June reporter final

THE

State Employees Association of North Carolina, SEIU Local 2008 1621 Midtown Place, Raleigh, NC 27609 • www.seanc.org 800-222-2758 • 919-833-6436 • Circulation 55,000

June 2014

• Vol. 32, Issue 7

McCrory proposes raises for state workers, retirees

By Jonathan Owens

SEANC Asst. Director of Communications

With the General Assembly’s return to Raleigh on May 14 and an election looming, the hottest topic for state employees and retirees continues to be whether or not legislators will value public services and the people who provide them by adding more to their paychecks.

In his budget proposal, Gov. Pat McCrory gave state employees a recurring $809 raise this year, which for the median state worker equates to a 2.2-percent increase. For employees lower on the state pay scale, the raise could equate more than 3 percent.

Retirees would receive a 1.9-percent costof-living adjustment from McCrory’s budget.

The increases come despite predictions from the Office of State Budget and Management that the state is expecting a revenue shortfall of at least $445 million this year, and also will have to cover an estimated $140 million in Medicaid expenses.

Still, State Rep. Nelson Dollar (R-Wake), senior co-chairman of the House Appropriations Committee, told The Associated Press in early May, “I anticipate that we will be able to follow through on having a general increase for teachers and state employees.”

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Highlights of Gov. McCrory’s Budget Proposal

Gov. Pat McCrory’s budget recommendations include the following provisions: n Provides for a $809 increase in salary (not a bonus) for most state employees and a 1.9% cost-of-living adjustment for state retirees n Moves two administrative judges from the Office of Administrative Hearings to the Office of State Human Resources to be the sole hearing officers for state employee appeals n Cuts 356 positions in the Department of Public Safety; closes Fountain Correctional Center for Women and North Piedmont Correctional Center for Women; consolidates the management of Tillery and Caledonia adult male correctional facilities; Eastern Correctional Center will convert from male to female inmates; consolidates Adult Correction region offices and eliminates female command n Reorganizes Department of Commerce into Public-Private Partnership

SEANC continues to strongly advocate for a full 3-percent across-theboard increase for state employees and retirees, which we understand is likely to be in the form of a flat, recurring dollar amount. Executive Director Dana Cope commended McCrory’s proposal as a step in the right direction as the session starts, but said SEANC will look to the General Assembly to increase this number.

Pension reform

Among other SEANC priorities as the session starts is reform and transparency for the $87 billion Teachers’ and State Employees’ Retirement System.

SEANC has investigated Treasurer Janet Cowell’s management of TSERS and found hundreds of millions of

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dollars in fees paid to fund managers, yet not reported to the General Assembly – the details of which can be found on page 7.

SEANC will be pursuing legislation to force the Treasurer to disclose those fees to the General Assembly, the employees and taxpayers.

SEANC also will be watching for any bills that include the privatization of public services, and our lobbyists carefully monitor each bill to ensure that our jobs and taxpayers’ money are safe.

To stay in the know, be sure to subscribe to the SEANC Scoop and read our weekly Legislative Update, which is posted on seanc.org each Friday. Just send us your email address at seanc.org/email-alerts to sign up. jowens@seanc.org, Twitter @jonbowens

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President’s Message

By Sidney M. Sandy SEANC President

Retirees, go back to work in the General Assembly

S

ome folks think that once you retire, you put your feet up and sip on sweet tea all day long on the front porch. The reality is that most of us who are lucky enough to retire pick up another job, give back more to our communities by volunteering at church or civic club or keep the grandkids so our children can work.

Well, my fellow retirees, I have another job for you this spring. I want you to come with me and lobby in the General Assembly for public services and a pay raise and cost-of-living adjustment for our fellow SEANC members.

It used to be that state employees came to Raleigh in droves to advocate on behalf of themselves in the General Assembly, but times have changed. Last year when DHHS dental hygienists came to talk about how they Sandy provide dental care in rural areas, their supervisor was called to see if they had taken the appropriate vacation time — they had — and what specifically they were out doing that day. Dr. Rebecca King, the hygienists’ supervisor, lost her job shortly thereafter, and 14 dental hygienist positions were cut from the program — coincidentally about the same number of folks who spoke up about how they were helping children with preventative oral health services.

So we need you to lobby at the General Assembly — because no one can fire you.

If you were a correctional officer, a transportation worker or worked in mental health, come on down to the legislature and talk about dangerous working conditions and why you and your fellow employees deserve a raise and the folks who retired deserve a COLA. If you provided services or taught at a local community college, a UNC campus or at a cultural The Reporter, USPS 009-852 (ISSN 1069 2142), is published nine times a year in the months of February, March, April, May, June, July, September, November and December for $2.50 per year, per member, by the State Employees Association of North Carolina, Inc., 1621 Midtown Place, Raleigh, N.C. 27609. Periodicals postage paid at Raleigh and additional offices.

