Dan Blue III - State Treasurer | Candidate Questionnaires - Statewide | Indy Week
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Dan Blue III - State Treasurer 

Name as it appears on the ballot: Dan Blue III

Campaign website: bluefornc.com

Phone number: 919-229-9323

Email: info@bluefornc.com

Years lived in the state: 36 years

What are the three most pressing issues facing the treasurer’s office? How would you deal with those issues? What are your priorities?

The three most pressing issues facing North Carolina’s next treasurer are: first, protecting the public employee retirement system so that the state can recruit and retain talented employees and those employees can retire with the dignity and security they have earned; second, improving the State Health Plan so that it offers affordable services for its members while controlling costs; and third, maintaining North Carolina’s AAA bond rating so that the state is able keep its financing costs low and make the critical investments in infrastructure that our state needs.

• Protecting the public employee retirement system.  Our public pension system is well-funded but faces challenges going forward, including a difficult investment environment. I will reduce the costs, particularly management fees and expenses, by bringing certain investment functions in-house in a responsible manner that does not increase the risk to our investments. [need to add defined benefit] I will be a strong advocate for a defined benefit plan for our retirees.  I will work the the General Assembly, the governing boards for the plans, and the investment advisory committee to ensure that the pension is stable and responsibly managed.

• Stabilizing our State Health Plan. Like many other health plans, our State Health Plan is struggling to manage the increasing costs of care and aging demographics. As Treasurer, I will aggressively negotiate with our key vendors to reduce costs [PBM, TPA].  Too often, our discussion on the health plan focuses on striking the balance benefits offered and the premiums and copays charged to the employees.  I will maintain a long-term goal of improving health within our covered population; a healthier population will reduce costs of care.

• Maintaining our AAA bond rating. North Carolina enjoys a AAA bond rating because of good financial management practices at the state and local level. North Carolina is woefully behind in building a 21st century foundation to serve us for the next 50 years. The Treasurer’s office is responsible for the Local Government Commission that approves all bond requests for counties, municipalities and the state. Communities across North Carolina need to build new schools, water treatment facilities, roads, bridges, airport facilities and many other critical projects. I intend to visit all 100 counties in my first 12 months in office to help communities identify their needs and ensure they have the resources necessary to make these critical improvements.

2. What in your experience, political or otherwise, demonstrates your ability to be an effective state treasurer from the time you enter office? Given that experience, what would you need to learn?

My breadth of experience in across healthcare, banking, and local government that qualifies me to be Treasurer. In light of the fact that the Department oversees the health and pension plans for state employees, issues and manages all state and local debt and invests over $100 billion in state and pension fund assets, I believe that my education and professional experience qualify me to take on the challenges I would deal with as State Treasurer.   

I am a product of the North Carolina public school system, having attended Enloe High School.  I earned a Bachelor of Science in Engineering from Duke University, where I studied biomedical engineering. I am a graduate of the Duke University School of Law and the Fuqua School of Business, with a Juris Doctor in law and a Masters of Business Administration.

I have spent my professional life focused on business and healthcare.  In my professional life I have worked with GlaxoWellcome to help found Healthmatics, a company that allowed health care personnel to manage and analyze medical information and quickly access that information during exams to reduce the cost of care. I have worked as an investment banker with Bear, Stearns & Co., advising help pharmaceutical, biotechnology, diagnostic and service companies raise capital and helping them to acquire new businesses.  I founded the Pharmaceutical Institute, a leading provider of specialized training for pharmaceutical and biotechnology professionals, and created jobs and curriculum.  Currently, I work alongside my father and brother in our law firm specializing in debt financing. Our firm has worked for the State of North Carolina and our private colleges and universities to raise money in support of infrastructure. In each area, I have been successful by working closely with others to reach mutually

The Department is a large public institution employing well over 300 individuals. Managing an organization of that size and complexity can be a challenge. But by assembling a team of professionals with experience managing large complex organizations, I believe that I can meet that challenge effectively. Given my experience in the private sector, I will need to learn how to successfully translate my experience into a public department that has a different set of constraints than most businesses.  Fortunately, the Department has a strong reputation for its professional culture.

