[exciting music] - Joining us for the first discussion is Democratic nominee for treasurer, Wesley Harris.

Mr. Harris, thanks for coming onto the set, good to see you.

- Yeah, thank you for having me, it's great to be here.

- Well, first things first, you're running a statewide campaign when very few voters statistically, sadly, don't pay attention to Council of State but they have a choice, and you're the Democratic nominee.

Who are you and why do you want to be the treasurer?

- Yeah, so my name is Wesley Harris.

I am the Democratic nominee for state treasurer.

So, I'm a native North Carolinian.

I was born and raised in Alexander in Iredell County, in the northwestern part of the state.

My dad was a local banker, my mom was a public school teacher.

So I like to tell people, put a banker and a state employee together, and that's pretty much the treasurer's race.

I currently serve my third term in the state legislature.

I represent in South Charlotte.

We flipped a seat back in 2018, and I'm actually the only PhD economist in the entire legislature.

And so I've been the lead Democrat on every finance and economic issue since I've taken office in 2019.

And so, you know, the state's finances are of critical importance to me, and so many people in North Carolina.

So I'm running for state treasurer to make sure that we actually invest in our people, so that we can continue to not only grow our state, but it can live up to all of its potential.

- So how are the state's finances right now?

And particularly, health plan and state pensions, since that's the job you want running that?

- They're a little dicey.

You know, we have on the pension plan, good news, bad news.

Good news is it's one of the best-funded pension plans in the entire country.

I think almost 85% of our pension plan is actually funded.

Bad news is, is that, it has been one of the worst-performing pension plans of the past seven to eight years, ranked 50 out of 50 in the country.

And so we have to do better in getting the returns that we need.

'Cause if you look at why we can't give cost of living adjustment raises to our retirees, it's because our pension plan has not performed the way it needs to.

And on the state health plan side, again, the legislature is not raising wages the way they need to and paying our state employees they need to.

And so our stock of state employees is they're getting older and they're getting sicker, coupled with hospital consolidation and pharmaceutical prices outrageously rising.

It's a challenge.

And so we have to have a lot of work ahead of us to make sure that we can not only provide the healthcare that our state employees needed, but with that, we can make it sustainable.

- Let's go back to that pension plan.

You say it rated at the bottom or near the bottom for return on investment.

Why did that happen?

And how do you avoid that?

- It's an asset allocation problem.

You know, we have 14% of our $120 billion pension plan sitting in cash, and that's getting zero returns.

It's actually getting negative returns, because we have inflation going on here.

And so we could take a fraction of that, and invest it just in index funds, just a conservative investment strategy.

And over the last six years, we could see almost $10 billion extra into our pension plan, and so we just have to invest that money.

You know, most other pension plans have their cash balance around 2%.

We have it at 14%, so that is well over $10 billion that's just sitting there in cash.

And the money that's being invested is actually performing quite well.

About the same as the market, but we just have way too much of our pension plan simply sitting in cash.

- This race is interesting to me because a Republican and Dale Folwell earned an endorsement of an association in the past that people would always assume would always endorse a Democrat, 'cause it's a workers association seeing it.

But how partisan is this job really in practice?

I mean, both of you in this race, the major party candidates have great resumes, and know how to invest money.

So how do we go between, how do we know it's you versus the other person?

- Sure.

And you know, that's one of my favorite things about public finance is that it's more of a math problem than it is a politics problem.

And you know, people should vote for me because I actually believe in investing in our state employees.

Like you said, I'm honored to be the first treasurer candidate actually since 2008, to have the endorsement of both the State Employees Association and the North Carolinas Association of Educators.

And so, you know, we wanna do right by our state employees because we want to fully fund our state employees.

I like to say you can't have a government that works for everybody if you don't have a government people are willing to work for.

And they're not gonna be willing to work for you unless you have great benefits.

