NC Treasurer Briner lays out plan to fix pension and health plan deficits, boost retiree COLAs

On his first press call with reporters on Monday, North Carolina State Treasurer Brad Briner acknowledged that his department has a lot on its plate.

“We are responsible for managing almost $250 billion across different parts of what we do in this department,” he said. “We send out about 375,000 pension checks every month and provide health benefits for about 760,000 people, so we have a number of important responsibilities on our plate. We also manage the two biggest deficits or biggest liabilities for the state, about $16 billion that the pension plan is underfunded relative to what it needs, which is about $36 billion.”

Briner said he wants to improve the pension plan over time, including cost-of-living adjustments (COLAs) for retirees.

“On the investment management side, if you look at the Boston College Center for Retirement Research, they provide this data that North Carolina is either 49th or 50th in investment performance over any period,” Briner said. “That challenge manifests the inability to provide cost of living adjustments to our retirees over time. That is something that we are actively seeking to change.”

He argued that North Carolina is not 49th or 50th in any major way across any other metric, and to address that, some changes in asset allocation and governance will be required. In addition, four additional people have been hired for the Investment Advisory Committee to help manage those assets.

Another change Briner is looking to make to the pension plan is the percentage of exposure in certain areas. Currently, the plan is about 48% exposed to the equity markets and 52% to cash and fixed income. The average state pension plan in the US, he said, is 70% exposed to stocks and private equivalents and 30% to cash and fixed income.

“We have been a conservative state fiscally for many years, and that has served us very well, and so I expect us to still be at the conservative end of the spectrum of all the states but carrying over 10% cash for long periods of time has had material cost to the pension plans,” he said. “If we had performed at the median of state pension plans for the last decade, we would have no pension deficit. We would require over a billion dollars less of employer contributions into the pension plan.”

Ironically, Briner said, with inflation and the challenges that it has presented people, on the investment side, there have been higher interest rates, and it is now easier than it has been for a long time to make 6.5% without taking much risk. He said they need to take a little bit more of a risk with conservative fixed-income investments, which earn 7.5 or 8%, as opposed to cash returns, which they have now, that only earn 4%.

“We’re not talking about being very aggressive in venture capital or crypto assets or other things like that which are not really appropriate for the level of risk that this pension plan needs to take,” he said. “So, it is a bit of a nuanced message. It is half a step or a rung up the risk ladder, but it’s not a bunch of steps up.”

With health care costs rising faster than inflation, the second biggest deficit is the State Health Plan (SHP), which Briner said will have a $507 million deficit in 2026.  

“Those are areas that we are laser-focused on, and we must deliver even better results going forward as we think about the financial picture for this state,” he said.

One of those ways will most likely be incremental contributions from everyone based on income, starting at $20 per month.

He said another aspect of the SHP that needs to be discussed is the Clear Pricing Project (CPP), which was developed to bring transparency to healthcare expenses and address rising costs.

Briner said that while CPP was well intended, the SHP hasn’t been able to provide transparency in pricing, mainly because CPP was an opt-in program, and participation was predictable: providers like primary care and mental health providers were paid more to join and did, while those who were offered less did not because they weren’t forced to.

Also, many of the providers who may have been in CPP before the SHP third-party administrator transitioned from Blue Cross Blue Shield of North Carolina to Aetna missed three deadlines to sign back up last year but now want to rejoin.

“As it relates to the large deficit the state health plan encounters, it is going to be very hard for us to spend more money with providers who ignored a series of deadlines,” he said. “That said, there was a transition to Aetna here, and there are some providers who have made good faith efforts to meet those deadlines, and so we’re working through ensuring that we know who those are and working with them to get them back on CPP.”

Looking ahead 20 years, Briner said there will only be two choices regarding how the SHP will operate under healthcare: either a fixed-price regime, which will be a multiple-Medicare system, which he hopes will not happen because he said it could cause all sorts of problems or a market-based mechanism that allows for transparent pricing and lets people choose where they’re going to get their health care, knowing what the quality of that is. But, to do that, he said everyone will have to get on board to help, including the state legislature.

The State Health Plan board will discuss those issues at its next meeting on Feb. 7.

Staying on the subject of healthcare, he said the SHP is looking into reinstating coverage for GLP-1 weight loss drugs in 2026. However, they have to be able to differentiate between those who want them for small weight issues and those who want them for much larger weight issues. He said the drugs may be cheaper with increased competition in the next few years.

Briner said the North Carolina General Assembly asked the treasurer’s office to administer a $100 million cash flow lending program as part of Hurricane Helene relief funding in SB 382, which became law in December. He said they will partner with the affected western North Carolina counties in the coming weeks to get those funds to those who need them.

He also wants the office to be more user-friendly for municipalities. One way to do this is to allow them to sell more than one bond per day and change the outstanding period or amortization period so that people can finance assets relative to their useful lives rather than relative to a reasonably arbitrary number of years.

Historically, amortization periods have been kept for 20 years, but he would like to allow as long as 30 years for certain fixed assets or maybe under 20 years for other assets that have shorter useful lives.

Briner also noted that $300 million in unclaimed property was returned to its owners last year, and hopefully, that number will increase this year.

When a reporter asked about Diversity, Equity, and Inclusion (DEI) policies, he said his office has never had them and won’t have them now.

“As a reminder, the EEOC (Equal Employment Opportunity Commission) was put in place in the 1960s, which ensures equal opportunity to everyone based on any characteristic you can think of, and we believe in that,” Briner said. “We believe in giving people the opportunity to succeed that’s fundamental to the American dream. DEI issues have become weaponized for a different agenda, and I reject that different agenda. What we are interested in is making sure that we have enabled people to succeed based on merit.”

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