Incumbent Democratic state Treasurer Janet Cowell and Republican challenger Steve Royal don’t agree on much, but concur that lack of statewide name recognition is a challenge in the Nov. 6 general election.

As the incumbent, Cowell would seem to have the advantage in the race after four years as North Carolina’s first elected female treasurer. She has a lopsided advantage in campaign finances, having raised $969,202 and spent $774,860 on this election, with $318,664 cash on hand as of June 30. She has outspent her opponent by 129-1. Royal has spent $6,015 and had $236 in the bank as of June 30.

Yet polling indicates the race is not a runaway. A survey taken by Public Policy Polling, from Oct. 12-14, shows Cowell led among likely voters 41-36 percent. But 23 percent of voters were still undecided.

“My name recognition is probably like in the 20 percent range after being in office for 10 years,” said Cowell, who served two terms on Raleigh City Council and one as state senator prior to being elected treasurer in 2008.

“Most people just have no idea” that the treasurer’s office is responsible for nearly $100 billion in state finances, Cowell said.

“That’s the down-ballot blues,” she said.

“It’s a dangerous place to be in a way because you’re just whipsawed by what’s happening up-ticket,” where voter turnout for presidential and gubernatorial contests may more heavily influence the treasurer’s race than the treasurer candidates’ platforms and performances.

Royal, a CPA and former community college accounting instructor, knows he’s in the underdog role.

“I’m going to be spending just a pittance of what she spends. I’m actually using that as a strength instead of a weakness” by hammering on a theme that the treasurer’s office has been used for years as a pay-to-play “milking machine” through which incumbents collect hundreds of thousands of dollars in campaign contributions from law firms, financial interests and bank interests, Royal said.

“I just remind people that she’s going to take more money from just one big law firm in New York City than I’m going to spend in my whole race, and that’s the law firm that’s going to help her sue Facebook,” Royal said.

“We differ dramatically on almost everything except for the financial literacy” program Cowell has supported in public schools and colleges, Royal said.

The Facebook situation is an example. The $75 billion state pension fund that Cowell oversees for 850,000 teachers, firefighters, and public employees, purchased 685,737 shares of the social networking site’s stock, but lost $4.1 million.

Royal said it “was not an appropriate investment for a pension fund” because “the track record of dot-com IPOs is not favorable.” He said Cowell owes taxpayers answers because Facebook “had bad written all over it for at least two months before the stock was ever issued, and that was a pretty common consensus in the investment community.” He also questioned why Cowell spends so much money on outside consultants to make decisions that could be done in-state.

Cowell said the General Assembly requires investment authority be outsourced rather than empowering the state treasurer to make investment decisions. Sands Capital is one of the pension fund’s best portfolio managers. It selected and bought the Facebook stock. Not every stock pans out, Cowell conceded, but it is more important how a fund manager does overall over the long run rather than focusing on one stock in the short term.

“Hopefully we’ll recover all that money since it was bought under suspect kind of investment numbers,” Cowell said. The state should know in a few weeks whether it will be named lead plaintiff in a federal class-action lawsuit against Facebook that alleges two sets of numbers were used in offering the initial public sales of stock — one for inside investors and another for everyone else, Cowell said.

Royal said the state’s unfunded liabilities are worrisome. They include about a $32 billion shortfall in state retiree health insurance benefits, $3.7 billion in the state retiree pension plan, as well as $2.5 billion owed to the federal government for borrowing to pay unemployment insurance benefits, and $7 billion in state debt.

“Right now all of this adds up to about $15,000 per taxpayer,” Royal said. North Carolina is “doing the same thing the federal government is doing, just kicking the can down the road. We’re putting this debt on the backs of our children and grandchildren.”

As the state piled up the unemployment debt, “Neither the treasurer was jumping up and down on this or the governor,” Royal said. “You’ve got a treasurer that wants to be re-elected. I don’t want to be re-elected. I’ve taken a pledge. It’s four years for me to fix it and go home.”

Royal said he is “calling for a full, independent audit of the pension fund, and I have even discussed this with the current state auditor.” His would be a more transparent department, he said.

Cowell said she put in more “protocol, processes, and transparencies” than existed before she took office, and the pension fund is in good shape. It has experienced about a 6.9 percent return on a 7.25 percent goal over a 10-year period, according to recent calculations. That means it is being funded at about 95 percent.

“That certainly is in the top 5 percent of the country,” she said.

She said a determination must be made by the General Assembly whether to lower the goal to a 7 percent return and ask taxpayers to contribute more, or consider investing in higher-yield, higher-risk areas.

But because the pension fund has been stable and the state has kept debt payments under 4 percent of revenue, North Carolina continues to enjoy a AAA bond rating under her leadership, Cowell said.

The biggest threat to that rating is external, Cowell said. The federal bond rating has been downgraded already, and if it happens again it could impact North Carolina because of how much of the economy is based on the federal government.

The state shouldn’t see a large monetary impact on interest rates if it were to be lowered in conjunction with a federal downgrade, Cowell said, but would suffer a hit on its reputation as a stable place to invest in state bonds. But she said she is being proactive in scheduling meetings with bond houses, the state controller, and budget director to assess the situation.

Cowell said she also is attacking the unfunded liabilities issue through her new authority overseeing the state employees health plan for about 665,000 beneficiaries. The plan will cost $3 billion in 2013-14, and taxpayers will pick up about $1.8 billion of that tab.

Cowell assembled a fiduciary board comprising beneficiaries and experts in the medical arena who do not have conflicts of interest.

In the first few months $40 million was saved in administrative costs by tightening up contracts, and an employer group savings plan was adopted that will save $5 billion. The most recent numbers show, because of that savings, unfunded liabilities will drop to $29.8 billion, she said.

Royal said the state should be investing in North Carolina interests instead of sending money out of state. Cowell said in 2010 she set up a $230 million innovation fund through Credit Suisse and $150 million of that already has been targeted in state investments that will be tracked over time for performance, business expansion, and job creation.

Dan Way (@danway_carolina) is an associate editor of Carolina Journal.