PSS austerity proposals include salary cuts

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FOLLOWING a meeting with Gov. Ralph DLG Torres regarding the Public School System’s budget, Education Commissioner Alfred Ada presented three austerity proposals to the Board of Education’s Fiscal, Personnel and Administrative Committee on Tuesday.

Ada mentioned the possibility of returning to the pay schedule for teachers and support staff before the 2017 pay raises.

“We need to be proactive and responsible for what we have,” he said, adding that he has asked the PSS finance team to review the business goals and objectives of the school system in order to find ways to reduce expenses.

Based on their analysis, Ada said they concluded that a return to the old compensation scale would allow PSS to stay afloat and avoid payless Fridays.

Ada said he recognizes the likely repercussion of this recommendation: it will affect PSS’ recruitment of highly qualified teachers. “It won’t be appealing, and it will lower staff morale,” he added.

But he said PSS will have sufficient funds for school operations.

“This is an extremely tough decision and I understand the impact it will have on everyone and their families. But it is the only option at this time that I can think of that will have the least impact on our employees overall.”

Lucretia Borja, PSS human resources director, said the following are the three austerity proposals:

• Schedule 1 — The pay of teachers and school support staff will revert to the previous compensation plan. This will save PSS $6.2 million a year.

• Schedule 2 — The salaries of principals, vice principals, key management, program managers, directors and coordinators will revert to the previous compensation plan. This will mean annual savings of $1.5 million.

• Schedule 3 — An additional 25 percent reduction in the salary increase of PSS employees. This will save PSS $4.9 million a year.

In June 2019, with the approval of the BOE, PSS implemented an austerity measure for FY 2019 that reduced its personnel’s salary increase by 50 percent.

Borja said employees earning $23,000 or less are not included in the FY 2020 austerity proposals.

“I hope the teachers will see a silver lining in the measures that we are proposing,” Commissioner Ada said. “We will be able to continue our school operation, our home life, and financial life.”

He said teachers could stage protest actions — “we could pound on the door, but if they don’t have money, what are they going to do?”

The austerity measure selected by the BOE will take effect on Feb. 2, 2020, Borja said.

No action

However, no action was taken by the FPA Committee on Tuesday. Its chairwoman, BOE member MaryLou S. Ada said they will continue the discussions today, Wednesday.

She said she will not allow further cuts to the teachers’ salary unless the central government provides data to justify the austerity measure.

“We were told to reduce again our budget. I am not willing to do that unless I see the facts from the government as to why — and why other agencies are not being asked,” BOE member Ada said in an interview.

“We have reduced 50 percent of our budget and that means 50 percent of personnel salary. He [the governor] has lifted austerity. He has hired additional people. We are not travelling, and he is travelling…we cannot stand this misinformation by the government that everything is okay and then asking PSS to be the sacrificial lamb for the entire CNMI,” she added.

For FY 2020, $37.7 million was appropriated to PSS — $34 million for personnel and $2.9 million for operations.

The BOE decided to maintain the FY 2019 austerity measure so that PSS can meet the payroll for its 1,000 employees.

In October and November, PSS acting finance director Kimo Rosario said the central government was transferring money to the school system regularly and adequately.

“But when the government lifted its austerity measure, that was when we started going south,” he added.

For the first quarter of FY 2020, Rosario said PSS received $7.6 million instead of $9.4 million from the central government.

As a result, Rosario said PSS is behind five pay periods on withholding taxes, three pay periods behind the Group Health and Life Insurance, and a pay period behind with vendors, including private insurance companies.

This January, which has three pay periods, PSS needs $3.9 million.

“I did communicate with the CNMI Treasury. They said they are doing all they can, but that is based on collections,” Rosario said.

Same situation

“We are in the same situation again,” PSS legal counsel Tiberius Mocanu said referring to the school system’s financial situation in FY 2019.

He said there was neither letter nor formal communication from the central government about how much PSS will be receiving.

“All we know is what they actually give to PSS…and it looks bad. We are now in a situation where we believe the government and wait for a letter and base our salaries off of what they tell us they are going to give us. Or do we look at what has been given so far and extrapolate that into the rest of the fiscal year and make some decisions based on that?”

BOE member Ada said the government lifted its austerity measure too soon at the expense of PSS.

“They are asking us to pay — to our detriment. We did what we could. If you look at the history of how much PSS has received over the years, this has been the lowest allocation for public education,” she said.

She reiterated that she wanted to see “the facts or figures of the financial condition of the Commonwealth.”

Principled stance

Mocanu said the PSS situation has no legal solution. “Everything you have discussed is political and the legal solution is already in the [CNMI] Supreme Court.” He was referring to the certified question the BOE and the administration submitted to the high court to clarify what constitutes the government’s “general revenue” when determining PSS’ “guaranteed annual budget of not less than 25 percent” of the general revenues of the Commonwealth.

