This was also the stand of the Board of Education upon reviewing Senate Bill 16-36 which will amend Public Law 15-61 to allow the Retirement Fund to pay pension proportionate to employer’s contribution.
BOE Chairwoman Lucy Blanco-Maratita, in a letter to the Legislature, said PSS cannot support the legislation, saying the school system has already been placed in a difficult position through the enactment of P.L. 15-61 which allows government agencies to remit an employee’s retirement contribution rate of 11 percent instead of 36 percent.
According to BOE, the Senate bill will penalize the school system’s employees because the Fund still requires a certain payment level to be achieved before an employee can access their benefits, and when a payment is late or deficient, penalties and late fees are attached.
Prior to the enactment of P.L. 15-61, PSS was current in employee contributions.
It wasn’t until the enactment of the law that the retirement benefits of PSS employees became threatened, BOE said.
This fiscal year, PSS projects a $7.6 million unfunded liability to the Retirement Fund.
Blanco-Maratita also noted that a provision of S.B. 16-36 mandates that a member’s full time employment position “shall remain unfilled upon the retirement of the member….”
“The way this provision is written,” she added, “PSS would not be able to fill vacant positions as they become open. PSS would be precluded from filling positions of critically needed personnel until the previous employer’s contribution is paid off.”
Under the bill, the Fund “shall apply the salary received from the unfilled employee FTE to the member’s deficient employer contribution and the employer may fill the vacant position only upon full payment of the deficient contribution and certification by joint resolution from the Legislature.”
The board said that this specific provision will have a “devastating” effect on PSS.
“PSS would be unable to replace retiring personnel; however, PSS is not exempted from providing a free compulsory education to all students from ages 6-16 and even longer amount of time to our special needs students. This is unacceptable,” Blanco-Maratita said.
She added that several PSS employees get their salaries from federal funds and grants.
The regulations guiding how federal funds are to be spent are very restrictive and would most likely prohibit using federal funds to pay the CNMI’s Retirement Fund, she said.
“Requiring PSS to pay for what essentially amounts to a ‘ghost employee’ may jeopardize PSS from being able to secure future federal funds and grant,” she added.
Another concern is the proposed timeline in getting the “certification” to fill vacant positions, which the board described as “very problematic.”
“Time is of the essence in order to ensure a seamless transition for our school system,” Blanco-Maratita said.
She said the Legislature should exempt PSS from this bill or insert a provision that waives the interest that PSS must remit to the Retirement Fund.
