Settlement Fund proposed budget for FY ’20 is $46M

The NMI Settlement Fund’s proposed fiscal year 2020 budget is $46 million, which is $1.2 million less than the fiscal year 2019 budget of $47.2 million.

Settlement Fund trustee Joyce C. H. Tang discussed the Fund’s budget in her report filed Friday with the U.S. District Court for the NMI.

Tang’s report covered the combined period from the fourth quarter FY 2017 through the third quarter FY 2019. Tang will present the report before U.S. District Court for the NMI designated Judge Frances Tydingco-Gatewood tomorrow, Thursday, at 9am.

Tang said the proposed total benefits and refunds payment for FY 2020 is $43.7 million as compared to $44.9 million in FY 2019 budget.

Tang said the total refunds in the proposed FY 2020 is $685,000 as compared to only $60,000 in the FY 2019 budget.

Tang said the increase of $625,000 in total refunds under refund of contributions represent refund of the overpayments made by class 1 Fund members who paid the actuarially determined equivalent of Class II member contributions in order to retire without penalty pursuant to Public Law 13-60.

Tang said the Settlement Fund discovered that the NMI Retirement Fund had incorrectly applied compound interest rather than simple interest in computing the amount due from each retiring Class 1 member.

Tang said this amount ($685,000) will be paid out by November 2019.

The trustee said there is an increase of $49,267 in personnel cost which is attributed to the need to adjust key employees’ salaries to be in line with the salary range paid to federal employees without the locality pay as well as budgeting for an additional in-house counsel.

She said retaining key employees is critical to the ongoing operation of the Settlement Fund.

Tang said the proposed total professional fees for FY 2020 is $858,000 as compared to $945,000 in FY 2019, or a decrease of $87,000.

The trustee said the increase of $75,000 in legal fees is to provide for fees for Class counsel (subject to court approval), in addition to hiring for administrating hearing officers and arbitrators.

Tang said the $130,000 increase for utilities under general and administrative expenses covers Federal Emergency Management Agency’s consumption.

FEMA’s monthly rental payments include utilities. FEMA leased the second and third floor spaces in November 2018, immediately after Super Typhoon Yutu struck Saipan and Tinian in October 2018.

Tang said as work was winding down, FEMA reduced its leased space at the second floor and a portion of the third floor.

She said FEMA currently pays a monthly rental of $24,436, which covers office space, utilities, and cleaning of the common area.

Tang said the office space rental from FEMA has garnered a total of $342,303 in rental income for the Settlement Fund as of Aug. 31, 2019.

The rentals from FEMA, she said, cover the additional amounts over the insurance proceeds needed for repairs of the Settlement Fund building.

Tang said the Settlement Fund building on Capital Hill sustained damage from Super Typhoon Yutu also requires maintenance work.

She said the Settlement Fund submitted a claim for $109,580.95 and after deducting the deductible of $25,000, received $84,580.95 in insurance proceeds for typhoon repairs.

As of Sept. 15, 2019, the trustee said, the Settlement Fund has spent $149,623 on the repair and maintenance of the building.