State Treasurer Folwell Releases 2019 Debt Affordability Study Liability for the State Pension System Increased by More Than $2 billion in 2018​



Contact: Frank Lester (919) 814-3811


State Treasurer Folwell Releases 2019 Debt Affordability Study

Liability for the State Pension System Increased by More Than $2 billion in 2018​

(RALEIGH, N.C.) – State Treasurer Dale R. Folwell, CPA, announced today the results of the 2019 Debt Affordability Advisory Committee Study, advising the governor and General Assembly on the estimated debt capacity of the General and Transportation Funds for the upcoming 10 fiscal years.

The annual study, approved by the Debt Affordability Advisory Committee (Committee), provides analysis of the impact of future debt issuance on the state's fiscal position. A secondary purpose of the report is to provide a methodology for measuring, monitoring and managing the State's debt levels, thereby protecting North Carolina's bond ratings of AAA/Aaa/AAA.

The methodology incorporates trends in debt levels and peer group comparisons and provides recommendations within adopted guidelines. The analysis includes the projected issuance of the remaining $1.4 billion of authorized but unissued Connect NC Bonds and the $3 billion Build NC Bonds.

The Committee reiterated its recommendation that the State recognize the magnitude of its unfunded pension and other post-employment obligations (OPEB) that cover retiree healthcare costs and to begin to fund these liabilities using principles of gradualism that are appropriate for a State with a long history of good fiscal management and high financial ratings. It was also noted that during 2018 that the State's pension liability increased by more than $2 billion.

State Budget Director Charlie Perusse initiated a discussion on whether the recommendations from the Committee should take into consideration the decrease in future debt service payments over the next 10 years in light of statewide capital and infrastructure needs. The majority of the Committee voted to support the recommendation as is with no changes.

Treasurer Folwell acknowledged the capital infrastructure needs of the state including school construction, noting that nothing in the Committee's recommendation prevents the governor or General Assembly from approving expenditures, including debt, to address those issues.

“This is not political or emotional, but mathematical," said Folwell. “We have almost $40 billion in unfunded pension and health care liabilities. That bill will come due much sooner than people realize. We're doing what's necessary at this point in the state's history because others didn't. As Gov. Martin said, '…doing right is rarely wrong.'"

The 2019 Debt Affordability Study was prepared by the staff of the State and Local Government Finance Division of the N.C. Department of State Treasurer. The Committee was created by the General Assembly in 2004 and is chaired by Treasurer Folwell. A study of debt affordability is an essential management tool that helps to provide a comprehensive assessment of a government's ability to issue debt for its capital needs. North Carolina is nationally recognized for the quality of its debt affordability studies. Control of debt burden is one of the key factors used by rating agencies' analysts in assessing credit quality.

Other Committee members are Ronald Penny, Secretary of Revenue; Linda Combs, State Controller; Charles Perusse, State Budget Director; Beth Wood, State Auditor; Frank Aikmus, Senate Appointee; Bradford Briner, Senate Appointee; Cecil T. Turner, House Appointee; and Eugene Chianelli, House Appointee.

The N.C. Department of State Treasurer's State and Local Government Finance Division handles the sale and delivery of all State and local debt and monitors the repayment of State and local government debt. More information can be found at