$20M loan with NMIRF?

The Executive Branch is planning to use Compact money as leverage for a $20-million lump sum loan from the NMI Retirement Fund to finance the Public School System’s capital improvement projects.

This came following the governor’s announcement that he would commit the entire Compact Impact funds totaling $5.1 million a year in the next four years to PSS.

The administration favors giving the whole $20 million to PSS instead of giving the amount in $5.1 million increments, citing that the former would result in greater efficiency.

Lump sum spending would also allow the government to develop a new line of credit.

“We talked with the Retirement Fund on the possibility of borrowing money from them….They are open to discussion,” said governor senior policy advisor Bob Schwalbach, noting that the Fund only wants to ensure that payment would come on a regular and timely basis.

Such arrangement, he said, would call for an agreement signing between the Fund and the Department of the Interior on the payment terms.

The DOI releases the annual Compact Impact grants annually to all U.S. jurisdictions to help them cope with the impact of migration of citizens from other Pacific Islands: Federated State of Micronesia, Palau, and Marshal Islands, collectively called the Freely Associated States.

“That [Fund borrowing] is one way in which we can leverage the next four years of funding into lump sum amount so we don’t have to wait every year for the funding. We don’t have to do it incrementally,” said Gov. Juan N. Babauta.

He said this requires that the administration and PSS sit down together to plan the priority projects in the next four years.

“We need to come up with a comprehensive plan. We need to know what are we going to do with the federal money down the line. It requires PSS and the government to come up with a long-term plan,” said the governor.

Administration and education officials said during a meeting Thursday that the initial grant money can be used for urgent repair needs in schools.

Board of Education officials have described some PSS schools as “very dangerous,” citing the lack of maintenance and deterioration of buildings.

PSS earlier said that it would need $3 million for school repair and maintenance; $1 million for school buses; $600,000 for copiers; over $2 million for construction of 31 classrooms for Kagman kindergarten to third grade students; $311,000 for the Sinapalo elementary school playground; $80,000 for a Kagman High School stage; and $50,000 for 25 computers to allow the implementation of a student information system.

PSS said there are 516 FAS students enrolled in public schools. This number, PSS said, would translate to $1.8 million for personnel and operating support cost, $2.6 million for the classroom needs of FAS students, and $1.25 million for buses.

PSS puts at $3,520 the educational cost per student.

The CNMI receives $5.1 million a year out of the $30 million federal appropriation to compensate territories on FAS migration-related costs. The $30 million grant will be divided each year for the next 20 years among the CNMI, Guam, Hawaii, and American Samoa

The funds are to be divided proportionally among the jurisdictions on the basis of the number of people in each jurisdiction who migrated from FAS after 1986, when the original Compacts went into effect.

Meantime, Schwalbach said the legislation provides that a census of FAS citizens would be held every five years.

It means that the funding may change depending on the number of FAS immigrants in the CNMI.

“But in the first five years, the CNMI is relatively assured of $5.1 million funding every year,” he said.