State Treasurer Dale Folwell is a straight shooter’s straight shooter, with a well-deserved reputation for uncovering the political fictions that paper over state finances.
Folwell, a former state representative from Winston-Salem and Commerce department official, is quick to tell you he is a CPA. He’s quick to mention he’s a motorcycle mechanic and used to work on a garbage truck. He’s quick to tell you lots of other things too, and you’d better not be daydreaming or you’ll miss a ton.
Now that he is Treasurer, he’s not letting up one bit. On the contrary, his campaign was a call to arms, and in the early days of his tenure he is on the march.
Have you heard that the state has a $322 million budget surplus? Get real, Folwell says. We’re in a $47 billion hole.
Folwell, a Republican, has been beating this drum for a long time. He counts both a $15 billion future pension shortfall and $32 billion in unfunded future liabilities in the state health plan, which he says will require over $4 billion a year out of the General Assembly over the next 15 years.
When you’re talking about $47 billion in liabilities, it’s hard to know where to start. With the state employees’ pension fund, roughly $87 billion in assets, Folwell decided to start with the Wall Street money managers. Investment managers together make more than $500 million annually managing North Carolina’s billions, even though many do no better than index benchmarks.
Last fiscal year, the state pension fund earned a return of less than 1 percent. And while Folwell is loath to disparage his recent predecessors (all Democrats), former Treasurer Janet Cowell was roundly criticized including by Folwell during the campaign for the lavish fees paid to Wall Street.
So Folwell started calling the fund managers on the phone, one by one. It’s been uncomfortable for the managers, but Folwell considers it his fiduciary duty. He’s eyeing at least a 20 percent drop in management fees in his four-year term.
For the $32 billion health plan hole, Folwell has announced he will begin with an enrollment audit. An audit would catch employees who game the system, keeping divorced spouses and overage “children” on their plans illegally.
But saving money in the plans isn’t just about finding the cheaters. The last audit netted the health plan $21 million in savings. Savings equal lower premiums, which Folwell hopes will entice younger, healthier dependents of state employees into the plan the only way to stabilize the risk pool. The state plan, Folwell says, can be fixed: “The buying power of 750,000 people should be worth something.”
And just so you know, a recent headline above an otherwise excellent article, in his opinion has Folwell calling for tax hikes to close the gaps. He never said that, simply saying that new taxes or cuts to government services would be inevitable if the state doesn’t start soberly attacking the problem.Onward, fiscal soldier.NOTE: This editorial originally stated that Folwell pledged to cut 20 percent of management fees this year. That has been corrected to a 20 percent cut over the next four years. The error was the author’s.
Drew Elliot is a member of the North State Journal’s editorial board, separate from the news staff. Unlike other newspapers, the North State Journal does not publish unsigned editorials; the author or authors of every editorial, letter, op-ed, and column is prominently displayed. To submit a letter or op-ed, see our submission guidelines.