Examining the race for North Carolina Treasurer

Thanks for joining us this morning. Continuing our focus on down ballot races, we’re assessing the state treasurer race today.
 
We’ll get right to it.
 
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North Carolina’s treasurer is among the most powerful keepers of the public purse in the country. That’s because, as Business NC reported this week, North Carolina “is one of the three remaining states that use a sole fiduciary model of pension fund management. That means the treasurer has the sole power to make investment decisions on behalf of the fund.”
 
The pension fund right sits at about $125 billion – a very large sum overseen by just one elected official.
 
In addition to managing the pension fund, the state treasurer also oversees the day-to-day operations of the State Health Plan, which covers billions of dollars of health expenses every year for 740,000 state employees, retirees, and their dependents.
 
Incumbent Treasurer Dale Folwell (R) is retiring this year. The two candidates vying to replace him bring very different experience to the role. Whoever wins will face acute challenges to both the pension fund and the State Health Plan upon assuming office.
 
First, the candidates. Democrat Wesley Harris represents part of Mecklenburg County in the state House of Representatives. He graduated from UNC-Chapel Hill and earned a PhD in economics from Clemson University. He wrote his dissertation on political geography, suggesting that population density in cities “allows more affluent individuals to observe the benefits associated with government redistribution more so than in a rural area.”
 
After earning his PhD, Harris worked at EY (formerly Ernst & Young) as “Transfer Pricing Senior” for four years, per his LinkedIn profile, and then as a senior consultant at Dixon, Hughes, Goodman, LLP, an accounting firm. He ran for the General Assembly in 2018 and has served there ever since.
 
Business NC reported that Harris’s economic disclosure shows he does not own stocks or real estate exceeding $10,000, and that he has debt in excess of $10,000 to both a bank and a credit card company.
 
Republican Brad Briner is running for office for the first time. He was a Morehead scholar at UNC before earning his MBA from Harvard Business School.
 
Briner recently retired as a leader at Willett Advisors, which “manages the personal fortune of billionaire Michael Bloomberg,” Business NC reported. Before that, Briner worked at Morgan Creek Capital, UNC Management (which handles UNC’s endowment), and Goldman Sachs. He currently serves on the UNC Board of Trustees.
 
Now, onto the challenges Briner or Harris will confront next year.
 
The returns of the North Carolina pension fund rank at or near the bottom nationally. Treasurer Dale Folwell has said his conservative investment strategy avoided potential losses had the market seen a downturn.
 
Both Briner and Harris say they would do more to maximize returns. “We have performed about 2.5% lower annually than median state pension plans,” Briner said on PBS State Lines recently. “So 2.5% each year times $125 billion ends up being a lot of money.”
 
Briner argues the fund’s current investment mix – half stocks, half bonds – should be closer to 70% stocks, 30% bonds. Harris agrees: “We have 14% of our $125 billion pension plan sitting in cash. That’s getting zero returns. It’s actually getting negative returns because we have inflation.”
 
Briner and Harris differ on the proper governance structure for the pension fund. Briner would lobby the legislature to do away with North Carolina’s sole fiduciary model. He points to what happened to treasurers in the other two states with sole fiduciaries, New York and Connecticut: They went to jail for corruption. Briner prefers a model adopted by 47 other states that involves a board or committee with control over the fund.
 
Harris wants the treasurer to maintain sole control, and has attacked Briner’s proposal as diluting the treasurer’s power.
 
The new treasurer will also inherit a State Health Plan facing insolvency. “The minimum amount the plan needs to pay for services is projected to fall below the plan’s required threshold by 2026,” WRAL reported. Briner suggested in a recent interview that improving returns on the state pension fund may provide the legislature some fiscal breathing room to help rescue the State Health Plan.
 
And Jan. 1, 2025, won’t be the first day for the just the new treasurer. Aetna will replace Blue Cross Blue Shield as the State Health Plan’s third-party administrator beginning next year. The transition has been underway for two years, and Folwell, Briner, and Harris have not raised concerns about the switch, but speed bumps are possible at the start.
 
Whoever wins the job will have a challenging first term. Briner seems more of a technocrat, and has chops as an investment manager in the upper echelons of finance. Harris, who has been in office for the better part of a decade, is the more traditional political figure.