POSTMASTER Send address changes to: THE REPORTER 1621 Midtown Place Raleigh, NC 27609

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The Reporter • June 2014

Come to Raleigh to Lobby

If you are interested in visiting with legislators, contact SEANC’s Central Office at 1-800-222-2758.

facility, let your legislator hear how you helped educate the next generation of North Carolinians and why you and your fellow employees deserve a raise and the folks who retired deserve a COLA. If you worked to protect consumers at the Department of Agriculture, Justice or Insurance, your representative needs to hear how your profession helps all taxpayers and why you and your fellow employees deserve a raise and the folks who retired deserve a COLA. So you see, we need you. Most importantly, you need you.

No one is going to advocate for a pay raise and a retiree COLA like a person who served North Carolina for their entire career. So it’s back to work we go. I’ll see you in the halls of the General Assembly, my friend. sandman4seanc@aol.com THE

Toni Davis, Editor-In-Chief Jonathan Owens, Managing Editor Alicia Miller, Associate Editor Beth Dew, Associate Editor Matthew Whittle, Associate Editor State Employees Association of North Carolina 1621 Midtown Place • Raleigh, NC 27609 Telephone 919-833-6436, 800-222-2758 www.seanc.org

Advertising Policy SEANC accepts advertising material from companies and persons seeking to communicate with SEANC members. Acceptance of this advertising does not indicate SEANC approval or endorsement of any representation that the message, product or service is as represented by the advertiser.

SEANC accepts no responsibility and shall not be liable for any use of or reliance on any such information, product or service. SEANC is a private entity and is under no obligation to carry advertisements of any nature, political or otherwise, that may be viewed as contrary to the interests of the association and its membership.

Legal Representation For State Employees For Employment & Personnel Disputes

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MEMBER BENEFITS

Guard your identity with InfoArmor for peace of mind

By Matthew Whittle

SEANC Communications Specialist

With more and more transactions being conducted online and more and more information traveling digitally, an increasing number of Americans are impacted each year by identity theft.

Last year alone, identity theft was a $21 billion crime impacting more than 13 million Americans.

To help prevent you from becoming just another statistic, SEANC is partnering with a new company to monitor and protect your privacy, money and identity.

InfoArmor, listed under the Insurance Programs tab on our website, is a state-of-the-art company, seeking to proactively protect clients against identity theft. By detecting fraud at its source, when thieves first use your information to apply for accounts, InfoArmor’s Privacy Armor benefit will minimize damages and better protect you from the fastest-growing crime in America.

If you or a loved one has ever been affected by identity theft, then you know it is an expensive and time-consuming process to retrieve your good name.

Don’t let yourself go unprotected another day. Protect yourself and your family from the devastating effects of this crime.

Enroll today to receive proactive identity monitoring, high-risk transaction monitoring; credit monitoring, monthly credit scores, an annual credit report, fully managed Privacy Advocate Identity Restoration, WalletArmor to make replacing a stolen wallet quick and easy; digital identity reports with privacy grades and tips, solicitation reduction and much more.

Because you are a SEANC member, you can sign up today for security and peace of mind for only $7.95 per member, per month, or $13.95 per family (up to four people), per month. Just visit us at seanc.org/insurance/identity-theft. mwhittle@seanc.org; Twitter @mwwhittle

Welcome New Members!

Congratulations to the 467 new members who chose to empower themselves and the public services they provide by joining SEANC since March 1 from a wide range of departments and agencies, including: Departments of • Administration • Agriculture and Consumer Services • Commerce • Cultural Resources • Environment & Natural Resources • Health & Human Services • Labor • Public Safety • Revenue • Transportation Office of Administrative Hearings Administrative Office of the Courts Office of the State Treasurer Office of the Secretary of State N.C. Education Lottery UNC Hospitals Appalachian State University East Carolina University Fayetteville State University N.C. A&T State University N.C. Central University N.C. State University UNC-Chapel Hill UNC-Charlotte UNC-Greensboro UNC-Pembroke Beaufort County Community College Blue Ridge Community College Caldwell Community College Cape Fear Technical College Central Carolina Community College Fayetteville Tech. Community College Johnston Community College Lenoir Community College McDowell Tech. Community College

Fri., Sat. & Sun. May 23 – June 29

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Savings not available at front gate. Restrictions apply. Event is included with park admission. Prices, products and dates are subject to change and/or cancellation without notice. Food and beverages are available for purchase at an additional fee. Must be 21 or older to purchase or consume alcoholic beverages. ©2014 SeaWorld Parks & Entertainment, Inc. All rights reserved.

