Inos: No decision yet on MOE formula

Gov. Eloy S. Inos has yet to receive any decision from the U.S. Department of Education whether or not it accepted the CNMI’s request to change the formula in calculating the maintenance of effort or MOE requirement.

When it awarded the Commonwealth $44 million in ARRA funding in 2009, the federal agency made it a condition that a certain percentage of the government budget will be allocated to public education, and this is what is calls the MOE requirement. It is calculated as equivalent to 40 cents to $1 dollar or 25 percent of the CNMI’s overall government budget.

Based on the books of the Public School System, the central government owes PSS some $7 million in unremitted MOE covering fiscal years 2010 and 2011.

Inos, however, says the final number hasn’t been calculated yet pending the USDOE decision.

The issue over the MOE formula came to light after the CNMI government filed a waiver application for it in 2012.

“On the question of how much, we need to finalize it and this is contingent on the decision to be made by the feds,” according to Inos.

He pointed out, though, that despite some improvements in the economy, the government has no capability at this time to make such payment to PSS.

“Assuming their claim that the central government owes PSS $6 million in MOE, there’s no way the government can appropriate that much,” said Inos.

Saipan Tribune learned that Inos met Wednesday last week with Education Commissioner Dr. Rita A. Sablan, Board of Education chair Herman T. Guerrero, and the board’s legal counsel to specifically discuss the unresolved MOE issue.

“In fact, in that meeting, I suggested that any MOE due PSS from the administration maybe…we can work something out and applied against what they owe the [Commonwealth Utilities Corp.],” said the governor.

Education officials earlier said that PSS has no funds to pay its obligations to CUC, which ironically totals $6 million covering debts from past fiscal years. CUC has filed a collection lawsuit against PSS.

Inos told Saipan Tribune that staff at his office is specifically working on the MOE matter and is communicating with USDOE. He believes the matter “would be resolved pretty soon.”

But, according to BOE chair Guerrero, PSS and the board were made to believe that the “old formula” used in calculating the MOE will be maintained.

This, he told Saipan Tribune, was expressed to PSS officials in numerous off-island meetings with USDOE executives.

“We know from the beginning that the feds would not change [the MOE formula]. At this time, it really doesn’t matter really how much the government owes PSS…we just want them to pay,” Guerrero said Friday.

MOE funds must come from the local coffers. If the CNMI fails to comply with the MOE requirement, the government may end up returning the $44 million in ARRA funds it got in 2009.

Because there was no specific timeframe as to when the CNMI must meet this MOE requirement, Guerrero said there’s a need for USDOE to have some sort of formal document that will convey its seriousness on the matter.