It's 5.05 and a good Monday morning to you. Welcome into the Carolina Journal News Hour, News Talk 1110-993 WBT. I'm Nick Craig. Good morning to you.
Well, as of 5 o'clock this morning, we are continuing to track Hurricane Aaron as it continues to progress westwards in the Atlantic. It is still a category 4 hurricane with maximum sustained winds at 130 miles an hour. Fortunately, the official track from the storm does have it splitting the gap between the United States and Bermuda as we head into the middle and latter parts of this week.
However, due to the storm's large nature, it is still expected to have some impacts in the northeastern part of North Carolina, with authorities in the outer banks not taking any chances. Dare County senior officials noting in a press release. Release yesterday, quote, the system will continue to increase in size and is forecast to bring life-threatening impacts to Dare County's coastline. That is in the Outer Banks. As officials in that area noted, portions of NC-12 on Hatteras Island will likely be impassable for several days.
Noting that there are some of those life-threatening impacts could begin to take place throughout Wednesday and Thursday of this week, and there's even some mandatory evacuations in certain areas of the Outer Banks this morning due to what is expected to be some high surf, even though the storm again is not expected to make any immediate impact in terms of landfalling here across North Carolina. That state of emergency went into effect at 6 p.m. last night for all areas in Dare County. We will continue to watch the preparations throughout the eastern half of North Carolina as we have continued to track Hurricane Aaron over the last week or so. We'll bring you any.
Additional announcements or details from various counties and communities in the eastern half of the state, as we get it right here on the Carolina Journal News Hour. In some statewide news this morning, a much anticipated move by the State Health Plan Board of Trustees on Friday when they voted unanimously To approve premium increases for more than 750,000 members of the state health plan. This should have not come as a surprise to folks, as multiple meetings this year have indicated that was likely the way forward. Back in February, the board met to try and find a solution to the plan's projected deficit of $570 million next year in 2026, and somewhere between $800 and $900 million in 2027. The board met again in May to reconvene and discuss approved changes to state health plan benefits, raising annual deductibles for singles and families under both the standard PPO and the plus PPO plan that is set to take place next year.
State Treasurer Brad Briner, whose office oversees the state health plan, said that these changes were necessary to keep the plan functioning in the future. Here's what the state treasurer had to say a Friday afternoon. I want to say it all our state points. Value your service and your commitment to the state. We know how hard you all work for us.
Why keeping the state health plan viable? It's been the highest priority. since I took office. I walked into office in January with a half a billion dollar deficit, and that's just for 2026. Today, we're going to take the last step.
to filling the hole. by finalizing premiums. I know that few people are going to be happy about that. But it is necessary. want to have a state health plan in the future.
I appreciate the true team effort. It has happened over the last seven months as we work to put this plan on stable long-term footing. collaboration with many of the organizations that are represented here today. scenic retired government Employees. hired school personnel, et cetera, has made the process smoother.
by offering invaluable insights. into our members. I'd like to spend a minute. on how we got here. Simply put, We're here because of the short-sighted decisions of my predecessor.
Premiums were frozen for years. And members were made to believe it could be that way forever. But the plan was actually spending more than it took in each and every year. That meant cash reserves for the plan were being used to keep prices stable. rather than doing the hard work with providers.
and making adjustments to get better services at lower prices for our members.
Now those cash reserves are nearly gone. We also embarked on a flawed strategy called the Clear Pricing Project. The original stated intention was very admirable, price transparency. The voluntary nature of the program meant that those who got paid more to be part of it opted in. and those who would have been paid less to be part of it.
Did not. That predictably led to higher expenses. There were no cost savings in that program. Instead, it was another huge financial miscalculation. Finally, on this topic.
A common political ploy was used against our members. Creating distractions to take attention away from the severity of the financial lows. The most notable of which was the claim that the state health plan's problems were only as a result of the General Assembly not reimbursing COVID-related expenses. Like any good diversion. That was half true.
