- Hello, I'm David Crabtree.

In a moment, we'll be joined by State Treasurer Brad Briner to talk about his tenure in office, his investment strategy, and the fiscal outlook for the state.

That's next.

- [Announcer] Quality public television is made possible through the financial contributions of viewers like you who invite you to join them in supporting PBS NC.

[bright music] [bright music continues] - Hello, and thanks for joining us.

I'm David Crabtree.

We're here to have a conversation with North Carolina's State Treasurer, Brad Briner.

Thanks for taking the time to come in and talk.

- It's great to see you.

- I want to talk about a lot of things, which we will include the WakeMed Atrium potential merger, but I want to talk about some other things first.

I want to talk about the job as treasurer entails so much.

- It does.

- And so many of us who've lived in North Carolina the majority of our lives aren't really sure what all of those things are.

- Sure.

- So give me the basics.

- So when I speak to crowds, I often start by asking how many people have a financial advisor?

Half the crowd will raise their hand.

And I tell them that actually all of them should raise their hand because I'm the financial advisor for all of you.

If you're a citizen of the state, if you're a taxpayer of the state, ultimately, the treasurer manages your money, your tax dollars, your pension assets, your healthcare assets.

And so that's the basic of it.

There's a lot of threads that come off of that.

I sit on 23 different boards for the state and we have seven different divisions in the department.

It all touches the money of the people.

And so I'm the financial advisor for the people.

That's really the best way to encapsulate it all.

- And in this day and age, market volatility.

- Yes.

- People coming at us with information constantly about where we should put money.

Should we buy gold?

Should we look at Bitcoin?

Should we look at all these different things?

- Yeah.

- You have to remain focused, laser focused, on what to do.

- We do.

There's a helpful statute in this state, in fact, though, that really prescribes what we can and can't do in the pension system.

And that is we have to consider only pecuniary factors.

So it's tempting in the investment business to think, "Well, what if I did this?

Then that might help that."

And the truth is, we don't get to do that.

We have to invest the $150 billion pension system according to what's best for the $150 billion pension system and no other concerns.

So that helps us narrow.

But yeah, it's a wild world out there with a lot of different cross currents, whether it's artificial intelligence or inflation, which has led to higher interest rates.

Of course, politics impact us as well.

But the team's doing a great job keeping focused.

We've changed a lot about what we do and how we do it, and it's really paying dividends for the people in North Carolina.

- Just one more thing about that.

With those teams, as many divisions, with all that is at stake, I won't say at risk, I will say at stake.

- Sure.

- What is your leadership style to keep that team focused?

- Yeah.

I've always believed in hiring great people, giving them the tools they need to be successful, and getting out of their way.

There's accountability there and there's clarity there that I think is really important.

When you walk into our office, we have these video boards and historically it was advertisements for the treasurer.

I didn't want to do that.

What I wanted to do was put up on our boards the accountability metrics of our divisions.

What are they basically trying to achieve for the people in North Carolina?

And then how are they doing?

And I'm not a believer that everyone gets A's.

So we have stretch goals that are up there.

We want to answer the phone in a certain amount of time.

We want to deliver a rate of return that's so high in the pension system.

We want to make sure the health plan system is solvent.

And you'll see that as you come in.

Next to those boards, we do a quarterly honoring of the people who make that happen.

And so my leadership style is very much centered on accountability, transparency, and simplicity.

What are we trying to do?

How are we getting there?

I'm open to a lot of answers, as long as it's getting us where we're supposed to be.

- How many people are covered in the state's pension plan or participate in the plan?

- So there's a couple hundred thousand current employees and a total of a million people who depend on the pension system in some way.

Out of 11.2 million North Carolinians, it's an enormous part of the population.

- And with the state health plan, are those numbers basically the same or did they vary?

- They're a little smaller.

So there's 770,000 people on the state health plan at the immediate moment.

And really the difference is, there's a lot more dependence on the pension system.

A number of people don't have their dependence on the state health plan.

- You grew up in Dallas, Texas.

- I did.

Got here as soon as I could.

[David laughs] - And was it going to the University of North Carolina that brought you- - It was.

- Here and that made the transition for you?

- It was.

