Just three months into the current fiscal year, public schools are already encountering financial shortages due to delayed allotments from the local government, according to finance director Derek Sasamoto.
As of Friday, the Public School System has already incurred a $2.2 million shortfall due to delayed remittances from the Finance Department. The last time Finance cut a check for PSS was on Dec. 25, 2013, amounting to $250,000, he said.
In his report to the Board of Education on Friday, Sasamoto said that PSS was promised a weekly allotment of $616,136 from Finance. He disclosed that, as of Dec. 16, total allotment received was at $5.15 million. On Christmas Day, another disbursement of $250,000 was made.
“We’re still incomplete in November allotments and to date, the shortfall is a little over $2.2 million,” Sasamoto said.
He assured, though, that he is in constant communication with Finance Secretary Larrisa Larson and that she had promised to catch up by this month.
Saipan Tribune learned that other government agencies receiving funds from the general fund are also experiencing delays in their weekly allotments. Many are behind by five weeks.
When asked by board member Marylou Ada how PSS has managed its finances considering it is incurring a significant shortfall this early, Sasamoto said PSS has no choice but to age its receivables and cut its daily expenses.
“We’re managing our cash flow. We’re aging invoices as much as up to 30 days (allowed) and we’re prioritizing our expenses,” Sasamoto said.
Besides these measures, he said they are using some reimbursements that should have gone back to its general fund in the past but was never done. He said these reimbursements helped in the cash flow situation of the system and a portion was used to pay previous liabilities. The amounts of these reimbursements were not disclosed.
Sasamoto said the delayed allotments are also affecting school operations. “Even schools, unfortunately, are holding back on all expenses they would like.”
PSS has been allocated $33.039 million for fiscal year 2014, from Oct. 1, 2013, to Sept. 30, 2014. Included in this amount is $177,140 in Compact Impact funding and $500,000 in contract worker’s fees. The PSS budget is broken down as follows: $28.5 million for personnel; $2.3 million for all others; and $2.2 million for utilities.
Pursuant to the law, 1 percent of the PSS budget must be remitted to the Office of Public Auditor. This results in a reduction of $323,627 in the PSS budget.
Sasamoto said that because of OPA’s 1-percent cut, PSS has to reduce its budget for personnel from $28.5 million to $28.216 million.
As of Dec. 16, 2013, only $26.8 million remains in the PSS budget. For personnel, total expended as of December is $4.6 million, leaving a balance of $23.5 million. Of $2.2 million budget for all others, total expenditure incurred is $759,610, leaving a balance of $1.4 million.
For utilities, PSS was budgeted $2.3 million; $428,000 has already been spent for November and December billings. This leaves a balance of $1.8 million for the rest of the fiscal year.
Sasamoto said the November and December billings reflect the new rate for PSS water and wastewater.