Subsidy to FAS citizens costs NMI $12-M in ’99

The United States owes the CNMI government about $120 million in total funds for the reimbursement of the Compacts of Free Association’s fiscal impacts to Commonwealth coffers from 1986 to 1999.

The commerce department, which was tasked to look into the financial impact of hosting residents of the Freely Associated States in the Northern Marianas, revealed the Compacts cost the CNMI government $12 million in Fiscal Year 1999 alone.

A summary of the Compacts’ estimated financial impacts indicated that the Commonwealth government coughs up an average of $15 million every year to subsidize various social services delivered to citizens of the three countries signatory to the agreement with the U.S.

Between 1986 and 1998, the CNMI Department of Commerce placed the estimated financial impact of the agreement between the U.S. and the Freely Associated States to be between $80 million and $108 million.

A fiscal impact study conducted by the Department of Commerce disclosed migration of residents of Palau, Marshall Islands and the Federated States of Micronesia to the CNMI restrained Commonwealth coffers by another $12 million in FY 1999.

Government estimates indicated there are more than 3,000 FSM, Marshalls and Palau citizens residing in the Northern Marianas, who represent about four percent of the CNMI’s overall population count of 69,000 in 1999.

Costs associated with providing public services to the citizens of the Freely Associated States represented about 15 percent of the total Commonwealth’s budget in FY 1999.

Major services impacted by the Compacts include the public health department, which spent 19 percent or some $7.5 million of its budget for services extended to FAS citizens; the Public School System which hosts 712 FAS students costing the government about $2.8 million.

The youth services division spent $196,000, or over a quarter of its overall FY 1999 budget, to FAS participants whose total number rose 19 percent in the last financial year, while the Department of Public Safety reported a decrease in the amount of expenditures associated with the hosting of FAS citizens in the Northern Marianas at $1.5 million.

The agreement with the Federates States of Micronesia and the Republic of Marshall Islands started in 1986, while that with the Republic of Palau was implemented in 1994.

In the period covering 1986 to 1995, the commerce department said the CNMI government has incurred between $43.7 million and $71.7 million in total expenses for services provided to FAS citizens.

In 1986, a Hay Group study said migration of FAS citizens to the Northern Marianas caused at least $7.5 million to the local coffers. The CNMI Department of Commerce placed the estimate in 1997 and 1998 at $13.7 million and $15.1 million respectively.

Reimbursement

Of the estimated $80 million-$108 million Compact Impact between 1986 and 1998, the federal government has reimbursed the CNMI government with measly $3.8 million in the form of grants released in 1992, 1993, 1994, 1995 and 2000.

In 1992, the CNMI government received $394,960 in total grants from the Department of the Interior; another $396,600 in 1993; $400,000 in 1994 and $1.6 million in 1995.

Insular Affairs Director Danny Aranza, during a meeting with CNMI government officials and business leaders last week, turned over $1 million in Compact-Impact reimbursement to the Commonwealth.

The U.S. government has been consistently allocating funds for the reimbursement to Guam of the impacts of the Compact of Free Association and nothing for the CNMI since 1996, until Mr. Aranza’s visit Thursday last week.

The CNMI had been billing the United States government for the Compact-Impact reimbursements since the 1980’s but nothing has been finalized so far, and that the figure has already grown bigger.

This, even as the US Congress openly recognized that the federal government should reimburse the money spent by the CNMI in accommodating migrants from the Federated States of Micronesia, Marshall Islands and the Republic of Palau.

Under the Compact of the Free Association, residents from Pohnpei, Yap, Chuuk, Palau and Marshall Islands can migrate to US island-territories like Guam and the CNMI, as well as to the State of Hawaii without restrictions.

The agreement guarantees the provision of education, medical and other state benefits to the migrating Micronesians which will be shouldered by the local governments and will, in turn, reimbursed by the United States through Congressional appropriations.