Dan Blue III is running for the office of N.C. treasurer.


Several errors related to Mr. Blue's professional background and the value of the state's pension fund and associated annual management fees have been corrected in this version of the story.

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Democratic state treasurer candidate Dan Blue III touts experience, consultative approach to leadership

Posted at 7:23 AM on Sep 22, 2016



Democrat Dan Blue III says his experience in the healthcare, financial, and legal arenas make him the perfect candidate for the job of state treasurer.

He will face Republican Dale Folwell in the November general election. The candidates are scheduled to participate in a forum at the Statesville Civic Center on Tuesday, Sept. 27.

In his second run for the office, Blue cites specific plans to reduce state employees’ health plan costs, strengthen the pension plan, and improve transparency within the treasurer’s office.


To reduce state health plan costs, Blue sees several possible solutions: increasing funding, reducing costs, and improving the health of employees. He believes that renegotiating contracts coming up for bid in the next few years will also reduce costs.

For example, Blue said, the state health plan recently changed its pharmacy benefits management from Express Script to CVS to reduce pharmacy benefit costs, which account for 29% of state health plan spending.

He will also examine contracts with third-party administrators, such as Blue Cross/Blue Shield (BCBS), to ensure that medical claims are processed properly. He additionally wants the plan to focus on helping patients manage treatable conditions, such as type II diabetes or high cholesterol, before they turn into worse conditions.

Getting plan members to improve their health through financial or other incentives by exercising, eating healthy, and getting routine checkups will also shift the plan's focus to less costly preventative medicine, added Blue.

BCBS was recently fined for last fall’s enrollment problems, and Blue will be watching this fall to see if service improves as promised. He wants the State Health Plan to do a much better job of making enrollment transparent and ensure people are educated on the process and the options and services they elect.

He cited recent conversations with teachers who enrolled last year on iPads. The website was missing a button to apply for discounts, so employees were not enrolled as they wished. Blue wants to ensure the health plan’s technology is up to the task as well. He also wants enough people available to field plan members' questions and help walk them through the process.


If elected, Blue also plans to improve the transparency of the state employees’ pension plan, which has garnered some criticism under current Treasurer Janet Cowell.

Blue sees two main areas of concern.

“The treasurer’s office puts out a lot of information, and you have to know what you are looking for in order to find it. I want to make sure information is available, using web and other technology, in a way that makes sense.”

He said state employees also are concerned about investments made by the treasurer’s office. Employees want to know where their pension funds are and in what companies the money is invested. In some cases, the contract with the financial management company bars the treasurer’s office from sharing this information.

Blue promises to renegotiate such contracts to create transparency or to discontinue doing business with financial management companies that refuse to let people know where their pension dollars are going.

He also wants to reduce the fees for financial management services for the state’s nearly $100 billion in pension funds. “There are ways to reduce fees and get returns without taking on more risk,” he said.

He also wants to bring assets managed outside the treasurer’s back in and get expert people in house to reduce fees.

The treasurer’s office 2015 report cited $513 million in management fees. “The question is: What are we getting for those fees? If we are reducing volatility in the portfolio, that is a good thing. However, with the weight of a $100 billion portfolio, we can find better deals and perhaps not use a middle man,” said Blue.

“I’m not comfortable with the amount of money that we pay in outside management fees. But also I am cognizant of that fact that paying half a million dollars in fees on a $100,000,000 portfolio is a better rate than a lot of people paid on their 401ks,” added Blue.

Citing the state pension’s 7.25 percent assumed rate of return, Blue said, “I do believe it needs to be lowered, but one thing you have to remember is that when you are talking about return rate assumption, you are looking over the very long term. We look at public pensions not in terms of years but decades. If you look at the last 20 years, we were meeting or close to meeting it over those years.”

“Going forward, the next ten years look full of uncertainty. There is a process in place, required by statute, for the retirement system board to review that 7.25 percent assumption rate periodically and decide if we are doing the right thing or not,” noted Blue.

“If you go too low, you are going to force taxpayers to pay more than they should,” cautioned Blue. “If you go too high, the money is not really there and you are going to make future generations pay for benefits we should be paying for now. You want to make sure that you get the right number.”

“We are also going to be challenged over the next ten years because the markets are unpredictable with zero or below-zero interest rates," he added. "I think it is appropriate to lower the assumed rate of return, but I think the more responsible way is to reduce it periodically by a quarter of a percentage point. That way we will ease into the increased levels of funding needed once we start reducing that return rate."


