High fives and cheerful smiles flashed across the room when the casino amendment was inked last Friday. Indeed, fellow retirees deserve to receive what’s owed them, including DB members who no longer could look forward to retirement upon completion of service.
I was prepared to scribble a panegyric piece for a suspect job riddled with shortsightedness. However, reality check says otherwise. Why the celebration that would turn into a requiem mass in three short months? I fact-checked the issue with the Fund to ensure it is stated in straightforward fashion. It isn’t injected with pejorative spin, misrepresentation of facts, or hyperbole. It’s fact-based from A-Z.
Briefly, the $30 million from the single license fee has already been earmarked: $25 million to repay the 25-percent cut for Saipan retirees, $4 million for Tinian and Rota retirees ($2 million apiece), and the balance of a million dollars to help DB members.
But this group needs some $8 million to pay off interest earned from their contributions. The license fee is depleted even before the get-go. The other sectors slated for funding out of the 5 percent gross revenue tax could sit idly by until three to five years from now when funds may be available. It includes utilities, medical referral and hospital operations. Who pays for these costs in the interim given the CNMI’s fiscal collapse?
The fiscal year 2015 begins this October—three months from now—where the requisite amount to pay retirees is $27 million per the settlement agreement. Herein lies another huge fiscal hurdle versus a not-so-encouraging revenue stream. The agreement spreads and mandates the NMI government to pay the following amount over 10 years: $27 million, fiscal year 2015; $30 million, fiscal year 2016; $33 million, fiscal year 2017; $45 million, fiscal year 2018; then the amount decreases.
Interestingly, would pension pay be 100 or 75 percent upon resumption of the settlement agreement that starts this October?
The program is saddled with $791 million in unfunded liability. This simply means that this is how much the Fund is obligated to pay until the last retiree expires. It’s a huge sum, though there’s no money up ahead to pay retirees when investments are also depleted. DB members have withdrawn their contributions, the group whose deductions cushions paychecks for current retirees. Salt to injury: retirees and a lot of employees have opted out of their health premiums, forcing the spread of this cost solely to retirees. Health premiums would be far more expensive! No fun playground up that alley.
Simple arithmetic reveals a tale that nullifies optimism. We can’t scamper away from it nor are we ready to be hopelessly enchanted by disoriented politicians who failed simple arithmetic time and again. A` Saina ta`lu na diskuidu!
Monkey on backs of governments
We’re used to our grand mañana, playing Santa Claus even in July. Defraying the cost of the Fund is a bit too technical for average folks to understand. That it has gone belly up turns into a colossus political vultures refuse to revisit with the view to resolving persistent insolvency. It’s all Band-Aid!
Though not necessarily visible in plain sight, health and pension are two costly programs that have driven city and state governments into bankruptcy. National papers are replete with banner stories how city governments throughout California are now bankrupt, including Detroit that owes some $18 billion.
Meeting the requirements—money to pay retirees—is itself one humongous challenge. The anticipated cushion players (DB and DC) members have opted out. Obviously, retirees can’t contribute into the Fund given that they’ve retired.
Sadly, the hangover of the boom years refuses to leave the magnificently adolescent attitude of politicians who still wish to sing White Christmas in July. Thus, the challenge remains: 1). Where do we find $27 million to pay retirees beginning this October? 2). What’s in the future of 3,800 families?
The impending return of the 25 percent sadly reminds me of my first and last Christmas present from my late saintly mom. It was Christmas Eve when she was wrapping tiny gifts for the boys. Mine was a sports tube socks with red and black stripes. It was a gift so embedded in mind that comes nostalgically around every Christmas since then. It was my first and last gift since dad expired.
The issue doesn’t involve political stripes. No, sir! We all must pitch in and hopefully through deliberate discussions we could find a lasting answer both for current retirees and DB members who ought to have something to hang their hats on upon completion of services. Otherwise, start singing Swing Low, Sweet Chariot, we’ll massage your spirit in our prayers! But this doesn’t fiscally refill empty family pocketbooks ahead, does it?
Disengagement and disconnection have given prominence to the obvious lack of leadership and vision to begin resolving the mounting fiscal collapse at home. The NMI could have worked on a comprehensive plan with goals and objectives to begin realistic plans on economic recovery. Quick fixes like casino isn’t a recovery but a shocking “discovery” that the Fund is still broke! It needs $27 million by this October to meet retirees’ pension pay.
The DB and DC members have severed relations with the Fund. It’s the group, per design of the program that pays contributions, which are used to pay current retirees. It’s basically the Ponzi scheme that is as good as dead fish in the water. No more healthy contributions. By 2018 when the Fund’s investments are depleted we’d do an historic wake and funeral for the program!