Saipan Tribune

Tuesday, May 21, 2013

Monday, March 11, 2013

Loss of ARRA funding seen to worsen sequestration impact

The CNMI will not only lose millions in federal funds because of “sequestration”-a series of automatic, across-the-board funding cuts to U.S. government agencies totaling $1.2 trillion over 10 years-but will also see the end this year of the American Recovery and Reinvestment Act program that has awarded more than $119 million to the islands since 2009, officials said.

Of the over $119 million ARRA grants awarded since 2009, the CNMI has yet to draw down or spend $17 million of them.

If the CNMI fails to use the money and complete its projects, it could end up losing millions of dollars some seven months before the federal government starts reclaiming unused ARRA funds.

Gov. Eloy S. Inos said Friday that the end of the ARRA program will worsen the negative impact of federal funding cuts brought by sequestration.

Latest quarterly data from federal tracking website, recovery.gov, updated on Jan. 30, 2013, shows that the CNMI was awarded over $119.847 million in ARRA grants from 2009 through Dec. 31, 2012.

The $119 million-plus ARRA funding is more than the CNMI's fiscal year 2013 budget of $114 million.

ARRA funds helped the CNMI fund its education programs, created and saved jobs, built and maintained schools, improved health programs, funded energy and road projects, among others. The Public School System, for example, got over $36 million in ARRA money and was able to retain and hire dozens of classroom teachers. With ARRA funding source drying up and sequestration kicking in, PSS is asking for a bigger appropriation from the CNMI central government for fiscal year 2014.

Delegate Gregorio Kilili C. Sablan (Ind-MP) said the sequestration cuts funding to federal agencies that the CNMI has relied on for many of its programs and jobs.

For the CNMI, the cuts will be in the millions of dollars, although the Inos administration continues to assess the total impact.

Press secretary Angel Demapan said yesterday that the Office of Grants Management is now overseeing the remaining activities of the ARRA program.

“However, management of such ARRA grants are being handled by the respective grantees of each grant program. The Office of Grants Management is currently in the process of compiling status reports from each grantee for review by the governor and lieutenant governor,” Demapan said.

The CNMI government used to have a sole-source ARRA management contract with former Commerce secretary Mike Ada's Integrated Professional Solutions.

Of the over $119 million in ARRA grants to the CNMI, more than $101 million or 90 percent has been used or drawn down.

However, when it comes to project completion rate, the CNMI has yet to complete 25 or 40 percent of 58 total projects.

Of 58 ARRA projects, 33 or 60 percent have already been completed; 13 or 20 percent are more than 50 percent completed; nine or 20 percent are less than 50 percent completed, and three or 10 percent have not even started as of end-2012.

ARRA money was a major factor in the CNMI's economic growth in 2010 alone, based on U.S. Bureau of Economic Analysis data on gross domestic product that showed a 2.3-percent increase. It was in 2010 when ARRA really hit the ground, Sablan said.

The Obama administration's ARRA program was meant to jumpstart the economy, and create and save jobs. But the Inos administration is hoping that the negative impact of the end of ARRA money flowing to the CNMI and sequestration will be cushioned by spending cuts and full tourism recovery along with new investments on the islands.