“We can take a principled stance and say we are not cutting, but eventually there’s not enough numbers on Kimo’s page to make disbursements to people to pay them," Mocanu said. “The principled stance is fine, but we also need to solve [PSS’ financial] problem.”

He added the board has to decide to balance the budget. “Those decisions…need to be made…while at the same time…we fight.”

Mocanu said the “imminent issue today…is we can’t support our current payroll. Something needs to give. We have to deal with the reality as we have it. The numbers don’t add up to making payroll at its current level.”

Board of Education teacher representative Paul Miura said PSS has been “taken advantage of to the fullest extent and it will continue that way unless we fight.”

“There has to be a breaking point,” he added. “I think we are beyond that already. If we remain silent as we have been for the last year, they are going to keep doing that to us. We will never know the truth as to how the monies are being spent. They will keep us in this box and continue to shrink that box until the schools are closed.”

BOE member Ada said, “if worst comes to worst,” she would not hesitate to close schools. “I want the parents behind us [to say] that we cannot tolerate this anymore. They lift the austerity and when they cannot meet our payments, they are asking us to reduce and go back to the [old] compensation plan. The government must reduce their expenses and must go back to austerity.”

Many factors

In a statement to Variety, BOE Chairwoman Janice Marie Ada- Tenorio said:

“This is not about what the central government is saying. The reality is that the CNMI has suffered due to many factors…and is still suffering up to now. We have to accept that.

“Now, on our end as education leaders, we have to help everybody understand that the numbers that we are expecting are not there because of factors that are beyond our control. Instead, we have to base our expenditure level with what was appropriated to us (through the budget law). This was approved by the Legislature and the governor.

Under the current budget act, PSS was allotted $37.7 million which represents the 25 percent constitutional mandate, she said.

Chairwoman Ada-Tenorio added: “I stand with our teachers. They don’t need additional cuts. I share everyone’s sentiments. Yet we are faced with the hard reality that we should live within our means based on what has been statutorily appropriated to us. We have to help each other here.”

Financial outlook

In a separate statement, the administration said through the Department of Finance, it “is doing everything it can to ensure the disbursement of PSS funding. Finance will be conducting a thorough review of our quarterly revenue projections and prioritize 25 percent of the quarterly revenue is allocated for PSS.”

On Tuesday, the governor “held a productive meeting…with Commissioner Alfred Ada and members of the Board of Education to go over the 2020 financial outlook, as well as [to take] collaborative steps to ensure disbursement of funding to PSS for its teachers and students moving forward in this ongoing recovery period for the entire CNMI.”

The Board of Education’s Fiscal, Personnel and Administrative Committee meets on Tuesday.  Photo by Lori Lyn C. Lirio

However, “to be clear, the governor and his administration have not made any mention of a cut to teachers’ salaries. For board member Ada and…others…to imply that this administration is advocating for a cut in teachers’ salaries is completely false and blown out of proportion. For their legal counsel to imply that this is political is also not true. No one has suggested to cut teachers’ salaries. If certain members on the Board of Education truly care for the students, then they should also stop the exaggerated rhetoric of closing down schools.”

The administration said “the secretary of Finance explained to Commissioner Ada and [the PSS] finance team…that the 1st quarter allotment was based on our 1st quarter revenue projections, which is at 23 percent of annual revenue projection, so they are not getting the straight quarterly budget amount. In the 2nd quarter the Department of Finance anticipates a 27 percent revenue collection so the 2nd quarter allotments will reflect a higher monthly allotment than the first 3 months of the fiscal year.”

As the governor promised to PSS, the administration added, “Finance will remit the full 25 percent due to PSS on a quarterly basis under the condition that what we collect in revenue is more than what we have already transmitted. Based [on] current projections, PSS can expect more in the 2nd and 3rd quarters, but possibly less in the 4th quarter due to historical tourist arrival trends.”

The administration said “what was specifically mentioned to the BOE and commissioner was to make adjustments to their administrative or central PSS payroll levels, which are at the 2018 pay level, when we had a larger budget and a stronger economy before the typhoon. We want to make it clear that PSS’s current pay level is larger than the current budget level, which is not at the 2018 level. Because of this…PSS [must] make adjustments to their budget or to find other resources to make up the difference. How they do that is their decision. But the fact remains that their current budget level with their 2018 payroll figures is larger than the approved budget for PSS.”

The governor “has continued to work closely with the BOE and the commissioner to ensure that our classrooms remain open, our educational system continues, and our teachers’ salaries remain,” the administration said.

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