3. How would you define yourself politically? Given that state treasurer Janet Cowell has a relatively good working relationship with both Republicans and Democrats, how would you work to continue that trend if elected treasurer?

I describe myself as socially progressive and fiscally responsible. In our system of government, politics are inevitable; but the politics in the office should not be partisan or petty.  If elected, I will reach out to the leadership at the General Assembly, Governor’s office and Council of State in an effort to work together to craft pragmatic policies that will both address our many problems and move North Carolina forward.

4. Cowell came under fire this spring for managing the state’s pension while serving on corporate boards, giving the perception of a conflict of interest. Would you state, unequivocally, that you would not accept a position on a corporate board while serving as state treasurer? Why or why not?

Yes, I will state and have stated, unequivocally, that I would not accept a position on a corporate board or accept outside employment while serving as state treasurer.  The Treasurer’s focus should be on managing the Department and serving the people of our state; the corporate board issue is an unnecessary distraction.

5. Do you approve of Cowell’s tenure as state treasurer? What has she done well? What policies would you hope to continue? What would you approach differently?

Yes, I approve of Cowell’s tenure. Treasurer Cowell took office at one of the most difficult times in our country’s financial history.  The Great Recession posed significant challenges to the pension plan’s investments and placed great stress on both state and local government resources. It was an environment characterized by rapid political and economic change. Yet, given all of that, our pension plan remains one of the best funded in the country, our state maintained its AAA bond rating and the Department gained a reputation as being one of the most responsive and effective in state government. In 2011, the Department took over management of the State Health Plan, adding a new dynamic to the Department’s functions.

There are some key areas that I would approach differently. Although the management fees are low in relative terms (approximately $513 million on $87 billion, or 0.5% of the total pension), the fees paid to outside managers are too high; I will focus on lowering them responsibly. We need to increase transparency within our investments so that the general public has a better understanding of how and where our pension money is invested; I will push for greater disclosure and will work with the General Assembly to adopt policies and legislation that serve the public’s interest in this area. Most of all, the Department needs to demonstrate its relevance to all of North Carolina; I will heavily emphasize a strong constituent services program and commit to visiting all 100 counties in my first 12 months in office to visit with constituents and our communities.

6. HB 2 is the most contentious issue of this election, and its effect on the economy has been substantial. Do you believe that HB 2 has or will negatively impact the state’s bond rating? If so, how would be your approach in making sure the damage is minimal?

In addition HB 2 has had a severe impact on our economy and has marred North Carolina’s reputation. If HB 2 is not repealed it will continue to harm our state’s ability to attract new industry and jobs which will affect our ability to maintain our AAA credit rating in the long term.

For example, North Carolina could lose approximately $5 billion per year in federal funding for public schools and universities (depending on the Justice Department’s pending lawsuit against the state for violation of Title IX). That is a significant risk and a loss of that magnitude would negatively impact our state’s credit rating.  Even more troubling is the impact of HB 2 on local communities; while the state may be able to withstand significant losses because of the sheer size of its economy, many of the communities losing concerts, sporting events, and business opportunities because of HB 2 are the same communities that have invested in infrastructure to attract those concerts, sporting events, and businesses. They will be challenged to maintain their credit ratings.   Greensboro, for example, projects that it will miss out on $17 million as a result of losing the NCAA championships.

Given the nature of the legislation, the best way to minimize the damage caused by HB2 is to repeal it in its entirety. A court ruling on the Justice Department’s lawsuit will eliminate the uncertainty around the Title IX issue, but the impact on the state’s reputation will still linger and we will continue to lose opportunities. I support the full repeal of HB2 and lend my voice to that proposal should I be elected Treasurer.

7. One of the most significant roles of the state treasurer is overseeing the state employee health plan. What would be your approach to managing the state employees’ health plan?

