By John Hood

RALEIGH — The person who manages most of state government’s financial assets — the $107 billion pension fund for state and local employees, for starters — is not an appointee of the governor. The voters of North Carolina elect a state treasurer every four years.

The current treasurer, Republican Dale Folwell, is a former state legislator now seeking reelection to a second term. The Democratic challenger seeking to replace him, Ronnie Chatterji, is a professor at Duke University.

At a recent debate hosted by the North Carolina Institute of Political Leadership and Spectrum News, the two candidates sparred repeatedly about the pension fund and Folwell’s push for cost savings and transparency in the state employee health plan.

Chatterji, formerly an economist in the Obama White House, said that Folwell’s investment strategy was too conservative. If more pension assets had been in stocks, the market trajectory of the past few months would have produced an addition $4 billion in gains, he said.

“If you are scared to put the money to work, you’re going to lose money for North Carolina,” he argued.

Folwell responded by pointing out that the state treasurer is obligated to balance market return and risk in real time.

“We are in the check-delivery business,” he said.

His office pays out about $550 million in pension and disability benefits each month to more than 300,000 state and local employees.

Indeed, there are now fewer public employees paying into the pension fund than retirees drawing from it. If North Carolina starts chasing higher rates of return by investing in riskier assets, Folwell argued, that could lead to unwelcome situations in which the state must sell low to pay monthly benefits.

Chatterji called that approach too risk-adverse, like keeping “cash underneath the mattress somewhere.”

As you can see, the Folwell-Chatterji debate was a substantive one, populated with lots of references to numbers, fiscal principles, and high-stakes policy decisions. But it was also a surprisingly combative debate, with Chatterji trying to rattle Folwell by ridiculing his use of the phrase “keeper of the public purse” — famously the slogan of former State Treasurer Harlan Boyles — and Folwell’s own signature use of props such as redacted documents and convoluted hospital bills to illustrate his points.

A key area of conflict was health care. Some years ago, the General Assembly transferred responsibility for the financially shaky state health plan to the state treasurer’s office. During his first term, Folwell sought to shore up the health plan by renegotiating the state’s contracts with medical providers — his initial efforts helped reduce the state’s unfunded liability for retiree health benefits by $3.3 billion — and pursuing more transparency in medical billing.

The latter idea is that with more information, plan members will make more cost-effective decisions. Health care “is the only thing in your viewers’ lives where they don’t know the price or value of [it] after they consume it,” Folwell said during the debate.

Chatterji didn’t criticize the goal. He argued that Folwell’s initiative, the Clear Pricing Project, hadn’t worked. While tens of thousands of providers, mainly doctors, chose to participate in it, North Carolina’s major hospital systems did not.

That’s because they weren’t adequately consulted and the challenges facing hospitals adequately addressed, Chatterji said. “It’s really important to have transparency in health care,” he added, but “you have to get the job done.”

Tellingly, hospital executives and employees tend to favor Ronnie Chatterji in the 2020 race for state treasurer, while the State Employees Association of North Carolina is working hard to reelect Dale Folwell.

That said, this race is about far more than conflicts between associations and interest groups. Public employees understandably care a great deal about who is managing their retirement savings and health plan, but all North Carolinians have a stake in the outcome. Taxpayers help finance both plans, too. And the treasurer is North Carolina’s primary banker, issuing state bonds and safeguarding the state’s coveted triple-A bond rating.

Don’t forget to vote in this race. It’s important.

John Hood is chairman of the John Locke Foundation.