NMC in fund mess •Hofschneider: Papers point to a ‘very alarming’ financial chaos

Finance officials may have to juggle the shrinking public funds to squeeze in additional $575,000 needed by the Northern Marianas College for some 500 students under a scholarship program which drew flak at the start of a House oversight hearing yesterday.

The chair of the House committee on Health, Education and Welfare which is conducting a series of hearings on NMC, asked the finance department to look into the $488,000 recently appropriated by the Saipan delegation in a bid to boost its financial aid program granted to on-island students.

The money will cover shortfall in the scholarship funds for this spring semester, including tuition and books, for 530 NMC students who have protested what they claim as government’s neglect and apparent special preference to off-island students.

According to HEW chair Rep. Heinz Hofschneider, this will provide immediate solution to the cash flow problem which has dogged the financially troubled state college for the last seven years.

But the lawmaker vowed to investigate into allegations of mismanagement of CNMI’s lone college which he described as “alarming” because of questionable financial records since 1992.

“I will apologize to (the NMC president), to the students, to the board of regents and to the public if there is no wrongdoing,” he said at the full-packed hearing that lasted for five hours.

“But I believe that we have to get into the bottom of this. Some of the documents we have in our possession are very alarming,” Hofschneider added.

The hearing, the first in a series of oversight investigation into the college’s financial management, operations and policies as well as the government scholarship program, drew an overspill of crowd, comprised mostly of NMC officials and students.

A dozen government officials also spoke during the hearing, including Mike Sablan, special advisor for finance and budget; Finance Secretary Lucy Nielsen, Public Auditor Leo L. LaMotte, NMC President Agnes M. McPhetres and Board Chairman Manuel Sablan, as well as officials from the CNMI Scholarship office.

Gov. Pedro P. Tenorio, who was seated at the House gallery, stayed for an hour, but did not speak at the town meeting.

The oversight came after more than 50 students marched to the Capitol Hill last week to seek audience with Tenorio and Hofschneider, denouncing alleged failure by the current administration to appropriate funds for the educational grants this spring semester.

In the hearing, government officials attempted to trace what they claimed as “misunderstanding” on the scholarship funds. NMC officials said they were made to believe that there were available money when they met several times last year with finance and the governor.

Tenorio earlier had said he funneled some $575,000 to the college for its scholarships and which was meant for the medical referral program last year. Close to $4 million was set aside by his administration last September for the various CNMI financial assistance programs provided to both on and off-island students.

According to the finance department, the initial appropriation had already been disbursed entirely during the fall semester, leaving no reserve for the next semester.

McPhetres, however, disclosed that they had been asking the Tenorio administration for additional funds to meet their needs. “I asked about funds for the spring semester, the answer was vague. I was under the impression that (the $575,000) was only for the fall,” she told the hearing.

Tenorio’s financial adviser Mike Sablan admitted that the administration had promised to find available funds, but “we can’t commit beyond that because of the financial situation.”

In his testimoy, he said the financial dilemma facing the institution is partly due to the current economic situation on the island, but largely to management and policies of the college.

The Northern Marianas is reeling from its worst crisis in years spawned by the prolonged recession in Asia, its main source of tourists and investors, which has drastically decreased government revenues.

Due to the tight cash flow, the government has cut spending level by 13.4 percent, slashing quarterly allotment of all departments and agencies, including NMC and the scholarships office.

Hilaria K. Santos, scholarship administrator, said the office has to reduce the amount of grants given to off-island students, denying charges that they were discriminating against NMC students.

In fact, she said, that while they have about $1.2 million left in their appropriation, there is no money in the bank to make them available to the college.

“I assure you there is no discrimination,” Santos said to appease the students. “Tell me how are we going to handle them without the money.”

A NMC student body representative Shirley Santos sat at the hearing and called for “fairness” in treating government scholars of NMC and off-island students whom she claimed eat up a huge chunk of the budget.

“How could you sacrifice on-island students?” she asked, describing the disparity as a cookie split in two unequal parts. “Tell me if that’s just, tell me that it’s not discrimination. We are in the back burner once again.”

Calling the statement a “judgment call,” Hofschneider argued that NMC receives government funds for its operations and salary of the teaching and administrative staff, noting that the legislature appropriated $7.8 million for FY 1999, on top of the scholarship grants.

He agreed, however, with NMC chairman Sablan that there is a need to draw up a comprehensive scholarship policy that will correct loopholes in the existing system.

Meanwhile, finance officials promised to give a definite answer by Monday whether they can still re-program some funds into the college when the oversight hearing resumes next week.