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- A contemporary writer coined the concept recently, "Things are getting better and better, worse and worse, faster and faster simultaneously."

In many ways, that certainly feels right.

The velocity of change in almost all things seems stunning.

I'm Chris William, welcome again to the most widely watched and the longest running program on Carolina business, policy and public affairs.

Following on the heels of yet another major hurricane recently, the increasing political pitch of this election season and an economy that just got a major shot in the arm by a bit of an unexpected drop in prevailing interest rates, it feels as if we are moving fast indeed.

And as we have done every week for more than three decades, we will try to make some sense of these themes going on now in the Carolinas and why they're important to know.

And later on, the outgoing treasurer of North Carolina, the Honorable Dale Folwell.

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And Martin Marietta, a leading provider of natural resource-based building materials, providing the foundation on which our communities improve and grow.

(upbeat music) On this edition of Carolina Business Review, John Hood from the John William Pope Foundation and special guest, Dale Folwell, North Carolina state treasurer.

(upbeat music) - Hello, welcome again to our program.

It's important to note here at the top of the broadcast that we are producing this program literally, quite literally on the heels of Hurricane Helene that is still barely going through the Carolinas.

Probably doesn't feel that way in Asheville and Western North Carolina, but at this point, it is mostly making it through, so we have had to pivot quite a bit.

And one of our panelists, Rohit Verma, the dean of the Moore School of Business at USC is not able to join us.

He is safe but is not going to be able to join us, but joining us now from the safety of his office, and we're glad to see, and if I can ask the producers to please put Mr. John Hood up on the monitor here so I can see him.

There he is.

John, you look happy.

You look healthy.

Thanks for joining us, and I'm glad you're safe.

- Thanks for having me.

I appreciate it.

- So John, it's gonna be you and me.

You got a little bit of pressure, but I think you've probably done this before.

You can probably handle this.

Let's start with the easy stuff.

John, about four years ago on this dialogue, we had the presidents of four major universities and colleges in the Carolinas during COVID, during lockdown, talking about how hard it was going to be to manage through it.

And Dr. Elizabeth Davis from Furman University was the first one that said, "We are most likely going to see some major closures and/or acquisitions or combinations of schools because many won't make it."

And here we are four years later.

And there was a story in the Epoch Times that reported that over the last year, 99 colleges and universities have indeed closed or had to merge their operations into other schools.

So, John, the question is, are you surprised by that?

And what is the implication of that?

Is that just that it was going to happen?

What are your thoughts?

- Well, I think that the COVID-19 epidemic, I think it accelerated or accentuated trends that were already present in the higher education market.

And so it's not at all surprising that there have been closures and consolidations.

I think there will continue to be closures and consolidations.

In some cases, the colleges had been shaky for a long time.

They don't have very large endowments, their enrollments had been declining.

We've got to keep in mind that back in earlier decades, there was this assumption that the number of college-age students was just gonna keep growing and the propensity to go to college was just gonna keep growing.

And neither of those things happening anymore.

There's been a leveling off or soon to be a plateau effect on college enrollment.

Now, many schools will be just fine.

There's lots of high-demand institutions, universities and colleges around the Carolinas that are gonna be just fine, but some of the colleges that were already shaky aren't gonna make it, and they already haven't made it.

I'll give you an example of one.

This is a case of a consolidation, where actually a North Carolina institution, Carolina University is the actual name of it, it's near Winston-Salem, it actually has now become, it has absorbed, I think, three or four other campuses around the south.

And so this is a religious institution.

A lot of these institutions that have closed or consolidated were, in fact, religious institutions created sometimes decades or even a century ago by religious denominations.

And as public universities in North and South Carolina have grown and other opportunities have presented themselves, and some students are even going to two-year community colleges and technical schools rather than some of these smaller private colleges, then we've had the closures and the consolidations.

I think they're gonna continue.

Haven't seen this as much in the Carolinas, but in other parts of the country, we've seen, in some cases, two-year schools, be it public or private, merged into universities, managed together on multiple campuses.

