(The Center Square) – Members of the Debt Affordability Advisory Committee plan to ask lawmakers to set aside more funding for North Carolina state employees' pension systems.
The committee, charged with monitoring the state's debt capacity, will recommend the North Carolina Legislature allocate money to the Unfunded Liability Solvency Reserve in the new state budget.
Lawmakers will convene Wednesday for the 2021 legislative session, and the General Assembly must pass a 2021-2023 biennial budget this session.
The Unfunded Liability Solvency Reserve is a trust fund for employee benefits aimed at reducing pension and health care unfunded liabilities, which currently exceed $42 billion, according to the state's treasurer's office.
It is unclear how much in funding committee members will request and how much is in the trust fund. Members requested $100 million last year, and lawmakers appropriated $30 million.
The Teachers' and State Employees' Retirement System is underfunded by $11.5 billion, the treasurer's office said. The Local Governmental Employees' Retirement System is underfunded by $3.3 billion, and the State Health Plan is unfunded by $27.7 billion.
State Treasurer Dale Folwell, who chairs the committee, said a healthy pension plan is one of the most significant variables in the state's ability to borrow with low interest rates. All three national credit rating agencies have given North Carolina the highest rating possible, which keeps interest down and limits taxpayers' economic burden.
The General Assembly created the Debt Affordability Advisory Committee in 2004 to keep track of how much debt the state has and how much it can borrow. The committee must produce a debt affordability study each February, but a delay in revenue forecasting by legislative analysts has caused members to extend the deadline to March 1. The forecast has been stalled because of economic uncertainty from the pandemic. It is expected to be completed by Feb. 10.
Other committee members include State Auditor Beth Wood, Secretary of Revenue Ronald Penny, State Budget Director Charlie Perusse and State Controller Linda Combs. Frank Aikmus, vice president of Suntrust Bank; Bradford Briner, director of Real Assets Willett Advisors; attorney Eugene Chianelli Jr.; and accountant Donald Pomeroy II account for the public's membership.
They also have voted to keep the state borrowing cap at 4% of state budget revenues.
"The state has new and ongoing capital needs such as school construction every year," Folwell said. "But it also carries existing bond and other debt obligations for past years' projects. The Debt Affordability Study is North Carolina's most important tool in determining how much debt the government can issue and to prioritize those capital needs."