State Treasurer Dale R. Folwell, CPA, today sought to reassure the state’s citizens and business leaders that North Carolina’s government is on strong financial footing and is well-positioned to weather the storm caused by the COVID-19 pandemic. The pandemic has closed schools and businesses across the state, causing severe economic disruption.
“As keepers of the public purse, we feel that it’s important to let the people know the state is financially secure,” said Treasurer Folwell. “Because of the conservative management of the state’s finances by this General Assembly and others before it, we are in a good position to withstand economic headwinds.”
Treasurer Folwell cited the state’s Rainy Day Fund at $1.2 billion, the Unspent Cash Reserves at $2.0 billion and the state’s Unemployment Trust Fund with nearly a $4 billion balance as buffers against the economic downturn.
Prior to being elected in 2016, Treasurer Folwell led the N.C. Division of Employment Security (DES) as the Assistant Secretary of Commerce. When he started at DES the unemployment fund was $2.7 billion in debt to the federal government, and North Carolina businesses paid resulting surcharges of $600 million a year. With unified leadership, the General Assembly, businesses across the state and the hard-working employees at DES, that fund now has almost $4 billion.
“The business disruption of social distancing, and the subsequent job loss, could be substantial,” said Treasurer Folwell. “New leaders at DES will need additional resources so that additional claims can be handled quickly and correctly.”
Treasurer Folwell noted that the money for the unemployment fund comes from a surcharge on businesses across the state, not from general tax revenue. In past economic downturns that resulted in increased unemployment, and additional business charges were levied. Because of the current unemployment fund balance, businesses will not have to worry about the increased financial pressure of additional unemployment surcharges.
Earlier in the month, Treasurer Folwell also reported that the state’s pension plans were secure. Despite the S&P 500 tumbling more than 21%, the state’s pension plans’ investments are down a little more than 8%. This is due to the conservative management philosophy of Treasurer Folwell and other treasurers for the past 50 years.
In fact, Moody’s Investors Service recently reported that North Carolina’s Retirement Systems, which includes state and local employees, is the best funded in the nation when looking at its Adjusted Net Pension Liability.
Additionally, a recent “stress test” by The Pew Charitable Trusts concluded that North Carolina’s state pension fund is well-positioned to maintain solvency during tough economic times.
Treasurer Folwell wants to reassure those that are already receiving pension checks that they will be paid on time next week. He added that despite interruptions in staffing, the Retirement Systems Division made the decision early in the week to go ahead and process checks so staffing issues would not impact payments to retirees on the regular end-of-month schedule.
“I couldn’t be prouder of the staff here at the Treasurer’s Office,” added Folwell. “We’re in the check delivery business and everyone has stepped up to the plate to make sure that those who teach, protect and otherwise serve the citizens of this state are taken care of.”