There are tens of millions of dollars of unreimbursed COVID expenses. But today we're talking about a multi-billion dollar problem.
So even if we had gotten every single possible dollar of COVID-related expenses, we would still be in the position. to have to raise premiums today. That's state treasurer Brad Briner at the state health plans board of trustee meetings that took place on Friday. For the first time ever, planned premiums are now on a sliding scale based on income, with the smallest increase going to the lowest paid state employees. The scale is broken down into four income brackets: those making under $50,000 a year, those making between $50,000 and $65,000, the next year, $65,000 to $90,000 and over $90,000.
For employees earning under $50,000 a year, monthly premiums for a single subscriber will rise by either $10,000 or $16 a month, depending on the plan, whether they're on the standard or the plus plan. And in the top income tier over $90,000, that increase will either be $30 a month or $110 a month. Important to note that retirees on the plan will see their current monthly premiums remain the same. In June, an audit of the state health plan confirmed the dire financial situation using actuarial projections from 2024, which were used for financial forecasting by the state treasurer's office, showing net losses for the state health plan of $199 million in 2025, $507 million in 2026, and a whopping $862 million in 2027. Ultimately, the projections showed that the state health plan would have something near a $950 million cash deficit by the end of 2027 if plans and pricing did not change.
Deductibles under the standard PPO plan, those deductibles will go up under the standard plan from $1,500 for singles and $4,500 for families to $3,000 and $9,000 respectively under the PLUS plan, the PUSPLUS PPO plan. Those deductibles will go from $1,250 and $3,740 to $1,500 and $4,500 for those additional plans. As the treasurer noted, saying, quote, today's vote was not easy, but these increases were necessary to keep the plan solvent and to keep this benefit in place for those that serve and have served the state of North Carolina. State Treasurer Brad Briner noted, the goal now is to move forward and focus on ways to improve benefits through transparency and better partnerships and programs to keep our members healthy. The 2026 open enrollment period for those eligible for the state health plan are expected to take place between October 13th and October 31st of this year.
That's when the open enrollment period will take place. We have got a lot of coverage as to how we got here, including some details on those board meetings that took place both in February and May of this year. As well as charts this morning showing what those new costs are going to be for those with spouses and families, those just with individual children. All of that is linked up in our article this morning over on our website, CarolinaJournal.com. The headline: Premium Increases Ahead for State Health Plan members.
You can read that at CarolinaJournal.com. It's 522. Welcome back to the Carolina Journal News Hour. News Talk 1110-993-WBT. A new report out this morning from the Office of the State Auditor shows a dire financial situation in the Winston-Salem Forsyth County School District.
Concerns submitted through the auditor's tip line led to an investigation that revealed an estimated $46 million budget deficit for the fiscal year 2025. State Auditor Dave Bollick saying in a press release, quote, Winston-Salem-Forsyth County schools dug itself into a deep financial hole, and it's going to take real discipline to climb out of it. Our schools need to be focused on teaching students. That becomes a lot more difficult when you're staring down a $46 million budget deficit. By shining a bright light on these specific problems, it is our hope that a sense of urgency will develop in Winston County, Forsyth County schools to uh to right the ship in a hurry.
The report uncovered multiple issues, including the use of onetime COVID funds to cover ongoing expenses like employee salaries, failure to adjust staffing levels despite a declining student population, and overall financial mismanagement. Education funding for public school districts across North Carolina is largely determined by per-pupil spending, meaning the amount of money a district receives is quite heavily tied directly to the number of students enrolled. Enrollment changes such as population growth, decline, or shifts to private homeschooling or charter schools is a major factor in shaping a district's budget and resources. Since 2018, the Forsyth County School District's student tuition had fallen by more than 3,000 students, yet the number of full-time equivalent employees, also known as FTEs, increased by 245 individuals. The report reads, the district appears to have proportionately reduced staffing as a result of declining enrollment through fiscal year 2022, but that practice has not persisted.
