Fed record regarding Compact Impact Funds for CNMI

Negotiations for a Compact with the United States began in 1969 with the Trust Territories of the Pacific Islands) that were comprised of the districts of Kosrae, Pohnpei, Chuuk, Yap, as well as the Marshall Islands, the Northern Mariana Islands, and Palau. In 1985, the Compact of Free Association Act was passed into law by the U.S. Congress and amended in 2003.

The Compact of Free Association allows citizens of Palau, Marshall Islands, and Federated States of Micronesia to migrate to Guam, CNMI, and Hawaii. Since the creation of the Compact of Free Association Act in 1985, the migration has steadily increased due to the increasing populations of the abovementioned districts.

According to media accounts back in 1999, the Department of the Interior’s Office of Insular Affairs made a commitment regarding an estimated $28 million in Compact Impact Funds owed to the CNMI. In that same year, the OIA announced that they in fact owed the CNMI CIF to the tune of $80 million. Two years later in 2001, the media brought out in a story that from 1986 until 1998, the feds owed the CNMI between $80 million and $108 million of CIF.

According to Department of Commerce figures, the amount of CIF reimbursed to the CNMI from 1992 through 1995 and 2000 came to a grand total of $3.8 million. This total reflects about 5 percent of the abovementioned $80 million to $108 million range of debt.

During 2001, the CNMI Commerce Department told the media that the CNMI had incurred between $43.7 million and $71.7 million in total expenses for services provided to Freely Associated States citizens since 1986 and informed the federal government accordingly. Since that time, the expenses regarding FAS citizens has continually accumulated and expected to increase over the next two decades.

The CNMI Department of Commerce announced to the media in 2001 that the CNMI received approximately $1 million in CIF. If we add this to the $3.8 million received from 1992 through 1995, and 2000, we have a grand total of $4.8 million disbursed by the feds over a 10-year timeframe.

The Bush administration put forth a request for $4.58 million for the CNMI in October 2001. According to Department of Commerce figures, the CNMI received less than half of what Bush requested, i.e., about $2 million of CIF, since that request was placed.

In 2003, President Bush signed a bill providing approximately $30 million of CIF annually to the various FAS areas, e.g., Guam, CNMI, Hawaii. It was projected by Gov. Juan Babauta that the CNMI would receive between $6 million and $8 million based on figures reflecting FAS citizens.

At the onset of 2004, Gale Norton, Secretary of the Interior, and her assistant Cohen, allocated approximately $5.1 of CIF which represented the CNMI’s share of the $30 million bill signed by Bush a year earlier. An announcement by the Finance Secretary for the CNMI, Fermin Atalig, in January 2005 was made that “the CNMI has yet to receive the Compact Impact Funds approved by the OIA”.

During the summer of 2004, a media story stated that the CNMI is expected to get over $5 million in CIF every year for the next 20 years. Six months after this story ran, Gov. stated publicly that he would commit $20 million, i.e., $5.1 million per year, for the next four years starting in 2005 to the Public School System in the CNMI.

In light of the fact the disbursement track record for CIF by the Feds has been somewhat sporadic; and because of the recent announcement by the Bush administration of “cutbacks” which may have a negative fiscal impact in the CNMI, the public commitment by Babauta to the PSS for $20 million may not have been a wise and prudent decision. Committing the funds before they are deposited into the CNMI coffers would be akin to an individual “kiting a check” before they deposit their paycheck in the bank.

A media story in 2002 stated, “The Compact Impact was supposed to be a mechanism where the host territories are reimbursed of the money they spend to provide health care, education, and social services to the migrants”. Clearly, the mechanism has not lived up totally to its main purpose and function; and would be an effective one if “all” of the CIF reimbursements were processed timely and the lag time between when the territories incurred the expenses and the disbursement of funding was reduced significantly. Some would say that this is being “idealistic” given the way the federal government moves in terms of handling and taking care of issues and commitments.

Since the Compact Impact Act was enacted, the reimbursement track record of the Feds for CIF has clearly been sporadic and inconsistent at best. Notwithstanding this unfortunate reality, there are some who have proclaimed, “Don’t bite the hand that feeds you”. Or, you can look at it from a different perspective and say that the “hand” is the one that is doing the biting!

Dr. Jesus D. Camacho
Delano, California