The Board of Education disclosed that the Commonwealth's waiver application with the U.S. Department of Education regarding the maintenance-of-effort requirement remains unapproved and has been pending for seven months now.
In light of this, board members recommended to Gov. Eloy S. Inos to allow the Public School System to participate in the process to get the desired document approved by the federal agency.
BOE chair Herman T. Guerrero made the recommendation in his letter to the governor on Tuesday, saying that the central government owes PSS $3.846 million in unremitted MOE funds.
USDOE awarded the CNMI $44 million in 2009 under the state fiscal stabilization fund. Of this amount, $32.4 million was given to PSS, with the requirement that PSS must be allocated a specific percentage of the overall budget of the CNMI government. This requirement was not met.
Based on the board's analysis of the maintenance-of-effort rule, Guerrero said the central government still owes the school system some $3.846 million-as shown in both PSS and CNMI audit reports.
“We have received a copy of the CNMI's application for a waiver of the [maintenance-of-effort] for fiscal year 2010. We have noted the general fund deductions for bond interest in the amount of $7,697,354, transfers out in the amount of $3,004,174, and federal contributions of $4,006,914. Total transfer outs amount to $14,708,442. When we prepared the calculations for the MOE waiver for [fiscal years] 2006, 2008, and 2009, we only subtracted out the federal grant contributions,” stated Guerrero.
This new method changes the calculation of funds owed the system, he added.
“What does not change is that the CNMI still owes PSS $3,846,402 as is shown in our audit report and in the CNMI audit report,” said Guerrero.
Based on the August 2012 waiver application with the USDOE, the CNMI government's revenue in fiscal year 2010 totaled $134,956,280. Of that amount, PSS only received $41,759,596 that same year-not enough to meet the maintenance-of-effort rule, hence the need to apply for a waiver of this requirement with USDOE.
Guerrero recommended to the governor to develop a payment plan to pay this debt, in addition to paying the full amount of PSS allotments for fiscal year 2013, which he said is behind by $1.5 million.
Guerrero also asked the governor to allow PSS federal programs officer Tim Thornburgh to help the CNMI federal grant coordinator finalize the maintenance-of-effort application, which was submitted seven months ago and remains unapproved.
“Work together with us to finalize the FY 2011 application for a waiver of MOE after approval of the FY 2010 waiver,” said Guerrero.
According to him, failure to meet the maintenance-of-effort rule will result in the CNMI having to return $44 million to USDOE and the federal government refusing to honor any CNMI government request to draw federal funds until this $44 million debt is repaid.
“As you will recall, there was a hold put on CNMI federal grant draws in [fiscal year] 2011 until a $40,000 debt was paid by the CNMI. We do not want to replay that scene again,” added Guerrero.
In October last year, U.S. Delegate Gregorio Kilili C. Sablan (Ind-MP) disclosed that the CNMI government's waiver application for MOE had been found insufficient and inconsistent with federal standards.