Civitas Review

Senate Budget Plan Includes Retiree Insurance, Pension Reform


As highlighted in this Asheville Citizen-Times article, the NC Senate budget proposal  includes measures to address two issues very critical to the long-term fiscal health of the state government: retiree health benefits and realistic measures of the state pension fund.

North Carolina lawmakers are looking at changes they say will shore up important benefits for hundreds of thousands of state employees and teachers when approaching retirement.

Some public employee advocates worry the changes will create more uncertainty and erode incentives that attract and retain state workers.

The Senate budget approved last month contained a provision that would prevent retirees hired after 2015 from obtaining or buying health insurance for themselves or dependents through the State Health Plan. Another Senate budget item would automatically decrease a fixed rate of return on state pension fund investments that helps calculate the state's annual contribution to that fund.


Senate Republicans say the insurance change would give the state better control over an unfunded liability of $25.5 billion in projected state medical expenses for current and future retirees. The liability has fallen by several billion dollars since 2010. The General Assembly's government watchdog agency will examine the liability in a study being released Monday.

Still, "it is the largest unfunded liability we have in the state right now," said Sen. Ralph Hise, R-Mitchell, a health budget-writer, and capping the future retirees covered creates a "fixed number we're targeting and addressing over 30 years."

Civitas has been writing for years about the massive unfunded liability for state retiree health benefits, including these recommendations written nearly three years ago.

And many financial experts agree that most states, including North Carolina, are using unrealistic discount rate assumptions when calculating the state's unfunded pension liability. North Carolina continues to use 7.25%, far above more realistic rates in the 4% to 6% range recommended by firms like Moody's. Another provision in the Senate budget would begin to slightly bring down the discount rate used by the treasurer's office to determine the unfunded pension liability.

These financial issues have been building for a long time and are in urgent need of being addressed.

Progress on H.B. 13, but questions remain


Earlier this week, I wrote on the potential ramifications of H.B. 13, a bill working its way through the NC Senate. While the main theme of the bill is to ensure that students entering public schools at any age undergo a health assessment, it also has the potential to rein in bureaucratic overreach at the Department of Public Instruction and Department of Health and Human Services. Yesterday, the News & Observer picked up on my concerns regarding data gathering and parental consent:

The wide-ranging amount of information collected has mobilized conservative groups to call for passage of House Bill 13.

“When properly understood, H.B. 13 is not such a bland endeavor,” Elliot Engstrom wrote Tuesday for the conservative Civitas Institute. “It is in fact a proposal to rein in a state bureaucracy that, on its own initiative, has launched a program to collect and store intimate data about children in public schools, all while requiring parents to waive their right to be involved in discussions about their child’s health.”

On Thursday, the Senate education committee held a special session just to address H.B. 13. (Normally the committee only meets on Wednesdays). Following the one-man comedy show that was Sen. Jerry W. Tillman (who conceded to the Committee that he's been wrong "one time in [his] life"), the bill passed — but with amendments.

The question, then, is whether these amendments support or undermine the causes of privacy and parental rights. The initial answer is that progress has been made, but questions remain.

The progress comes due to the fact that the bill maintains language restricting the health assessment to certain necessary elements, instead of allowing DPI and DHHS to collect and store data on anything and everything about a child. The bill also makes strides in terms of keeping parents in the know about their child, whereas the present law allows school officials to communicate with student healthcare providers without the parent's knowledge.

Questions remain on two key issues. First, the bill states that doctors can indicate to school officials "whether school follow-up is needed." It is unclear how the school can follow-up with the healthcare provider without parents first giving their consent. Second, the bill still provides that a "development screening of cognition and language abilities may be conducted in accordance with G.S. 115C-83.5(a)." Here again, there is some ambiguity. Any good kindergarten teacher is constantly monitoring things like cognition and language abilities — no controversy there. However, G.S. 115C-83.5(a) has a plethora of potential issues in its own right.

The bill now goes to the full Senate, after which it will return to the House for final approval.

NC Supreme Court approves vouchers



Today the North Carolina Supreme Court gave everyone who believes all children deserve  access to quality educational opportunities some very good news when it upheld the constitutionality of the  state's Opportunity Scholarship program. The court's 4-3 decision reversed a lower court decision by Superior Court  Judge Robert  Hobgood.

In writing for the majority, Chief Justice, Mark Martin said plaintiffs had failed to show that the program violates North Carolina's constitution.

The long-awaited ruling, is expected to lift the cloud of uncertainty which enveloped  the scholarship program  and likely limited participation in the program.

The Opportunity Scholarship Program offers recipients vouchers of up to $4,200 to attend the school of their choice.  To be eligible, an applicant's household income cannot exceed 133 percent of the eligibility threshold for free and reduced lunch, about $ 58,000 for a family of four.

Despite extended legal problems, interest in the program has remained high. According to Parents for Educational Freedom North Carolina,  in 2014 over 5,500 families applied for nearly 2,400 scholarships to attend the school of their choice.  Since February 2014, over 11,000 applicants have been received from low-income families around  North Carolina.

The Senate included an additional $6.8 million in each of the next two years to expand the Opportunity Scholarship Program. The provision was not included the House budget.

School choice advocates hope the Court's decision  gives lawmakers confidence to expand a very popular and worthwhile program.

Should Bureaucrats Get Kids' Intimate Health Records?


The Center for Law and Freedom's Elliot Engstrom has written an important article about the state Senate's opportunity to rein in a process that raises troubling questions about how the education and health systems respect family and student privacy.

The Senate is now considering HB 13, which among other things would expand but also clarify the Kindergarten Health Assessment Report that parents must submit when enrolling their children in the public schools.

Parents should be concerned. The assessment forces parents to sign a waver that "1) allows school personnel to communicate directly with a child’s healthcare provider without notifying the parents and (2) allows DHHS to store and analyze the information on the form."

The information includes:

  • Whether a child’s emotional/social development is “within normal” parameters.
  • Whether a child’s genitalia, skin, abdomen, “extremities,” and more are “normal” or “abnormal.”
  • Whether a child regularly gets healthcare from a hospital clinic, community health center, health department, or private doctor.
  • Whether and what kind of health insurance a child has.
  • Whether a child has “behavior concerns.”

If you're a parent, do you want that information to be passed on to bureaucrats without your consent? Do you want that permanently stored in state records system.

At this writing, it's unclear what if anything the Senate will do.

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