Payments to Settlement Fund  in ‘actual legal jeopardy’ due to PSS lawsuit, lawyer says

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THE CNMI government authority and ability to make payments required under the settlement agreement are in “actual legal jeopardy” because of the lawsuit filed in the local court by the Public School System over its budget, Settlement Fund attorney Nicole Torres-Ripple told the federal court.

She also asked the court to reject the PSS argument that the CNMI appropriations for the settlement agreement payments and fiscal year 2020 annual budget law are unconstitutional.

In the Settlement Fund response to the PSS opposition to enforce the settlement agreement, Torres-Ripple said PSS has not presented any legal authority for its argument.

Moreover, the PSS argument is wrong, she added.

“The Planning and Budgeting Act does not prohibit the Legislature from setting the amount of general revenues on which to base PSS’s 25% appropriation, or from making an appropriation to PSS based on that amount,” Torres-Ripple said.

In other words, she added, the Legislature may lawfully appropriate amounts for the Settlement Fund and provide for those appropriations in the annual budget law while also appropriating the 25% of PSS based on total general revenues and still achieve a balanced budget.

“Seeking a declaration that the budget law appropriations for the settlement agreement payments are unconstitutional does not remedy and is not a legal solution to PSS’s problem — it is a non-sequitur,” she said, adding that Settlement Fund  motion is ripe for review and the District Court for the NMI has jurisdiction to determine the issues.

Represented by attorney Tiberius Mocanu, PSS has sued the governor and his Finance secretary in CNMI Superior Court for not providing the school system the constitutionally required 25% of the general government revenues in fiscal year 2020.

But according to the administration, PSS was allotted 25.3% of the total local revenue and resources available for appropriation in FY 2020.

For his part,  Mocanu said the Settlement Fund has no basis for its motion as it has not alleged any breach.

“PSS is not trying to take 25% of what is owed to the SF,” he added.

“PSS just wants the $43 million the SF was paid this year to be declared as paid from the ‘general revenues’ of the Commonwealth and thus to be included in the calculation of the total amount available for appropriation of which PSS is entitled to 25%.”

The Attorney General’s Office, which represents the governor and the Finance secretary in the lawsuit filed by PSS, has also opposed the Settlement Fund motion, saying that “the legal basis for the relief falls outside the federal court’s jurisdiction under the settlement agreement as the Commonwealth’s obligations under the settlement agreement are unaffected by the PSS lawsuit filed in Superior Court.”

But Torres-Ripple said the jurisdiction of the federal court is not limited to defaults in the CNMI payment obligations under the settlement agreement.  

“Paragraph 28 of the settlement agreement states that this [federal] court has ‘exclusive jurisdiction to enforce and interpret any provision of this [settlement] agreement and to enjoin any person or entity from pursuing any action that is inconsistent with this [settlement]  agreement or the exclusive jurisdiction’ of this [federal] court.”

She added that the final judgment approving the settlement agreement provides that the federal court retains “exclusive jurisdiction of this action and of all matters relating to the enforcement, effectuation, administration, interpretation, administration, or modification of this judgment, the agreement and the settlement.” 

Last month Superior Court Associate Judge Joseph N. Camacho  granted the Settlement Fund motion to intervene in the PSS lawsuit against the governor and the secretary of Finance.

But Judge Camacho denied the SF motion for stay, finding its argument unpersuasive.

He  scheduled a motion hearing for Aug. 28 at 10 a.m.

In 2009, retiree Betty Johnson sued the CNMI government for its failure to pay the amounts that it was required by law to pay to the Retirement Fund since 2005.

Johnson said the Fund would run out of money by June 2014 and would no longer be able to pay retirement benefits.

In Sept. 2013, the parties agreed to settle the lawsuit and the federal court approved a $779 million consent judgment in case the CNMI government does not meet its obligations to the Settlement Fund.

The Settlement Fund was created by the federal court as part of the settlement between the CNMI government and its retirees.


November 2020 pssnewsletter

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