You have a feeder system, where students would go to two-year schools and then go to the main campus to finish an undergraduate degree if that's their aspiration.

So there's all these things are happening.

It doesn't mean that the major institutions we're all familiar with aren't gonna continue to exist, they are, but even some of the public- - No, please finish.

- Campuses in North and South Carolina are facing enrollment pressure.

- Let's go down grade to some degree, and I mean down grade, the K through 12, and go to some contemporary politics.

In North Carolina, Governor Cooper has vetoed the bill that would allow, what's called, the mini budget in North Carolina, would allow almost 500 million that the General Assembly was trying to apply toward this wait list of those looking for the private or the vouchers for private schools and charter schools.

There's some, obviously, debate about that.

In South Carolina, the Supreme Court had ruled that that was unconstitutional in a state that's conservative, and it was surprising to some degree, in North Carolina, the Supreme Court, in 2015, as you well know, and I'm preaching way to the choir on this one, had already encouraged the idea and it support vouchers to private schools and charter schools.

John, what is going on here with public school budgets in North Carolina, governor veto, in South Carolina trying to get more money to go, how would you describe where vouchers are now?

- Well, remember that in North Carolina there is an opportunity scholarship program.

That's the main program we're talking about.

There's also an ESA system but it's much smaller, educational savings account.

In South Carolina, that was the program and educational savings account option.

And yes, it had a different fate in the South Carolina Supreme Court than the opportunity scholarships did in North Carolina Supreme Court.

That's because the two constitutions are quite different.

They have different wording.

In South Carolina, there is specific language that has to do with a prohibition against direct aid to religious institutions.

The supporters of ESAs in South Carolina thought, "Look, we're not doing direct aid.

We're doing something different directly to families, but the court ruled otherwise."

So now South Carolina advocates of school choice have to go back to the drawing board.

In North Carolina, the constitution doesn't have that language.

This is sometimes called a Blaine Amendment 'cause it was supported by a senator long time ago, back a century ago.

It was anti-Catholic education series of amendments in many states around the country.

But North Carolina doesn't have that language.

And that's why it got upheld and the South Carolina program did not.

- Quickly on jobs, and we're gonna bring our guests in in just a second.

Jobs in the Carolinas have always been a very robust and wonderful place.

A lot of immigration has added to that.

As we head into these elections, and obviously a lot of political rhetoric going on, and if we get past this, what do you think the jobs picture looks like for the Carolinas into next year?

Are you encouraged?

Are you worried?

Are you concerned?

What are your thoughts?

- I am more concerned about North Carolina job creation than I am South Carolina.

If you look at the most recently released Bureau of Labor Statistics data, South Carolina job creation was blazing in the last 12 months.

So I think 3.3% growth in jobs.

North Carolina's was quite a bit lower at 1.5%.

That just matches the national average.

If you look at GDP growth, gross domestic product growth between the two states, the most recent data just came out, South Carolina's growing a little faster than North Carolina.

I'm also seeing the labor force participation in North Carolina dropping over the last 12 months.

And it stayed the same roughly in South Carolina.

So I think right now South Carolina job markets look a little stronger than North Carolina's.

It's hard to tell exactly for the, maybe just because the different sectors are performing differently.

And as you pointed out at the top of the show, the change in interest rates may be boost, may help to boost some of those job creation numbers in North Carolina over the next several months.

- John, stay with us.

We're gonna bring our guest on.

Before we do that, coming up on this program, talk about education, Ellen Weaver is the new, relatively new, newly-elected South Carolina superintendent of education.

She was quiet for a long time going into the election, quiet coming out of the election, quiet, I mean, when it comes to talking to a lot of media.

She will join us on this program and her impact in the Palmetto State.

And then also soon after that, Vicente Reynal, he is the chairman, president and chief executive officer of global manufacturer Ingersoll Rand will join us as well.

It would not be too much of a stretch to consider this conversation a bit of an exit interview with our guest after two terms as North Carolina treasurer, also the assistant secretary of commerce before that, a four-term member of the North Carolina House before that and starting his public service career on the Winston-Salem for South County Board of Education.