I was blessed to get the Morehead Scholarship.

And so I had come and looked at UNC and looked at Duke the summer before my senior year.

I had a terrible tour at UNC at the time.

I had a great tour at Duke.

I intended on just applying to Duke of the schools here.

And then I got the opportunity to apply for the Morehead Scholarship and that changed everything.

I came down here February of my senior year and I was in boarding school in New England at the time.

So keep in mind, February in New England is not great.

It was snowing sideways when I left.

Got down here, it was 70 and sunny.

And in addition to the weather, it's the culture.

And we'll talk about this, I'm sure, like the state of North Carolina, we're so blessed in so many ways, but the simple fact is that people love being in North Carolina and that is infectious.

And I got that, a taste of that, in February 1995 and it never got old.

I met my wife at Carolina, we have four children, and we still live in Chapel Hill 31 years later.

- So it was blue heaven, literally.

- Literally.

- Got that.

Numbers.

- Yeah.

- Some of... I'm just not one of them, a lot of people are attracted to numbers.

- Sure.

- They like the fact that numbers are the numbers.

- Precise.

- And they work.

And investments.

- Yeah.

- What led you to a life of numbers?

- Yeah.

You know, when you drive around this very large state of ours campaigning, you have a lot of time to reflect on what's happened in your life and why you're driving around all these many miles.

I think I've put 45,000 miles on my car in the last 12 months without leaving the state.

And for me, it kind of came back to when I was very young.

I was five years old and my dad lost his job and we were a traditional family.

My mom stayed home with my brothers and me.

I was the youngest of, I am the youngest of four boys.

And so he lost his job and that changed our family unit irrevocably.

One of the things that is still a vestige of that is I eat very quick.

And the reason for that is if you didn't in our house, there wasn't enough.

And so it was a race.

And a lot of people go through this and it affects us all differently.

For me, that pushed me towards finances as what went wrong in my family.

And I always wanted to solve that problem for my own family.

In addition to being mathematically inclined, the investment business was a natural fit for me.

I always joke that when I talk at business schools, they ask for career advice and I'm terrible at giving career advice because I knew what I wanted to do when I was, like, 10 years old and it's never changed.

I find the investment business endlessly fascinating.

It is the cross of politics and headlines and economics and math and that makes it varied every single day.

So it's nonstop interesting.

It's also profoundly important in the way that families manage themselves and the way that the state manages itselves, the things that we can and cannot do, for our citizens all come back to finances.

- So you worked in New York for a dozen years.

- Yeah.

- Working for Bloomberg.

- I did, yeah.

- Quite a name, quite a company.

- Yeah.

- A lot of expectations- - Yes.

- At that company.

And yet, this story you just shared about your childhood and the trauma your family went through still informs you today.

It informed you when you were in New York.

- Very much.

So I worked for Mike personally, managing his wealth.

And what you see of a lot of people of that level of success is that they too have a similar story.

What drove them still drives them.

And no matter how many times you try to fix that problem, it's kind of rooted deep in your own psychology.

And so for me, I'll never get tired of trying to push this ball up the hill, so to speak.

Mike was a fantastic guy to work for.

He very much espouses the same ethos I just talked about.

- Was it intimidating to work for him?

- Well, initially, sure.

I interviewed with him when he was still mayor of New York City and we were talking a bit about what I'd done and all that stuff.

He doesn't have a lot of patience.

So maybe six minutes into the interview, he starts talking about Joe and how he had a terrible meeting with Joe earlier that day.

And it took me a little while to figure out he was talking about the vice president of the United States.

So that was a little intimidating, yes.

- Give me just an example of his expectations.

And I mean, the stories about him having a desk in the middle of a room.

- Very much.

- That's true?

- That is very true.

- So he's there, his presence is there.

- Yes.

- You feel it, but there has to be a tipping point where it goes from intimidation to just drive to want to serve.

- It really manifests actually in empowerment.

So I think high expectations aren't necessarily always intimidating if they're clear, and his expectations are extremely clear.

And like I was talking about, he gave me the tools that I needed to be successful.

While hard charging, people love to work for Mike Bloomberg.

They stay for decades and they do that because he empowers them and he holds them accountable.

