The central government owes the Public School System $11.8 in unremitted maintenance-of-effort, a requirement under the state fiscal stabilization fund from the federal government, according to PSS federal programs officer Tim Thornburgh.
The maintenance of effort requirement mandates that a certain percentage of the government budget be allocated to education as required by U.S. Department of Education when it provided the CNMI $34.2 million SFSF two years ago.
For two years, there was disagreement on its calculation but Thornburgh, during yesterday's fiscal and personnel affairs committee meeting of the State Board of Education, said the new figure is based on calculations made by USDOE and after a review of the CNMI audit report for fiscal year 2009.
“That's the calculation that USDOE came up with after they reviewed the 2009 CNMI audit report, revenues received, and the amount invested in public education,” said Thornburgh.
Based on USDOE calculation, PSS should have received 25.28 percent of the CNMI budget as part of the MOE requirement for state fiscal stabilization fund.
The unpaid MOE covered fiscal years 2010 and 2011. It was two years ago when PSS was awarded $32.4 million total SFSF money which was authorized for expenditure until Sept. 30, 2011.
Thornburgh described FY 2012 as an “interesting year” for PSS because the CNMI budget was set at $102 million and it only provided $29 million to PSS.
With a projected CNMI budget of $114 million for FY 2013, MOE mandates that PSS should be given a share of 28.9 percent, or at least $33 million. He said PSS now has a good argument to claim these unremitted amounts from the central government.
“So basically, we were owed a substantial amount of money and that's one of the areas Christine Jackson wants to talk about in her visit,” reported Thornburgh, adding that USDOE execs will also focus on the closing out of SFSF projects of PSS.
Christine Jackson is the senior risk management consultant of U.S. Education Secretary Arne Duncan and she is expected to visit PSS on Aug. 17 along with Mark Robinson.
PSS earlier said it is projected to incur a shortfall of $7 million at the end of the fiscal year and is banking on these unremitted MOE from the central government to address the anticipated deficit. Projected deficit for personnel cost is $3.8 million, while for all others is $3.2 million.
Meantime, PSS acting finance director George Palican reported to the committee yesterday that to fulfill the system's obligation to its vendors, a meeting is being set up with the finance secretary to discuss the local budget and the unremitted MOE for PSS.
In the upcoming visit of USDOE officials, board member Herman T. Guerrero recommended that PSS seek an audience with the Legislature so they could also hear what the USDOE has to say about the MOE.