PSS expects to owe Fund $11M in FY09

The Public School System expects to owe the Retirement Fund $11 million in employer contributions by the end of the current fiscal year, according to PSS financial consultant Ed Tenorio.

PSS’ current unfunded liability to the Fund is at $3.8 million.

Last fiscal year, PSS accumulated a $7.3 million shortfall in its obligation to the Fund.

“The $10 million to $11 million anticipated unfunded liability [to the Fund] is based on the 36.77 percent actuarial contribution rate,” Tenorio told Board of Education members during a special meeting Wednesday.

However, the anticipated figure may go down, he said, noting that the 36 percent contribution rate has been cut to 24 percent and then 11 percent due to recent passage of laws providing for the adjustments.

This is a concern that may affect the system’s federally-funded personnel, according to education officials.

At present, Tenorio said PSS is paying at an 11-percent rate and is doing its best to pay its employer contribution obligations for employees who want to retire.

Tenorio, however, admitted that “PSS can’t stay at 11 percent.”

According to PSS human resource officer Charlie Kenty, less than 10 employees applied for retirement this year and PSS employees are covered under the defined contribution plan.

Although PSS stands to receive only $34.6 million in the Fiscal Year 2009 budget, Tenorio believes that operations would be “OK” for public schools.

The approved budget includes $2 million in Compact impact funds and $32.6 million that will come from the general fund.

The law also allows 1 percent of the Public Auditor fee to be used for textbooks, which amounts to $330,000.

Among the biggest anticipated PSS expenditures this fiscal year is power and utilities consumption, which is projected to reach $3 million by the end of the fiscal year.

“Hopefully we can cut this amount by half,” Tenorio said, adding that PSS is looking at implementing solar and renewable energy in schools to reduce consumption.

Saipan Southern High School was the first school to use renewable energy early this year.

“We’re looking at the figure at SSHS. If they spent $70,000 on utilities and they saved $3,000 upon using the renewable energy…we can do the math for our other schools,” Tenorio told the board.

He disclosed that some $9 million in stimulus funds will also be added to the PSS budget this fiscal year.

“There’s $9 million from stimulus we can spend for purposes like air conditioning, new classrooms, salary of teachers, and renovations of buildings,” Tenorio said.

Overall, he added, PSS is on target in FY 2009—due in large part to the stimulus assistance from the federal government.

“Once we receive the go-ahead to use the stimulus money, we will start the planning. Overall, PSS is on target this fiscal year,” he said.

Tenorio said the stimulus money is good for three years, or until 2012.

The completion of the PSS Financial Master Plan, he said, is vital in assessing PSS priorities.