The House Ways and Means Committee has recommended the passage of Senate Legislative Initiative 16-10, which was introduced by Senate Fiscal Affairs Committee Chairwoman Maria Frica T. Pangelinan, D-Saipan, and co-sponsored by seven other senators. The Senate has nine members.
In its report, the House committee said it merged S.L.I. 16-10 with a similar House proposal, H.L.I. 16-12, which was introduced by Rep. Heinz S. Hofschneider, R-Saipan.
The committee said S.L.I. 16-10, as amended by Ways and Means, also requires the annual reduction in the number of government employees until the total budget allocation for personnel is 60 percent or less of the general revenues. The current percentage is about 80 percent.
S.L.I. 16-10 “will reduce the financial pressure of making timely employer contributions to the Retirement Fund,” the committee stated in its report.
The CNMI government, the committee added, owes the Retirement Fund approximately $193 million. The Fund’s unfunded liability is roughly $500 million, the committee stated.
According to the committee, some 2,800 retirees and 4,595 active members do or will rely on the Fund for financial security.
The CNMI government is required to pay employer contributions to the Fund, but has failed to do so.
In its report, the committee stated that the government has provided very generous and expensive retirement benefits to its employees. These “benefits expanded over the years as a result of numerous statutes enacted for that purpose,” the report added.
“Furthermore, in providing great benefits to government employees, the government added to the burden of the retirement system by diverting revenues from and transferring costs to the Fund,” the report noted.
This “practice of adding to member benefits while siphoning off dedicated retirement revenues has exacerbated the government’s liability to the Fund, and has contributed to the explosion in the overall unfunded liability of the Fund.”
The Fund’s long-term survival, the report stated, “far outweighs the cost of a public debt through a pension obligation bond.”
Once the House passes its version of S.L.I. 16-10, it still has to be approved by the Senate.
A proposal to amend the CNMI Constitution, a legislative initiative must get the support of 3/4 of the members of each house before it can be placed on the general election ballot. Voters can then either ratify or reject it.
