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Governor-Elect Perdue

Transition Advisory Group Sessions

Session Summary 12

November 21, 2008

Session Arranged by the

Governor-Elect Perdue Transition Team

Session Facilitated by the

Small Business and Technology
Development Center (SBTDC)
Report Prepared by the
UNC-Chapel Hill School of Government
Session Summary 12

SECTION 1. Executive Summary
For the approximately sixty participants in the military affairs transition advisory group session,
there were four chief issues. The first was the proper state structure for military affairs. Many
participants favored the creation of a state cabinet-level office, perhaps under a secretary of
military affairs. The second was economic development. Participants focused on the need for
increased efforts to move additional authority for making military procurement decisions to
military commanders in North Carolina—and growing the state’s defense industry economy.
The third was infrastructure. Participants addressed ways to pay for facilities made necessary
by growth. And the fourth was the need to upgrade services to veterans and their families,
especially through health care, taxation changes, and workforce opportunities for transitioning
military personnel.
A theme throughout the discussion was the need for base sustainability. That is, North
Carolina must quickly develop comprehensive and coordinated land use plans and regulations
to protect the state’s military facilities from encroachment by incompatible development. Only
if the military continues to view our bases as effective and efficient facilities can we count on the
benefits from continued military presence.

SECTION 2. Process Used in Session

The session began with morning presentations by
hh Ann Lichtner, Military Affairs Advisor in the Office of Governor Mike Easley
hh Major General Bill Ingram, Adjutant General of the North Carolina National Guard
hh Charles Smith, Assistant Secretary of the North Carolina Division of Veterans Affairs
Lichtner and Smith spoke about the current administration’s efforts with respect to military
affairs, including issues, opportunities, and challenges. Major General Ingram provided an
overview of the activities of the National Guard and the challenges facing it.
In the afternoon, invited participants discussed pressing issues related to military affairs and
participated in an exercise for developing possible solutions and recommendations for the issues.
Further, the audience participated in an exercise to prioritize the issues. Finally, the audience
broke into groups to discuss solutions and recommendations.
See the facilitator agenda (electronic Appendix 1) for details about the process devised and
used by facilitators from the Small Business and Technology Development Center (SBTDC).

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SECTION 3. Participant list

SBTDC facilitators: Scott Daugherty and Ann Howard
UNC-Chapel Hill School of Government reporters: Bob Joyce and Tyler Mulligan
UNC-Chapel Hill MPA student note taker: Sean Gallagher
Perdue Transition Team representative: Will Austin and Tad Dunn
Marshall Ashworth Jay Bender Chris Bradford
Ted Brewer Dr. David Cistola Tony Davis
Emily Dickens Evon DiGregorio Gen. Paul Dordal
Scott Dorney Tom Elam Kenny Flowers
Paul Friday Sean Gallagher Tom Gaskill
Wayne Grant Rep. Larry Hall Col. Tom Harris
Patricia Harris M. Chris Herring Ron Hill
Judi Hudson Jim Kainz Curtis Leary
Sybil Leary Gen. Jim Lindsay Joe Long
Rep. Grier Martin Warren Murphy Joanie Myers
Hugh Overholt Ed Petkovich Freda Porter
Joe Ramirez Richard Rice Chris Russo
Jim Sadler David Schanzer David Swenson
Wayne Szafranski Wally Tyson Linda Weiner
Tom White

SECTION 4. Significant Issues, Opportunities, and Challenges Identified

in Morning Sessions about Current Administration Efforts
All three morning presenters spoke to the current activities of their agencies and to the
challenges facing the state in the immediate future.

The Governor’s Office

Lichtner described the history of the relationship between government and military in North
Carolina and identified three areas in need of attention in the immediate future.
As Lichtner explained, local governments have had a longer and richer relationship with the
military than the state has, chiefly because military facilities were originally located in remote
areas and could carry out their activities without raising issues of statewide consequence. In
recent decades, population and demographic trends have caused a significant change. All
military facilities in North Carolina are now located within cities, raising direct issues of
statewide consequence. Governor Hunt established the first state–military liaison function
and Governor Easley has put new focus on the effort. In 2001 the General Assembly created
the Advisory Commission on Military Affairs. That commission is updating a draft of a state
strategic plan now.
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Lichtner identified three areas in need of attention in the immediate future.

hh The first is base sustainability. It is greatly in the state’s interest that the military view
its North Carolina facilities as useful and effective. A chief challenge for the state is to
protect those facilities from incompatible development. The areas around the facilities
must not be allowed to develop in ways that unduly inhibit the military usefulness of the
hh The second is economic development. In its efforts to attract and retain industries
supporting military and homeland security, a chief challenge for the state will be the
provision of suitable infrastructure and its maintenance.
hh The third involves quality of life for members of the military and their families, the
quality of life of nonmilitary North Carolinians living near military facilities, and the
relationships between the military and the surrounding communities. A chief challenge in
this area will be access to health care for veterans by civilian doctors.
The ultimate challenge, Lichtner explained, is budgetary and organizational. How can the efforts
that the state has undertaken already be sustained and institutionalized?

