- [Kelly] Governor Roy Cooper uses the Bully pulpit to challenge Republican lawmakers on public education policy and funding.

This is "State Lines."

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[captivating music] ♪ - Welcome to "State Lines."

I'm Kelly McCullen.

Joining me today, Wake County Senator, Jay Chaudhuri Iredell and Mecklenburg County Senator, Vickie Sawyer, former North Carolina Attorney General and former Secretary of State, Rufus Edmisten, and public relations consultant, Pat Ryan.

Welcome, panel.

We got a good top story.

I'm gonna start with Rufus with all his experience with speeches and politicking, but Governor Roy Cooper raised the political heat, that's my term, by offering his take on the state of North Carolina's public education system.

The governor released a video on YouTube where he's asking parents to help him fight the Republican legislature.

He says, public education can be saved if the damage is limited.

- It's clear that the Republican legislature is aiming to choke the life out of public education.

I'm declaring the state of emergency because you need to know what's happening.

If you care about public schools in North Carolina, it's time to take immediate action and tell them to stop the damage that will set back our schools for a generation.

- Rufus, that seems out of brand for Governor Roy Cooper.

He seems like such a nice, mellow man and he came out with that speech this week and I found it entertaining and informative.

- I would call that a passionate Jim Hunt speech.

- Ah.

- And he feels very strongly about it and it's a separation-of-powers question.

You gotta remember, back when I was First Attorney General, 40 years ago, you had a legislature that was very friendly to the governors.

It was all democratic and things have changed now.

And so here you have a defection in the Democratic Party over to Senator Sawyer's party and it makes things very rough on the governor.

And I noticed in his speech on education, we seem to be forgetting, especially in the area of the vouchers, for years, and I think Senator Chaudhuri and Senator Sawyer will agree to this.

We have funded universities and colleges with state-taxpayer money.

And so this is nothing really new except accountability.

- Pat, you worked for Senator Berger's team for a few years so you're not nonpartisan in this.

However, the technique used, the style, the quality of the video, the clarity of that speech, what do you make of it as a PR guy?

- Yeah, so I agree with Rufus that there's really nothing new here.

I found it to be, frankly, a kind of a bizarre move.

I don't know that anybody here around the table can truly explain what...

It's a state of emergency, but it's not a state of emergency, but it's an emergency state.

I can't really make sense of it.

But at bottom, it really rehashes what's a years-old argument over education funding, over opportunity scholarships, right?

And at the end, Governor Cooper says, "Well, you should just call your legislator and complain about it."

I did like how Travis Fain from WRAL framed it in a tweet this week.

He said, "You don't need a state of emergency to ask people to call their legislator."

And by the way, education funding is at the highest level in state history.

Higher than when Governor Hunt was in office even when adjusting for inflation.

To me, that hardly constitutes an emergency, whether it's a pretend emergency or a real emergency.

So we can bicker about whether education funding is high enough.

That's a reasonable argument.

But all this catastrophizing about choking the life out of public education, to me, is a little bit ridiculous.

- Pat, I saw two local news broadcasts in Raleigh, I won't name them unless you asked me to, that literally put on the screen "State of Emergency," not alleged, not pseudo, not anything.

And the governor, to his credit, said, "This isn't a real state of emergency like a hurricane."

However, the news media and two different channels put State of Emergency.

How are folks supposed to interpret that when they catch this speech in a 30-second sound bite?

- Yeah, and especially when there's a red banner blaring across the governor's website that says, "Public education is facing a state of emergency," and some word games.

But I think you're right, Kelly.

At bottom, it's sort of a new PR angle on what is a years-old policy debate.

- Jay, Senator Chaudhuri, what do you think?

That was bully pulpit if I've ever seen it.

- I mean, look, I think it's classic bully pulpit.

I think it reflects their political realities of what we're dealing with where you've got a Republican super majority and a Democratic governor.

I think we're also looking at a much more animated and energized governor who's going into the last two years of office.

And I will say that, I think from a policies perspective, a couple of things have probably triggered the interest in kind of elevating the debate.

I mean, I think one, I think Pat is absolutely right.

I think it's really about whether we're putting enough money into public education, but I think the $1.4 billion of money that's going into vouchers that are unaccountable, I think the fact that now that you've lifted the income cap on who receives a voucher, I think also makes it an easy political target to draw contrast between the Democratic governor's perspective towards public education versus the Republican Senate's budget.

- Jay, back in the Senate, the governor does what the Governor does in the executive branch.

Does it help you get any business done to have the top of your ticket come right down on the legislature?