Our guest doesn't seem to have a political next step, or does he?

That will be a question.

Joining us again is the treasurer of North Carolina, the Honorable Dale Folwell.

Your Honor, welcome to the program.

- Thank you for having me.

- Do you have a next step?

- Well, my next step is to make sure that God's happy with me, my friends and family are happy with me, and my motorcycles are happy with me.

And that's my next step.

- So, Your Honor, what I didn't say in your introduction is you also were a gubernatorial candidate in the primary election, didn't make it through, lost to the current candidate, the GOP candidate, Mark Robinson.

Is this a case in your mind that you're thinking in North Carolina, you should have given me the nod given what Mr. Robinson is going through?

- Well, I get asked, you know, why would I give up being the state treasurer of North Carolina to run for governor, and it's really biblical.

You know, the book of Mark talks about getting out of the boat and taking your talents where they need to be.

I love fixing things, I love saving money, and I have fun doing it, as you know.

And there's so much more that needs to be fixed in North Carolina, that responsibilities report only to the governor of the state, DMV, DOT, DHHS.

And I was looking forward to not only governing, which is a verb, but also explaining conservatism, which mean to save, conserve, in a way that doesn't offend people and that they can understand.

So I was looking forward to governing, as a verb, not being called the governor, but, you know, the voters had a different opinion.

- This is a temptation to ask this question.

It's not completely fair, but it's still one of those questions people are gonna wanna know.

Knowing what you know now about the outcome of the primary, that you did not make it through, would you do something differently about even running?

Would you have committed again to another term as a treasurer or tried to run?

- I'm glad I made the decision.

I'm sorry that I'm not on the ballot in November.

But the reason I did this is that I was tired of losing.

I have said publicly for two years that I think this is the last opportunity for a Republican to be elected governor in my lifetime.

And the reason is it's not the Democrat or the Republican Party that are the biggest parties in North Carolina, it's the unaffiliated parties.

And people just want someone who can explain what it is they're going to do for them that impact their lives.

And that was my mission for doing that.

- Okay.

- As far as the current controversy that your viewers are very aware of, you know, it's really the opponent's job to bring that out.

- And this is about Mark Robinson, the current- - Yeah, and we tried to do that in so many different ways, but no one wanted to listen back before the primary.

And in many instances in these Republican primaries, we have selections followed by elections.

You know, the selections are made by our former president, Trump, you know, Michael Whatley, RNC chair, you know, Senator Berger, speaker Moore, their consultants.

These are people that select who they decide who they want the primary nominee to be.

And then it's followed by an election.

So I'm always in favor of pushing the power down to the voter.

- I suspect, John Hood is with us, of course, as you know, and I suspect he probably has a question or two for you too.

John, welcome to the dialogue here.

And go ahead, fire away.

- Well, thank you.

We've just been talking about elections, and Dale, of course, been elected twice state treasurer.

We also elect a state treasurer in South Carolina.

I think there are 10 statewide elected officers in North Carolina and 8 in South Carolina.

Should we still elect all of these officers, Dale?

Or should we do something different?

Should we continue to elect state treasurers?

- Well, I believe so.

And I'm the first Republican state treasurer elected since President Ulysses S. Grant.

And I think about your question in context of the Council of State, and if your viewers wake up thinking about the Council of State, they should probably try to get a life.

But these are meetings convened every month by the governor.

The Council of State is where all these statewide elected officials come together and talk about their agencies.

And when we have, you know, natural disasters like we're having as we sit here in the studio, that's why that becomes important.

But it's also important that we do a better job of educating the public about what the responsibilities and accountabilities of these individuals are.

You know, in North Carolina we have an OSBM director who reports to the governor, we have a controller that is appointed by the governor, but then we have a statewide-elected treasurer.

- And how do those work?

- Well, we work very closely together, but the fact is, is that, you know, as we say at the SFOF, when you've seen one state treasurer's office, you've seen one state treasurer's office.

