Spare the retirees

Dear Governor Torres: Your recent decision informing our retirees, surviving spouses, and minor children that 25% of their retirement pension will no longer be funded by the government is very alarming to say the least. This 25% pension reduction will impose a financial hardship on our man’amko who rely solely on their retirement checks to make a living and pay for their medical needs. We must look at other avenues to meet our constitutional mandate to PSS while making our man’amko whole with their full pension.

The Commonwealth has been struggling financially for a couple of years now from fiscal mismanagement. Your Dec. 31, 2018, letter to the presiding officers of the Legislature affirms this. You stated in that letter that the fiscal challenges actually began around 2017 and due to the decline in revenue collection and excess expenditures, the Commonwealth had a deficit of $25,910,717 for the fiscal year ending Sept. 30, 2018, before Super Typhoon Yutu made landfall in the Commonwealth. This is not all. Just a year before in fiscal year 2017, we had an $8 million deficit; and in fiscal year 2019, our deficit grew to a whopping total of $98 million.

As such, we cannot put the blame on and point fingers at the members of the Public School System Board of Education for the 25% reduction in retirement pension payments. Legislative journal records will show that the 25% earmarking requirement for PSS had always been significantly underfunded during the budget process. In fact, several unconstitutional earmarking legislations, such as Public Law 20-34, were intentionally passed to make sure that PSS did not get its required 25% funding. We have always known of PSS’ 25% earmark, so we cannot now pretend that we were blindsided by the Commonwealth Supreme Court’s decision.

On June 12, 2019, I sent you a letter regarding government overspending and deficit accumulations. In my letter, I emphasized the need for us all, in working on the Fiscal Year Budget Plan, to work with reliable factual information such as the true cost of government operations. There is no doubt that our practice of omitting or knowingly under-budgeting known, unavoidable costs from the budget—including government utilities, medical referral services, Medicaid matching requirements, CHC indigent care costs, and PSS’ 25 % earmarking constitutional requirement—have been the main reason for our government’s overspending.

The independent auditor’s report by Deloitte on Aug. 13, 2019, shows that the Executive Branch alone exceeded its budgeted allotment by $11 million in fiscal year 2018, the Medical Referral and Medicaid local expenses exceeded allotments by almost $20 million, and government utilities by $1.8 million. We cannot attribute our fiscal mismanagement on the retirees, surviving spouses, minor children, or PSS. We have no one to blame but ourselves, the leaders, for the maladministration of public funds.

Governor, there are several options Finance Secretary David Atalig can examine before moving forward with your decision to cut the retirees’ pension. Keeping in mind that the fiscal year is about halfway over so we need approximately $11 million for the 25% of class members’ full benefits, I respectfully ask that the secretary consider the following:

Negotiate with Imperial Pacific International for an advance payment of their Exclusive Casino Annual License Fee of $15 million that is due in October 2020;

Negotiate with IPI for the long overdue Community Benefit Fund mandatory contribution in the amount of $37 million for the years 2018 and 2019;

Use the Marianas Public Land Trust’s $15 million loan reimbursement by FEMA;

Reprogram unused fund balances from all the various appropriation measures funded by more than $150 million in Casino Gross Revenue taxes;

Reprogram unused fund balances from Public Law 20-59 funded by $13 million from revenues generated from the licensing of amusement machines;

Use a portion of the $35 million federal assistance coming from the recently passed CARES Act, which the governor has sole discretion on its disbursement;

Use portions of FEMA reimbursement for Typhoon Yutu and Mangkhut expenses in the amount of more than $175 million;

Use fund balances of Section 702 Covenant CIP funding, approximately $11 million per year for medical supplies and equipment, to free up government operation monies to be used for retirees; and

Work with Region 9 EPA to speed up funding availability of $56 million in federal money for sanitary landfill projects, saving CNMI millions in government operation expenses.

Governor, again, as I had always emphasized in all my previous letters to you, it is essential that we work with reliable factual information from the Department of Finance before making any drastic decisions. I believe the Legislature should have been brought into the discussions regarding this severe measure to reduce our retirees’ pension by 25%. In any event, I hope you will reevaluate your decision by seriously and reasonably considering all the options above at a minimum before implementing the 25% reduction, which would ultimately require that the Department of Finance provide us all with accurate and up-to-date financial figures. With government transparency and accountability, our people will be behind us and be more willing to accept the tough austerity measures that we impose upon them because they trust that we are seriously confronting the magnitude of our fiscal dilemma.

Further, if after exhausting all efforts at finding additional resources for the retirees’ pension and the Secretary of Finance still comes up short of the approximately $11 million needed, I strongly recommend that there be a 3- or 4-tier pension rate reduction. For instance, the lowest tier may consist of retirees receiving less than $20,000 per annum getting minimal to no cuts at all to their full benefits.

Governor, I am confident that if we all put all our heads together we can come to a reasonable and satisfactory solution. In addition, as we try to readjust our government’s fiscal plan, our nation’s leaders are doing everything they can to provide financial assistance and stimulus to keep our economy afloat. In fact, Delegate Gregorio Kilili Sablan has indicated that the U.S. Congress is now working on CARES 2 Act. Likewise, we too should all come together and work to find ways to help our people during these uncertain times.

Paul A. Manglona (Special to the Saipan Tribune)
Paul A. Manglona is a senator in the 21st CNMI Legislature and a former Senate president.