Northern Marianas Stand To Lose Federal Grant

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Pacific Islands Development Program, East-West Center With Support From Center for Pacific Islands Studies, University of Hawai‘i

Over Non-Compliance
Not meeting 25% budget for education commitment, $44 M at stake

By Alexie Villegas Zotomayor

SAIPAN, CNMI (Marianas Variety, July 21, 2014) – The Northern Marianas is the only jurisdiction which has not complied with the maintenance of effort or MOE agreement and this places the commonwealth in jeopardy of losing federal grants.

Education Commissioner Dr. Rita A. Sablan said the commonwealth is still non-compliant.

"The CNMI has not yet addressed that [MOE]. We are the only entity that has not addressed that," she said.

Back in 2009, the U.S. Department of Education awarded the CNMI $44 million in American Recovery and Reinvestment Act funding predicated on the condition that the CNMI allocate 25 percent of the overall budget to public education.

The CNMI Board of Education and Dr. Sablan met over a week ago with U.S. Department of Education senior risk consultant Christine Jackson who conveyed the seriousness of the commonwealth’s not meeting the maintenance of effort agreement.

Dr. Sablan said they had already been told of the implications.

"We have talked to the legislators and the governor about that," she said.

For its failure to comply with the MOE, the government will either have to return the $44 million in State Fiscal Stabilization Funds or face a freeze on all federal funds.

Dr. Sablan clarified with Variety that education grants will not be part of the freeze; however, all other grants received by the government will be affected.

"When the governor made that commitment, he agreed to the MOE to make sure that public education funding would not decrease," she said.

The PSS commissioner said the governor is working with the U.S. Department of Education and she is hopeful they will be able to resolve this.

"We are giving them the alert, want them informed that these are the implications," she added.

The CNMI may be required to return $44 million in federal grants if it does not satisfy the deficit of $11.4 million it owes PSS pursuant to the MOE agreement.

BOE Chairman Herman T. Guerrero said there have been U.S. congressional inquiries into this failure to meet the MOE.

He said in their meeting with Jackson, the congressional inquiry on compliance with the maintenance of effort was mentioned.

He said U.S. Congressman Gregorio Kilili Camacho Sablan has been vocal about the commonwealth’s need to meet the requirements of the MOE.

"Our Congressman has been vocal about it. He asked the governor for information on it. I don’t know whether the governor ever responded to our congressman," added Guerrero.

Guerrero echoed Dr. Sablan’s concern over this.

He said the Feds will be communicating with the governor "to find out what is going on with this MOE commitment."

He said that the CNMI must work on this as these inquiries by members of the U.S. Congress can not be ignored.

Guerrero said the board told Jackson about their plan to explore other ways by which they can help the CNMI government address this.

During Friday’s special board meeting, Guerrero noted that all federal grants may be placed under a lien.

Earlier this year, U.S. Congressman Gregorio Kilili Camacho Sablan sounded the alarm on the continuing failure to meet the requirements of the maintenance of effort agreement.

In a letter to Governor Inos on March 27, Sablan relayed his concern over the government’s not complying with the maintenance of effort agreement that led to a windfall of $44 million in State Fiscal Stabilization Funds.

He said this may put "other elements of the financial relationship between the Commonwealth and the federal government at risk."

Based on the MOE, the CNMI committed to keep funding for education in fiscal years 2009, 2010 and 2011 at least at the same dollar amount as had been provided in fiscal year 2006.

Aside from this, Sablan also told the governor that the maintenance of effort agreement was subject to a waiver — which the CNMI applied for and received — that accepted as fulfillment of the obligation maintaining the percentage of total appropriations for education at least at the same percentage as in the preceding fiscal year.

However, funding for public education has been dwindling over the last decade.

From $37.2 million in FY 2005, its budget went down to $36.72 million in FY 2007; $35.84 million in FY 2008; $34.60 million in FY 2009; $33 million in FY 2010; $31 million in FY 2011; $31 million, FY 2012; $32 million, FY 2013; and $32.06 million, FY 2014.

For fiscal year 2015, PSS asked for $40 million yet the pre-filed budget bill appropriated only $32.27 million.

Kilili finds this inability to meet the MOE disconcerting as he echoed the statistic that the commonwealth provides less funding per pupil than other U.S. jurisdictions.

In his letter to Inos, Kilili pointed out how this deficit puts CNMI children at a disadvantage throughout their lives.

"Shortchanging an already poorly funded education system — as may be the case if the maintenance of effort agreement has been breached — only makes the situation worse for the young people," said Sablan in his letter to Inos.

As early as 2010, Kilili had notified the CNMI government of his concern regarding MOE.

Back then, he said that if the government continues to violate the MOE, there is no fallback and that this will be a very serious breach of faith.

During Friday’s special board meeting of the public education board, Guerrero warned, "you don’t challenge the Feds."

The federal government might impose a lien against the CNMI government.

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