There's not one that's constituted quite like ours in terms of its sole fiduciary over the pension, healthcare, 401, 457 plan.

And as well as local government commission, chair of the state banking commission.

So the state treasurer's office is very important, and we've been very involved in the last two months with the transition to the next treasurer of North Carolina.

For the last two months, every public meeting that I chair, I've invited both candidates to this.

I'm doing this in honor of former treasurer, Harlan Boyles.

- [Chris] Do they show up?

- They show up either virtually, let us know they have a schedule conflict or they show up in person.

And then every meeting that I have after the election, if I'm sitting here, the treasurer elect will have an opportunity to sit right there sitting beside me because at the end of the day, our customers don't care about lots of things that people talk about.

There's no Black, white, brown, there's no Republican, Democrat, unaffiliated, there's no male, female, money.

The treasurer's office is all green.

And they just wanna make sure that the person who's the keeper of the public purse keeps us in the check-delivery business.

That's what our public servants care about.

- John, question?

- So in North Carolina, as your viewers need to know, of course Dale knows, the treasure isn't just in charge of the pensions and other investments of the state, also manages, as you just mentioned, the state health plan, public employee health plans.

You've been working hard at this since you were given this responsibility.

How much progress do you think you've made?

I think I that our unfunded liabilities for retiree health benefits in North Carolina, I think the state number is still something like 32 billion, and there's billions more at the local level.

Have you made some progress, and what do you hope the next treasurer can accomplish try to manage this very complicated and costly state health plan?

- That's a great point.

We have put sunshine on the issue, but the fact is we still have a cartel in North Carolina.

Back in the day, I stuttered more than I do now, and I was told by my professor at Winston-Salem State, when I was struggling to find just the right word to go to the Webster's dictionary.

You know, cartel is defined as association which is formed to restrict competition and raise prices.

You know, Forbes, Fortune, there's many reports that are showing that North Carolina has the highest-cost healthcare in the United States, and probably for the least amount of value.

It's because we have a concentration of healthcare in the hands of these multi-billion dollar corporations who disguise themselves as non-profits.

The things we're proud of is that we negotiate our Medicare Advantage program for our retirees at zero cost to the taxpayers, zero cost to the member.

We have exalted and increased the reimbursements for primary care physicians, mental health specialists, physical therapists.

I believe these are the people that keep people out of hospitals, which I think is vitally important.

But the cartel is more powerful than ever, John.

And to directly answer your question, it's my understanding that the amount of money spending in lobbying by the healthcare and the drug industry is more than the alcohol, firearms, and tobacco industry combined.

That's how powerful the cartel is.

But at the end of the day, people don't consume healthcare in this state, it consumes them.

We do have, NC stands for nothing compares in terms of our balance sheet, our surplus, the fundness of our pension plan, but according to Pew Research, John, just a few years ago, we had one of the largest unfunded liabilities per capita right behind the Illinois, the same Illinois that everybody talks about.

That's how much trouble the state health plan is in because it has not been fully funded.

This has been brewing for the last 45 years.

And all I've ever been after, as the state treasurer, is abide by President Biden and President Trump's executive orders to tell people what things cost, match your charity care with the billions of dollars of local and state and federal tax benefit that you get and stop breaking neat people's kneecaps for not paying their bill.

This not only applies to the healthcare delivery system, but obviously the prescription drug system.

- So, okay, so let me follow and take this, John's question a little bit longer in a different way.

Can the next treasurer, whomever that is, can the next treasurer put out for bid again and reverse, effectively, the management or the administration of the state health plan now that it's going from Blue Cross Blue Shield to Aetna?

Can they do, can the next treasurer do the same thing?

- When that contract comes up for bid in three years, and of course it has an extension on it, and for your viewers that teach, protect and otherwise serve, it's just important to think about this in terms of a car.

The body of the state health plan is not changing.

That's the board of trustees who set the benefits, the deductibles and the copays.

The engine, how we typically get our money, generally from the General Assembly, that's not changed.

What we're changing is the transmission.