And let's just say it.

Phil Berger.

- Yeah, I mean, look.

I think Senator Sawyer can speak to that.

It would be an understatement to say that things have not been heated in the Senate lately.

You know, three weeks ago we had the abortion debate.

Now we're seeing the governor really coming out with frankly more of a combative tone on public education.

And you have to wonder whether this is gonna kind of be the tone as we go forward.

I mean, I will say that I think there's still an effort by those of us in the Senate to try to reach across the aisle and there's still good bipartisanship, but as we know, Kelly, combat and conflict sells and we may see more of that as we get to the end of the summer.

- I'll be selfish.

It makes this job easier as a host of a political analysis show.

Senator Sawyer, please tell me you watched that video.

- Actually, I did not.

- Oh.

[Kelly laughing] - I did not because I knew exactly what's happening.

So it's all about 2024.

We're looking at the same polling, I'm sure, as Republicans and Democrats are, and it's gonna be those swing voters that are gonna decide statewide election.

And the thing that I think the governor is actually having an issue with is gonna be credibility.

So swing voters are not necessarily low-informed voters, but they definitely will make their decision on certain things like education and abortion.

But what they will do is actually reward him for being disingenuous about states of emergency, or about portraying abortion legislation as a ban.

And once they figure out that they're not being truthful, I think they're going to reward the Republican party in 2024.

- What was the tone among the GOP caucus, at least the Senate caucus, when you see this come out, and it's professionally done?

By the way, I got the press release on paper from the Republicans.

I got a video from the governor.

- So are you saying us Republicans are conservative in our media approach and we need to up our game?

- I'm not saying, but the camera sure looks nice if you do it right.

It's a very powerful medium.

- I actually agree, and I think I will take that back to the caucus.

I'm sure Senator Berger will appreciate you commenting on that, and so I'll make sure he knows specifically.

But no, I kid about that, and I do know that it is a political football, and education has always been that way, which is very frustrating for me as someone who is trained as a teacher, loves her public schools and has a lot of friends in that public school space, it really does feel like they just put their hands over their ears so they don't have to listen anymore, because it becomes such a political football and a wedge issue.

And it's unfortunate that that's where it's become.

- Rufus, is there any guarantee that private schools would even wanna take public school money?

'Cause once you take that government money, it comes with government rules eventually, no matter whether it's a Republican giving you that funding or a Democrat.

- Well, I've had a private foundation for over 50 years and I never wanted a drop of government money.

Call us superkids.

I was afraid of that very thing.

And what bothers me though is that there seems to be little accountability in some of these schools.

And I harken back to the days of my old boss, Senator Sam Irvin, who would be a conservative today.

He was scared to death of eroding the separation of church and state in America.

And I think we're getting so close to that when you have these private religious schools, 'cause he said keep religion to itself and keep government to itself, 'cause when you intertwine the two, you lose one or both of them.

And so that's what bothers me about this rash to fund so many schools.

And I know the rationale.

If you didn't put 'em in that school, the taxpayers would have to pay for it.

That's what they use on the colleges and universities that gets funded every year.

But I don't think the rationale is the same, because there is very little accountability.

- Okay Kelly, can I just quickly say I think it's hard for us to not talk about public education because I think it has become a wedge issue, unfortunately or fortunately, 'cause I think the debates that we're having now in the legislature now focuses on curriculum, which is something Governor Cooper talked about.

I think you talked about vouchers and schools that discriminate.

And so I think a lot of the social issues now have crept into our debate about public education, which just makes it more divisive, unfortunately.

- But I'm back to the point.

Putting public money in a private school, doesn't that make it a public school?

- I mean, the Supreme Court, US Supreme Court, once said that it was.

We're seeing that scale back and certainly the state Supreme Court has also opined on that, which I think is to attorney general Edmondson's point, I think is blurring the lines between church and state.

- Pat, this is a debate where if you talk to a conservative or listen to a speech, you can be very worried about vouchers and all this education, all this policies and things going through.

I can listen to the other side and you know what?

If I listen to them independently of what the governor says, that makes sense as well.

So in the space, do we get good policy if we stay in our echo chamber?

Or could the government really screw this up?

- So I think you're absolutely right that there are reasonable points on both sides of this question.

What Senator Chaudhary said, what Rufus has said, those are reasonable objections, right?

And at at base it's, there's a difference of philosophy in how to approach education.

So on the Republican side, we argue, and I believe in that argument that the more options that a child has in their schooling, the better, because sometimes a public school may not be right for that child.

For decades prior, the only way that you could have really an option in your child's education was if you were wealthy and you could afford to send that child to a public school.

