CDA uncertain about PSS, Fund loans plan

Citing that his office is the only agency authorized to float bonds on behalf of the CNMI government, Commonwealth Development Authority board chair Tom Glenn Quitugua said he is uncertain with the Public School System and NMI Retirement Fund’ proposed public debts.

“CDA is the one responsible in floating bonds so I’m not sure what direction they want to take,” said Quitugua.

He said that, like other debts, the government “should be mindful of the repayment factor.”

PSS wants to take out a $54-million loan from a federal agency to construct new classrooms and other facilities.

The Attorney General’s Office earlier opposed House Joint resolution 14-44, which pushes for the PSS loan, citing, among others, that CDA is the authorized agency to do it.

PSS had said that the loan can be done without CDA because 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.

HJR 14-44, PSS said, was modeled after HJR 10-36, which authorized the 1999 PSS General Obligation Bond for $15.68 million. It had matching Capital Improvement Program funds of $32 million. But unlike the previous measure, HJR 14-44 would be a federal government loan instead of a bond issue.

The $54 million is PSS’ CIP Plan for 2005 to 2012, which would include the construction of a new junior and senior high school for the northern part of Saipan, a second elementary school in Kagman, and 139 new classrooms.

Meantime, the NMI Retirement Fund wants to float a $200-million pension obligation bond

to reduce the government’s unfunded liability, now totaling $526 million.

The Fund said this approach would allow the agency to convert the government liability into the Fund’s assets.

This would also result in the government paying a reduced contribution rate to the Fund. The Fund said that if the $200 million bond is realized, the retirement contribution rate would be down to 21 percent. Right now, the rate is up at 36.7 percent.

The pension obligation bond requires that it should be under the name of the Retirement Fund, not the CDA, according to Fund administrator Karl T. Reyes.

“It requires that the Fund should be the recipient,” said Reyes.