RALEIGH — January updates from the North Carolina State Treasurer’s Office included key topics such as retiree cost-of-living adjustments, provider strategies for the State Health Plan and a positive report on the state’s debt affordability outlook.
On Jan. 29, the North Carolina Retirement Systems (NCRS) Board of Trustees approved modifications to policies aimed at facilitating cost-of-living (COLA) adjustments for retirees in the Teachers’ and State Employees’ Retirement System (TSERS) and the Local Governmental Employees’ Retirement System (LGERS), potentially starting in fiscal year 2027.
For TSERS, the board directed staff to develop proposals to produce year-to-year recommendations for COLAs based on “sufficient” investment gains. The current approach requires all gains be put toward reducing unfunded liabilities. COLA changes require legislative approval, but the General Assembly has not granted approval for a COLA change since 2017, according to a press release by Treasurer Brad Briner’s office.
For LGERS, the board held a separate vote authorizing the use of sufficient investment gains for COLAs or supplemental increases without increasing employer contribution rates.
The board also approved recommended employer contribution rates for the fiscal year ending 2027. The recommended rates included:
- TSERS, 17.49% of employee compensation
- Consolidated Judicial Retirement System, 40.68% of employee compensation
- Legislative Retirement System, 17.87% of employee compensation
- Disability Income Plan of North Carolina, 0.06% of employee compensation
- North Carolina National Guard Pension Fund, in the amount of $1,173,123
The State Health Plan’s (SHP) Board of Trustees also met Jan. 29, moving Phase One of its “Preferred Provider Strategy” forward by approving contracts with three clinically integrated networks (CINs): Aledade, Community Care Physician Network and UNC Health Alliance.
The contracts involved with those providers total more than $3 million.
Aledade North Carolina Market President Alex Mullineaux called the move a “win-win.”
“This effort shows that investing in independent primary care is a win-win for North Carolina physicians and state employees — demonstrating that incentivizing preventive care keeps employees healthy, ensures access to care statewide and saves money for the system in the long run,” said Mullineaux.
According to the presentation given to the SHP Board, the Preferred Provider Strategy would seek to enhance member health outcomes, improve care coordination, reduce overall costs through quality-based incentives and greater transparency, and provide lower copays, ranging from $10 to $15 depending on plan type.
For members using preferred providers, which include about 4,500 providers statewide. The strategy reduces administrative burdens, such as prior authorizations, particularly for smaller and rural providers.
The presentation also noted that Phase Two will focus on maternity, dermatology and independent pharmacies.
“In 2025, we had a revenue problem. In 2026, we have a cost problem,” said Briner, who chairs the SHP Board of Trustees. “This preferred provider strategy is one of the tools we are using to confront that challenge head-on — by rewarding quality, improving coordination of care and bending the cost curve in a way that aims to protect our members.”
The new strategy follows the Dec. 31, 2025, end of the previous Clear Pricing Project, instituted under Briner’s predecessor, Dale Folwell.
A few days prior, on Jan. 27, the Debt Affordability Advisory Committee (DAAC), also chaired by Briner, approved its annual report, concluding that North Carolina maintains significant borrowing capacity due to its triple-A credit rating and conservative debt management.
According to the press release, the DAAC report says that over the next 10 years, the state could borrow “nearly $2 billion” for capital projects and “$155 million annually for transportation projects.”
“The study determined the General Fund debt capacity is $11.68 billion in 2026, or $1.93 billion annually if spread equally over the next 10 years,” the press release reads. “The Highway Trust Fund debt capacity is $920 million in 2026, or $155 million if spread in equal amounts over the next 10 years.”
Without new debt issuance, general fund debt service is projected to decline by more than 85% and be eliminated by June 30, 2039, according to the report.
The DAAC annual report serves as guidance for both the governor and lawmakers on debt management and spending priorities.
