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Pacific Islands Development Program, East-West Center

With Support From Center for Pacific Islands Studies, University of Hawai‘i

Public School System Pays $1.4 Million To NMI Fund
PSS still allegedly owes Fund additional $34.1 million

By Moneth Deposa

SAIPAN, CNMI (Saipan Tribune, Nov. 30, 2012) – The Public School System (PSS), through acting finance director George Palican, yesterday made a payment of $1.4 million to the Northern Mariana Islands Retirement Fund, minutes before the 5pm closing of the business operation of the pension agency.

The decision to fulfill the obligation was reached after yesterday's 45-minute emergency closed-door meeting of the Board of Education's (BOE) fiscal and personnel affairs committee.

The Fund disclosed this week that PSS has failed to remit the employee contributions of its personnel to the pension system in fiscal year 2012 amounting to $1.436 million. This was among the reasons cited for the suspension of the issuance of refund checks to Fund members, along with the outstanding contributions of other autonomous agencies and departments.

BOE chair Tanya King and board member Herman T. Guerrero were mum after the closed-door meeting.

Sources revealed that the "decision to pay" was reached after yesterday's leadership team presentation in the executive session. The $1.4 million, Saipan Tribune learned, was sourced from the interest of the PSS' general obligation bond.

Education Commissioner Rita A. Sablan, Ed.D, was off island yesterday. Acting COE Glenn Muña did not return this reporter's call for comments.

Saipan Tribune learned that upon the return of the commissioner, she is expected to initiate "conversation" with the Fitial administration on the matter.

It was earlier disclosed that the administration owes PSS approximately $7 million for failing to meet the U.S. Department of Education's (USDOE) maintenance-of-effort requirement.

It was in 2009 when USDOE awarded the CNMI $44 million under the state fiscal stabilization fund. Of this amount, $32.4 million was given to PSS. Under this federal award, there is a condition set that the education system must receive a specific amount of the overall budget of the CNMI government.

According to the Fund, besides the $1.4 million unremitted employee contributions, PSS also continues to refuse to remit its employer contributions reaching approximately $34.1 million. Other agencies, it was learned, also failed to remit employer contributions to the tune of approximately $20 million.

Fund trustee ad litem Joseph C. Razzano told pension members Tuesday that with the ongoing fiscal challenges at the pension agency, the Fund cannot comply with Public Law 17-82, which authorizes members to elect to terminate their contributions to the program without separating from government service.

PL 17-82 provides that Class I and Class II members of the Fund's defined benefit plan may elect to voluntarily terminate membership in the Fund. The law also directs that any employee who elects to terminate membership shall receive his/her contribution with regular interest. Out of the over 1,700 members who filed for refund applications since Sept. 17, only 94 have so far received their checks.

Saipan Tribune
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