Airport, seaport debt service ratios at risk anew

The Commonwealth Ports Authority described as “ridiculous” the new NMI Retirement Fund actuarial contribution rate of 60 percent effective next fiscal year, adding that the new level would bring both seaport and airport bond service ratios to serious risk.

CPA executive director Edward Deleon Guerrero disclosed last Friday during the board meeting that the new rate will translate to $1.7 million in financial impact to the agency which would later result to not meeting again the requirements of the bond indenture agreements.

The required debt service ratio for both airport and seaport is 1.25. Seaport at present is at 1.36 ratio and has been compliance for many years compared to the airport side, which as of June stands at only 1.06 ratio. But due to the approval of the Federal Aviation Administration on the classification of passenger facility charges as operating revenue, the airport ratio recently met the 1.25 ratio as indicated in the amended fiscal year 2010 audit.

According to Derek Sasamoto, the ports authority comptroller, airport ratio now is 1.33 percent. However, because of the financial impact of the 60-percent new employee contribution rate enforced by the Fund, the airport ratio will go down to 0.69 percent while seaport ratio will be downgraded to 1.24 percent.

Sasamoto revealed that these figures are based on the actual numbers and budget of the agency. For airport alone, the increased contribution rate will create $750,000 in shortfall. “It created the liability [for CPA] without a matching source of revenue. These are actual numbers based on our budget.” CPA employs 198 personnel working on airport and seaports in three islands.

Deleon Guerrero has asked the blessing of the board to appeal the issue to the Fund trustees. He said a meeting is being arranged so CPA could present its concern. For many years, the executive director said CPA is so far among the few agencies that is up to date in its employer contribution to the Retirement Fund.

“I don’t think it’s appropriate that CPA will be penalized or subsidize for them,” said the executive director. The agency has requested the Fund an accounting of all CPA contributions to secure the funding for their employees who wish to retire.

During the board’s discussion, members were one in saying that increasing the contribution rate to almost double is “unfair” and “inappropriate” for CPA, which should not be penalized for the defaults of other agencies and departments.