PSS explains loan plans to AGO

The Public School System recently explained to the Attorney General’s Office its plan to take out a loan from a federal agency, which, unlike previous undertakings, would depend on a combination of federal funding rather than the issuance of new bonds.

In a letter to Attorney General Pam Brown last week, Education Commissioner Rita H. Inos and Board of Education chair Roman C. Benavente justified PSS’ support of House Joint Resolution 14-44, which authorizes a public debt of $54 million to support new schools, additional classrooms, and other school facilities in the CNMI in the next seven years.

Inos and Benavente explained that there is no need to issue new bonds, as the new capital expenditure would be financed through a combination of federal government loans, federal loans, federal loan guarantees, and a small federal grant.

House Joint Resolution 14-44 was modeled after House Joint Resolution 10-36, which authorized the 1999 PSS General Obligation Bond. That bond was briefly highlighted as “AAA” rated and featured a 3.96 percent interest rate on a $15.68 million bond issue, with matching Capital Improvement Program funds for a total of $32 million.

“PSS and the Legislature worked collaboratively on this and started with the authorization through a HJR and then proceeded to an appropriation once the bond was ready for issue,” Inos and Benavente said in the letter.

The PSS officials said HJR 14-44 would emulate the process with one major difference: it would be a federal government loan instead of a bond issue.

The PSS’ seven-year CIP Plan for 2005 to 2012 will serve as a guide for the public debt that is authorized by HJR 14-44. The new CIP plan would include construction of a new junior and senior high school for the northern part of Saipan.

It would also include the construction of a second elementary school in the rapidly growing Kagman homestead area and 139 new classrooms to accommodate the growing student population in the 20 public schools in the CNMI.

The plan would also allow replacement of 39 dilapidated classrooms and related school facility improvements.

Last week Borja and PSS Federal Programs advisor Tim Thornburgh visited public schools on Saipan to discuss and verify with school principals their maintenance requirements. Borja said Thornburgh would also be visiting schools on Rota and Tinian.

PSS director of finance Richard Waldo said the $54 million loan application would likely be submitted to the U.S. Department of Agriculture.