Not everybody stays for 30 years, not everybody can make it, but many do.

And I think as you consider employment, look around and you see people staying for a long time, that's a great sign about how it is to work for that person.

- So what led you to run for state treasurer?

- I've truly been blessed in life, for a lot of reasons, mostly my parents, but the skills that God gave me.

And I got to a point at 46 where I didn't need to work anymore, so I wanted to retire, but I also didn't want to do nothing because I'm not good at that.

So I'd always been fascinated by what the state treasurer does here.

In fact, in 2006, when I was in business school, I wrote a case study about the North Carolina pension system and some of the math on how we should value the benefits.

So I've always been paying attention.

In 2016, the office was open.

I though about it for a hot second, but it wasn't the right time for me or my family.

But by the time 2024 came along, it was.

I knew I could do the job.

And so completely new to politics, hadn't been around the state preparing to do this, hadn't been particularly politically active, voted reliably Republican, but that's kind of it.

And so the new challenge for me was the political side of it.

The functional side, which is I think really important in the treasurer's office, is something that I've been doing a very, very long time and I know how to do, and that gives me great confidence to do it.

But the new part was the politics, which I'm sure I'm still learning.

- I love that you said you knew you could do the job.

When people experience that in life, it is life changing.

- It is.

- And you don't have to worry about the other stuff, if you will, when you know that you can do the job.

- Yeah.

These jobs are all challenging, right?

In very different ways.

And so I think as people think about their career paths, and I certainly though about it this way, it is easy to take one step away from what you already do.

When you start taking two or three steps, I mean, that becomes a jump, literally, and jumps are hard, but one step pivots are reasonably straightforward.

And that's how I thought about this, and that's how I think about it when I give people career advices.

It is easy to make a pivot.

It is very hard to make a jump.

And this for me was a pivot, not a completely new exercise.

- What's the biggest surprise about becoming, okay, you might not define yourself as a politician, but yet, you're in the world of politics like it or not.

- I've made peace with it at this point.

[Brad and David laugh] - But have there been times you've thought, or when you were running, you thought, "This is nuts."

- Sure, of course.

- "Why are people asking me to do this?"

- Of course, I do have those moments.

It is hard to change in general in life, and state government is set up to be extremely resistant to change.

Where that blows my mind is where change would be so beneficial to everybody.

And I think about modernizing systems, as an example.

It's not particularly exciting, but it's profoundly important.

We have software that is old enough to drink.

We have systems that were last modernized in the 1960s, and the gains that come to everybody, certainly the taxpayers, the beneficiaries or whatever program it is, and our employees to modernizing that stuff, it makes me crazy that we haven't done that.

- Why is that such a fight?

- The incentives are misaligned.

I mean, as it usually is when things don't get changed, it's that nobody's encouraged to actually do it.

So you've seen historical and high profile examples of technology implementations gone awry, and there's lots of blame to go around.

And when they work, nobody celebrates, because it's a mundane software system in many cases.

Although important, nobody sees it, they just take it for granted.

And so in a four-year elected office, you can't have a failure like that and expect to get elected again.

I think that that's the wrong way to think about things.

The whole point of running for office, in my view, was to change things for the better.

And so we're trying and we're doing some things around artificial intelligence and potentially large scale software implementations that will benefit people decades from now.

And I'm happy to take the risk of doing that because I think we can do it successfully.

- You are treasurer of a state that consistently in the past decade has been ranked either at the top or near the top as the best place to do business in the country.

That's important.

We have educational challenges.

- We do.

- At the same time.

There's still have nots and haves in this state.

As you look at the horizon, is the state... Are we AAA?

Are we 4A?

Are we top of our game with always room to improve?

How do you rate us?

- I go to state treasurer conferences and I look around the room and you have every state there.

And sometimes someone's saying something in the front of the room that's not that interesting, so I daydream a bit about what it must be like to be treasurer of that state or this state.

And you rapidly come to the conclusion that you're just so blessed to be a North Carolinian as you do that exercise.

We made a decision 15 years ago as a state to change fundamentally the financial trajectory of the state.

Coming out of the great financial crisis, we owed the federal government money because we hadn't had the resources to pay unemployment benefits.

