‘Some govt agencies actually pay above 30 percent employer contribution rate’

Although 30 percent was the applicable employer contribution rate as of June 26, 2013, a number of government agencies are actually paying above 30 percent, according to NMI Settlement Fund administrator Lillian M. Pangelinan.

In her declaration, Pangelinan disclosed that the Public School System and the Tinian Mayor’s Office were both paying at a higher 37.390 percent ERC rate.

“All other government agencies (with the exception of the Northern Marianas College) were paying at the 30 percent ERC rate as of June 26, 2013,” Pangelinan said.

She issued the declaration on Thursday to support the Settlement Fund trustee’s motion to compel NMC to pay the 30 percent rate as per the settlement agreement in Betty Johnson’s class action.

Pangelinan said that NMC paid ERC at the rate of 30 percent from pay period ending Oct. 22, 2010, through pay period ending Nov. 18, 211, as evidenced in the NMC ERC payment history.

She noted that as shown in the spreadsheet, NMC reduced its ERC from 30 percent to 20 percent in pay period ending Dec. 2, 2011.

She said this is also shown in the minutes of the NMC Board of Regents’ special meeting dated Nov. 28, 2011.

Pangelinan said the reduction to 20 percent is attributable to budgeting concerns, as stated in the NMC board minutes.

In the Settlement Fund trustee’s reply to NMC’s opposition, the trustee’s counsel, Dean Manglona, asserted that NMC’s opposition brief confirms that its failure to pay the correct ERC of 30 percent is not authorized by the terms of the settlement agreement, but is an internal dispute between NMC and the CNMI government.

To allow NMC to pay at the deficient 20 percent ERC rate would be completely unfair and unreasonable to the government and all other autonomous agencies which comply, Manglona said.

He said NMC’s interpretation does not further the best interest of retirees.

“Simply put, applying NMC’s interpretation would be contrary to relevant CNMI law on the issue and would undermine the primary objectives and terms of the settlement agreement,” he said.

Further, Manglona said, nowhere in Section 5.0 of the settlement agreement does it state that different entities within the government would be treated differently from each other with respect to the employer contribution rate.

Manglona said NMC’s board meeting minutes indicate that NMC’s decision to unilaterally reduce its contribution to 20 percent in December 2011 is attributable to internal budget issues.

The NMI Settlement Fund trustee has asked the court for an order requiring NMC to comply with the settlement agreement in Johnson’s class action by paying all outstanding and accrued employer contributions and penalties in the amount of $75,080.79.