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BOE deadlocked on MPLT loan proposal

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THE Board of Education on Tuesday afternoon failed to pass a proposal to authorize the education commissioner to negotiate a $3.4 million loan from the Marianas Public Land Trust.

The vote was 2 in favor and 2 against. Those in favor were BOE members Philip Mendiola-Long and Andrew Orsini while those against were BOE Chairwoman Janice Tenorio and vice chairman Herman Atalig. BOE member MaryLou Ada was absent.

The board will hold another videoconference meeting on Wednesday to again vote on the proposal.

On March 27, Education Commissioner Dr. Alfred Ada and BOE Chairwoman Janice Tenorio asked MPLT to lend $5 million to the Public School System for a term of 90 days. The proposed loan amount has been reduced to $3.4 million which represents the unpaid salary of locally funded PSS employees.

During the board meeting on Tuesday, BOE member Philip Mendiola-Long moved for the approval of a board resolution stating that MPLT will be paid by PSS once it receives $12.6 million from the Coronavirus Aid, Relief, and Economic Security Act or CARES Act.

Orsini said the board resolution is an MPLT requirement. “The resolution needs to be approved to make sure that this is an official thing that we are trying to get into,” he added.

“In a previous meeting, majority of us voted to…moved forward with MPLT,” he said. “Today all we need is for them to vote with us so we can get this thing moving. Now the people that are going to be affected are our entire PSS personnel.”

Orsini said PSS officials are scheduled to meet with MPLT on Thursday.

PSS legal counsel Tiberius Mocanu, for his part, said “the board needs to decide as to when we will pay back MPLT.”

BOE teacher representative Paul Miura asked Tenorio and Atalig why they voted no.

Tenorio replied “I voted no. I don’t need to explain myself.”

“Madame Chair,” Miura said. “I am confused here. I thought the purpose of this meeting is to get it passed so that we could get the loan and pay out teachers. What is going on here?”

“There is nothing going on,” Tenorio said. “There was a motion on the floor, and we decided. There’s a deadlock and that’s it.”

“This is unbelievable,” Miura said. “You turn your back on teachers and on your employees.”


‘Laudable, but…’

In a statement on Tuesday evening, BOE Chairwoman Janice Tenorio and vice chairman Herman Atalig said:

“On the agenda (one of two) was the proposed borrowing of $3.4 million from the Commonwealth Development Authority-Marianas Public Lands Trust. CDA must first approved the PSS borrowing in order for MPLT board of trustees to entertain the loan proposal.

“The planned borrowing will be shepherded through a BOE resolution. To be specific the purpose of the proposed resolution was for the Public School System to enter into a bridge loan or a short-term loan, primarily to ‘be used to pay for PSS’ outstanding local obligations…’

“The outstanding local obligation will be to pay for the salaries of all our hardworking PSS personnel.

“We recognize the intent of the proposed borrowing. It is very laudable. We are one with everyone especially during these very trying times, and that we have to find means to ensure that we are able to pay our hardworking PSS personnel what is due of them.

“But in doing so, we also have to be cognizant that in funding for PSS operation/salaries, it must also be based on the actual/current realities. Currently, our central government has no means to fund all services and operations, and has to shut down and furlough operations and employees; government services and operations are limited only to those that are in the health care and frontline sectors fighting the spread of Covid-19 in the CNMI.

‘Against the law’

Tenorio and Atalig said they “respectfully and earnestly appeal for everyone’s understanding and hear us both why we voted ‘No’ ”:

In the law that created CDA (Title 4: Economic Resources, Division 10: Commonwealth Development Authority) under § 10203. Powers and Restrictions, Section (3), CDA is

“To receive and hold funds from the United States government, the government of the Commonwealth, the Marianas Public Land Trust, the Economic Development Loan Fund and any other sources….:

Tenorio and Atalig said the proposed CDA-MPLT borrowing is against the law.

“We are governed by laws which were promulgated and enacted as safeguards and protect the function(s) of government departments/instrumentalities/agencies including corporations and boards’ functions. These statutes were explicitly put in place to ensure that every government entity is able to perform and deliver respective fiduciary duties,” Tenorio and Atalig said.

“To further explain, allow us to quote CDA’s mission which is, ‘to provide appropriate financial and technical assistance to facilitate the start-up or expansion of private and public enterprise for their success, the benefit of the Commonwealth's economic welfare and the long term sustainability of the CDA.’ ”

Tenorio and Atalig said CDA has a very specific and explicit mandate in the disposition and utilization of government funds.