Right, so the philosophical basis for opportunity scholarships is let every child have that opportunity.

And the way that you do that is by in effect allowing the state money to follow the child to whichever school he or she or his or her parents choose.

And that's different at a very basic level from the idea that if we just focus on one school, the public school, and give them more money, then that will result in a better educational outcome.

They're two reasonable positions, right?

But there of course engenders a lot of emotion about it.

- Rufus, how does the governor come out of this?

You know the Republicans have all the votes they need.

This opportunity scholarship deals don't go through.

- Well, I think Senator Sawyer was talking about something a moment ago that's very real.

This is still a purple state statewide.

You can't gerrymander the governor's race or the statewide races, and obviously, Governor Cooper wanted to get a point across because yes, we are looking toward 2024, and I think the governor is very passionate about this.

You might call it a rant, which is one of my Republican friends said, the governor's rant.

But I think it was from the heart.

I think he understands.

I was a public, a private school teacher at one time, that very little known fact that I taught the third grade one time in a Catholic school and I was a shallow water Baptist.

Now that was a sight, and it was strictly religious stuff.

But I don't really know because I'm not familiar with especially Christian religious schools where I have a lot of friends who send their children to them because they say they get a better education.

- Vicky, last word to you.

- Remember the Opportunity Scholarship is only about 4% of the total budget.

This isn't slashing public ed by half.

We're talking about 4% of the money that's going to the Opportunity Scholarship.

- Is that new money or is that 4% out of the existing public education budget?

- So Pat, you can correct me if I'm wrong, but my understanding is that we are continuing to increase public education funding, as well as funding the Opportunity Scholarship.

- Jay, you buying that?

- Well, I, the percentage is right as if you start doing a breakdown of different school systems, you see more money that I would argue being diverted from Opportunity Scholar, I mean from public schools to opportunity scholarships.

The other point that I'll make, which I think is an important one 'cause I think Pat has framed the issue exactly right.

The argument for vouchers originally was to make sure that low income families have that same opportunity.

But now we have legislation and a budget that actually gives those same vouchers to millionaires, and I think the real question is why would millionaires, why does a person make a million dollars deserve $5,300 of taxpayer money to be able to send his or her child to a public, to a private school?

- Yeah, so that goes back to the philosophical, and it's a great point, goes back to the philosophical basis for the money following the child, right?

Similar to Social security, everybody pays in and everybody gets something out.

And so, in fact, the Opportunity Scholarship Program is far more progressive than Social Security in that if you're of a higher income, you only get half the value.

But everybody's paying in taxes for education.

And the idea is everybody should have taxpayer dollars for their child's education.

- Is that what you guys call a backpack?

[group laughing] Follows the child.

- That's right.

- I promised you last word.

Do you have the last word?

Are we good?

- That's all right.

I don't think I can follow up after Rufus.

- All right, there you go.

The Senate's moving a House bill that would give Blue Cross Blue Shield of North Carolina more flexibility to make certain kinds of business deals.

Supporters, and this is a bipartisan group, way bipartisan, believe the healthcare marketplace has changed and Blue Cross needs the ability to compete against other insurance companies.

Republican Insurance Commissioner Mike Causey is fighting the bill because he says Blue Cross would use policyholder money, not shareholder money, to cover future acquisitions.

Vicki, this, this is a complex issue.

The Senate looks poised to pass it.

Bring this to the kitchen table, so someone who's on Blue Cross, or could be on Aetna soon, they can understand what this means.

- Well, it's very simply called a game of Mother May I.

Do you remember playing Mother May I when you were a kid?

- Oh yeah.

- And this question is a call and response.

Well, that's what.... - The answer was no.

[group laughing] - Well that's what, Commissioner Causey is the mother in this group and he's trying to say the answer is no.

But there is more competition in the insurance space, and many folks understand that.

You know, an insurance company, when you give them a dollar, by law, by federal law they have to pay out 85 cents of that dollar.

Then they have to have their income, or their operating expenses from the rest of that, it's that 15 cents.

So it is kind of a misnomer to say that this is policyholder money.

It is money that they have accrued over time.

Insurance companies make money like some other people, through their investments.

So this isn't necessarily taking money out of people's mouths to give it to a wealthy corporation.

But they do have an abuse of cash laying over there because they have been around for so long.

This is just saying to use that cash, that extra reserve, and to take it out of the game of Mother May I, which means no more Commissioner Causey, and then they can diversify.

So hopefully, over time, once they able to diversify their book of business, then they will able to provide everybody lower cost for health insurance.

