GOVERNOR Arnold I. Palacios told the federal court that his administration is committed to making the required payments to the NMI Settlement Fund.
Palacios, represented by Deputy Attorney General Lilian Tenorio and Assistant Attorney General Brendan Layde, with Secretary of Finance Tracy Norita attended a status conference on Friday and responded to designated Judge Frances Tydingco-Gatewood’s inquiries regarding legislative initiatives and resolutions regarding the Settlement Fund.
In her report to the court, Trustee Joyce CH Tang said the CNMI government has been compliant with the settlement agreement.
She said the Minimum Annual Payment or MPA for fiscal year 2023 of $36 million was paid weekly, according to the agreed upon schedule since 2018.
The Settlement Fund has not had to draw down on investments to cover pension payments, Tang added.
She noted that the settlement agreement also requires the CNMI government to pay an “Alternative Payment of a Greater Amount” or APGA equal to the difference of 17% of the government’s total annual revenue after deducting the amount of the MPA.
Tang said “APGA were paid for 2014, 2015, 2016, and 2017 totaling $36.29 million,” but added that APGA payments will not be due for 2020 and are unlikely for 2021, 2022 or 2023 because of the CNMI government’s financial challenges.
Background
In 2009, retiree Betty Johnson sued the CNMI government for its failure to pay the amounts that it was required by law to pay to the Retirement Fund since 2005.
Johnson said the Fund would run out of money by June 2014 and would no longer be able to pay retirement benefits.
In September 2013, the parties agreed to settle the lawsuit and the federal court approved a $779 million consent judgment in case the CNMI government did not meet its obligations to the Settlement Fund.
The CNMI government committed to pay at least 75% of the retirees’ benefits.
Since the Inos administration, the CNMI government has also been voluntarily payingthe 25% benefit of the retirees, which the governor said costs $13 million a year,
In her latest report to the federal court, Tang noted that the CNMI government’s FY 2024 budget, or Public Law 23-09, does not fully cover certain items, including the Group Health and Life Insurance Program and the 25% voluntary payments to retirees.