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The Reporter • June 2014

Robeson Community College Tri-County Community College Schools in Alamance, Caldwell, Caswell, Catawba, Cleveland, Davidson, Davie, Durham, Forsyth, Graham, Guilford, Halifax, Henderson, Mecklenburg, Moore, New Hanover, Northampton, Person, Pitt, Randolph, Richmond, Sampson, Scotland, Surry, Union and Wake counties.

MEMBER ACTION

SEANC members hit the polls in primary

District 7 Chairman Henry Belada (left), Western Region Representative Tony Smith and District 5 member Johnny Burnette support Michael Lavender (R-McDowell).

District 63 Chairwoman Marion Drake supports Erica Smith-Ingram (D-Northampton) for N.C. Senate.

Smith-Ingram unseated incumbent Sen. Clark Jenkins (D-Edgecombe).

PHOTO SUBMITTED BY HIAWATHA JONES

PHOTO SUBMITTED BY HENRY BELADA

District 26 Chairwoman Gloria Upperman (right) and District 26 member Donna Russau stump for Rep. Ray Jeffers (D-Person).

PHOTO SUBMITTED BY MARION DRAKE

PHOTO SUBMITTED BY GLORIA UPPERMAN

SEANC members around the state hit the polls on May 6 in support of candidates endorsed by EMPAC — SEANC’s member-led political action committee, in the 2014 primary election.

District 59 member Lorice Worrells (left) and State Member Strength Chairwoman Hiawatha Jones of District 60 stump for Sen. Don Davis (D-Greene).

The Reporter • June 2014

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PUBLIC POLICY

Quotes to Note

“State employees deserve that money. They work hard. They’re under a lot of work stress. They’re putting in incredible hours. And we’re trying to do everything we can in tough budget circumstances to put more money in their pockets, and it starts with this budget right now.”

Gov. Pat McCrory in a press conference on teacher and state employee salary increases on May 7.

“Some of us can’t understand why, with that much money in the fund, we cannot get a COLA. The last one we got was only 1 percent and it was six years ago. Burke County is really hurting as far as getting more income for state employees.”

District 7 Chairman Henry Belada in an April 23 story in The News Herald of Morganton titled “District 7 chair concerned about state employees’ income”

“This is an unprecedented state of affairs.

The money has been taken off the radar screen. No one knows where it’s being invested, and I think the public has a right to know.”

“I am concerned that there is an apparent lack of governance. Somebody needs to look at this and she needs to be more transparent. This is taxpayer money.”

Pension expert Ted Siedle commenting on alternative investments with the state retirement system in an April 22 Charlotte Business Journal article “Consultant accuses NC Treasurer Cowell of cutting $30 billion in secret deals with Wall Street”

“Employee wellness is important to Broughton Hospital because we are in the business of health care.”

“The treasurer has spent millions hiring experts to facilitate moving money — middle men who add no value to the pension system — which is an unnecessary expense. When you have an $87 billion retirement system, everyone wants to do business with you. This is the first time that the workers have hired someone to find out what’s going on with their money. The bottom line is that industry standards cannot trump North Carolina law, which mandates the disclosure of all direct and indirect fees.”

District 6 member Sherry Helton in a May 1 release from DHHS titled, “Broughton Hospital earns Excellence Recognition from Prevention Partners”

SEANC Communications Director Toni Davis in an April 23 story in The News Herald of Morganton titled “Report claims state treasurer mismanaged assets”

District 44 member Ray Minthorn following SEANC’s pension investigation press conference in an April 22 WTVD-TV story “SEANC taking North Carolina pension system complaints to US SEC”

FROM SOCIAL MEDIA

Severe thunderstorms thru tomorrow. Thanks state employees working despite weather threats to keep NC safe/running. #theydeservearaise #ncga SEANC’s official Twitter account (@seanc2008) in a tweet from April 29

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The Reporter • June 2014

Great meeting tonight in Greenville with eastern SEANC leaders. Growing membership & strong activism. Time for Sen. Clark Jenkins to go. #ncpol

SEANC Executive Director Dana Cope (@DanaDCope) in a tweet from April 24

PUBLIC POLICY

Retirement investigation prompts SEC complaint

By Jonathan Owens

National pension expert Ted Siedle unveils the findings of a forensic investigation into investments with the state retirement system at a press conference on April 22. The report turned up possible violations of state and federal laws and fees in excess of $1 billion paid by the state treasurer.

Hidden fees. Secret investments.

Possible violations of state and federal law. Those are just some of the problems that SEANC’s recently completed forensic investigation of the $87 billion state retirement system turned up.

The investigation, commissioned by SEANC’s Retiree Council and completed by nationally known pension expert Ted Siedle of Benchmark Financial Services, found up to $30 billion (35 percent) unaccounted for in North Carolina’s Teachers’ and State Employees’ Retirement System (TSERS) and fees paid by the system in excess of $1 billion.