- Senator Chaudhuri, I'll go to you on this one.

Democrats take on this bill, and I saw the vote count.

A fair amount of your caucus likes this.

- Yeah, so I mean certainly on the House side it was a strong bipartisan support.

And I think Senator Sawyer's right in framing the bait the way it is.

I mean his background, right?

There was an attempt for a conversion of Blue Cross Blue Shield in 19, in 2002.

But I think you have to recognize, one, is that the healthcare space has changed, and secondly, you have to look at the makeup of the general assembly now.

Republicans have a super majority.

I would say three things.

I think the Mother May I point is exactly right.

I think when you look at criticisms of the bill and what some of the issues that have been identified, one is whether the insurance commissioner should maintain authority to protect the interest of Blue Cross Blue Shield policyholders.

And it was a pretty combative, intense discussion that took place in the Commerce Committee earlier this week.

Secondly, is whether Blue Cross should maintain its amount of reserves to be able to protect, carry out its mission.

And the last is whether if they spin out this out of this holding company, can an out of state for profit company be able to buy that without it being converted into a foundation?

Because obviously, Blue Cross has benefited from generations of Blue Cross Blue Shield policyholders paying premiums.

And so I think, I think those are three kind of the outstanding issues that you kind of hear if you're looking at the bill.

- So Blue Cross wants to take money that it has left over, people would call it profit, they wanna move it into another holding company that's not estate regulated, and then use that money to do business deals, things that bring them into the modern marketplace.

Is that correct?

- Yes, and I think there's a general agreement that they should be able to do that in order to be competitive in the marketplace.

I think that the real debate and kind of where the discussions are, is how much protections are in place, or should be in place, to protect the Blue Cross Blue Shield policyholder.

- Rufus, what do you stake on Blue Cross?

Is it time to let them be unshackled, if you will, to do a little bit more modern type of, or so they say, more modern business?

- Well, they're a semi-regulated agency, sort of like a power company.

And Jay's got the the question down right.

But it is not a sleepy little company like it was when I was Attorney General 40 years ago.

Blue Cross Blue Shield is nationally known, internationally known.

It's a great contributor to the economy in North Carolina.

And I find that the commissioner, I looked at that bill, I believe Jay, he has a semblance of control still over, if you go to that system.

And that would be important to me.

Because obviously, when you use the taxpayer's money you need to be regulated, going back to your question about should some of these schools worry about regulation.

So I think the bill's got safeguards in it.

I don't think that any national company can ever buy Blue Cross Blue Shield or they'd have to pay a huge, huge, heavy price.

- Pat, you represent Aetna, which is not Blue Cross, and they're supposedly taking over the state health plan here soon, at least the administration of it.

I won't ask you to go in on Blue Cross Blue Shield.

But, what is the marketplace like now with Aetnas, and United, and Blue Cross Blue Shield, North Carolina all attempting to serve the North Carolina market?

- Yeah, it's like any state marketplace.

It is, and should properly be, somewhat competitive.

I think Blue Cross still maintains, and somebody please correct me, something like 82% of the market share.

So it's certainly not, you know, for want of business.

But you know, on the bill, I think sort of unanswered, and I'm not gonna go into the policy details, unanswered is, you know, what exactly the company will do under the new structure.

And maybe only a handful of people know the answer to that question, and it's just that we'll find out, right?

And there's nothing necessarily wrong with that, but that's just the sort of state of things.

- Do you perceive Aetna other companies watching this bill in awe, just if anything, just to know what's up with Blue Cross?

- Yeah, certainly companies in the marketplace keep an eye on legislation that impacts them or their competitors, like any other good organization would do.

- Gotcha.

Any final comments on Blue Cross?

- It's just easy to say insurance company, bad.

As speaking as an insurance agent and dealing with that oftentimes, and so the political part of that actually is very interesting to me.

And the alliances that are being formed with a Republican insurance commissioner and a democratic leaning groups that are supporting him, I am like reading this with baited breath.

I'm like, what is gonna happen next?

And so for me, it's become more political than it has about policy.

- Mike Causey admits he's fighting an uphill battle and in some ways, just not getting anywhere with your caucus, at least this week.

- [Vickie] Right.

- Is he doing what he's supposed to do, even though he knows he probably will not win this?

- Well, lemme go back to that truth in advertising portion, and we have seen some things, and Senator Perry actually pointed out, as did Jay, was talking about during our commerce and insurance group that there has been a little bit of bending of the truth in advertising, especially about the law and a trigger law about conversion.

