PSS gets mixed signals from Fund

The Public School System said it has been getting mixed signals from the NMI Retirement Fund, with the cash-strapped agency getting as much as three different solutions to the proposed rate increase contribution of its employees.

Acting Commissioner of Education David Borja said that PSS, however, remains opposed to the contribution rate increase from 24 percent to 37.77 percent.

“First, it was the huge increase to 36.77 percent. Then, the Retirement Fund administrator advocated for a $200 million bond issue and a reduced rate of 21 percent. Just last week, our Finance Director, Richard Waldo, was told by the Retirement Fund administrator that all PSS has to pay is 24 percent,” Borja said.

He added that on Saturday, Retirement Fund administrator Karl Reyes reportedly said that PSS is delinquent in its payments and was only paying 24 percent.

PSS has been asking the governor to sign into law House Bill 14-369, which exempts the PSS from any rate increases in retirement contributions for the next five years.

Borja said that exempting PSS from the 12-percent hike makes sense because the PSS has always paid the full amount appropriated by law, compared with the CNMI government, which owes $110 million that was appropriated by law but never remitted to the Retirement Fund.

Borja said that exempting PSS highlights a basic fairness issue. He said the PSS has always paid its share of the retirement contribution every pay period.

“Requiring PSS and other autonomous agencies to pay a higher rate because the government owes the Retirement Fund over $110 million simply does not make sense,” he said. “It is only penalizing the education office and other autonomous agencies that made the hard choices that good managers make to balance their budgets.”

It is for this reason and because of the fidelity that PSS has demonstrated in paying its retirement contribution that the Legislature decided to exempt PSS from the rate increase.

Borja said that Reyes had testified before the Senate that if the government had paid the $110 million it owes, then the rate increase would not be necessary.

“Since the Department of Finance has a track record of failing to pay its Retirement Fund obligations at the 24 percent rate, is there any good reason to expect that they will pay at the 36 percent rate?” asked Borja.