After announcing the findings of the investigation in a press conference on April 22, SEANC Executive Director Dana Cope filed a complaint with the U.S. Securities and Exchange Commission’s Office of the Whistleblower because of potential violations of state and federal laws and mismanagement by State Treasurer Janet Cowell.

“Nobody has any idea where that $30 billion has gone. It’s all in secret accounts,” Siedle said when releasing a 147-page report.

Siedle also found that the Treasurer’s office paid hundreds of millions of dollars in fees to money managers not previously reported to the public or the N.C. General Assembly, and the fund has lost more than $6.8 billion due to highrisk investments.

Cope said transparency and reform are needed. Additionally, the system must have a full audit by the State Auditor’s Office, which has never been conducted.

“This report shows the dangers of the sole fiduciary governance model for the state pension plan and the need for reform,” Cope said. “State Treasurer Janet Cowell is refusing to disclose hundreds of millions in fees, as required by law, and

PHOTO BY JONATHAN OWENS

SEANC Asst. Director of Communications

Key findings of SEANC’s retirement investigation (From report issued by Benchmark Financial Services Inc.)

HIGHLIGHTS: n Billions of dollars in investments kept secret by State Treasurer Janet Cowell from all stakeholders, including the General Assembly n Loss of $6.8 billion through high-risk alternative funds n $1 billion in unnecessary fees paid to Wall Street n Potential violation of state and federal laws RECOMMENDATIONS: n Request SEC investigation into fees paid to money managers n Eliminate the flawed sole fiduciary governance structure n Formally and completely audit TSERS by State Auditor n End the use of placement agents n End the North Carolina Nexus Investment Program For more on the investigation or to read the report, visit seanc.org/retirementinvestigation.

her high-risk investment experiments are hurting North Carolina taxpayers, as well as employees and retirees. SEANC is calling on the General Assembly to take up legislation to reform this system.

SEANC also is calling for a full audit and an SEC investigation into Cowell’s management of this $87 billion fund.”

The End of the Sole Fiduciary System?

Two days after Siedle’s report was released, Cowell’s own handpicked N.C. Investment Fiduciary Governance Commission released a proposal for changes to the governance structure of the plan.

The proposal recommended the end of the sole fiduciary system in North

Carolina, which is one of only four states in the country with such a structure, in favor of a nine-person board who would make investment decisions for the plan.

This proposal agrees with SEANC’s recommendation, according to SEANC Communications Director Toni Davis.

“This is a great first-step in the right direction,” Davis said. “As always, the devil is in the details, and our members will continue to press for a retirement board that makes its records open and its fees transparent to the employees who fund the system and the public. We want to put the public back in the N.C. public pension.” jowens@seanc.org; Twitter @jonbowens

The Reporter • June 2014

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Periodical Postage PAID Raleigh, NC 1621 Midtown Place Raleigh, NC 27609

EMPAC has a 76 percent success rate in primary

By Toni Davis

Winners Endorsed

by EMPAC

SEANC Director of Communications

Congratulations to the 76 percent of EMPAC-endorsed bipartisan candidates who won their contested primaries and are moving on to the November ballot.

Still unresolved is the House District 23 race where Shelly Willingham of Edgecombe County is in a July run-off for the Democratic nomination.

For members unfamiliar with the Employees Political Action Committee known as EMPAC, it is the member-led political subsidiary of SEANC. In keeping with the association’s unofficial motto, “We have no permanent friends and no permanent enemies, only permanent issues,” SEANC is no shrinking violet when it comes to political races. We play in races that are tough and fight for policy issues, not the incumbent or the political party’s favorite son or daughter.

Sometimes we win, as in the case of Erica

Smith-Ingram of Senate District 3 who knocked off long-time, incumbent Sen. Clark Jenkins, and sometimes we lose as in the case of state Sen. Ralph Hise (R-McDowell) or Wake County District Attorney candidate Boz Zellinger.

We congratulate all of the winners and look forward to working to promote public services and you, the people who provide them, with a well-deserved pay raise and retiree COLA in the near future. tdavis@seanc.org; Twitter @ToniCDavis

N.C. Senate n Stan White (District 1, D-Dare) n Erica Smith-Ingram (District 3, D-Northampton) n Don Davis (District 5, D-Greene) n Stan Bingham (District 33, R-Davidson) n Bob Rucho (District 39, R-Mecklenburg) N.C. House n Ray Jeffers (District 2, D-Person) n George Cleveland (District 14, R-Onslow) n Phillip Shepard (District 15, R-Onslow) n Jean Farmer-Butterfield (District 24, D-Wilson) n Leo Daughtry (District 26, R-Johnston) n Michael Wray (District 27, D-Northampton) n Cecil Brockman (District 60, D-Guilford) n Rena Turner (District 84, R-Iredell) * Shelly Willingham (District 23, D-Edgecombe) will have a runoff