As usual, we have some good news coming out of the State Treasures office this week. First, we begin with the pension plan…
State Treasurer Dale R. Folwell, CPA reported that the state pension fund posted overall gains of 7.3 percent for Fiscal Year 2017-2018. However, earnings to date for 2018 reflected only a 1.3 percent increase. The approximately $100 billion fund, known as the North Carolina Retirement Systems, is managed by the N.C. Department of State Treasurer.
A 7.3% return is nothing to sneeze at, but as you can see its not all good news. Despite a 7.3% return, the fund is dealing with the problems plaguing every pension fund in the country, too many recipients. Brian Balfour at Civitas explains…http://shorturl.at/ikESY
The state budget passed earlier this summer requires pension contributions from state agencies of 12.29 percent of payroll (see pg. 203). That comes to a rough estimate of almost $1.5 billion in taxpayer dollars in this year’s budget going toward retiree pension payments. That’s more money than the budget devotes to the entire community college system, and about half spent on the entire UNC system.
The 12.29 percent rate is up nearly by half from the 8.33% used just six years ago. In dollar terms, the nearly $1.5 billion in taxpayer funds for pension benefits is up from about $800 million just six years ago – a staggering spike of about 85 percent. In short, pension obligations are ballooning at an unsustainable pace.
North Carolina’s pension bomb is exploding before our eyes. This isn’t partisan, its just math.
Despite the problems with the pension, all the rest of the news is good. Treasurer Folwell was able to freeze health care premiums without dipping into reserves…
The freeze for 2019 comes at a time when the Congressional Budget Office is predicting that Affordable Care Act, or Obamacare, premiums will increase by as much as 15 percent next year. Treasurer Folwell and the State Health Plan paid for the freeze by renegotiating 2019 rates with UnitedHealthcare to provide Medicare-eligible retirees with Group Medicare Advantage Plans. The renegotiation saved approximately $55 million.
The Treasurer’s office also had good news about the recent bond sale. Thanks to the General Assembly’s fiscal prudence the taxpayers saved a bunch of money…
The bond sale comes just after all three major national bond rating agencies re-affirmed the state’s “AAA” bond rating, noting the state’s strong economy, growing reserves and conservative fiscal management. North Carolina is one of only 13 states that have an “AAA” rating from all major rating agencies.
“Continuing to have all three agencies affirm our ‘AAA’ rating is essential,” said Treasurer Folwell. “This allows us to get very favorable rates, saving taxpayers millions of dollars.
Dale Folwell continues to kill it in the Treasurer’s office. His only hiccup is a problem that every state in the union is dealing with and our problems are far less severe than most. There is little doubt in my mind that North Carolina is in a far better place financially now and we owe Dale Folwell a lot for that.