NMI Settlement Fund Trustee Joyce CH Tang expressed her appreciation for the commitment and dedication of Gov. Ralph DLG Torres and Department of Finance Secretary David DLG Atalig to meeting the CNMI government’s financial obligations under the settlement agreement.
The past two years have been challenging to all, Tang told the federal court.
“Throughout the Covid 19 pandemic, the NMI government has been diligent in paying the Minimum Annual Payment [or MAP] in weekly allotments. This has enabled the Settlement Fund to avoid drawing down on investments and to invest its reserves,” she added.
In 2009, retiree Betty Johnson sued the CNMI government for its failure to pay the amount that it was required by law to pay to the NMI 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 Settlement Fund was created by the federal court as part of the settlement between the CNMI government and retirees.
The federal court appointed Tang as Settlement Fund trustee on Sept. 25, 2013.
At a hearing on Dec. 16, 2021 presided over by designated federal Judge Frances Tydingco-Gatewood, Tang said since FY 2019, the Settlement Fund was able to avoid drawing down on its investments to cover expenses not covered by the MAP in FYs 2020 and 2021.
She said this was due in large part to: (1) the CNMI government’s diligence in making payments each week towards the MAP; (2) the enactment of Public Law 20-33, which established a Settlement Fund Revolving Fund Account funded by the NMI Gross Revenue Taxes exclusively used to pay for MAP payments from the beginning of FY 2018 through FY 2021; and (3) the strong performance of the Fund’s investment portfolio.
Tang noted that the settlement agreement requires the CNMI government to make 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 MAP paid.
Based on the government’s audited financial statements for FY 2017, Tang said the Settlement Fund was entitled to an APGA for FY 2017 in the amount of $17, 693,237.40.
In 2019, she said, pursuant to P.S. 21-10, the Settlement Fund received full payment of the APGA for FY 2017.
Based on the government’s audited financial statements for FYs 2018 and 2019, Tang said the government was not required to pay APGA for FYs 2018 and 2019.
Whether the APGA for FY 2020 and FY 2021 will be assessed has not been determined because the government’s audited financial statements for those years have not been finalized, the trustee added.
As for the 25% benefit payment, Tang said, the government remitted $13.6 million to the Settlement Fund for FY 2021, and $13.98 million for FY 2020.
For FY 2019, the government remitted $14.2 million to the Settlement Fund for the 25% benefit payments, the trustee added.
Tang noted that while not required, the government has voluntarily made the 25% benefit payments under the settlement agreement.
“The Settlement Fund has assisted with the processing of the 25% benefit payments conditioned on the government’s timely payment of the MAP obligations, and fulfilling payment obligations such as the APGA,” she said.
“As of the date of this report, the government remitted $2.8 million to the Settlement Fund for the 25% benefit payment.”
She said with the exception of the central government, the Commonwealth Healthcare Corporation and the Commonwealth Utilities Corporation, all other autonomous agencies were current on their employer contribution obligations through Nov. 2021.
“The Settlement Fund anticipates receiving full payment from the government and CHCC by Dec. 17,” she said.
With respect to CUC, the Settlement Fund and CUC have reached a tentative settlement regarding CUC’s outstanding employer contributions, she added.
Pursuant to the Settlement Agreement, the CNMI government and its autonomous agencies are required to submit employer contributions after each pay period.
Tang also reported on the CNMI judiciary building loan which matured on March 1, 2015.
“The government has continued to make regular monthly payments to reduce this debt. The original principal amount was $15 million. The government paid a total of $1,000,494.13 in FY 2019; $843,905.46 in FY 2020; $890,209.65 in FY 2021; and $223,472 for FY 2022.”
Tang said as of the date of her report, the outstanding balance of the judicial building loan was $277,360.66.
“If the government continues to make regular monthly payments as it did in prior fiscal years, the loan could be paid off in 8 months.”
The trustee noted that the government, for the past five years, has been exploring the option of obtaining a United States Department of Agriculture loan to pay off the judicial building loan and cover other courthouse renovations.
An amendment to P.L. 19-67, which authorized the government to borrow from the USDA, is necessary to allow the government to borrow from commercial lenders, said Tang.
“This amendment is under review,” she added.
Tang said there were 2,701 Settlement Class members as of Sept. 30, 2021, 49 were active employees, and 2,654 were retirees, and 22 had since returned to government service.
According to Tang, the overall class membership decreased by 137 members from FY 2019.
