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New rate strains agencies’ budgets
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Posted on Jun 14 2005
At least one autonomous agency has already refused to comply with the increase in employer contribution rate to the NMI Retirement Fund, while two others maintained they had no choice but to obey the Fund’s new policy.
In a letter to Reyes, Marianas Visitors Authority managing director Vicky I. Benavente said it would be impossible for MVA to meet the new rate because it was operating on a continuing budget resolution.
MVA relies only on the CNMI government-appropriated budget for funding, she noted.
Benavente also pointed out that the FY 2006 budget, which MVA had submitted to the Office of Management and Budget, reflected only a 24-percent contribution rate.
“Hence, we cannot fulfill the additional obligation until fiscal year 2007, when a new budget is submitted,” she said.
At the current 24-percent contribution rate, MVA pays only about $10,600 per period, or about $275,000 a year, to the Retirement Fund.
With the new rate, MVA will have to contribute over $425,000—or $150,000 more—per year.
Meanwhile, the Commonwealth Utilities Corp. has complied with the new contribution rate.
“It’s causing additional burden to us financially, but we have no choice but to comply with it,” said CUC comptroller Sohale Samari.
He noted that the new rate would increase CUC’s contributions by $107,000 a month, or about $1.2 million a year.
“There’s no way we can generate the revenues to cover this increase except by raising our rates again, which we don’t want to do,” Samari said.
For its part, the Commonwealth Ports Authority approved yesterday a supplemental budget of $229,000 to cover the increase in its contribution for the port employees’ retirement benefits.
The amount covers the nine pay periods in fiscal year 2005 that will be affected by the contribution rate increase.
With a payroll amounting $199,253, CPA currently contributes $47,821 per pay period to the Retirement Fund. This will increase to $73,271 with the implementation of the new Fund rate.
