Two experts hired by OIA to analyze the financial health of the CNMI presented to lawmakers on Friday the result of their study showing how the commonwealth’s financial condition continued to decline from 2002 to 2009.
Stephen Latimer, program manager of USDA Graduate School, and Frank W. Crawford, president of Crawford & Associates accounting firm, submitted a report titled “A Financial Statement Analysis Using Indicators of the Financial Health and Success, and the Status Report of Audit Findings, Timeliness and Exception Resolution of the CNMI as of Sept. 30, 2009.”
They said they used the method called The Performeter, “an analysis that takes a government’s financial statements and converts them into useful and understandable measures of financial performance.”
Latimer said the study measured the CNMI’s financial health and all the figures came from the audited financial statements of the commonwealth government.
According to the report, in fiscal year 2009, the deficit grew by $45.2 million or 38 percent compared to the previous fiscal year.
This increase in deficit was primarily due to an approximate $20 million increase in the amount due to the employee benefit plan system which had an increased deficit in net asset at the end of the year and continued a decline in net asset position over the past several years, the report stated.
In 2005, the deficit in net assets that included all assets of the CNMI was $30.7 million. In 2006, the deficit was $49.4 million; in 2007 it was $79.2 million; in 2008, $120 million; and in 2009, it reached $164 million.
The study stated that in FY 2009, the CNMI funded 83.6 percent of its expenses with current year revenues.
This means there will be a significant amount that future funding will have to pay for the current costs.
The study also determined how heavily the CNMI was relying on revenue sources it couldn’t control.
For FY 2009, the CNMI had direct control of over 67.5 percent of its revenues. This ratio indicated that the CNMI had “some limited exposure to financial difficulties due to reliance on non-controlled revenues.”
The report also showed that 47.3 percent of CNMI revenue sources were from taxes, 30.8 percent from grants and contributions, 20.2 percent from service charges, and 1.7 percent from “others.”
As of Sept. 30, 2009 the report said the CNMI’s pension plan assets were 40 percent of the accrued pension benefit liability, indicating that the plan continued to be underfunded.
