CNMI May Declare State Of Emergency Over Retirement Fund

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Lawmakers feel Fund should be put under Financial Department

By Alexie Villegas Zotomayor and Emmanuel T. Erediano

SAIPAN, CNMI (Marianas Variety, May 30, 2012) – The Commonwealth of the Northern Mariana Islands (CNMI) administration is considering a declaration of a state of emergency for the pension agency once the court rules against the Retirement Fund’s bankruptcy petition.

Attorney General (AG) Edward T. Buckingham said "it is [still] premature to know what will be done since the decision on the bankruptcy petition is pending. However, a ‘draft’ declaration of emergency and executive order is in process and should be issued within the next 48 hours or so."

Asked if the administration also plans to place the pension agency under the Department of Finance and abolish its board of trustees, the AG replied: "Rather than comment at this time, it seems appropriate to await the issuance of the draft declaration of emergency and executive order."

Asked if he believes that the court will dismiss the Chapter 11 bankruptcy petition, Buckingham said, "The filing of the Office of the Attorney General reflects our legal conclusion that the bankruptcy petition should be denied. One respects that there are different perspectives that are offered by different parties in any case. We believe our position is legally correct and are optimistic about the likely decision."

The AG said the pension agency is not a "person" that can be a debtor under Chapter 11 because it is a governmental unit.

Regarding the Fund’s filing of a complaint in court against the government’s credit union, Buckingham replied, "As a general matter, however, one would hope that issues within the CNMI government could be resolved through discussion and negotiation rather than through formal proceedings within the judiciary."

No to emergency declaration

Speaker Eli D. Cabrera and a few other House members support the idea of placing the Retirement Fund under the Department of Finance, but they don’t think an emergency declaration is necessary.

In separate interviews yesterday, Cabrera, R-Saipan, and House Floor Leader George N. Camacho, Ind.-Saipan, they won’t support a state of emergency declaration for the retirement system.

But they said Finance can take over the pension agency.

Cabrera said once Finance takes over, the Fund won’t need so many employees. All it needs to do is issue checks to the retirees, he added.

The governor, he said, can issue an executive order placing the Fund under Finance. But that executive order requires the consent of one of the two houses of the Legislature.

Camacho said the issues facing the Fund are not as life-threatening as that of the Commonwealth Healthcare Corp. and the Commonwealth Utilities Corp. so he does think another emergency declaration is necessary.

Rep. Froilan C. Tenorio, Covenant-Saipan, said he agrees with Cabrera that reorganizing the Fund does not require emergency declaration.

He said in this kind of situation, "we don’t need the Fund board to administer the retirement system. It should be just the Finance secretary."

He said some employees will lose their jobs once the Fund is dissolved.

"I don’t know what is going to happen to all the staffers. Maybe they can transfer to Finance and I hope that would be included in the executive order," he said.

Tenorio prefers a Chapter 11 bankruptcy as he feels there is some good that will come out of it.

He said he believes the federal court ruling on bankruptcy can supersede the CNMI Constitution that protects retirement benefits from reduction.

The federal court ruling in favor of bankruptcy will result in a reduction of benefits in order to stretch the life of the Fund at least for another year or two, he added.

Rep. Fredrick P. Deleon, Ind.-Saipan, said it appears now that "we are doing due diligence in getting a view of the issue from the outside."

He added, "We want to make sure that what we are doing is the right thing because we cannot trust just one side of the issue. We have to make sure that everything is all set."

Putting the Fund in the hands of Finance, he said, will allow retirees to continue to get their pension as long as there is money for it.

"I want to make sure that they get it. The challenge is how to proceed and what is the best route to proceed," he said.

Rep. Joseph M. Palacios, R-Saipan, said he does not like another emergency declaration but it may happen again.

Beneficiaries who rely only on their pension face hunger, he added.

"So there will be an emergency situation here," he said.

He said abolishing the Fund board and allowing Finance to handle retirement system is going to happen. But what the government will save from the reorganization will most likely go to the Fund’s consultants and legal counsels, he added.

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