During the board meeting on Friday, CPA Executive Director Edward M. Deleon Guerrero said the increased rate will cost the ports authority around $1.7 million.
CPA may find itself in a financial bind next fiscal year, and this will significantly affect its bond indenture compliance.
The new Retirement Fund rate takes effect on Oct. 1, 2011, the start of fiscal year 2012.
The employer contribution rate for fiscal year 2011 was 37.3909.
Deleon Guerrero said CPA is the only agency that is up to date with its contributions.
He said he was trying to arrange a meeting with the Retirement Fund board and officials to present CPA’s case.
CPA comptroller Derek Sasamoto said they may be non-compliant with the bond indenture requirements due to the increased rate.
With this unanticipated cost and with no additional revenue to cover the shortfall, CPA expects a decrease in its bond ratio from 1.33 to 1.069 for the airport.
CPA legal counsel Robert T. Torres said the rate increase was based on the Fund’s commissioned actuarial study.
He noted that the government has yet to comply with the court judgment regarding its unpaid contributions to the Fund that now amount to over $300 million.
CPA, he added, “owes zero.”
According to the Fund’s actuarial report for fiscal year 2009, its unfunded liability stood at $591.775 million.
Torres said he will confer with Deleon Guerrero and Sasamoto to discuss “this very serious issue.”
“It is a big hit on us [CPA] financially. There is also a potential rate impact on the community,” the lawyer said.
As of Friday, the CPA had 49 days to come up with a solution.
CPA recognizes that the central government has been having difficulty in paying what it owes the Retirement Fund.
Sasamoto said there may be something in the emergency procedures that will help CPA.
“We are also requesting the Retirement Fund to provide us an accounting of all CPA retirement contributions. We would like to make sure that our funding is secured for our employees to retire and that we are not subsidizing the retirement of people from the central government,” he said.
