BOND BORROWING WON’T FIX CNMI’S PENSION FUND

Editorial

BOND BORROWING WON’T FIX CNMI’S PENSION FUND Marianas Variety

SAIPAN, CNMI (Aug. 26, 2011) – In the Commonwealth of the Northern Mariana Islands (CNMI), a court ordered US$100 million set-aside resulted in yet another serious review of the Retirement Fund, prompting some lawmakers to again propose a pension bond. But Wilshire Associates, financial advisor to the Fund, explained that floating a bond will not save the pension agency.

"The Fund cannot invest its way out of trouble and it has lost its window in winning back contributions from the government." Wilshire Associates recommended that the Fund liability be significantly reduced to assure its survivability beyond the three- to four-year estimate now suggested.

Even with these clear, sober and unequivocal assessments from financial experts, Senate President Manglona said a pension bond was an option.

This is tantamount to a denial of reality. Wilshire specifically warned that hope is not a solution. The Senate president’s stubborn insistence on a pension bond puts the community at greater risk because it merely postpones the government’s need to address critical and difficult issues head on.

The CNMI government is in freefall. It does not have the revenue to support its operations and has barely enough to pay the salaries of its officials and employees. Businesses are closing and their revenue is shrinking. Jobs are lost and the number of consumers is dwindling, with many residents leaving island in search of better opportunity elsewhere. This exodus places a smaller burden on the demand for government services but it also results in a shrinking tax base. Yet none of these have translated into personnel cuts for the government. The worsening crisis, moreover, did not even prevent lawmakers from proposing a slightly higher allotment for their salaries in the FY 2012 budget and maintaining the House leadership accounts.

The Fitial administration itself has already reminded the commonwealth that federal assistance to states and territories will be reduced as a result of severe cuts in the U.S. budget. This will have an impact on the CNMI government and the community.

Public School System (PSS), for its part, seems to be the only government agency aware of the state of the economy and the government’s budget constraints. It proposes to consolidate two schools on Rota because of a dramatic drop in student enrollment. This makes infinite sense given the deep cuts in the PSS budget and the uncertainty of future funding.

On Capital Hill, however, lawmakers are driving the CNMI off the cliff and no one’s stopping them.

The Saipan Higher Education Financial Assistance (SHEFA) board also needs to come to terms with reality. It doesn’t have its own funding sources and must rely on government poker collections to dole out student grants. The sooner it hands this responsibility over to the banks, the sooner it can put itself out of business and save the CNMI government badly needed funds.

Parents should be responsible for financing their children’s college education. Government support for higher education is a good thing, but that requires funding which the CNMI no longer has.

The Saipan mayor’s office has approached the dog eradication program very seriously, perhaps even a bit overzealously. Questions about the handling of pets have arisen only to be swiftly buried with dismissive comments from some lawmakers. The fact that everyone supports a better society where stray animals don’t pose a health threat or ruin a tourist’s experience of the island cannot entirely eliminate legitimate concerns about government employees taking family pets and destroying them.

The recent tragic incident involving Mrs. Walker’s two dogs exposes a defect in the current process. There is a problem and it should be examined to ensure that mistakes are not repeated. The dog control program director should apologize to Mrs. Walker and the mayor’s office should ensure that proper procedures are in place and that they are observed.

Northern Marianas Housing Corporation (NMHC) announced that it will fund the construction of a junior high school in Koblerville, about one mile from Hopwood Junior High School. With the island’s population shrinking, and the PSS population remaining more or less the same, the question remains: is this a good time to build a new junior high school? The public would also like to know if PSS endorsed this idea and whether it is the best use of available resources.

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