Report: NMI finances doing better; still needs work

A report analyzing the financial position of the CNMI compared to other insular territories noted that, although it is improving compared to previous years, it would still need “excellent” work.

A financial statement analysis, known as the Performeter, which was submitted to the CNMI Legislature last week by Crawford & Associates, LLC, noted that although the CNMI’s economic performance is slowly reversing several years of “less than satisfactory” health and performance, it still needs work.

“…Continued excellent annual financial performances will still [be] necessary to completely reverse the poor financial position that the CNMI has found itself in over the past decade,” the report noted.

The Performeter rated the CNMI’s financial performance for fiscal year 2018 at 3.84, which indicated a steady and consistent improvement since fiscal year 2009.

The rating scale ranges from zero to 10, with zero being the lowest and 10 the highest. In 2009, the CNMI’s overall score was at 1.84. The lowest was in 2011 at 1.48.

“The 2018 reading of 3.84 indicates the evaluator’s opinion that the CNMI government’s overall financial health and performance showed consistent improvement with the prior period, although the reading continues to remain below satisfactory as of and for the fiscal year ended Sept. 30, 2018,” the report noted.

Among the excellent aspects of the CNMI government’s financial health included a large improvement in the CNMI’s net position, which was consistent with previous year’s performances.

For fiscal year 2018, the CNMI’s total net position deficit decreased from fiscal year 2017’s $62.9 million to $39.3 million. This is a difference of $22.6 million, or 36.5%.

“The CNMI primary government’s overall net position now stands as a net deficit of $39.3 million, an improvement of significantly shrinking down the size of the overall net position deficit by earning revenue in excess of expenses for the year,” the report noted.

The report further noted a healthy intergenerational equity measure for the government. Intergenerational measure is a measure of whether the government lived within its means in the measurement year, or was required to use prior year resources to fund a portion of current year costs, or shifted the funding of some of the current year costs to future periods.

“For the year ended Sept. 30, 2018, the CNMI funded 108.8% of their expenses with current year revenues, which is considered an excellent ratio,” the report stated. “…Although a slight decrease in the ratio from the prior year.”

For fiscal year 2017, the intergenerational equity measure for the CNMI government was at 118.8%.

While the report noted several favorable figures, it also showed some unsavory figures.

The CNMI’s level of total unrestricted net position, an indication of the amount of unexpended and available resources the CNMI has at a point in time to fund for emergencies, shortfalls, or unexpected needs, are less than ideal.

“For [fiscal year 2018], the CNMI’s total unrestricted net position was in a deficit position that approximated -32.7% of annual total revenues, which amounts to $133 million,” the report noted.

“However, this represents an improvement in the ratio when compared to the ratio of the prior year and continues a six-year trend of improvement,” it noted.

Fiscal year 2017’s ratio was -34.1%, while the prior fiscal year’s was -57%. The largest ratio the Performeter provided was for fiscal year 2012, where the CNMI government was -145.4% in a deficit should an emergency arise. The ratio has been shrinking since then.

For those interested, the full report is available online at http://www.pitiviti.org.