Specifically, the number of full-time employees added since fiscal year 2022 does not reflect the general decline of student enrollment that has occurred inside the district. And quote they are from the report.
Some other issues noted, according to the report, the district routinely bypassed its budget limits according to the Office of the State Auditor using an override function to approve 308 purchase orders that exceeded accounts budget between July 1st, 2024 and May 9th of this year. While policy required the CFO, that's the chief financial officer, to approve these overrides and the Board of Education to adjust accordingly, the district only made timely budget adjustments 33 out of the more than 311 cases, leaving 278 instances where overspending was not corrected on time. The uncorrected overrides left accounts inaccurate, reducing budget clarity and contributing to the ongoing deficit.
Some recommendations in the report read, unless an emergency arises, the district's CFO and Financial Service Department should consistently use the budget transfer process adopted by the district in a budget resolution in 2024 to override the process. The budget transfer process gives the superintendent authority to raise the amount of money appropriated to certain budgets while equivalently lowering the amount of money appropriated to other budgets. Superintendent Caddy Moore responded to the report, acknowledging the district must accept responsibility for its actions. In an announcement, the superintendent wrote, quote, we appreciate the time and effort taken by the auditor's office in reviewing our financial records and providing recommendations for how we can continue to improve our process and procedures. The Winston-Salem Forsyth County Schools accepts responsibility for its current financial situation and acknowledges the difficult path forward in restoring the financial health of the district.
We are committed to transparency, accountability, and to rebuilding the public's trust by showing good stewardship of public dollars.
Some other highlights in the report include more than $75 million in bonuses were given out to employees and overspent in its annual revenue during fiscal year 2022 and 2023. The district did not reconcile budgeted and actual revenue and expenditures in a timely manner. The district misused suspense accounts, meant to hold transactions until they are properly classified. And finally, the district also was not fully reviewing all active contracts when creating the system's annual budget. All of this added up, and it led to what is expected or estimated now to be a nearly $47 million budget deficit for the fiscal year 2025 as the district attempts to climb out of this hole.
This report again all coming due to the fact that multiple tips were made to the state auditors' tip line. That caused them to begin poking around in the numbers over. In Winston-Salem in the Forsyth County School District, finding some of these major financial issues. Unfortunately, this is not necessarily the first time that we have seen this with school districts or local governments across the state of North Carolina. One of the responsibilities of the state auditor's office is to look into issues of potential financial mismanagement and not only provide that information to the public, but provide recommendations to the government entity.
In this case, we're talking about the Board of Education. Provide them with resources as well as recommendations for how to correct some of those problems. And as state auditor noted, begin the process of turning that ship in a hurry. We've got a link to the full report, including the response from the superintendent of the school district over on our website this morning, CarolinaJournal.com. The headline: Winston-Salem Forsyth Schools Facing Dire $46 million budget gap.
You can read those details at CarolinaJournal.com. Yeah. It's 5:35. Welcome back to the Carolina Journal News Hour, News Talk 1110-993 WBT. Don't forget, if you miss any portion of our show live on this Monday morning, you can listen to it after the fact on your own time by checking out the Carolina Journal News Hour podcast.
It's available in Google Play, Apple Podcasts, Spotify, anywhere you get your shows. Search for the Carolina Journal News Hour, tap the subscribe or follow button, and you'll get a new program delivered each and every weekday morning. You can also watch the show live and after the fact on our Carolina Journal YouTube channel. As budget negotiations continue stalled in Riley, we've continued to follow that here on the Carolina Journal News Hour. One of the big questions continues around a group known as NC Innovation.
They had a meeting last week, and the future of them remains relatively unknown at this point. To walk us through that meeting, Donna King, the editor-in-chief of CarolinaJournal.com, joins us on the news hour. Donna, we've talked a little bit about NC Innovation over the last year or so. It's an interesting entity, and there's maybe more questions than answers as we sit here this morning. Yeah, there really is.