So I think voters will start cluing in soon, and they'll understand that's not necessarily what's being reported as what's happening.

- Rufus, when as a state-elected leader do you just decide, "I'm gonna fight a battle I know that I can't win, but I've gotta make my voice heard"?

- Oh, on any occasion where you've got a good conscience, where you have taken an oath that you'll do what's right.

And, of course, I would disagree some with the Commissioner because I think he's got ample power there to over oversee anything that occurs as a result of this bill.

But on many occasions, I remember in my 28 years of public life, you had to say, "Look, it's time to do the right thing and take the consequences," and sometimes they're not nice.

- Kelly, someone told me, I don't know if I necessarily agree with this, "Who had the worst week this week?

Was it Ron DeSantis or Commissioner Causey?"

- My goodness.

[panel laughs] - I would argue Causey.

- You wanna bet on it?

- Well, Yes.

- That's the perfect segue of the season 'cause the effort to legalize betting here in the state, not seemingly slowing down.

We're talking about taxing future sports betting companies.

There's two bills out there.

The House has one that would tax the booking companies at 14% of their gross revenue and allow some expenses to be deducted.

The Senate wants an 18% tax on revenue and really get rid of those deductions.

And the Senate would give UNC system athletic departments a share of the tax revenue.

Pat, this is big money.

- Yeah, I think that makes good policy sense, by the way, what you just explained.

Now lemme just open by saying I'm so happy that I'm discussing this topic.

I grew up in Saratoga Springs, New York at the horse race track, selling Italian ice in high school, and I would go to the pari-mutuel teller and trade her free Italian ice in exchange for letting me gamble away my tips at 14.

And that turned okay.

Everything's okay.

[panel laughs] So I love the policy, especially the Senate's addition of horse betting, so thank you both.

Look, a lotta people in this state, not making any admissions here, are already gambling on, you know, untaxed and unregulated offshore companies, right?

This bill has been two years in the making.

There was some, you know, controversy last year as it tried to go through the House, and it makes for some odd bedfellows, right?

There's a strong group of Democrats and Republicans who oppose the bill, and for them, it's really a moral question, and you know, that's certainly fair.

As far as the tax rates, if you look around the country, they range from 10% to 50% in some states.

And so, you know, I think the 18% rate that you mentioned is pretty in line with some neighboring states.

Tennessee is 20%.

Virginia is, I think, 15%.

And so, you know, perhaps there'll be some negotiation there between the House and Senate.

Perhaps the House will just accept.

- Rufus, horse racing, very possible you could at least bet on it and watch it on TV.

- Oh, absolutely.

- You got close.

- You know what we're missing here?

- [Kelly] What are we missing?

- We're missing that the House held a hearing the other day on video poker in North Carolina.

There are literally tens of thousands of video poker machines out there.

For years, the organization has sought to get 'em regulated, pay taxes on 'em, which is what should be done.

And what bothers me is that all this gambling now, all of it is gonna go out of state to big gaming companies.

Now, you have these local little, I call them poor man's Vegas.

You go into a convenience store.

You've got three or four video poker machines there.

That's a poor man's Vegas.

Well, for years, we have said, "Regulate those.

Put 'em on the tax rolls."

And that is coming along, and I think it will be even more advantageous tax-wise to the state than the sports betting.

In fact, in the state of North Dakota, I had a friend tell me that their video poker machines brought in more revenue to the state than did the lottery, so we need to go ahead and do that and protect the people that are locally providing the machines, rather than paying out-of-staters.

- Vickie, we got about 30 seconds for you.

- Yes, sir.

- What a difference 10 years makes in video poker.

Your thoughts on the bill?

- I'm all for personal responsibility and freedom, and so I'm gonna be supporting the bill, and I appreciate it.

And you're right.

Both of the gentlemen are right.

It's happening now.

It happens every given Sunday, Tuesday or Wednesday or Thursday and sometimes with some of my friends.

I say we need to open up politics for betting.

Let's do that.

- All right, Jay, 20 seconds to you, and we gotta go.

- Yeah, so I think, really quick, I think sports betting's gonna happen whether we like it or not.

You have neighboring states, as you mentioned, Virginia and Tennessee, that do it.

We have professional sports teams that are gonna advocate for it.

I think the fact that the Senate's moving to seek additional revenue is the right move.

- And Virginia will cash North Carolina money.

You can believe that.

Thanks to our panelists for joining us.

Email your thoughts and opinions to statelines@pbsnc.org.

We read every email, folks, so send one our away.

I'm Kelly McCullen.

Thanks for watching, and we'll see you next time.

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