Crunch time: Monday meeting on Fund emergency

A day after placing the beleaguered NMI Retirement Fund under a state of emergency, Gov. Benigno R. Fitial invited lawmakers yesterday to a Monday meeting to explore possible solutions to problems plaguing the pension agency. The Fund is expected to last only two years unless the government takes actions to prolong its lifespan.

Lawmakers, in separate interviews yesterday, said they look forward to a meeting with Fitial and Lt. Gov. Eloy S. Inos to hear about the administration’s plans and, at the same time, for the administration to also consider lawmakers’ proposals.

Fitial said he and Inos want to meet with lawmakers “to explore possible solutions to the pressing Retirement Fund issues.” The meeting is at 2:30pm in the governor’s main conference room on the first floor of the governor’s office building on Capital Hill.

“It is important that we emphasize the need to work diligently for the common good of our CNMI people,” Fitial said in a one-page letter to Senate President Paul Manglona (Ind-Rota) and House Speaker Eli Cabrera (R-Saipan).

The government owes the Fund some $317 million in unpaid employer contribution plus interest.

Rep. Trenton Conner (R-Tinian) said it’s about time the government streamline its operations, and hopes that leaders would stop “playing political ping-pong with peoples’ lives.”

Conner believes the CNMI government chose not to pay its employer contribution to the pension agency for several years to use the money to hire more people in government for “political gains.”

“I’m not happy about this and I believe it’s time we take a look at really streamlining this government,” Conner told Saipan Tribune. Conner said he is also going to introduce a bill on the integration of government employees into the private sector.

Press secretary Angel Demapan said the meeting is mainly intended to discuss the governor’s executive order, as well as to initiate joint efforts among the elected leadership on matters pertaining to the Fund.

Rep. Frank Dela Cruz (R-Tinian) said yesterday he expects that after Monday’s meeting, a “doable plan of action is made and timelines are set to help both active defined benefit plan members as well as retirees.”

“I believe the first order of business is to hear the administration’s plan now that they have declared a state of emergency for the Retirement Fund. Next is to discuss the fate of House Bill 17-226 as this should be done immediately, although any action on this legislation should hinge on the administration’s plans,” he said.

Dela Cruz, one of those attending Monday’s meeting, earlier said it should be the central government that should be placed under a state of emergency and not the Fund, the Commonwealth Healthcare Corp., and the Commonwealth Utilities Corp.

Manglona, in a separate letter to Cabrera on the eve of the Fund emergency declaration, called on leaders and legislators to “set aside political differences and work collectively to address the retirement problems.”

“Now we are back to where we were before the Retirement Fund filed for bankruptcy. Notwithstanding the bankruptcy case, the Retirement Fund still has a two-year lifespan,” he said.

On April 17, the NMI Retirement Fund became the first public pension agency on American soil to file for Chapter 11 bankruptcy protection. But the federal court dismissed the motion last week, although it has yet to issue a written ruling.

The governor, in his five-page executive order on Thursday declaring a state of emergency for the Fund, said his executive order “shall become effective immediately upon the federal bankruptcy court in re Northern Mariana Islands Retirement Fund, BK-12-0003, filing its judgment dismissing the action.”

House floor leader George Camacho (Ind-Saipan), also attending Monday’s meeting with Fitial and Inos, said everyone should understand that there are different parties involved and finding the best solution may not make everyone happy but at least it is the “most fair” solution.

Rep. Janet Maratita (Ind-Saipan) said she would have loved to attend Monday’s meeting but she’s still away on personal/medical leave. She said she wants to be part of the deliberation on the solutions to Fund’s problems.

Sen. Frank Cruz (R-Tinian) said he hopes the House will consider the Senate bills and initiatives that are “still sitting in the House.” Rep. Ray Tebuteb (R-Saipan) said he also looks forward to the meeting.

House Ways and Means Committee chair Ray Basa (Cov-Saipan), however, said he’s disappointed that the Senate passed initiatives and bills to help the Fund without first sitting down with all stakeholders.

“I don’t think that’s the right way. I hope during Monday’s meeting, there will be bills and initiatives that will be discussed and agreed upon, and will be acted upon immediately because it’s something that the Legislature and the Executive Branch agreed upon,” Basa said in a phone interview.

He said the Fund is “not an easy problem to solve,” especially in putting more money to the Fund so that retirees will continue to receive their pensions beyond two years.

“Among our tasks is to see where we will be able to find new money. We need to move revenue-generating bills. If nobody brings up the issue of Saipan casino legislation, then I will bring it up during the meeting,” he said.

Fitial’s state of emergency declaration for the Fund suspends the power of the pension agency’s board of trustees and administrator, and transfers this executive power to Finance Secretary Larrisa Larson. It re-organizes and transfers the Fund’s statutory authority, powers, duties, functions, and responsibilities to the Department of Finance.

The governor made it clear that he intends to enable the Fund to continue to provide necessary services to retirees.

Under the EO, the governor may suspend all statutory or regulatory provisions as required and reprogram funds necessary to address the emergency.

The governor cited several reasons for placing the Fund under a state of emergency, including the Fund’s own declaration that it is unable to pay its creditors by bringing an action for bankruptcy in federal court.

Fitial said until this problem is addressed, he finds that the Fund will continue to disburse its remaining assets unsustainably to a handful of retirees until the benefits of all members in the retirement system will be depleted.

“In order to stabilize the Retirement Fund’s cash outflow and ensure continued viability of the Fund, change must be effectuated now,” the governor said.

Fitial said the Fund’s board cannot resolve these problems as it currently does not have the minimum number of members needed for quorum requirements.

Fitial’s two appointees have yet to submit required documents to the Senate, whose advice and consent are needed.

The governor said it is the CNMI government’s responsibility to take steps to increase the Fund’s longevity, uphold its promises to its senior citizens, and therefore prevent the social and economic disaster that would result from the imminent disintegration of the Fund.

Fitial said the Fund’s debts and obligations are ultimately the debts and obligations of the CNMI pursuant to Article III section 20(a) of the NMI Constitution, and it is inefficient and senseless to have intra-governmental litigation when the CNMI is ultimately responsible, acknowledges its responsibility, and desires to fulfill its duties.