How Big Is The Debt?
Unfunded healthcare benefits in North Carolina for state and local municipal employees are $24,600,000,000. That's the fifth highest amount in the nation. That exceeds the amount for the entire FY 2007-2008 General Fund budget. For a family of four today in North Carolina, that’s over $11,000 of hidden debt.

Moreover, the above $24 billion plus figure doesn’t include North Carolina county and municipal unfunded retiree health benefit liabilities. With county governments returning 20% of their local sales tax revenues to the state (½ cent of 2 ½ cents) in exchange for the state assuming the counties’ share of Medicaid costs, further pressure is put on increasing local taxes without increasing services.

The GASB Bomb
The Governmental Accounting Standards Board (GASB) changed the playing field in in 2005 with GASB 45. This accounting guideline calls for states to calculate and disclose the total costs, in current dollars, of financing the accrued health benefits for current and future state retirees.

As with many actuarial reports, the devil is in the details. The above North Carolina figure is based on healthcare costs not rising as they have in the past. Over the past decade, costs have been rising annually in the range of 10% to 14%. Many state actuarial reports are forecasting 5%. What does this mean as to the actual debt for North Carolina? For the state of Hawaii, a 1% increase (from an assumed base of 5%) in the annual healthcare cost rise means a 20% increase in the unfunded liability. (See NC State Authored Paper.)

The North Carolina Plan
Since the inception of the current state system (which includes local school and state university employees), unfunded healthcare benefits spending has increased 720%. For those thirty years, the General Assembly never set aside enough funds to pay for retirees, despite the known demographic baby boomer bulge working its way through the population. North Carolina finances retiree healthcare premiums on a pay-as-you-go basis.

Until CY 2006, state workers needed only five years of state service to be eligible for free enrollment in the state health plan upon retirement. Now, with a change in state law, (S.L. 2006-174), future retirees are required to accumulate 20 or more years of “retirement service credit” to be eligible for fully subsidized health insurance premiums. With 10 to 20 years of service, half of the insurance premiums are covered by the state. With 5 to 10 years of service you can enroll in the state health insurance plan at your own cost. (Even this drives up state healthcare insurance benefit liabilities by raising the average insured policyholder age of the pool.)

How Much Would It Cost To Pre-fund The Healthcare Retirement Benefit?
After thirty years that figure is now over $2,400,000,000 annually, more than the entire FY 2007-2008 Justice & Public Safety budget. That figure assumes that healthcare costs don't increase as they have in the past. That figure would be an additional increase in the General Fund budget of about 11%. And the problem grows. During Governor Mike Easley’s term as governor, the state added over 25,000 new employees.

What Do Other States Do?
In response to the GASB 45 bomb, over 12 states passed legislation establishing an account or fund in which money is to be set aside to pay for future retiree healthcare costs. North Carolina was not among them.

Some states (such as neighboring Virginia and South Carolina) have longer eligibility requirements (10 and 15 years, respectively). Some states have increased the co-pay for retirees. More and more states are looking at adopting fully paid funding. The State of Nebraska has no healthcare retiree debt.

Pulp readers should be used to local government behavior towards those reporting embarrassing problems (read reality) to government authorities. If you report the problem, then you are the problem. The real problem is not the problem, so long as no one talks about it.

Back in February 2008, the Pulp posted about an N&O story on the toe tapping behavior out at nearby Jordan Lake. (See Pulp Wild Life Story.) The salacious aspects of rampant public lewdness were embarrassing to the North Carolina Wildlife Resources Commission (NCWRC).

Eight months later, the reward to the New Hope Audubon Society (NHAS) for reporting the “advanced sexual acts” to the NCWRC is to be told to leave the Indian Creek Trail area after 20 years and to move to another part of the lake.

According to the NCWRC they are unable to stop male homosexual encounters in a public park space. NCWRC Sgt. Reggie Barker, who oversees enforcement for Chatham, Lee and Randolph counties, ”It would become very frustrating. It's not something you can deal with every day, and it's a delicate situation to handle.”