And since the state health plan board made the decision to select, based on a scoring, to go with Aetna, since that decision was made, Blue Cross Blue Shield, their second biggest customer, BB and T Truist, is now with Aetna, not Blue Cross Blue Shield.

And I understand- - Because of that?

- No, they just made their own individual decision to put their contract out for bid.

And lastly, the League of Municipalities, they have a big book of business, they're also going with Aetna.

So we're anticipating and looking forward to a robust relationship with Aetna that will bring us the cost savings that is in the contract, number one, and number two, will put us in a position to get the transparency we need.

As state treasurer, I'm embarrassed to tell this to your viewers, we're spending billions of dollars of your taxpayer money.

And in many instances, in most all instances with the healthcare, we don't know what we're spending it on.

When you or your viewer gets a bill, we don't know if you had an appendectomy or a tonsillectomy.

- John, we have about four minutes.

Another question?

- Yes.

The current treasurer debate in North Carolina between the two, the Republican and Democratic candidates, both of them have argued that in recent years, North Carolina's pension fund has been too in, too much of the money has been in cash and not enough in the market, not enough in equities.

Do you think that's a fair criticism, Dale?

And how would you describe your investment philosophy as treasurer?

- That is a fair criticism if somebody has a crystal ball and if somebody can turn the spigot down when things go wrong like they did in 2022.

The fact is, is that I don't have a crystal ball and our spigot is actually being turned up every month.

To put this in context, the state budget's $30 billion, John.

We're gonna pay out nearly $7 billion in gross benefits this year out of the state pension plan.

Just the pension plan for state and local benefits.

That's how gigantic this is.

I've been criticized for being too conservative, not swinging for the fences, you know, having money in the mattress, so to speak.

We have no mattresses at the treasurer's office.

That money's been invested in many instances now.

We're earning over 5% on that money where, for a period of time, we weren't earning that much.

But more importantly, John, and I think you and I have talked about this as well as Chris, I lowered the assumed rate of return on the state pension plan four times, the first time it happened nearly half a century, because the rating agencies and the actuaries have told us that we were too optimistic about what we thought the plan would earn.

And lastly, when I was sworn in, I inherited nearly $12 billion of commitments that the previous treasurer had made into investments that are tied up between 10 and 15 years.

And I thought that with that amount of uncalled capital and with things being so uncertain, I thought it was best to be more conservative and less risky.

- We have about two minutes left.

Let me go to, you talk about fiscal worthiness, you talk about credit worthiness, certainly of the state, national debt, interest cost, it's come down a little bit since the feds adjusted last week, but still coming down actually.

Are you worried about that?

Are you worried about the fallout of that kind of overhang, debt overhang on North Carolina and South Carolina maybe?

- Well, it's one of, when I ran for governor, I talked about the next governor's gonna have to figure out how to protect North Carolina, our way of life, our citizens, our neighborhoods and our economy from Washington DC's ineptness, inability to protect our border or control their addiction.

They have an addiction for money and debt.

With all the billions and hundreds of millions of dollars that we've saved at the Treasurer's Office over the last several years, probably about 35% of that has been wiped out because of the higher cost of things.

The national debt is the single biggest national security issue of my lifetime- - 30 seconds.

- yes, and we're paying more in interest this year than we're paying for the military.

And, you know, these are issues that the next treasurer and the next governor are gonna have to deal with in addition to getting low-cost natural gas into Eastern North Carolina, and to continue to advocate for the invisible, which is what we do at the Treasurer's Office.

- Would you be available to the next treasurer for consultation?

- My door, my mind and my heart have been open for the last several months to the treasurer nominees, and we will treat them with radical hospitality once the election is decided.

- Your Honor, thank you for your public service.

That's probably an understatement.

I know a lot of people feel that way.

But thank you also for being our guest these last few years and best of luck to you going forward, of course.

- Thank you.

- Nice to see you.

John, always nice to have you on.

It's not enough, so please come back.

- Be happy to.

- Until next week, I'm Chris William.

Goodnight.

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Thank you.

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