Fund to sue PSS

The NMI Retirement Fund will sue the Public School System over its $28-million unpaid employer contributions, according to Fund chair Sixto K. Igisomar. He said the decision came after both sides failed to reach an agreement.

As of Oct. 31, 2011, PSS owed the Fund $26.744 million but Igisomar said the actual employer contributions owed by PSS is actually closer to $28 million. The money represents unpaid employer contributions spanning several years.

“Yes, we did give direction to our counsels with respect to uncollectible amounts from PSS. We’ve been negotiating with them for quite a long time on this issue and we’ve come to a point where we just can’t keep going like this. We have come to a solution and we decided on this course of action: to formalize this item in a court process,” said Igisomar.

Going to court is always a “nice way,” he said, to formalize things if there is no action or movement on the account.

According to Igisomar, the Fund did its best to iron out differences with employers who owe the agency unpaid employer contributions. Some of these successful negotiations are with the Commonwealth Ports Authority and Marianas Visitors Authority.

“We have a good experience in talking to agencies and we’re able to iron out our differences resulting in payment of their accounts,” he said.

The board also tackled in Friday’s closed-door session the issue with Commonwealth Utilities Corp. According to Igisomar, the utilities company is disputing the amount it owes the Fund and is offering payment proposals based on what it insists it owes.

The Fund earlier sued CUC for its $4.44 million unpaid employer contributions covering several years.

“CUC was sending back and forth their offers and we did give direction to our counsels to respond to that offer,” Igisomar said. He refused to comment further as the case is pending in court.

In disputing the Fund’s numbers, CUC cited various laws to justify its own calculations. Igisomar insists, however, that the Fund is not making up its numbers and that it is just following what the law states.

According to him, the Fund is just using what the court had determined in the 2009 case between the central government and the Fund. “That case put some clarity on those laws, that’s why we’re using them. If we don’t agree, the court will make the decision.”

In an earlier interview with PSS finance director Richard Waldo, he said PSS projects to incur an $8 million shortfall this fiscal year as a result of the significant increase in the employer contribution rate-from 37 percent to 61 percent. He said there’s no way the school system can afford that rate.

Waldo had said that PSS will ask the central government to absorb its unpaid obligation to the Fund because PSS is a non-revenue generating agency and is part of the government.

Igisomar refused to comment if this is constitutional, saying there are legal questions that may be involved in making it happen.