The National Guard

Major General Ingram provided an overview of the activities of the North Carolina National
Guard. The Guard consists of 12,000 soldiers and airmen, constituting a reserve component of
the U.S. Army and the U.S. Air Force. About 95 percent of its funding comes from the federal
government, and about 5 percent (approximately $16 million) comes from the state. It has three
chief missions: (1) providing ready forces for the Army and the Air Force; (2) providing ready
forces for the governor for disaster relief, fire fighting, counter-drug activities, and weapons-
of-mass-destruction response; (3) adding value to communities through activities such as
the Tar Heel Challenge (a program for high schoolers who have dropped out of school, with
2,200 graduates since 1984), innovative readiness training (such as engineering programs in
communities), and participation in flyovers, parades, color guards, and funeral honors.
Major General Ingram identified four areas of challenge for the immediate future.
hh The first is the inescapable fact that the country is in the seventh year of persistent
conflict. The demands by the Army and the Air Force on National Guard forces have
been great. Half of the current North Carolina Guard force has enlisted since 9/11. There
is a great challenge in keeping the Guard at appropriate strength.
hh The second is the need to keep equipment updated, effective, and located in North
Carolina. The role of the Guard has changed. It has gone from composing a strategic
reserve (in which its forces might constitute a second or third wave in an operation) to
constituting an operational reserve (in which its forces go on initial deployment side-
by-side with regular military forces). The Guard’s military equipment deploys to combat
zones with the Guard, but the equipment may not come back to North Carolina when
Guard units return from deployment. The equipment, if it is not damaged beyond repair
in combat, either remains behind in combat zones, or it must undergo maintenance
and repair at the conclusion of a deployment. Shortages of Guard equipment in North
Carolina, if left unresolved, could degrade the Guard’s ability to execute its state disaster
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assistance and civil support functions. Congress has recognized the change in the Guard’s
role and has allocated additional resources to improve Guard equipment. Nonetheless,
equipment levels remain a concern for the Guard.
hh The third is the need to support members of the Guard through the colleges or
universities in the state. In the current financial squeeze, it is especially important that
resources be made available for the payment of bonuses and other forms of compensation
to permit soldiers and airmen to continue their education.
hh The fourth is the fact that the families of Guard soldiers and airmen suffer greater
challenges than the soldiers and airmen themselves. The state has responded with the
creation of family assistance centers in Greenville, Greensboro, and Caldwell County,
with help of all sorts—including help in dealing with the payment of health care costs
through the federal TRICARE program to which military personnel have access. More
efforts of this type are greatly needed.

Division of Veterans Affairs

Smith reviewed the activities of the state Division of Veterans Affairs.
The division, organized in 1945, works on behalf of 792,000 veterans now living in North
Carolina. That number, which is expected to continue to rise, represents more than 11 percent
of the total population of the state, and more than a third of the population are veterans,
living dependents of veterans, or survivor dependents of veterans. About $1.7 billion in federal
money comes to the state in direct payments to veterans, dependents, and survivors. The U.S.
Department of Veterans Affairs (VA) has four full-service medical centers in the state and eight
community-based outpatient clinics. The state provides assistance to the 12,000 individuals who
return from active duty to North Carolina each year. All one hundred counties have veterans
affairs officers and ninety-three counties supplement minimal state funds with county funds.
Smith identified four areas of concern for the immediate future.
hh The first stems from the fact that of the service personnel returning to North Carolina
each year from active duty deployment, half are members of the National Guard. Regular
military personnel return to communities that are familiar with their military experiences
and the difficulties they may face upon their return. Guard personnel, by contrast,
typically return to their civilian community and civilian employment. They do not have
the benefit of the community of experience. Difficulties they face—as, for instance, with
post-traumatic stress syndrome—may be compounded by this relative isolation.
hh The second challenge stems from what is, in fact, a benefit. The new post-9/11 GI Bill
provides for veterans payment of tuition and fees at the level of the highest public college
in the state, in addition to a housing allowance, plus $1,000 a year for books. The state
could take full advantage of the talents of these returning veterans by making every
veteran an in-state student for tuition purposes, so the GI Bill benefits will more nearly
cover the full costs of education and keep the returning veterans here.
hh The third challenge stems from the fact that 15 percent of returning veterans from today’s
war zones are female. The current VA health care system has developed from a time when
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the female representation among veterans was minuscule and is not geared to fully meet
the needs of female veterans.
hh The fourth challenge is to provide services related to education, training, and health care
to the large numbers of veterans returning to North Carolina each year.
See the electronic supplementary material for more detailed information.

SECTION 5. Key Issues and Solutions/Recommendations

Discussion among participants in the afternoon focused on four substantive areas of concern, the
issues and challenges within each area, and priorities for addressing those issues.
The four substantive areas of concern were (1) state structure and organization, (2) economic
development, (3) infrastructure needs, and (4) veterans and veterans’ families issues.

