MPLT Board Chairman Alvaro A. Santos told Variety the way the initiative was worded “is just defective.”
He said, “We think the intent is there but it is just worded incorrectly,” Santos said.
During MPLT’s Friday board meeting, the MPLT board chairman and the trustees agreed that they should set an appointment with the initiative’s author, Senate President Paul A. Manglona, Ind.-Rota, to discuss how the proposal would impact MPLT.
Santos told Variety in an interview, “We can give some advice as to what will be a better approach. But definitely we don’t want anything that will touch the corpus [of the portfolio].”
The trustees and officials of MPLT expressed concern with the confusion as to how the draft initiative was worded.
For trustee Pete Q. Cruz of Tinian, the said initiative begs a constitutional and Covenant question, pointing out that the MPLT’s park fund has been mandated for use in the development and maintenance of American Memorial Park.
MPLT’s fund has two components: general fund, which the agency remits to the general fund on a fiscal year basis and the park fund that goes to American Memorial Park.
He said there’s a legal issue involved and he deferred to legal counsel Robert A. Torres.
Section 6 part D of the initiative calls for MPLT trustees to carry out the intention of Article VIII, section 803 (e) of the Covenant by using the interest on the amount received for the lease of property at Tanapag Harbor for the development of a memorial park.
But the Covenant obligated the earnings from the lease of the Tanapag Harbor solely for the maintenance of the American Memorial Park and not the Retirement Fund, as being asked by the initiative.
Torres said, “This is triggering a Covenant issue.”
He said the Park fund money doesn’t go to the general fund at all.
“So, if asked, MPLT will offer its insight on it,” Torres said, stating that the initiative is still in its preliminary stage.
Vice Chairman Melchor Mendiola said, “Our corpus will continuously be decreasing because every growth we get we transfer, every loss we assume. Eventually we are going to be down to zero.”
Board consultant Bruce MacMillan also reviewed the proposed initiative and found that it doesn’t provide for how MPLT would find money to pay for administrative expenses.
“As long as there is an unfunded liability, the money from the general fund plus gains on the corpus will go to the Retirement Fund on a quarterly basis. That is as long as this unfunded liability is in place as determined by their actuary,” he said.
He cited the problem that it doesn’t provide for how MPLT could have “our administrative expenses during this period of time which will be disastrous for us because we would not have a way of paying our expense of administration.”
He also echoed Mendiola’s concern that the agency remits all gains but absorbs all losses.
For Santos, he asked he the board could communicate with Manglona and arrange for a dialogue because the language structure of the initiative “is a little bit confusing.”
He suggested MPLT could offer ideas on what impact it will have on MPLT and its ability to transfer to the general fund.
Trustee Greg Fitial Omar said, “Isn’t it a lot easier for them to allocate whatever is being transferred to the general fund?”
For trustee Cruz, either the Legislature appropriates MPLT’s remittances to the general fund for the Retirement Fund’s use or makes a law that will direct MPLT to transfer to the Fund.
From the trustees’ standpoint, the issue is a matter of appropriation.
MPLT annually remits to the general fund interest income less administrative costs.
For the last fiscal year, MPLT earned close to $2 million and this was remitted to the central government after deducting all administrative expenses incurred by MPLT.