As a benefit, the health plan has been an attractive recruiting tool. Our state employees typically do not make high salaries and the health and pension benefits are an important part of their compensation. We must keep this in mind when considering changes to the health plan. With that said, there are two challenges to managing the State Health Plan. The first is controlling rising healthcare costs and the second is addressing the plan’s unfunded liability.  These two issues can be addressed in a way that preserves the system and avoids radical changes to employee health benefits.  Doing so will mean that we will have to do the following:  

• First, the plan has over 700,000 members. We should use our “buying power” to aggressively reduce costs wherever possible. For example, the state recently renegotiated its pharmacy benefits management contract; pharmacy benefits are approximately 27% of the health care expense in the health plan. Other contracts are up for renewal in the coming years and we can achieve tremendous savings based on our size alone.

• Second, and as we renegotiate contracts, we need to focus on health outcomes rather than fee-for-service type arrangements. We should be helping our members, and especially those with chronic conditions, maintain a healthy lifestyle and keep watch on their health. For example, over 50% of the members on the health plan have chronic illnesses, such as diabetes and hypertension, that can be managed successfully with prescribed medicines. Yet, medication adherence rates for active members with diabetes was 46% and hypertension was 57%, and when untreated, these conditions almost always lead to higher costs. This is an area where we can shift the risks away from the State Health Plan and onto the health care providers in a way that contributes to the health of our members.

• Third, the General Assembly will have to increase contributions, probably over a 20 to 30 year period ,if it is serious about addressing the unfunded liability issue.

More importantly, we need to broad the conversation beyond co-pays, premiums, and benefits and discuss health in North Carolina. Because the size and scope of the State Health Plan, the Treasurer’s office has a vested interest in affordable and accessible health care across North Carolina: its members use the same doctors and same facilities as the general public, and with over 700,000 members, the State Health Plan covers nearly one-tenth of the state’s population. Accordingly, public health will be a central focus of my administration if I am elected and we will find ways to improve the health of North Carolinians across our state, including those on the State Health Plan, so we can bring down healthcare costs long term.

8. Identify a principled stance you would willing to take, even if it meant losing votes the next time you were up for it.

As a state, we have three options for paying for the management of our pension: we can invest less than 1% of the pension in managers who are investing portions of the pension that are getting healthy returns (and we must take appropriate measures to reduce fees and monitor their performance); we can work with the General Assembly to increase payroll and headcount at the Department and to fund the systems necessary to internalize those functions; or we can drastically simplify the pension by indexing large portions of the fund, possibly exposing the fund to unacceptable levels of risk.

Each option has strengths and weaknesses, and no single option is perfect.  While I am committed to crafting the best solution for our retirees and state from those three options, I maintain that we need to hire the best and most qualified managers to invest our pension funds. This may be unpopular with some, either because of the amount of money involved in absolute terms or because of the use of outside managers living outside of the state.

9. What can the treasurer's office do to help increase financial literacy among its citizens?

The office had made great strides in improving communication on financial matters with state employees around their retirement and health benefits and hosting statewide financial literacy tours. There are ways to do more:

• As a member of the State Board of Education I would propose and support ongoing financial literacy training for all K-12 students in North Carolina.  

• As a member of the Community College Board I will propose and support courses and one-on-one counseling for college students dealing with the costs and benefits of borrowing to support their education.

• As the manager of the state’s retirement system, I would facilitate a broader conversation about retirement savings.

I am also particularly concerned with student debt. As Treasurer, I will also explore ways that pension funds can be partnered with or support organizations that work to refinance and alleviate student debt. Recently, I unveiled my proposal to help families refinance their student debt through the State Education Assistance Authority. By offering a program that gives North Carolinians a chance to refinance both federal and private loans, we will put more money back in their pockets. We will not forgive the loans, but we can lower the monthly interest payments. I will work with our next Governor, the General Assembly, and the SEAA to design and fund a program that takes advantage of our State’s investment in higher education and releases the potential in our communities. You can read the plan here: https://bluefornc.com/refinancing.

10. As a member of the Council of State, you will be asked about spending, borrowing, and investments in general. In what areas do you believe the state needs to make significant investments? In what areas do we need to pull back our investments?