And I think the biggest difference between us is actually I want to maintain the independence of the treasurer's office and the sole fiduciary while my opponent is actually proposing a constitutional amendment, shifting that power to a committee, which in North Carolina, you're giving it to the legislature.

And there is one thing our legislature does not need and that's more power, particularly over our pension plan so that they can appoint it with political appointees, and have politicization of our pension plan where we really just need to make sure that we're making good investments that benefit our people.

And that is what I'm committed to do.

- For this campaign in regard to the sole fiduciary where the treasurer has absolute authority to invest funds, how he or she sees fit.

The argument is one person can be corrupted, and it happens in other states, but a committee of experts much more difficult, much more stable from good governments, your take.

- My take is it's about accountability.

You know, this is a position that is elected by the people.

You know, not every treasurer is elected by the people.

And so the people get these say, and that is something that I hold near and dear.

That's, you know, the backbone of our democracy and one person can be corrupted, so can a group of political appointees.

We have seen that with our UNC board of trustees that has done a terrible job politicizing the crown jewel of our economic development system, our UNC system.

And so I wanna keep the power of the office with the people so that they can hold those elected officials accountable, not rely on gerrymandered maps and political appointees.

- You took a shot at UNC there.

I wanna ask you, how forward facing should this position be?

And if you're elected treasurer, or any treasurer in the future, how loud should they be in public discourse?

- I think they should be loud enough to let people know what's going on.

You know, as one of the chief financial officers of the state, I think it's imperative that this position as a council state member goes around the state and tells people what's going on with the state's finances.

Because I think it is an area where people don't necessarily know what's going on.

It's, you know, it's not the sexiest of topics, but people need to know what's happening to our state's finances.

The fact that in 2019 we had $18 billion in debt capacity, and that has fallen to $8 billion.

Where our public school capital needs have risen from $8 billion in 2019 to over 13 billion.

And the fact that we have not made those investments and we have squandered so many financial opportunities over the past six to seven years, people need to know about that so that they can hold their elected officials accountable.

And as a financial role, I think it is a critical responsibility of the treasurer to make sure people know what's happening in our state.

- It's understandable, you need to be loyal opposition to a Republican super majority, at least as it is as we do this interview.

But if you poke too hard, you prod too hard, you go after 'em too hard, you still need to work with them 'cause they won't give you anything if you can't charm them in some way.

- Absolutely.

- So where can you be most effective and still, you know, be Wesley Harris, Democrat treasurer?

- Yeah, well you know, this is my third term in the legislature, so I'm quite comfortable with, I have good relationship with most Republican legislatures in the building.

Like I said, being a finance person, the math is nonpartisan.

The math is the math.

And so you can really bridge bridges there, and make connections there.

And so, but you have to hold people accountable.

And I think that's the biggest challenge of any political job, particularly in a purple state like North Carolina where you have a legislature that typically leans Republican and Council of State or statewide offices like the governor that typically lean Democratic.

And so finding those compromises where you can is critical, but you also gotta stand up for what your values are and make sure that you're doing what you can to hold the other elected officials accountable.

- Treasurer Folwell, in his two terms as treasurer, went directly after the state's investment in these private equity funds that may have high returns, but they have very high fees.

And he attacked fees to bring those down to save retirees' money was the launching, I remember him having on the campaign trail.

What is your opinion of going for the higher returns, even if it costs higher fees compared to low fees, low return on investment?

- It's a balance between risk and reward in the sense that... - But are you against the private, the hedge fund type work?

- In a lot of sense, yes.

Because if you look at what private equity is doing to so many parts of our economy, you know?

They're plundering it.

And they're going for short-term profits.

They load up companies with debt and then they dip out of there, which actually mis-aligns the entire incentive structure that we want our companies to have.

I would love for our companies to have a much longer term time horizon.

So they're making good investments, making good product, and that we're all benefiting from it.

But trying to catch on whatever the hot private equity is, you know, you can rise high pretty quickly and you can fall pretty quickly.