“This is further explained under Division 10, § 10203. Powers and Restrictions through the following sections:

“(7) To make and issue bonds, notes or other obligations in furtherance of the purposes of this division including, but not limited to, funding capital improvement projects of the Commonwealth for sewers, power, water, roads, health facilities, air and sea ports, and parks and recreation facilities;

“(8) To make loans to any autonomous public agency for use in any project that in the judgement of the authority will further the purposes of this division;

“(9) To guarantee the obligations of the Commonwealth or its autonomous public agencies, incurred to fund any project that in the judgement of the authority to be consistent with this division;

“(14) To make loans to private individuals, corporations and cooperatives who are eligible for loans under the special provisions reserving funds for farmers, fishermen, agricultural and marine cooperatives under Covenant § 702(c), and allocate to the Marianas Islands Housing Authority those funds reserved for a special program of low interest housing loans for low income families;

“Further, CDA has a very restrictive mandate and authority in disposition of public funds. The same law that created CDA, in particular § 10203. Powers and Restrictions, states that the authority shall not:

“(2) Fund or loan funds for government operations, except for its own operations as provided in this division;

“(3) Make, issue, guarantee or otherwise participate in providing credit or lending money for consumer loans….”

Regarding MPLT

Tenorio and Atalig said the chairman of the Marianas Public Land Trust, Martin B. Ada, on Tuesday evening “communicated to [the] BOE chairwoman…explaining MPLT’s positions/actions on four questions pertaining to PSS need for funding assistance.”

Tenorio and Atalig said these are the questions:

1) Is PSS allowed to borrow money from MPLT?

2) What is the money going to be used for?

3) Is there a guaranteed debt servicing of the loan?

4) Can the federal stimulus package of which $10 million is expected to be
earmarked for PSS be pledged as guaranteed repayment of the loan from
MPLT?

“These questions were based on the two letters sent by Commissioner of Education Dr. Alfred B. Ada and Chairwoman Tenorio, on March 26, 2020 and April 2, 2020, respectively to MPLT Chairman Martin B. Ada,” Tenorio and Atalig said.

MPLT Chairman Ada told Chairwoman Tenorio on Tuesday evening that on April 16, 2020, the MPLT board of trustees met to address the two letters and issued this position:

“By CNMI law the [BOE] needs to pass a resolution indicating their intention to loan from either CDA, MPLT or both. Two, the loan from CDA or MPLT cannot be used for operations (salaries). Three, there has to be a guaranteed form of repayment of the $5 million loan to MPLT. And four, we are skeptical that the federal award letter can be pledged as a form of repayment to MPLT. We all know that there are terms and conditions that must be followed by the recipient of any form of federal aid or grants. Three out of four MPLT trustees pointed out their concerns of borrowing for operations which includes salaries for employees.”

Chairman Martin Ada added, “But even with all these our door is still open for further discussions if the [BOE] can come up with a workable proposal for their present financial situation.”

False hopes

Sadly, Tenorio and Atalig said, “using the CDA-MPLT borrowing route is a futile move. As we’ve mentioned earlier while the intent is laudable, it essentially gives our hardworking PSS personnel false hopes given that the law does not support PSS borrowing.”

“We have to admit it,” the two added. “The filing of the injunction against the central government (governor, secretary of Finance) has effectively prevented us from using the only viable and workable way for us to navigate the current difficult situation PSS is facing: collaboration. The injunction has created further roadblocks for obtaining any additional funding from the central government. At this point in time, it is clearly evident where we stand: This is because of our own doing. We are standing alone from our partners in government. We have no way to reach out for help and support.”

Tenorio and Atalig said even with the injunction authorized by the three other members of the BOE, the two have been working with Gov. Ralph DLG Torres, Lt. Gov. Arnold I. Palacios and Secretary of Finance David DLG Atalig to continue the bi-weekly transfer of government funds.

“This is to ensure that our hardworking PSS personnel will be paid even in the midst of this economic difficulties and this public health emergency.

“On many occasions, Governor Torres, Lt. Governor Palacios and Secretary of Finance Atalig have opened their doors to us, BOE members and PSS leaders, to dialogue and work together in finding ways to mitigate the problem that PSS is facing…. Let us work together in partnership. We are facing an extraordinary challenge and the only way for us — all of us — is to support each other as one Commonwealth.”

 

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