You can be a more informed voter
By: Steve Trubilla
He is a liar, she is a crook. Would you like to read a big juicy story about corruption or a sex scandal? Well, then this one is not what you are looking for. Turn the TV on or pick up another paper, I am sure you will find that story.
Those stories are easy to write; they boost ratings, entertain the masses, and sell really well. They are about as challenging to craft as it is to open a can of peas.
I promise this story is not going to be very entertaining. Equally I promise it contains the kind of information you need if you are interested in making an informed decision when you vote for who the next North Carolina Secretary of the Treasury is going to be.
Some time ago I learned of a serious crisis looming over the North Carolina State Pension Fund. The more I learned of it the deeper I drilled.
In July 2016, the NC State Treasurer released annual performance figures for the N.C. pension fund, which is responsible for the retirement assets of nearly one million of our state's teachers, state/local employees, law enforcement, firefighters, rescue workers and National Guard members. This report showed that the plan's rate of return was less than 1 percent for the fiscal year. Even though it is reported to be 95 percent funded, according to a recent report from the Mercatus Center at George Mason University, the N.C. Pension Fund is facing a $34.5 billion shortfall.
There is something very wrong here. How can this be 95 percent funded if there is a $34.5 billion shortfall? I will admit I am lost when it comes to modern math. But I am not lost when it comes to political double talk.
Why does this matter? It matters because our state employees -- nearly one million of our neighbors -- are relying on this pension plan to fulfill the financial promises made to them when they retire. You may well be one of them, or maybe a family member is.
The ability to fulfill those promises is based on the pension plan being able to produce enough income to pay out retirement benefits. Pension fund investments earnings combined with the contributions made by public workers and their underlying departments is what makes the fund mathematically work.
It is pretty clear if the investment return calculation is flawed the money will not be there when it comes time to pay out the earned benefit. The people that screwed it up will be long gone when your time comes to retire.
Politicians like to jump on the, "what I will give you band wagon," but they never get into the details of where the money is going to come from. If you want to have some real fun ask one of them about the $34.5 billion. After the blank stare, you will most likely hear, "I have to get back to you on that." Do not hold your breath waiting.
So how did we get here, better question, where are we going? I have not read even one story about it, or seen it reported anywhere, have you? The opportunity presented for me to ask this of Dale R. Folwell, a CPA from Winston Salem and candidate for N.C. Treasurer this question. He is the former N.C. Assistant Secretary of Commerce.
In summary this is what he shared with me.
There are combinations of factors at play. First and foremost, the N.C. Pension Fund has not achieved its assumed rate of return of 7.25 percent on average for the past 15 years.
My stars if the projection has not been met in 15 years what would make anyone think it will in the next 15 years, or for that matter even next year? The 7.25 percent return is clearly unrealistic. Who do you know that is getting this kind of a return on their investments?
I understand financial markets are up and down, but common sense would seem to dictate a course correction in a zero interest rate environment.
While the investment returns have tanked, fees the fund paid to Wall Street managers have ballooned by more than 1,100 percent since 2000. In 2016, the fund paid Wall Street $519 million for management. Folwell has pledged to cut those fees by $100 million.
To some this may make sense, but not to me. The pension fund on its current course is unsustainable.
I really appreciate Folwell's willingness to speak to me on these issues. Looking at his career, he has a proven track record of solving difficult and complex problems.
That is what we need, leadership that will fix this, not just kick the can down the road.
You may now know more about this than you wanted to, but not more than you needed to. You are now a more informed voter.
This article was published on October 20, 2016 in the Franklin Times newspaper in Louisburg, North Carolina. "Paper Bullets"
By: Steve Trubilla
He is a liar, she is a crook. Would you like to read a big juicy story about corruption or a sex scandal? Well, then this one is not what you are looking for. Turn the TV on or pick up another paper, I am sure you will find that story.
Those stories are easy to write; they boost ratings, entertain the masses, and sell really well. They are about as challenging to craft as it is to open a can of peas.
I promise this story is not going to be very entertaining. Equally I promise it contains the kind of information you need if you are interested in making an informed decision when you vote for who the next North Carolina Secretary of the Treasury is going to be.
Some time ago I learned of a serious crisis looming over the North Carolina State Pension Fund. The more I learned of it the deeper I drilled.
In July 2016, the NC State Treasurer released annual performance figures for the N.C. pension fund, which is responsible for the retirement assets of nearly one million of our state's teachers, state/local employees, law enforcement, firefighters, rescue workers and National Guard members. This report showed that the plan's rate of return was less than 1 percent for the fiscal year. Even though it is reported to be 95 percent funded, according to a recent report from the Mercatus Center at George Mason University, the N.C. Pension Fund is facing a $34.5 billion shortfall.
There is something very wrong here. How can this be 95 percent funded if there is a $34.5 billion shortfall? I will admit I am lost when it comes to modern math. But I am not lost when it comes to political double talk.
Why does this matter? It matters because our state employees -- nearly one million of our neighbors -- are relying on this pension plan to fulfill the financial promises made to them when they retire. You may well be one of them, or maybe a family member is.
The ability to fulfill those promises is based on the pension plan being able to produce enough income to pay out retirement benefits. Pension fund investments earnings combined with the contributions made by public workers and their underlying departments is what makes the fund mathematically work.
It is pretty clear if the investment return calculation is flawed the money will not be there when it comes time to pay out the earned benefit. The people that screwed it up will be long gone when your time comes to retire.
Politicians like to jump on the, "what I will give you band wagon," but they never get into the details of where the money is going to come from. If you want to have some real fun ask one of them about the $34.5 billion. After the blank stare, you will most likely hear, "I have to get back to you on that." Do not hold your breath waiting.
So how did we get here, better question, where are we going? I have not read even one story about it, or seen it reported anywhere, have you? The opportunity presented for me to ask this of Dale R. Folwell, a CPA from Winston Salem and candidate for N.C. Treasurer this question. He is the former N.C. Assistant Secretary of Commerce.
In summary this is what he shared with me.
There are combinations of factors at play. First and foremost, the N.C. Pension Fund has not achieved its assumed rate of return of 7.25 percent on average for the past 15 years.
My stars if the projection has not been met in 15 years what would make anyone think it will in the next 15 years, or for that matter even next year? The 7.25 percent return is clearly unrealistic. Who do you know that is getting this kind of a return on their investments?
I understand financial markets are up and down, but common sense would seem to dictate a course correction in a zero interest rate environment.
While the investment returns have tanked, fees the fund paid to Wall Street managers have ballooned by more than 1,100 percent since 2000. In 2016, the fund paid Wall Street $519 million for management. Folwell has pledged to cut those fees by $100 million.
To some this may make sense, but not to me. The pension fund on its current course is unsustainable.
I really appreciate Folwell's willingness to speak to me on these issues. Looking at his career, he has a proven track record of solving difficult and complex problems.
That is what we need, leadership that will fix this, not just kick the can down the road.
You may now know more about this than you wanted to, but not more than you needed to. You are now a more informed voter.
This article was published on October 20, 2016 in the Franklin Times newspaper in Louisburg, North Carolina. "Paper Bullets"
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