So INSI Innovation is a private nonprofit, but it's operating on a $500 million endowment from North Carolina taxpayers. It's intended to help bridge the gap between the amazing research happening at our public universities and commercialization of that work.
So they were formed by a lot of business leaders, strong business people in North Carolina's economy, some retired bankers, things like that, to really give into the university system, help commercialize that research.
Now, the idea, of course, seems like a fantastic spot to really be investing that kind of time and talent. But the big question is, is it where we need to put 500 million taxpayer dollars right now when we have things like Helene and potentially Medicaid expenses and all these other things, infrastructure, DMV changes, all these other things that are happening in North Carolina, healthcare, education, name it. One of the things that we've been talking a lot about this year, and internally, I think that that board appears to, as of last Wednesday's meeting, be thinking about: okay, maybe we need to be start thinking about how to be independent, a privately funded entity to accomplish these goals. Because there's a lot of strings that are attached to public money, certainly, and I think that's what they're finding out. For the most part, a big day-long meeting on Wednesday.
One of the members of their board of directors, who's Art Pope, he's also coincidentally the co-founder of the John Locke Foundation, which is the publishing organization for Carolina Journal. It's all kind of tied there, but he's on that board and he had some concerns. He's a tax attorney by trade. He had some concerns with how their 990s, their lobbying expenses, how their accounting practices are being run. He had a lot of questions, and as a result, he feels like he's being shut out of some of the inner workings of what's happening, even though he's on that board.
So that was the big brouhaha that was going on around that meeting on Wednesday. The NC Innovation formed a special litigation committee to investigate Mr. Pope's allegations of what he says is happening in the management, some of the problems that are happening in NC Innovation, and to then decide if perhaps all of his questioning was creating an undue pressure, an expensive pressure on NC Innovation themselves.
Well, the upshot of it, they decided they weren't going to sue him. But they want all the boards of directors to form, to sign a code of conduct that says that as a member of the board of directors, you're going to follow what's in the best interests of NC Innovation, which is by extension in the interests of the state.
Well, you know, therein is the rub, right?
So I talked to some of the lawmakers who put in those strings into that money for the $500 million and said, hey, look. We wanted appointment power to this board because we want these folks to be watching that $500 million and make sure it's a return on our investment. We want them there asking the tough questions. We want them there getting all the information that they need so they can report back and make sure that this is where 500 million of our dollars should go.
So the whole thing has really turned into a he said, she said, you know, where's the documents? Who's running the show?
Now, The budget is what really hangs in the balance. You know, it's interesting, Donna, you bring this up and you go through some of this back and forth that's been unfolding over the last couple of months. And, you know, as from the standpoint of lawmakers, which we've got in our article over at CarolinaJournal.com, as you noted and as lawmakers have, this is exactly the reason why they wanted individuals that they appointed on that board to keep an eye on it. You would imagine with all of the negative attention that NC Innovation has gotten over the last six, eight, 12 months, that they wouldn't want something like this to be coming to fruition. That this code of conduct seems to be bringing more negative attention to a group that's kind of getting hit from all angles.
Right. And I don't think that that's what they expected because they have done some good things. They've got 25 grants out.
Some of them are small, but it is just getting rolling. I think that they're worried that the negative attention is clouding what they believe to be a fantastic mission. The idea is good.
Now, should it be publicly funded? That's the point that some of these lawmakers are raising.
So I spoke with the oversight chairs. for the House in North Carolina. Both of them said, look, you know, we, one, don't think public money should be spent like this, and we have so many competing priorities. We have bridges that need to be built, roads that need to be widened, teachers that need to be paid, Hurricane Helene damage, name it. And others say, I want to make sure that there are eyes on this money at all times and to report back.