We had taken on an enormous amount of debt in the early 2000s to do a number of things.

We were not AAA, but we decided to go in a different direction.

And that decision has added up to being able to do things like fund our share of Hurricane Helene relief.

We wouldn't have been able to do that had we not made that decision 15 years ago.

This state is exceptionally well run financially, and that predates me.

That has nothing to do with my tenure.

I'd like to think I've made it better, but the reality is that's been in the works for 15 years.

So we are a AAA state.

We're a triple AAA state, but it's not just the state government level.

We have the local government commission, which helps to manage all the municipalities finances of the state.

There's 1,100 municipal units.

We all live in at least one.

There's districts and counties and cities and towns.

Something like 25% of all AAA rated municipal governments in this country are in North Carolina.

And so it's not just the state, it's all up and down the state.

It doesn't mean that everyone's in great shape.

I'm sure we'll talk about some of them, but we're just so blessed as a state and we just got to keep carrying on.

- Where's the largest problem?

- Well, so, mathematically, there are two financially very large problems that we have for the state.

Politically, there's many others, of course.

Healthcare.

From a liability perspective, we owe the state health plan something like $22 billion.

Bigger than that and a little bit harder to nail down is water and sewer.

So a bit of financial history.

Back in the '60s, the Johnson administration put forth a number of subsidies for building water and sewer throughout the country.

They paid 87 and a half cents of every dollar at the federal level to build these systems.

That no longer exists.

These systems typically last 60 or so years, and here we are, but we don't have the 87 and a half cents coming from the federal government.

So by some estimates, that's 30 or $40 billion of water and sewer needs.

And it's not like we can have towns or even residences without water and sewer.

So that is a big challenge.

I'll give the general assembly a lot of credit.

They took some of the COVID funds, which were 2020 and 2021 ARPA monies, and put them aside to deal with some of these challenges, but they're enormous challenges.

So mathematically, those are the two.

Healthcare beyond the math is a challenge, and then of course education, as you already alluded to.

- Let's talk about healthcare.

- Yeah.

- Particularly if you live in this region where we are here in Research Triangle Park and our surrounding counties, or maybe if you live in Mecklenburg County.

- Sure.

- The WakeMed Atrium potential merger is huge news.

- It is.

- It's not so much to the rest of the state yet.

- Right.

- Why is this such a big deal?

- Yeah.

So we've been through a handful of these before, much larger ones that everyone knows about, and then a number of smaller ones as well.

The healthcare system is consolidating at all levels, and it's doing that to try to get pricing power.

There's this epic struggle between insurance and providers, and the insurers get bigger and they leverage over the providers and they drive rates down and the providers get bigger, they get leverage over the insurers, they drive rates up and on and on and on.

That is essentially a zero-sum game, and I'll tell you who does not win, and that's you and me, the healthcare consumer.

So what we see over and over again is when these mergers are consummated, prices go up, market power exists for the provider, and they exercise it.

And I don't blame anybody for acting according to their incentives, their fiduciary duties.

I blame us for putting in place rules that encourage this.

And so to my mind, one of the best ways to solve a problem is stop making it worse.

And what mergers do is make it worse.

You don't have to guess at that.

The other side would tell you that this is necessary for the survival of WakeMed, and maybe that's true, but that's a theoretical problem.

We have an actual problem of healthcare costs right now that I'm trying to solve.

- So WakeMed and Atrium will argue that becoming part of a larger system could, not necessarily would, could actually lower cost through economies of scale.

- Sure.

- You think no?

- Well, so it could, but that's not what the historical evidence tells you.

So Hope Springs eternal, I suppose, but I don't bet on hope.

I bet on facts.

And we've seen the facts over and over again play out the same.

So we can rationalize it all you want.

We can hope that this one's different and maybe it will be.

I'd love to be wrong, but all the history tells you I'm not.

- The county commission has voted.

- Yes.

- Does it look like this deal is going to go through?

- I think three months ago, it looked like this deal was gonna go through.

If you read the tea leaves, it's been pretty clear that people are lining up behind it.

They don't want to advertise it.

I don't think any politician wants to take credit for higher healthcare costs, even though some of them are causing it.

