The CNMI government owes the pension agency over $300 million.
Senate Bill 17-99, which will make the government responsible for the life and health insurance of Fund beneficiaries, was passed unanimously, while S.B. 17-94, which repeals the derivative law enacted three months ago, was passed by a 6 to 1 vote: Sen. Frank Q. Cruz, R-Tinian, opposed its passage while Sen. Jovita M. Taimanao abstained.
All the three legislative initiatives, which are proposed constitutional amendments, were approved unanimously and now go to the House of Representatives.
They must also be passed by at least three-fourths of the 20-member House before they can be placed on the ballot next year. They do not require the governor’s approval but they must be ratified by voters.
Taimanao, Ind.-Rota who chairs the special committee to address Retirement Fund issues, earlier vowed to act promptly on legislation that will help the pension agency.
Senate Floor Leader Pete P. Reyes who authored the derivative law or P.L. 17-51 supported the measure to repeal it, saying the objective of the law has been achieved.
Authored by Senate Vice President Jude U. Hofschneider, R-Tinian, S.B. 17-94 is similar to House Floor Leader George N. Camacho’s House Bill 17-220 which also seeks to repeal P.L. 17-51.
Despite the Fund’s opposition, the law was enacted last September in response to the lawsuit filed by some retirees who sued Merrill Lynch, a firm that used to handle the Fund’s investment.
In an interview, Reyes, R-Saipan, said the Fund has already agreed to “turn over” to the retirees’ attorney, Michael Dotts, the pension agency’s own lawsuit against Merrill Lynch.
He said his measure that was passed a year after he introduced it had served its purpose.
“When I introduced [the derivative bill] it had an objective. That objective is now achieved so at this time I support the bill that repeals it,” he told his colleagues.
Hofschneider said he came up with the measure to repeal the derivative bill because of the problems that surfaced over the last several weeks following the enactment of the law.
S.B. 17-94, he said, will help prolong the Fund’s life.
Commonwealth Retirement Association president Lorenzo LG Cabrera also expressed support for the bill, and asked the lawmakers to “refrain from passing bills detrimental to the Retirement Fund.”
Cabrera’s predecessor, Juan M. Sablan, supported the derivative bill.
Cruz said he wanted the derivative law amended instead of repealing it.
But Fund Administrator Richard Villagomez said the derivative law must be repealed to stop its “unintended consequences.”
After amending it, the Senate approved S.B. 17-99 which will transfer to the Department of Finance the functions and liability of the government life and insurance program.
Sen. Ralph DLG. Torres, R-Saipan, offered the bill but all the other senators co-authored it.
If S.B. 17-99 becomes law, the government life and insurance program will become the liability of the commonwealth government with respect to government employees and defined benefit plan retirees, disability annuitants and survivors.
Torres said his bill will save the Fund $7 million a year.
That amount, according to Fund legal counsel Caroline Kern, is half of what the Fund has to pay the insurance vendor for members and beneficiaries.
If S.B. 17-99 is enacted into law, $7 million will stay with the Fund because it is the CNMI government that will pay the vendors.
But Reyes wonders if it’s “prudent” to saddle the government with another financial burden. He asked Torres how the bill will affect the government’s own financial resources.
Reyes said the measure is like taking money out of the right pocket to put in the left pocket.
Torres said providing government employees with life and health insurance is the responsibility of the government.
Noting that the government has not met its $300 million obligation to the Fund, it might as well take care of its employees’ insurance, he added.
Initiatives
Reyes was also skeptical about Senate Legislative Initiative 17-13 but he voted in favor of its passage.
Introduced by Senate President Paul A. Manglona, Ind.-Rota, S.L.I 17-13 will give the Fund the authority to lease the public lands occupied by Coral Ocean Point Golf Resort, Laolao Bay Golf Resort, Rota Resort Golf Course and Marianas Country Club Golf Resort for 99 years and for $50 million.
The Department of Public Lands will remit all money from golf course leases to the Fund until the government employer contribution is paid in full and the unfunded liabilities of the government for defined benefit plan are satisfied.
Reyes noted that the CNMI Constitution restricts to people of Northern Marianas Descent the benefits earned from public lands.
Manglona’s S.L.I 17-14 was also passed by the Senate unanimously.
It will require the Marianas Public Land Trust to transfer to the Fund, “all returns on investments including interest and dividends earned from the preceding quarter less the reasonable expense of administration which shall not exceed 30 percent of such returns each quarter, for so long as the government has an unfunded liability to the Fund.”
Manglona’s third initiative, S.L.I 17-15, will allot 25 percent of the projected revenues each fiscal year to pay the government’s employer contribution to the Fund.
It will require the governor to set aside 25 percent of the anticipated revenue before submitting his appropriation measure to the Legislature.
The Fund’s Villagomez expressed support for the initiative saying it will supplement the contributions active members are continuously required to pay.