So here's the thing, though, without a budget, both chambers, the Senate and the House, have both put in their versions to claw back at least all, if not most, if not all, of that $500 million. But they don't have a budget agreement right now.
So, even if the General Assembly doesn't come up with a final budget agreement, even though both chambers agree on this, NC Innovation could hold on to that money for at least a little while longer. But if they, you know, the other options are the General Assembly could come back and do a mini budget or a technical correction, or there's other vehicles. But without a budget agreement, that money stays in the hands of NC Innovation for the near term. But they're really looking at a runway to try and build out private support for some of their mission.
Well, and it's interesting that you mentioned the private support because part of its initial charter was reliant on there being some level of private support on top of the more than half, almost half a billion dollars that the state of North Carolina gave NC Innovation to start. And Donna, as you talk about, and I think rightfully so, the mission here makes a lot of sense. Taxpayers are already investing into the university system to educate these children and go on and produce some of these studies and some of this research. It makes sense to try and commercialize it and get some money back. But of course, the big question is, is that the use of taxpayer dollars or the best use of taxpayer dollars?
I would imagine that the private sector would be all behind something like this. You know, that's the point. There's this area called the valley of death between the time the research is completed at the universities and the time it would make it to a commercialized market. That valley of death is what these, what NC Innovation's founders said, that's the problem. We need to solve that problem.
We need to help them get through that process.
Now, that said, when you're commercializing a product, That's an opportunity for investors, and that's an area where one would think that you know a private investment would really be able to find that hidden gold. But then they're going to face similar challenges, they're going to have to provide you know markers of success. They're going to have to say, Okay, what'd you do so far? You know, that the prove prove your metal kind of thing is what they're going to have to be moving forward with, just like they should for taxpayers. They go private, they're going to have to do it as well.
It's a super ambitious project with laudable goals. The question is: how is it being managed? Is everything being done correctly? And should, again, taxpayer money to the tune of 500 million be covering it.
So one of the other things that seems to be shaking up over at NC Innovation is the CEO is currently in the process of trying to figure out his retention plan as he plans on leaving that position within the next six months.
So not only is there some uncertainty as to what's going to happen with all this money, Donna, but the head honcho over there is planning on leaving over the next six months. Right. Yes. Dr. Bennett Waters has announced that he is going to work on a succession plan, planning on heading out after about the next six months.
That was something else that came out this week.
Now he is still, he says he's still very committed to the idea. And there had been some rumblings that he was really in here to get this thing going and he wasn't going to be here for its entire lifespan. This was he's a professional in management and fundraising and all these other things.
So the plan to find a successor in that role is already officially underway. As you mentioned, the General Assembly could come back and deal with this. They just passed a mini-budget a couple of weeks ago. It was surprising that because there was at least agreement on that, maybe not everything else in the budget proposals thus far that it wasn't included in there. But, Don, as we look at the calendar, there's only, I think, three more potential voting days left before we get to the end of 2025.
If lawmakers are going to do this, there's really only a couple of shots for them to get it done. That's really true. They signed an adjournment resolution at the last session, said they're going to come back for a few days at the end of August, the end of September, the end of October. And they're working. We can't kid ourselves, really.
They're working to a degree. They're negotiating. I'm understanding that there are still some budget negotiations going on at the most senior level.
So we may see things come out. And I think that those will be really critically important days, probably voting days. And there could be something bubbling up. But there's lots of competing priorities for both the money and the time. We're talking about hurricane relief, education, state employee raises, all these other priorities that are really competing for their time and money.
Donna, we've got a lot more in this. You've got a lot of quotes from lawmakers and from those on the NCI board, plus some of our previous coverage as to how we got to this situation that we're in right now. Where can folks go and read those details? Absolutely. You can get all the details at CarolinaJournal.com.
It's a great update. We appreciate the time this morning. Donna King, the editor-in-chief, joins us on the Carolina Journal News Hour. Yeah. Good morning again.