I believe the state needs to make significant investments in its infrastructure, particularly mass transit systems, to support our continued population growth. Every four years, the American Society of Civil Engineers publishes a state-by-state report card on infrastructure needs of our nation. The most recent report card for North Carolina shows we have a significant backlog of overdue maintenance across our infrastructure systems, a pressing need for modernization, and an immense opportunity to create reliable, long-term funding. If we fail to make these critical investments statewide we will not have the adequate infrastructure to sustain the economic prosperity and growth we are currently experiencing.

As a resident of Wake County, I am particularly concerned with our need to invest in better transportation infrastructure and better water systems (drinking water, stormwater, and wastewater).

11. A proposed constitutional amendment in the last session would have capped the state income tax rate at 5.5 percent. Do you support an idea like this? Why or why not? 

How could the state get by in a recession if an idea like this was put into practice? This proposal was part of a bill that is often called the “Taxpayer Bill of Rights” or TABOR for short. I do not support this proposal.

By design, TABOR legislation (and TABOR-like legislation) seeks to impose stronger constraints on state income taxes. North Carolina’s Constitution limits the tax income tax to 10 percent; For the better part of a century, the state’s top tax rate held steady at 7 percent (it spiked at 8.25 percent). Our current state income tax rate is just under 5.5 percent, so a 5.5 percent maximum locks in the current rates and leave no breathing room for changes.

However, the environment that supports low rates today may change tomorrow, and TABOR reduces the government’s ability to respond to those changes.  By eliminating the state income tax as a tool to raise funds, the legislation limits revenue streams available to the General Assembly to fund government, which in turn, forces the General Assembly to rely on sales taxes and other fees to generate revenue or to cut funding in other areas of the budget.

Bond ratings agencies have consistently said ideas like these are a “credit negative.” This kind of legislation limits the ability of state governments to react to changing economic circumstances by taking an important tool out of the tool box.  While a TABOR law might not, by itself, result in a credit downgrade, when combined with other recent actions such as HB2 and reductions state government revenue it could result in a hit to our state’s credit rating.

Most states have rejected TABOR legislation (and TABOR-like legislation) because of its impact on their flexibility.  Many that have passed the legislation have changed course after realizing that they needed the flexibility.  Kansas and Colorado are two examples of states that passed similar legislation. Kansas took aggressive steps to cut its state income taxes; the results have been significant reductions in public services without increases in economic growth. Colorado voters suspended their TABOR policies to avoid required reductions and declines in service in K-12 education, higher education, public health, and Medicaid.

North Carolinians already have a preferred method for limiting taxes and holding our elected leaders accountable for tax rates and spending: elections. We would be better served by fixing problems with our elections than passing TABOR.

12. Public employees in North Carolina do not have the right to effectively bargain. Do you believe that this should be changed? Why or why not?

Public employees should have the right to both form unions and collectively bargain.  

I believe that collective bargaining is a very powerful tool that employees can use to improve their salaries and working conditions. Historically, this was a key component in the rise of the middle class in the U.S. Given the growing unequal distribution of wealth and power in our country, all employees should be empowered to work together to improve their situation.

13. The INDY’s mission is to help build a just community in the Triangle. How would your election to office help further that goal?

Many North Carolinians have no idea that there is a Treasurer’s office or that it has the broad range of responsibilities.

• We debate the excesses of Wall Street without realizing that the Department manages a $87 billion pension and other retirement savings and has the ear of the investment community or that the Treasurer chairs North Carolina’s banking commission.

• We describe the growing disconnect between CEO pay and company performance without recognizing the responsibility of institutional investors, like North Carolina’s pension, to participate in corporate governance as shareholders.

• We debate health care affordability and accessibility in North Carolina without realizing that the Department manages a health plan that covers over 700,000 lives with members in every county.

• We discuss water problems in Flint, Michigan, or infrastructure problems in Eastern North Carolina, or affordable housing in North Carolina’s growing urban centers, without understanding the critical role that the Department plays in funding investment in our communities.

And, we usually conclude those discussions wishing that we could do more to build a just community in the Triangle and in North Carolina. We can do much more.

As State Treasurer, I will address the challenges facing the office but I will expand awareness of the unique opportunities to build a more just community as good stewards.


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