So no, I do think this is gonna go through.

I wish it wasn't.

I wish I could do something more about it.

As the treasurer, all I can do is manage the state health plan.

That's my job.

I think we're doing a good job of that, but it's a very difficult landscape.

The attorney general gets to review it, but he'll tell you, and I'm sure he has, that he has limited ability to do anything.

He can put out a study, and so he'll do that.

The Federal Trade Commission will look at this.

Historically, they've looked at market share in market as the arbiter of whether it's anti-competitive.

So this is why the UNC Healthcare bid for WakeMed really didn't go anywhere.

You have one with 40% market share and one with 35% market share, and if you put them together, that's a problem, and the Federal Trade Commission would tell you that's a problem.

This is what's called a cross-market merger, where Atrium does not have a presence in Wake County, and therefore they're going, you know, there's still three competitors and they're going from zero to 45, 40%, or whatever WakeMed's market share is.

Historically, that didn't really raise prices in most industries, but that's not the nature of healthcare negotiations.

Typically, the whole network is... The whole hospital system is in or out of network, and that's the way they use leverage, so that cross-market behavior actually manifests some more leverage against the payer, which means we pay higher prices.

So my central objection all along has been we're gonna pay higher prices.

And there's been no active effort to refute that.

In fact, the CEO said he hoped so when he was asked about higher prices in an interview a couple weeks ago.

So unfortunately, I think we've lost.

I think it will get done, and unfortunately, the state health plan will be paying higher rates for it.

- When you've been in some of these negotiations, how testy does it become?

How tense?

- I'd like to think I get to choose the tone of that.

Most executives that I deal with are pretty straight laced, have significant emotional self-control.

It's not their first rodeo.

And so if we approach it clinically and professionally, they do too.

So we essentially agree to disagree.

I don't need to call them names publicly.

I don't need to impugn their character.

They have different objectives than I do, and I respect that they're trying to achieve their objectives.

But the reality is North Carolina has an affordability objective that the state health plan shares, and the consolidation objective is not in keeping with that.

So I really don't understand why the support for something that is gonna be against a lot of what the population wants.

- Here's a pivot.

- Sure.

- The state treasurer is all business all the time.

What do you do for fun?

- I'm a huge UNC sports fan, and so we live right next to campus, going to the football game this weekend, but probably my favorite is Carolina baseball.

So this is an undiscovered gem.

- Did you play baseball?

- I didn't.

I had multiple shoulder surgeries, so it was kind of off the table all along.

I just have always loved baseball.

It's relaxing.

It's a good way to spend some time with friends and loved ones.

- Well, and going to a game at Boshamer.

- Yes.

- It's a great stadium to attend.

- It is.

- It's springtime.

- Yeah.

- The sun feels good.

- It does.

- It's good to be out there.

You're back on campus, you're a part of what's going on there.

- And we have season tickets, and I think the average ticket price, if you buy 'em by the season, is eight bucks.

So there's an even better one.

- Yeah, and you're a big Carolina football fan.

You've got a new basketball coach.

- We do.

- Do you have great hopes and anticipation for this new season?

- Very much.

So by all account, the new hire has been a great one at Carolina.

Obviously, they have to play the games, and whenever you come in, you saw this with Coach Belichick in his first season, the first season's roster construction isn't always perfect.

- What a diplomat you are [laughs] in saying that.

The first season's roster?

- Construction.

- Construction, is not always perfect.

- Well, it's a different world, college sports.

- Totally.

- And, you know, having the right pieces and how they fit together is the determiner of success in so many ways.

Indiana last year, they came out of nowhere, but they had the perfectly constructed roster and a fantastic coach.

But if you're missing one or two key holes in either basketball or football, it's really tough to be competitive in this environment.

- Brad Briner, state treasurer for North Carolina.

We appreciate the conversation.

I hope you'll come back and we'll continue this, and whether it's sports or healthcare, we'll find out more.

- Happy to do it.

Thanks for the time.

- Thank you.

And thank you for joining us.

[bright music] [bright music continues] [bright music continues] - [Announcer] Quality public television is made possible through the financial contributions of viewers like you, who invite you to join them in supporting PBS NC.