In response to former Northern Mariana Islands Retirement Fund administer Karl T. Reyes’ public statement regarding the “good financial standing” of the fund during the term of former governor Juan N. Babauta, CNMI Republican Party president James Ada issued a statement intended to provide the public with what he calls “the facts of that troubling time for the CNMI government retirees.”
In the statement, Ada stated, “As a citizen whose family members have been affected by the mismanagement of funds during the Babauta administration and as an avid supporter of the progress made for our retirees under the Torres administration, I found the statements of Mr. Reyes misleading and without substance.”
“Simply, to correct the record, I would like to provide the public with Mr. Reyes’ own statements he made in the opening pages of the Northern Mariana Islands Retirement Fund 2004 annual report,” said Ada.
In the 2004 report mentioned by Ada and which was addressed to Babauta, Reyes stated:
“The Fund continues to feel the pressure of tight cash flow because the CNMI government is not remitting the employer contribution to the Fund. However, the increase of $8.12 million ($6.24 employer contribution plus $1.88 million of allotment not remitted) of CNMI Obligations to the Fund reduces ‘cash flow.’ To date the Fund had drawn $3.02 million from the principal investments to supplement payment of pension cost.”
The report went on to state, “The allowance provision for uncollectible was increased by over $48.71 million due to highly likelihood of not collecting the CNMI receivable. Because of non-payment of the mounting CNMI government debt to the Fund, negative fiscal management is affecting the Fund operation. Because of two main factors: 1) CNMI Government Obligations due to the Fund that could not be invested by the Board of Trustees and 2) Increased CNMI government debts by $26.86 million decreases ‘cash flow’ available to finance the Fund current operation.”
Ada states that the attempt to rewrite history does a disservice to the sacrifices the CNMI’s retirees were forced to make following the fiscal mismanagement of the CNMI government at that time.
“To say that the Retirement Fund was well managed when there were repeated and documented occurrences of the Babauta administration’s unwillingness to secure the fund’s sustainability is outright false.” Ada said. “Over the course of his term, Babauta amassed more than $40 million unfunded pension liabilities and made the collapse of the fund in later years inevitable.”
This has longer effects, according to Ada. “It was this Republican government that had to take action to correct the mismanagement of that time. Creating new revenue sources to secure full pensions and entering into a Settlement Agreement with the Court were required to fix the mistakes of Babauta’s time in office.”
According to Ada, the CNMI was fortunate to have the leadership of late governor Eloy S. Inos, Ralph DLG Torres, and the Republican Party. “In a short timeframe, the CNMI Republican Party has made the right choices and decisions and has decreased the obligations to the Settlement Fund by $108 million.” Ada said. “This is progress from where we were, and no amount of misleading statements and misdirection by those formerly in the Babauta camp can change the facts.” (PR)