In 2000, the fund spent $41 million in outside fund management fees, which jumped to $513 million this past fiscal year. The pension fund had $59 billion in 2000 and currently has $87 billion on hand, so the fund’s 47% growth is much slower than the increase in fees.
“The first thing I’m going to do is cut $100 million out of the financial management fees that state employees now pay,” Folwell promised.
The State Employees Association of North Carolina (SEANC) has sounded the alarm for some time that the State Treasurer's Office is wasting state employees’ pension funds paying exorbitant fees and receiving poor rates of return in its “experimental” investments in higher risk ventures.
The unrealistic assumed rate of return for the pension fund, 7.25%, is the basis on which expected investment return is calculated. This state pension plan, one of the largest pools of money in the world, according to Folwell, has not met this projection in 15 years.
Folwell thinks a more realistic projection is 5.25%.
However, lowering this projection will cause another budget headache for state legislators, who will have to come up with millions of dollars to keep the promises made to state employees in their pension plan. However, with more transparency and accountability and cutting waste, Folwell believes the legislature will be willing to step up.
“If I am treasurer, I will open the books. There are two places where the sun is going to shine -- geographically and in the state treasurer’s office. And if I find anyone in the treasurer’s office who has put their personal gain over their loyalty to the state employees of North Carolina, we will pursue those issues. Everyone will have the same loyalty -- to the participants in the plan.”
“This job is about integrity, ability, and passion. You can be a rock star in ability and passion, but without integrity, it’s nothing.”