The Fitial administration and the Legislature, along with retirees and active members, welcomed yesterday U.S. District Court for the NMI Bankruptcy Division designated judge Robert Faris’ tentative ruling that he is inclined to dismiss the NMI Retirement Fund’s Chapter 11 bankruptcy petition.
“It’s a foregone conclusion that the bankruptcy filing will be dismissed. I wasn’t surprised at all that the judge will be dismissing it,” Senate President Paul Manglona (Ind-Rota) told Saipan Tribune yesterday.
He said the more important thing now is to “go back to Judge [Kenneth] Govendo’s June 15 deadline for all parties involved to come up with a solution and legislative initiatives to prolong the Fund’s lifespan.”
Faris, in his tentative ruling, said that Congress intended elected branches of the local government to address problems like the Fund’s insolvency.
On April 17, the NMI Retirement Fund became the first public pension agency on American soil to seek bankruptcy protection.
Manglona said it’s “very unfortunate that the Fund had to spend thousands of dollars in legal fees” for the bankruptcy case, including a $475-an-hour rate for one of the many Fund lawyers working on the issue.
The Fitial administration, meanwhile, is poised to place the Fund under a state of emergency once the federal court makes a final ruling on the Fund’s bankruptcy filing.
Press secretary Angel Demapan said the executive order that will place the Fund under a state of emergency “is still a work in progress.”
Demapan said the Fitial administration took the position that the bankruptcy petition would not be sustained.
“Although not final yet, the judge’s tentative decision is seemingly consistent with the administration’s position that bankruptcy is not the appropriate approach to addressing the budget and policy issues of the retirement system. It is important to note that just as the administration believes, the judge also noted that resolution of retirement issues should be a function of policymakers, not the courts,” Demapan added.
He said the administration is now reviewing the decision and seeking legal advice on what is to follow once a final decision has been rendered.
The Senate president, meanwhile, said the administration’s planned emergency declaration for the Fund may be necessary but it does not solve the fact that the government should make payments to the Fund. The government owes the Fund some $300 million in unpaid employer contributions.
With the expected dismissal of the Fund’s bankruptcy filing, House Speaker Eli Cabrera (R-Saipan) said the government should get rid of the Fund’s unfunded liability, allow active members who have contributed more than 15 years to withdraw their contributions or better yet, the Legislature should override the governor’s veto of House Bill 17-226, which allows non-retired Fund members to withdraw up to 50 percent of their contributions.
Cabrera will push for the override in today’s House session at 2pm.
The speaker also said he hopes the Senate will reconsider its opposition to legalizing casino gaming on Saipan, to help boost the economy, along with the launch of Saipan Air on July 1.
Joe Pangelinan, who is leading a group of non-retired Fund members, said it’s “good news” that the federal court is poised to dismiss the Fund bankruptcy filing.
Rep. Joseph Palacios (R-Saipan) said the dismissal of the Fund bankruptcy filing will allow the Legislature and the Executive Branch, along with the Fund, retirees and active members, to work more closely together to help everyone.
Manglona reiterated his call for the House passage of his Senate Legislative Initiative 17-15 SD1 setting aside 25 percent of the government’s annual revenue to pay the government’s employer contribution to the Fund.
He said there are also House measures that the Senate is waiting for, including an initiative on a pension obligation bond and cuts in tax rebate.