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The Associated Press April 14, 2011, 11:01AM ET

NC governor vetoes health plan, student loan bills

Gov. Beverly Perdue on Wednesday vetoed Republican-backed legislation that for the first time would have required monthly health insurance premiums for all active North Carolina state workers and teachers for health insurance.

Perdue also vetoed a measure that allowed community college campuses to opt out of participating in a federal student loan program, her fourth veto of 2011 and the most in a year by a North Carolina governor.

The Democrat's vetoes come as Republicans, who last controlled the General Assembly 140 years ago, pursue campaign promises that would change a raft of state policies and spending practices.

Perdue vetoed a proposal to close a $515 million shortfall through mid-2013 in the State Health Plan, which pays health care costs for 663,000 state employees, teachers, retirees and their dependents. A similar health plan bailout cost about $670 million two years ago and resulted in nearly 9 percent annual increases for dependent care premiums.

The current package included higher co-pays, deductibles and mandated monthly premiums for all active North Carolina state workers and teachers. The biggest change would have required premiums generally between $11 and $22 per month for more than 322,000 active workers, reaching $23 in July 2012. Retirees who keep the more generous of two insurance offerings also would have to pay premiums.

"This bill is in effect a tax on teachers, who have not received a pay raise - and have effectively seen their pay drop - for the past three years," Perdue said in her veto message.

Workers have paid premiums before for optional higher-tier or HMO coverage, but it's not been required to receive insurance.

The North Carolina Association of Educators had opposed the bill, saying it would cost every teacher an average $1,800. The state's leading teachers' association said was excluded from months of negotiations over the health plan financing.

"The governor is standing with teachers and educators," association lobbyist Brian Lewis said.

House Speaker Thom Tillis, R-Mecklenbug, said he met with Perdue before her veto and offered to make a $14 million adjustment for teachers in the basic coverage tier.

"We were prepared to take that off the table and avoid this veto. That didn't happen. So it's got to be more than that," Tillis said. He said lawmakers would rework the health plan bailout next week to meet a federal deadline under the federal Affordable Care Act.

The State Employees Association of North Carolina didn't actively oppose the measure because it liked other provisions, including the repeal of wellness programs that penalized smokers with less-generous coverage since July 1 and the very obese starting this summer.

Perdue also vetoed a GOP-backed attempt to repeal a law passed last year that required community colleges to participate in a federal program that makes low-cost loans available to students. North Carolina was one of four states where more than 40 percent of community college students can't get federal student loans, a legislative study committee found.

"More than 177,000 students would be denied access to the safest and least expensive method of borrowing money for college," Perdue said.

Community college presidents pushed for repeal, citing fears students wouldn't be able to pay off the loans if they drop out or don't land good jobs. That could lead to loss of all federal financial aid money, they said.

The U.S. Education Department said a Colorado beauty academy and a Las Vegas health services school in 2008 were the last to face sanctions for a very high default rate in a single year, while the last time schools were penalized for consistently high default rates was 2000.

North Carolina governors have now vetoed 14 bills since the chief executive received the authority in 1997 following a change to the state constitution -- making the state the last in the country to give the governor the power to veto.


Associated Press writer Gary D. Robertson contributed to this report.

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