PSS can draw $16M from bank this week

As scheduled, the Public School System will receive on Thursday through an electronic bank transfer the proceeds from the recent sale of the $15.6 million worth of bonds, the last step to finally begin the construction of its various infrastructure projects.

PSS officials expect to draw the money from the local branch of Bank of Hawaii, according to House Ways and Means Committee chair Rep. Karl T. Reyes.

“It’s ready to be disbursed once the money is here,” said the legislator who helped plan the bond flotation when he sponsored the law identifying the source of the loan repayment.

PSS is currently finalizing documents as there are still two days to go before getting the money. The bonds were sold late last month after almost two years of planning.

These funds will match the local requirements for the funding of projects under the Section 702 of the Covenant which has been derailed by cash shortage.

According to Reyes, the federal construction grants of equal amount will be released as soon as the $15.6 million in cash is transferred to PSS which has expenditure authority over these funds.

“After knowing that local funds are sitting in the bank, then we could request for drawdown (from the federal government) based on the assumption that the money is here,” he said in an interview after meeting with PSS officials and executives from underwriter Paine Webber.

The representative assured there will be no problem once the CNMI asks for the federal share which will increase the overall total to close to $32 million.

“The disbursement will be up to PSS whenever they make the drawdown based on their construction projects which have already been committed,” Reyes said.

The funds have been set aside by PSS for several long-stalled schoolbuilding projects , including the new elementary schools in Dandan and Kagman, under its seven-year capital improvement project master plan.

But the money will not be spent at once. “Not all the entire amount is going to be used immediately. The money will be there sitting in the bank earning interest,” Reyes added.

Loan repayment will also begin later this year, he said. Under his legislation which was signed into law early this year, a special account has be set up to appropriate some $2 million from the local fuel tax to ensure prompt payment of the loan.

The Board of Education previously had approved to share the $30 million left in the package among the three islands. Both Rota and Tinian will receive $3.5 million each, including matching funds, while Saipan will get $23 million.