Discussion has risen about putting up the Garapan Elementary School as collateral so that the Public School System could borrow $15 million from the Marianas Public Land Trust but all Board of Education members later thumbed down the idea.
BOE members were informed in an emergency meeting last Saturday that taking out a loan with MPLT in order to pay teachers and staff their three missed payrolls, vendors, and summer pay might require PSS to put up the school property as collateral.
According to PSS legal counsel Tiberius Mocanu, it was not officially stated as one of the requirements but it is a possibility, considering that PSS is looking into borrowing $15 million instead of the initial $5 million that was discussed in the last board meeting.
“The real property being put up as collateral, we haven’t heard that from any lender or being a requirement of any loan, but it was floated as something MPLT might require if we decide to pursue an MPLT loan and those are the best terms. If it’s not necessary, then it won’t happen, but if it’s a deal breaker for the Board of Education, then I could certainly exclude it,” he said.
Education Commissioner Dr. Alfred Ada said that PSS only wanted to borrow $5 million initially but, after a discussion last Friday with House Speaker Blas Jonathan Attao (R-Saipan) and other members of the Legislature, it was brought to the table that borrowing up to $15 million for PSS would provide them a safety net in case of emergency.
“Their rationale is to give us more than what we need, so that in the future, we don’t have to go back and look for more funding in an event that we need more. That gives us the flexibility to use the funds whenever we need it in an emergency situation,” he said.
However, all five board members disagreed with borrowing up to $15 million, solely because putting up Garapan Elementary School up for collateral would be “mortgaging PSS’ future.”
I really do not want Garapan [Elementary School] to be put on the chopping block or held as collateral. We’re mortgaging our future,” said BOE board member Marylou Ada.
BOE chair Janice Tenorio echoes Ada, stating that the reason behind the loan was a quick fix to pay employees so $15 million is not necessary since PSS is expected to receive over $12 million from the CARES Act.
“The loan is to really get a quick fix and pay our employees. If we can reduce it back to $5 million as the original and not have all these collateral or liability with the $15 million credit, then let’s go back down to $5 million. Just to get over the hoop of getting teachers and staff paid and get some of the vendors paid,” she said.
BOE vice chair Herman Atalig, and members Andrew Orsini, and Phillip Mendiola-Long agreed, stating that $15 million is too much and would put PSS in more debt when the goal is to get out of debt.
All board members agreed to remove Garapan Elementary School from the board resolution as collateral and to put up any federal funding they are expected to receive, like the CARES Act, as collateral instead, as well as PSS’ fiscal year 2020 budget.