NMI, DOI ink long-term funding accord

The Department of the Interior and the CNMI signed an agreement yesterday to provide long-term financial assistance to the Northern Marianas, starting off with $12.4 million for fiscal year 2005 that would fund several Capital Improvement Projects.

Deputy Assistant Secretary of the Interior David B. Cohen and Lt. Gov. Diego T. Benavente signed the agreement during a ceremony held at the Governor’s Conference Room.

As part of the new agreement, the Northern Mariana Islands would be subjected to an accountability clause under the Section 702 Funding Agreement based on a competitive criteria to ensure full compliance. This means that the CNMI will be vying with other territories for the funding provided under this assistance.

The agreement, which was initialed in February this year, hopes to provide up to $13 million per year for the next six years for capital improvement projects and would continue financial assistance indefinitely or until the U.S. Congress chooses to discontinue it.

Present to witness the initialing of the agreement were Gov. Juan N. Babauta, CNMI Representative to the United States Pedro A. Tenorio, Senate President Joaquin Adriano, and House Speaker Benigno R. Fitial, among others.

Cohen said the agreement is a win-win accord both for the U.S. government and the Northern Mariana Islands particularly that baseline allocation of $11 million. CNMI has a chance to get a maximum CIP funding of up to $13 million every year, depending on its performance.

Under its Modification of Competitive Criteria and Threshold Requirements, the Office of Insular Affairs may make reasonable amendments, modifications, and supplements to the competitive criteria from time to time in order to improve the process for allocating and administering funds provided to the eligible territories.

The agreement also calls for better assurance that funds provided by the U.S. government will be spent in a responsible manner and to focus on priority projects included in the submitted CIP plans.

“This is actually a good deal for the CNMI since baseline funding level is not less than the pre-approved agreement,” said Cohen, noting that all territories—Guam, American Samoa, the U.S. Virgin Islands, and Puerto Rico—would need to compete for the CIP funding by ensuring that it meets all provided requirements under the agreement.

Cohen explained that the accountability clause would give all territories responsibility to expend the money rightly or be penalized for not meeting all needed requirements. Non-performing territories might lose their allocation, which could possibly be added to funding allocation of performing territories.

The agreement stipulated that funds allocated to each eligible territory for any fiscal year will be obligated to such eligible territory through OIA’s execution of grant. To be eligible to receive the grant, a territory must satisfy all of the threshold requirements; in the event that an eligible territory is unable to meet the requirements, OIA can reprogram for other purposes the amount allocated to such territory for the applicable fiscal year.

The financial and administrative requirements include timely and comprehensive responses regarding audits, prompt and effective efforts to resolve or correct internal control deficiencies, effective contract administration, and exercising prudent financial management.

The project criteria on the other hand provides that the project helps achieve economic goals and objectives set by the OIA’s strategic plan, describes anticipated measurable outcomes, provides major milestones, detailed cost estimates, and serves significant proportion of the population.

The agreement urged territories also to satisfy all the requirements to demonstrate its willingness and capability to correct the deficiency prior to the grant award and present for approval a financially viable plan with clean benchmarks and bring it into compliance by a specific deadline.

Benavente said that, under the agreement, the CNMI would be allocated a baseline target of $11 million per year for at least the next six years, but could receive as much as $13 million or as little as $9 million in any year, depending on the CNMI’s performance with respect to fiscal management and specific project proposals compared with those of other insular areas.

The Bush administration batted for $12.423 million in capital improvement funds for the CNMI for fiscal year starting in Sept. 2004.

Cohen said the U.S. government wanted to allocate capital improvement funds among the CNMI, Guam, American Samoa and the U.S. Virgin Islands on a competitive basis. The CNMI wanted a stable source of funding so that it could plan its economic development. With this compromise, a significant amount of funding is up for competition. However, the CNMI will have a substantial amount of minimum funding so long as the U.S. Congress doesn’t terminate the capital improvement program for the territories.