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    Tuesday, August 21, 2018-11:33:54P.M.

     

     

     

     

     

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Protecting the future of GovGuam employees

THE “inevitable collapse” of the CNMI Retirement Fund, as outside pension professionals are predicting, should give many employees within the ranks of the government of Guam and policymakers great reason for pause with new proposals being bantered around.

The GovGuam Retirement Fund, or GGRF, must be protected and properly funded. The CNMI lesson to us is that no other magic or policy will substitute and that we must ensure that future retirees of the government will continue to receive their pensions earned by their hard work throughout their adult lives.

Over the past decade, the Guam Memorial Hospital Authority and the Guam Department of Education have failed to pay GovGuam Retirement Fund contributions to the GGRF due to financial constraints. This caused the GGRF to require employees of these agencies wishing to retire to have the agency pay the retirement contributions in full, for those specific employees.

Guam Public Law 28-38 fixed this problem by authorizing the government of Guam to make interest-only payments to the GGRF for them to allow the retirement of those employees eligible to do so. Every year, since the enactment of that law, the government of Guam has continued to remit interest-only payments to the GGRF.

It was less than a year ago, in June 2011, that the government of Guam again sought financial relief by shortchanging the GovGuam Retirement Fund. The governor concocted the raid plan found in his Supplemental Budget Act of FY 2011. The attempt to raid the GovGuam Retirement Fund was due to the ridiculously overpriced health insurance contract that the governor refused to renegotiate upon his inauguration. Now we know that the government, its employees and retirees will be paid back between $14 and 18 million from that controversial contract that the governor vowed to protect during the gubernatorial election.

Guam Public Law 31-74, the Supplemental Budget Act of FY2 011, added an additional $8 million to be owed to the GGRF by the government of Guam. This was creatively done by lowering the amount the government of Guam paid to the GGRF in contributions and taking those “savings” and shifting them to the SelectCare Health Insurance Contract, thereby adding about $8 million to our deficit. The law also authorized the governor to take the cold hard cash for the Hay Study Pay Raises and shift those funds to pay the SelectCare Health Insurance Contract.

In a letter to all government of Guam employees, our governor stated that “cash isn’t necessarily the problem for the rest of Fiscal Year 2011. We’ve managed the cash well enough.” He pleaded with the government of Guam employees that without this additional spending authority to pay the SelectCare Health Insurance Contract, the government would face mass layoffs and a potential shutdown.

Without my amendment to protect the interest of the GGRF, the Fund would have been left with an $8 million hole because of the attempted raid. This would have left the GGRF in a heated legal battle as there was a lawsuit filed against the transfer of funds to the SelectCare Health Insurance Contract.

The amendment called for the government of Guam to pay back GGRF for its borrowed funds in its next bond offering. With the new bond authorization in the hands of the governor, the GGRF will finally be paid back what was borrowed to pay for the unbudgeted portion of the SelectCare Health Insurance Contract, effectively taking a step toward protecting our government employees’ Retirement Fund benefits.

Now we hear of plans by the governor to turn to the “early-out” of employees as the solution to the government’s financial problem. This has been tried both here on Guam and most recently in the CNMI, and it has resulted in greater costs rather than savings to the government. The more important lesson to be learned is that it resulted in a deduction rather than an increase in the security ratio of the fund. This simply means the fund is less able to pay future pensions.

This is consistent with all the plans by the governor: Don’t pay what you owe today with today’s dollars. Witness the $32 million in the bank available to pay refunds. Borrow to pay your debts today, and push the payments out three years — let the children pay for our debt over the next 30 years.

I hope that we can, at this time, continue to protect the employees’ retirement and not place this burden on our children as the governor wants us to do.

SEN. BEN PANGELINAN
Guam Legislature