And so you need to have a very diversified approach of making sure that you're investing in companies that not only do well, but companies that do good.

As I like to say, if a company does good, they do well.

- Do you have a litmus test if you get your hands on the state pension funds, retirees just want COLAs, and, or cost of living adjustments, let me use the right term.

And they wanna know their retirement check is coming, but that means there's options in tobacco and liquor and vice and all the things that would sometimes make headlines.

How do you handle that?

- Yeah, the first thing is you have to make sure you get the returns that the pension plan needs.

You can make it solvent and be able to give those costs of living adjustments, but you also wanna make sure you're investing in companies that aren't harming the state.

You know, if there's a company that has decent returns but the people of North Carolina are actually being adversely impacted by the activities of that firm, we don't need to be investing in that because on the whole, it's a net loss for the state.

And so you need to be smart about like, making sure you have a diversified portfolio, but that's you're investing in companies that respect, that represent the values of our state.

- On the other side, the state of retire, not retirement, but the health plan is out there will be, if you take off as Aetna's coming on board in January, 2025, Blue Cross, not putting up a court fight.

What is your impression of this change of the state health plan as you see it as campaigner right now?

- Sure, well I'm hopeful, you know, I've talked with Aetna a handful of times as they've been through this process, and now that the court has finally decided.

You know, it's all boats ashore, and so they're working hard making sure that everyone who was covered by Blue Cross is gonna be covered by Aetna.

But that's the real challenge over the next couple months is making sure, 'cause anytime there's a shift, people start panicking in making sure is my doctor gonna be covered?

And we aren't really gonna know a lot of that until open enrollment begins in October.

And so working with them and working with the hospital systems to make sure that we have that coverage is gonna be the critical piece.

But they're working hard, they're doing everything they can, they actually just started a rollout the past couple weeks going around the state for state employees be like, listen, open enrollment's coming, check with your doctor today, make sure they're being covered and if they're not, let's see if we can work something out.

And so I'm very encouraged with what they've been doing and the effort they've had to make sure it will be a seamless transition.

- As treasurer should Aetna be expected to have as robust a network as we have under as a state employee of which I am one that we enjoy under Blue Cross Blue Shield North Carolina?

- They should, I mean, if you're going to cover state employees in North Carolina, state employees need to be comfortable knowing that their network is broad, and their network is big, and their network is inclusive.

And so we need to do everything we can to make sure that we expand that so that everyone is covered.

And I think the vast, vast majority of people will be covered.

- In this last minute we have in this interview, you will inherit a team of seasoned professionals in the treasurer's office.

Do you know that team?

How well do you know them?

What do you think of them largely?

And how much of a cultural change do you think is needed as you take office?

- Yeah, you know, I know a decent bit of 'em.

Sam Watts is the, you know, state health plan, and he's been the legislative liaison since I've been in the legislature.

And so, have a good relationship with them and you know, working with them of, you know, 'cause at the end of the day, like I said, it's not that political of an office, it's a math office.

And so having their expertise, having their background in the area is something that is going to be critical whenever there's a change at the top.

And so working with everybody to make sure that we can, you know, do what's best for the state employees, and do what's best for the state.

- Do you think it'd be a smooth transition even going from a Republican administration to a potential Democratic administration in that office?

- Oh, absolutely.

I have a good relationship with Treasurer Folwell, actually went up to to see the trustees meeting the other day and had a discussion with him.

And so he's been very open about being helpful and having a great transition.

And so I'm very much looking forward to it, and don't expect much tension at all.

- All right, this is Wesley Harris, Democratic nominee for North Carolina treasurer.

As I always say, there's more to this ballot than a president and a governor's race and your name is down there.

Sir, thank you for taking time to come to "State Lines" and good luck on the campaign trail.

Be safe out there.

Lots of travel, and lots of traffic.

- Thank you, good to be here.

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