State Structure and Organization

Participants pointed out that North Carolina lacks an adequate state structure for leadership
on military affairs. Without that leadership, there is a lack of coordination among the agencies
of state government and between local governments. Opportunities are lost for eliminating
conflicts between state and federal requirements, maximizing human capital, creating a systemic
approach, holding other agencies of state government accountable, and facilitating effective
decision making.
The clear priority for addressing these structure and organization issues was the creation of a
state cabinet-level position (perhaps a secretary of military affairs) to oversee base sustainability,
economic development, base relocation and closing (BRAC) issues, support services for members
of the military and their families, economic development, and assistance to the military in
identifying space for training and exercises. The new cabinet office could also open clear channels
of communication between the commanders of the military facilities and civilian officials.
Base sustainability (that is, protection against inappropriate development near bases that
is inconsistent with the military function of the bases) is an issue of immediate concern that
could be addressed by the cabinet-level office. The state must immediately turn its attention to
regulation of land use in the vicinity of military facilities. The secretary could oversee land use
planning to protect effective military use of bases.
In addition to the creation of a cabinet-level office, the state should consider rechartering the
Advisory Commission on Military Affairs so that its scope includes agriculture, transportation,
higher education, commerce, and environment and natural resources.

Defense and Homeland Security Economic Development

With the increase in military presence in North Carolina in recent years and more to come with
the BRAC changes, the participants recognized that a great economic development opportunity
exists. Three chief issues emerged.
hh The first is the need to work to keep military procurement in North Carolina. As it now
stands, military purchasing decisions are largely made in Washington, D.C. The state
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should work to have the Department of Defense (DOD) shift more of the procurement
decisions to the commanders who will be based in North Carolina.
hh The second is the need to involve existing North Carolina businesses in defense-related
economic development activities. It is insufficient—or even undesirable—to concentrate
exclusively on attracting new businesses. There must be a combined approach of reaching
out to in-state and out-of-state businesses.
hh The third is the need to involve our educational system—particularly the universities and
the community college system—in appropriate educational activities that train people to
support the needs of the defense industry and posture universities to take advantage of
economic development opportunities through research and development.
Other discussions of issues related to maximizing this opportunity relate to lack of state-level
leadership, the increasing rate at which the military makes use of off-base local providers of
goods and services, matching workforce training programs to jobs that will be created, taking full
advantage of the workforce skills of military spouses, and retaining veterans and military retirees
in the state.
Finally, the issue of base sustainability—that is, development of coordinated land use
regulations that protect military facilities from incompatible encroachment—has a distinct
economic development component. Only if the DOD continues to perceive its North Carolina
facilities as desirable will North Carolina continue to reap the benefits of economic development

Infrastructure Needs
As the military presence in the state continues to grow, the well-being of members of the military
and their families, the well-being of nonmilitary members of the surrounding communities, and
the capacity to take advantage of economic development opportunities all turn on the provision
of sufficient infrastructure—educational facilities, transportation facilities, water, and wastewater
management. The overarching issue is the need to provide financial resources to deal with
Potential responses to this issue discussed by participants included (1) taking advantage of new
state leadership to advocate to the N.C. congressional delegation and the DOD for additional
federal funds for roads, rail, ports, and schools; (2) petitioning the Gates Foundation for creation
of technology institutions around bases; and (3) focusing state efforts on smart, sustainable, and
base-sustainable growth.

Veterans and Families Issues

There was clear agreement among participants that North Carolina benefits by its status as a
residence destination of choice of soldiers, sailors, and airmen at the end of their military service.
We must do what we can to improve services to current veterans and their families living in the
state and to permit the state to continue to be attractive to members of the military.
Three chief issues arose in the discussion of services to veterans and their families.
hh The first relates to the military health care program TRICARE. Health care providers
who accept TRICARE payment at its relatively low payment rates are usually available
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around military bases, but they are much less available around the state generally. Many
veterans (as well as many active National Guard members) live in areas far removed from
military facilities, and they sometimes have great difficulty getting the health services
they need.
The state should work through its congressional delegation to get TRICARE rates
increased and it should explore incentives to increase health care provider participation.
Additionally, it should work to have the Navy/Marine Hospital at Cherry Point reopened.
hh The second issue relates to family support services. The stresses that military service can
put on families are serious and unique. The state should work more actively to coordinate
its social services programs with similar programs of the military.
hh The third issue centers on taxing military and government pensions. As a result of
litigation settled some time ago, taxation of pensions differs depending on when the
retiree retired. The state should strongly consider upgrading its “military-friendliness” by
removing the state taxation on these pensions for all retirees.

SECTION 6. Concluding Comments

The four areas of greatest agreement among participants were (1) the need to create a state
cabinet-level office for military affairs, (2) the need for base-sustainability land use control,
(3) the need for improvements in TRICARE to help military families, and (4) the need for
efforts to move some levels of military procurement decision making from Washington to
commanders based in North Carolina—and growing the state’s defense industry economy.

Electronic Supplementary Material

hh Appendix 1: Facilitator agenda provided by the Small Business and Technology
Development Center (SBTDC)
hh Agency transition reports and other documents provided for session