by Sarah Curry
Director of Fiscal Policy Studies
While offering both retirement and healthcare benefits to employees is a reasonable and expected part of employment, the State needs to re-evaluate its method of paying for these benefits. There are two main ways these benefit plans can be maintained for future generations of state employees while still offering the benefits promised to those who have already retired. First, changing the way these plans are funded and second, changing the way they are paid to retired employees.
The biggest problem is that the State has over $27 billion in pension and healthcare liabilities that isn’t considered debt. When lawmakers or citizens look at the state budget, they can see the debt service amount and know how much is being taken away from other government services to pay for that debt. These liabilities are hidden in supplemental financial statements and not considered when the State calculates its debt capacity. Regardless of what changes are made to make these benefit programs more affordable, this is REAL debt and must be managed as such. Healthcare and retirement benefits are only going to become more expensive and require higher levels of funding in the future – North Carolina needs to make a change before it’s too late.
To read more about this issue, read my newsletter here.