Sen. Manglona, Propst: ‘Don’t blame BOE’

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SENATOR Paul A. Manglona and House Minority Leader Edwin Propst said Gov. Ralph DLG Torres should not blame three members of the Board of Education for his administration’s inability to pay 25% of the retirees’ pension.

In his open letter on Sunday to the retirees, spouses and minor children beneficiaries, the governor said starting on April 15, the central government will be unable to obtain the necessary funding to pay 25% of their pensions. He said he has “agonized over this decision and have exhausted as much avenues as possible. Unfortunately, under the circumstances before us, these efforts were simply not enough.”
Torres noted that under the direction of BOE members Phillip Mendiola-Long, Marylou Ada and Andrew Orsini, the Public School System filed a complaint for a declaratory and injunctive relief demanding 25% of the government’s general funds which include funds earmarked for retirees based on the CNMI Supreme Court’s slip opinion in Jan. 2020 regarding the PSS budget.
Torres said the lawsuit authorized by Mendiola-Long, Ada and Orsini “singlehandedly restricted our government funds at a time when students are not in session, schools are not operated and while our community is deeply entrenched in our fight against the Coronavirus Disease (Covid-19).”
He said he specifically informed BOE and PSS that an injunction would cause a 25% cut to the retirees’ pension. Unfortunately, he added, Mendiola-Long, Ada and Orsini demanded immediate access to funds and proceeded to order the lawsuit against the advice of BOE Chairwoman Janice Tenorio and Vice Chairman Herman Atalig.
Because of the lawsuit, the governor told the retirees, “my hands are tied and any ability I had to guarantee you your funds has now been stripped away.”
Under a settlement agreement enforced by the federal court, the CNMI government must pay 75% of a retiree’s benefits. This requires a weekly payment of $1 million to the Settlement Fund. When the economy improved due to an increase in tourist arrivals and the entry of a Saipan casino investor, the CNMI government, from 2013 to 2019 was able to pay the 25% benefit payment not required by the settlement agreement.
In his letter to the governor on Monday, Manglona said “we cannot put the blame on and point fingers” at the BOE members for the 25% reduction in retirement pension payments. He said that legislative records will show that the 25% earmarking requirement for PSS “had always been significantly underfunded during the budget process.”
He added that “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,” the senator said.
Instead of blaming the BOE, Manglona said “we must look at other avenues to meet our constitutional mandate to PSS while making our manamko’ whole with their full pension.”
Manglona, who was first elected to the Senate in 1987, reiterated his concerns regarding “government overspending and deficits,” saying that “there is no doubt that the main reason for [the] government’s overspending i practice of omitting or knowingly under-budgeting known, unavoidable costs from the budget — including government utilities, medical referral services, Medicaid matching requirements, CHCC indigent care costs, and PSS’ 25 % earmarking constitutional requirement.”
He added, “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.”
Propst, for his part, went “live: on his Facebook page on Sunday evening to challeng the governor, his press secretary, Kevin Bautista, and the governor’s chief of staff, former Rep. Angel Demapan, to a public debate.
Propst said the governor’s open letter to the retirees and their beneficiaries “is very misleading,” adding that it is also insulting to call BOE members “selfish.”
Propst said the BOE members will “not get anything” from pursuing with the injunction. Teachers, he said, are still going to be furloughed.
Why blame the BOE when it was actually the Torres administration, by enacting then-Rep Demapan’s Public Law 20-10, that took away the guarantee to pay the retirees’ 25%, Propst said
Prior to the governor’s signing of this law, Propst said the $15 million casino license fee guaranteed payment to the retirees’ 25%.
“P.L. 20-10 took that away and gave it to the senatorial districts,” said Propst who along with then-minority Reps. Blas Jonathan Attao, Edmund Villagomez and Vinnie Sablan voted against the bill.
“Governor, I challenge you to debate me on this,” Propst said adding that at the time, he and other members of minority bloc “knew” that one day the economy would decline and the business gross revenue tax from casino would not meet revenue projection.
Senator Manglona said there are several options the Finance secretary can examine before moving forward with the decision to cut the retirees’ pension.
“Keeping in mind that the fiscal year is about half way over so we need approximately $11 million for the 25% of class members’ full benefits,” Manglona said as he “respectfully” asks the Finance secretary to consider the following:
• Negotiate with the struggling Imperial Pacific International for an advance payment of its 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 from 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 for 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,” the senator said.
“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. 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, Congressman 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,” Manglona said.

November 2020 pssnewsletter

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