The flaunting of public lewdness became openly flamboyant by the summer 2008. At least 25 Craigslist internet advertisements for men seeking sexual encounters were posted. Sgt. Baker reports at least 20 cars in the parking lot at once, backed up to the forest line to hide their license plates. Undercover NCWRC officers have been solicited for illegal public lewdness every time they walked in the area.

No explanation has been given as to why the NCWRC did not photograph the plates. Furthermore, the NCWRC gives no explanation why other law enforcement manpower hasn’t been assigned to stop the illegal public lewdness behavior. For example, public lewdness at nearby Umstead Park in Raleigh has been abated by using local police. See N&O Public Lewdness Capitulation Story.

In a classic governmental response, the messenger is the problem. The NHAS has been asked to move their legal birding activities to where they will no longer see the problem, thereby “solving” the problem without changing anyone's behavior.

No word on whether or not the NCWRC has informed the birds as to where to move to be observed by the NHAS.

In related business news, Johnson & Johnson stock and Church & Dwight stock traded up slightly.

With the American Society of Civil Engineers (ASCE) recommending that American governments spend over $320,000,000,000 annually for the next five years, let’s look at how North Carolina is doing in providing and maintaining its public works. (All figures documented by the ASCE.)

Roads
• 42% of North Carolina's major urban roads are congested (2005), up from 40% in 2003.
• 34% of North Carolina's major roads are in poor or mediocre condition (2005), up from 33% in 2003.
• Vehicle travel on North Carolina's highways increased 50% from 1990 to 2003. North Carolina's population grew 27% between 1990 and 2003.
• The state has a $28 billion shortfall over the next 25 years in needed highway and bridge funding (2005).
• Driving on roads in need of repair costs North Carolina motorists $1,700,000,000 billion a year in extra vehicle repairs and operating costs — $282 per motorist (2005), up from $1,400,000,000 and $259 per year in 2003.
• Congestion in the Charlotte metropolitan area costs commuters $791 per person per year in excess fuel and lost time (2005).
• Congestion in the Raleigh metropolitan area costs commuters $460 per person per year in excess fuel and lost time (2005 pricing).

Bridges

31% of North Carolina's bridges are structurally deficient or functionally obsolete (2005), up from 30% in 2003.

Dams
• There are about 81 state-determined deficient dams in North Carolina (2005), up from 53 in 2003.
• North Carolina has 1,046 high hazard dams, i.e., a dam whose failure would cause a loss of life and significant property damage (2005).
• The rehabilitation cost for North Carolina's most critical dams is estimated at $394.8 million (2003).

Water systems
• North Carolina's drinking water infrastructure needs $2,700,000,000 over the next 20 years (2005).

Wastewater systems
• North Carolina has $5,920,000,000 in wastewater infrastructure needs (2005), up from $4,000,000,000 in 2003.

Solid waste systems
• North Carolina generates 1.08 tons of solid waste per capita (2005).
• North Carolina recycles 11% of the state's solid waste (2005).

Education
• 55% of North Carolina's schools have at least one inadequate building feature (2005).
• 68% of North Carolina's schools have at least one unsatisfactory environmental condition (2005).

Due to a federal “open border” policy and “sanctuary city” municipal policies, the Hispanic population in North Carolina increased from 76,726 to 597,382, a 770% increase since 1990 (U.S. Census Bureau). Moreover, Hispanic births increased 1100% times during the same period. Last year, one of every six babies born in North Carolina was Hispanic.

Womens’ Hospital (UNC-CH) reports that half (50%) of babies born there are now registered as Hispanic, up from 37.4% in 2005.

Uninsured mothers are eligible for emergency Medicaid regardless of immigration status. The average cost of a Caesarean birth with complications in North Carolina is $16,651 (Blue Cross and Blue Shield). For hospital births, all families earning up to 185 percent of the federal poverty limit are fully covered (roughly an annual income of $38,000 for a family of four).

(Originally reported in the 2 January 2008 Chapel Hill Herald)