North Carolina’s new treasurer, Dale Folwell, is leading the charge to address issues with the state’s unfunded retiree benefits before they become a big problem down the road.
Currently, the AP reports, North Carolina’s retirement system is valued at about $90 billion, meaning retirees are not in immediate danger of losing health coverage or missing monthly pension checks. This valuation lands the state’s fund among the ranks of the healthiest pension programs in the U.S.
However, the unfunded liability for state retirees’ healthcare and pension benefits is almost $38 billion, so Folwell wants to stop putting off solutions to the problem. He’s leading a committee that recently voted to recommend that the Legislature set aside funds each year to fund the retirement system.
The proposal would require legislative approval to implement. It calls for putting $153 million in a special fund in 2018, followed by a 10-year model that would calculate future contributions on a formula based on state revenues and the state’s ability to issue debt sensibly. Yearly payments to the retirement system would be mostly flat through 2020 and then increase thereafter. Contributions could reach $683 million in 2026.
Folwell pushed this issue several times as a North Carolina legislator, but the bills never got much attention. If it’s to move forward now, he will again have to convince legislators of the issue’s importance. Whether the proposal would come with measures to raise taxes or cut spending is yet to be determined.