It's 5:52. Welcome back to the Carolina Journal News Hour. News talk 11:10-99.3 WBT. Continuing to track the tropics this morning, Hurricane Aaron, as of the 5 a.m. advisory from the National Hurricane Center, is still a very strong category 4 storm.
Fortunately, for the vast majority of our state, that storm does look to split the gap between the continental United States and Bermuda.
However, some folks in the outer banks are getting prepared for what could be some rough weather. Officials in both the Dare and Hyde counties have declared states of emergency with some mandatory evacuations ordered for the outer banks. The National Weather Service issued a coastal flood watch for the outer banks starting Tuesday with the note of breaking waves between 15 and 20 feet. Dare County emergency management officials said with the state of emergency notice, Quote, portions of NC-12 on Hatteras Island will likely be impassable for several days. That is what has caused them to go forward with this evacuation.
We will continue to track the storm as it makes its way north over the next couple of days. And any more evacuation notices or state of emergencies, we'll pass them along to you right here on the Carolina Journal News Hour.
Well, on Friday, in a much anticipated move, the State Health Plan Board of Trustees voted unanimously to approve premium increases for the more than 750,000 members of the state health plan. This is something that, as I noted, was anticipated as the board has met multiple times this year to try and deal with major financial shortcomings moving forward. Back in February is when this conversation began, when the plan's projected deficits were estimated to be $507 million in 2020. 2026 and somewhere between 800 and 900 million dollars in 2027. The board met again on may the twentieth of this year to approve changes to the various benefit plans raising annual deductibles for singles and families under both the standard PPO and plus PPO plans starting in the twenty twenty six benefit year.
State Treasurer Brad Breiner, whose office oversees the state health plan, said that this was necessary to keep the plan functional in the future. Breiner told his colleagues on Friday, quote, I walked into office in January with a half a billion dollar deficit, and that's just for 2026. Today, we're going to take the last step to filling the hole by finalizing premiums. I know that few people are going to be happy about that, but it is necessary. We want to have a state health plan in the future.
Former state treasurer Dale Falwell maintained a policy of not increasing premiums, and Treasurer Breiner did not hesitate to point out how that decision contributed to the current dire financial situation. With Breiner saying very bluntly, Simply put, we're here because of the short-sighted decisions of my predecessor. Premiums were frozen for years, and members were made to believe that it could be that way forever. But the plan was actually spending more than it took in each and every year. That meant that cash reserves for the plan were being used to keep prices stable rather than doing the hard work with providers and making adjustments to get better services at lower prices for our members.
Now those cash reserves are nearly gone. Planned premiums for the first time are now on a sliding scale based on income, with the smallest increases going to the lowest paid state employees. That scale is broken down into four income brackets, those making under $50,000 a year, those making between $50,000 and $65,000, $65,000 to $90,000, and the final tier is over $90,000 a year. For employees earning under $50,000, monthly premiums for a single subscriber will rise by either $10,000 or $16 a month, depending whether they're on the standard 70-30 PPO plan or the plus 80,020 PPO plan. In the top income tier, those making over $90,000 a year, that increase will be either $30,000 or $110 per month.
Retirees on the plan will see their monthly premiums remain the same going forward. Treasurer Breiner noted the approach to fixing this crisis will not only preserve affordability, but will also put the state health plan on a sustainable path, ensuring that this valuable benefit will be available in the future as well. As you can imagine, with health insurance, there is a lot of different numbers and charts. We've got all of that linked up on our website this morning, CarolinaJournal.com. You can see what some of these new costs are going to be starting next year.
We've got a full breakdown, the headline over on our website this morning, premium increases ahead for state health plan members. You can read those details and check out those charts over at CarolinaJournal.com.
Well, that's going to do it for a Monday edition. WBT News is next, followed by Good Morning, BT. We're back with you tomorrow morning, 5 to 6, right here on News Talk 1110 and 99.3, WBT. Um
