Editorials 2020-February-14

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Cold comfort

THE CNMI’s previous financial crisis was much worse than what we are experiencing right now.

Of course, today’s dire situation can deteriorate further, but things were truly bleak a decade or so ago. The question back then was not whether CHC and CUC would shut down, but when. There was, moreover, an eight-day partial government shutdown that affected the livelihood of 1,400 government employees and their families. Retirees, for their part, had to deal not with the prospect of pension cuts, but the end of their pensions. One of the most shared news reports in those days was from the New York Times, titled, “Alabama Town’s Failed Pension Is a Warning”:

PRICHARD, Ala. — This struggling small city on the outskirts of Mobile was warned for years that if it did nothing, its pension fund would run out of money by 2009. Right on schedule, its fund ran dry.

Then Prichard did something that pension experts say they have never seen before: it stopped sending monthly pension checks to its 150 retired workers, breaking a state law requiring it to pay its promised retirement benefits in full.

Over 10 years ago in the CNMI, the only light at the end of the tunnel appeared to be that of an oncoming train. Amid the deepening economic crisis (and rolling blackouts), the incumbent governor was re-elected — the first to win a majority of the votes cast since 1993.

As for PSS’ budget, in FY 2012, the then-governor appropriated $29.5 million which was reduced by over $900,000 by the House. ($28 million in 2011 is worth over $32 million today. PSS’ current budget amounts to over $37 million.) PSS, among other things, could not hire enough bus drivers, and did not have enough funding for maintaining its school buses. In the spring of 2009, PSS had to remind the then-administration that the CNMI had to “minimally fund” the school system or the Commonwealth would lose its federal State Fiscal Stabilization Funds and pay back the $16 million PSS had received in previous years. The then-governor, for his part, wanted PSS investigated for its “questionable expenditures.”

The CNMI’s problem then and now — a problem it shares with many other jurisdictions — has always been basic arithmetic: plenty obligations but not enough money to pay for of all them. This will remain a problem in the foreseeable future unless voters agree to a significant reduction in the size and responsibilities of their government while paying more or higher taxes/fees; and 2) the island economy recovers, grows and never shrinks again, ever.

It is what it is

MOST of the other “solutions” we hear today are of the “shoulda-coulda-woulda” variety which may be convenient for politicians running for office this year, but not really useful for anything else. The first thing to ask when considering a “solution” is, Will voters support it or at least not oppose it? And by voters we usually mean government employees and retirees — they are the CNMI’s largest voting bloc.

Now let’s consider one of the “burning issues” this week.

Should PSS personnel be exempted from pay cuts? Yes? Then who are the other government employees who may have to be laid off or whose salaries have to be cut further?

Or we can ask the following question instead:

If PSS suspends the pay raises it gave itself in 2017 — when the economy was still growing and the government was still collecting more revenue — would the school system have enough funds for the current school year?

While BOE, PSS and elected officials sort out the government’s tangled finances, some lawmakers or other concerned citizens may want to look into the possibility of implementing a school-choice program and learn why its proponents say it is “cheaper for taxpayers and produces better outcomes.”

But proposing a school-choice program in a jurisdiction where about 25 percent of government employees (voters) work for PSS could be political suicide, right?


November 2020 pssnewsletter

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