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Settlement Fund ‘distracting’ court from actual issue in dispute, says assistant AG

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THE Settlement Fund or SF is only distracting the Superior Court from the actual issue in dispute in the lawsuit of the Public School System against the CNMI government over the PSS budget, the Office of the Attorney General said.

In response to the opposition of the Settlement Fund to the PSS motion for summary judgment, assistant Attorney General John P. Lowrey said the issue before the court is whether PSS has established that the appropriations listed in its complaint constitute general rather than special revenue.

Lowrey said PSS contends that a factual inquiry is not required for the court to rule that these revenues are general rather than special.

The Commonwealth contends that PSS failed to meet its burden on summary judgment because it presented no facts establishing its entitlement to judgment as a matter of law, the assistant AG said.

“Intervenor [SF], curiously, makes no contention regarding this issue at all, and instead takes no position on the sole issue before this court,” Lowrey added.

Not only is the Settlement Fund opposition unhelpful, he said, “but it also misconstrues both the complaint and PSS’s motion for summary judgment, and only serves to distract the court from the actual issue in dispute.”

The court should disregard the SF opposition, Lowrey added.

He said the SF “misconstrues this case as one concerned with payment of debt obligations.”

Likewise, Lowrey said the SF “mistakenly uses terms and concepts like ‘priority’ and ‘judgment creditor,’ which are typically reserved for tax, bankruptcy, or collection cases.”

Lowrey said because the SF “sees this as a debt collection matter, it argues that it is owed money under the Settlement Agreement and it should be paid before PSS.”

The settlement agreement, however, is not in dispute here, he added.

As a party to the Betty Johnson settlement agreement, Lowrey said, the SF “can enforce (and is enforcing) its rights in the appropriate forum, but this is not that forum.”

He added, “This case is not about payments out of the Commonwealth’s coffers, but about the classification of revenues coming in.”

Lowrey said, in particular, it is about revenue categorization and the methodology for classifying some revenues as special and others as general — the very issue on which the SF takes no position.

He said the issue before this court is “whether the standard of the CNMI Supreme Court in a certified question petition requires a factual inquiry into the source of revenue and purpose of the fund, and whether PSS has made this factual showing.”

Lowrey said the SF “offers nothing to assist the court with that inquiry, and instead makes confusing arguments that, if accepted, would mislead the court.”

He said: it is clear that the SF does not fully grasp the issues at the heart of this case and at the heart of the motion for summary judgment before the court.:

Lowrey said the Settlement Fund spends approximately a quarter of its brief “arguing about a phantom amended complaint that was never filed and is not before the court.”

According to Lowrey, the SF “spends one sentence addressing the primary issue raised in PSS’s motion for summary judgment.”

The SF states that it takes no position on the correct methodology for calculating the PSS constitutionally mandated 25% share of the FY 2020 budget.

“But that is the whole point of the complaint,” Lowrey said.

 “Because PSS failed to provide any undisputed material facts establishing that the revenue in the complaint constitutes general revenue, the court should deny PSS’s motion for summary judgment,” Lowrey added.

Judge Joseph N. Camacho has scheduled a motion hearing for Aug. 28 at 10 a.m.

According to the PSS lawsuit, Public Law 21-8, which set the Commonwealth government budget for fiscal year 2020, appropriated $37,718,904 to PSS, which PSS said is only about 16% of the budget.

Under the CNMI Constitution, PSS is guaranteed an annual budget of not less than 25% of the general revenues of the Commonwealth government.

Lowrey said contrary to the claim of PSS, it was allotted 25.3% of the total local revenue and resources available for appropriation for Commonwealth government activities in FY 2020.

For its part, the Settlement Fund said the PSS actions in seeking payment from amounts appropriated to the Settlement Fund violates the Settlement Agreement.

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.

In Sept. 2013, the parties agreed to settle the lawsuit and the U.S. 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 the retiree.

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