Retirees did not get a cost-of-living adjustment (COLA) this past June because of poor pension fund performance in the stock market. Blue thinks the state needs to do a philosophical reset of the premise that COLA and retiree benefits must be dependent on stock market performance.

“If it’s a promise that we are making to retirees, we need to back that up with a source of funding for it. It is simply not fair to say you are going to get it if stocks are doing well but you’re not going to get it if they are not,” Blue commented.

Of the three sources of pension money, the hard work of the current employees, the employer match, and the returns on the pension, Blue said, that the state can “vary one of those to make sure to make sure it builds in a solid COLA for retirees.”


The State Employees Association of North Carolina has suggested that a board of directors be formed to help oversee the state employees' pension plan. North Carolina is one of only four states that has a sole fiduciary, or one person, responsible for the pension plan. That person is the state treasurer.

Blue has reservations about this suggestion. “The difficulty with moving away from that is you start to introduce politics with boards. If you can find a board that is responsive and accountable without getting mired into political difficulty, great, but boards often get stuck in politics.”

“I think it's good to have multiple people keeping an eye on things,” said Blue, “but it’s dangerous and reckless to have a group of that size that cannot make basic decisions without extended debates over a long period of time. We have to make sure we are both accountable and responsive.”

Though he does not believe that Cowell’s presence on corporate boards influences her decisions as sole fiduciary for the state pension fund, Blue will not will not take such positions if he becomes state treasurer, citing the demands of the treasurer’s job.


Blue is optimistic about the state’s current fiscal situation. “The state itself is healthy. You can get into conversations about the sources of revenue, which becomes about who is being taxed and how much they are going to be taxed, but overall we just have to make sure we are not spending more than we take in, that we have adequate reserves and trust funds set up so that we have money when the need is there, and that there’s money to pay the bills.”

Blue is also pleased with the state’s AAA bond rating. “A lot of people deserve pats on the back for that, but there are things we can do to get the state even stronger. We need a growing economy. Over the past couple of years we have been on an austerity budget, which allows lower taxes but does not provide all the funds needed for schools and infrastructure,” he said.

“A lot of local economies are also trying to figure out where they are going to get the money to do the things they need to do,” Blue added.

Blue hopes the budget surplus this year might be invested in infrastructure, including water quality and sewer systems and school construction. “We could also work on providing COLAs, funding the state health plan adequately, and shoring up operations to make things work even better.”


Blue has an extensive educational and professional background. He earned his B.A. in biomedical engineering with a minor in public policy before earning his Masters in Business Administration and a law degree.

He started Healthmatics, a company that analyzes medical information and provides quick access during medical exams, which was later acquired by a larger company. He then moved to New York City to become an investment banker at Bear Stearns, but returned to North Carolina to become executive director of the Pharmaceutical Institute.

Blue believes his background makes him the best candidate for state treasurer. He believes his experiences in healthcare and pharmaceuticals, investment, finance, small business, and bonds for debt issuances for corporate clients at his law firm have well-prepared him for the office.

“My entire professional career in the private sector focused on making good deals for everyone,” said Blue. “With long-term partners, I built a level of trust, which is different than the practice of politics with a zero-sum gain attitude.”


“I will work for everyone," he explained. "My attitude and perspective about the office is that it is an opportunity to lead and make sure we are doing the right thing. I will make sure the numbers balance and that the state has a healthier population with more affordable and accessible health care."

“In infrastructure, I will make sure communities have access to the tools that they need for parks, schools, and drinking water facilities to create a strong state to raise our kids and do what we need to do,” Blue added.

Blue also vowed to create positive relationships with the state legislature and Council of State. “I will run an open shop, very transparent and with strong communication to bring all the relevant stakeholders to the table to make sure they understand what I am trying to do and that I understand what they are trying to do.”

“This is a political job, but it does not need to be a partisan political job,” Blue commented. “We need to practice a productive, pragmatic type of politics. The state treasurer has an interest in all 100 counties and the communities within those counties. It is an excellent opportunity to work with people in local districts and make sure we are working together and funding things adequately.”

“I want to take a consultative approach and find creative ways that make financial sense to achieve community goals. I want to make sure have we a strong state, not only in the urban centers but the rural areas too. I am committed to this, and you can hold me to it,” he said.

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