The State Health Plan Board of Trustees has a $500 million deficit to close. As a result, new premium hikes are on the way for employees, retirees and their families to close the gap.(Stock photo by Wichayada Suwanachun/Getty Images)
In 2010, the year North Carolina Republicans won control of both houses of the state legislature, Site Selection Magazine — the self-described “leading publication in corporate real estate, facility planning, location analysis and foreign direct investment” — ranked North Carolina as the nation’s fourth “most competitive state.”
It was a familiar accolade. Throughout most of the previous decade, things like solid infrastructure, low-to-moderate tax rates, forward-looking state leaders, rapidly improving systems of K-12 and higher education, good public services and an agreeable environment had kept North Carolina near the top of numerous “best for business” rankings.
Unfortunately, you know what happened next. Upon winning power — a victory they quickly cemented through multiple episodes of extreme partisan and racial gerrymandering — GOP lawmakers commenced a war on all things public by repeatedly slashing taxes in a regressive fashion. The result: today, a decade-and-a-half later, most public structures and systems in our state have been reduced to pale shadows of their former selves.
In 2009-10, state and local public spending was equal to 6.2% of the total state economy. This amount was actually down somewhat from the last few decades of the 20th Century — another period of rapid growth and progress in the state — when the figure was often close to 7%. By 2020-21, however, repeated tax cuts cut this important measure down to 4.3%. That’s a decline of more than 30% in core public investments in just a decade. And while, by 2024, things had rebounded slightly to 4.9%, this number still reflects a massive hit to public structures and systems.
Of course, the results of all this bloodletting are not hard to find. They can be readily seen in the massive job vacancy rates that plague so many places of public employment in our state — from public school classrooms to the institutions that serve people with mental and physical disabilities to prisons to highway road crews.
All across our state, lousy pay that has failed to keep up with inflation has driven thousands of people who once happily accepted stable, middle-class lives as career public servants, to abandon government employment in search of living incomes.
In North Carolina, the public sector-private sector pay gap — that is the gap between what someone with the education it takes to be a public school teacher can earn in the public and private sectors — is among the nation’s largest. Even states like Alabama and Mississippi can rightfully claim a much higher “funding effort” when it comes to teacher pay.
And now, as NC Newsline’s Ahmed Jallow reported last week, it looks like the situation is going to get even worse. Thanks to the never-ending cost surges that plague America’s madly overpriced health care system, and the General Assembly’s refusal to provide adequate funding, the State Health Plan Board of Trustees has a $500 million deficit to close. As a result, the trustees have made clear that they intend to impose significant new premium hikes on employees, retirees and their families to close the gap.
While the trustees have expressed an admirable desire to spare the state’s lowest paid employees from some of the pain, the premium hikes under consideration in a “moderate increase” scenario for middle and higher paid employees still figure to cost already struggling workers hundreds of dollars per year.
Such increases would be one thing if employee pay had been keeping up with the cost of living, but they’re quite another in a situation in which veteran schoolteachers with decades of experience are bringing home half what they could make in the private sector. As Tamika Walker Kelly, president of the N.C. Association of Educators observed, the increases are but the latest in seemingly endless series of actions by state leaders that are “…pricing our educators out of the profession.”
Of course, as noted, there are other maddening factors at work in this situation. In addition to the legislature’s cheapskate funding practices, soaring health care costs are another contributing factor.
As Ardis Watkins, executive director of the State Employees Association of North Carolina, has argued forcefully and persuasively of late, costs are an area in which lawmakers and State Health Plan leaders could be doing much more to demand greater transparency and cost control in provider reimbursements.
As Watkins detailed in a recent interview for the NC Newsline radio show/podcast, News & Views, under current law, the Health Plan hires a third-party administrator — an insurance company — to negotiate deals with health care providers, but in the end, all negotiations are kept of hidden from public view as “trade secrets.”
Her quite plausible conclusion: the deals end up including big, underreported profits for providers and insurance “middlemen” that contribute mightily to State Health Plan costs. Not surprisingly, however, in a legislature in which corporate interests play such a dominant role, the prospects for reform are scant.
In short, North Carolina teachers and state employees — public servants for whom decent benefits have long been one of the few perks they supposedly enjoy as compensation for low pay — are preparing to absorb yet another financial blow. And sadly, the war on all things public in North Carolina continues apace.