‘Resolution contains factual misrepresentations, false and misleading statements, harmful to retirees’
The NMI Settlement Fund under the leadership of its Trustee, Joyce C. H. Tang, currently has a balance of $135.35 million, which is enough to cover more than two years of pension payments, according to Fund administrator Lillian Pangelinan.
“This amount is more than what the Settlement Fund started with…in 2013,” said Pangelinan in highlighting Tang’s contributions to the Settlement Fund members or retirees.
In September 2013, the Settlement Fund’s ending balance was $128.4 million.
Pangelinan discussed Tang’s contributions in her letter to Rep. Joseph Lee Pan Guerrero (R-Saipan), who introduced last Tuesday a House resolution that opposes the pay raise of Guam-based Tang from $250 per hour to $350 an hour; it also calls for Tang to be replaced with a lawyer who lives in the CNMI.
In her letter last Thursday, Pangelinan said that Guerrero’s resolution contains factual misrepresentations and statements that are false and misleading.
The House did not act on Guerrero’s resolution.
Pangelinan said Tang has been persistently pushing the NMI government to prioritize payments to the Fund and has been working with CNMI leaders to secure a funding source and timely payments to the Fund to avoid drawing on the Fund’s investments to be able to pay retirees.
As a result, Pangelinan said, fiscal year 2020 marked the first time that the Fund did not have to draw on its investments to make benefit payments.
In fiscal year 2014, the Fund’s drawdown on its investment to make benefit payments amounted to $36 million.
In his resolution, Guerrero urged, among other things, the Settlement Fund to submit actuary and investment reports to the Legislature. Pangelinan pointed out that all the Fund reports that the lawmaker is seeking, including the actuary and investment reports, and independent audit reports and financial statements are all available on the Fund’s website, which is updated regularly.
During Tuesday’s House session, Commonwealth Casino Commission commissioner Mariano Taitano expressed support for the resolution and urged replacing Tang with a Saipan-based lawyer.
Guerrero’s resolution states that, given the COVID-19 pandemic, it is not in the best interest of the CNMI to be giving increases to any official who is being paid using taxpayer dollars. Also, with Tang living in Guam, the lawmaker said this adds costs to the Settlement Fund to pay for her travel, room, board, and transportation. He said that, as a cost-saving measure, it would be appropriate to appoint a legal counsel who resides in the CNMI.
Pangelinan pointed out that Tang’s pay rate was increased in December 2019, several months even before the COVID-19 pandemic, and was approved by U.S. District Court designated judge Frances Tydingco-Gatewood. She said Tang did not request a rate increase during the pandemic.
Pangelinan said Tang has never represented that the increased hourly rate was justified solely on “the positive growth of the stock,” nor has she ever taken “full credit” for the growth of stock. The administrator said the success of the Fund is due to many factors. Pangelinan said Tang and the Fund team have demonstrated singleminded determination in protecting the Fund by fighting to ensure that payments owed the Fund are made and by protecting money in the Fund from being diverted for other purposes. She said these combined efforts have ensured that retirees have been paid at least 75% of their benefits as required under the Betty Johnson class action’s settlement agreement, and are important in expanding the life of the Fund.
Pangelinan said Tang is not a CNMI government official and that, as the court-appointed trustee, she reports exclusively to the District Court.
She said Tang’s actions are overseen by Tydingco-Gatewood and that all payments made to her law firm are scrutinized by the judge.
Pangelinan said because payments owed to Tang’s law firm are paid from funds belonging to the Fund, any payment made for her services do not impact the CNMI’s budget.
She said the payments owed to Tang’s law firm do not increase the CNMI government’s payment obligations under the Johnson settlement agreement.
The administrator said that, as of this date, Tang’s travel costs have been limited to airfare between Saipan and Guam. She said Tang’s firm does not charge for food expenses incurred on Saipan, and that all of the trips in the past few years have been day trips and no hotel charges were incurred.
Pangelinan said all costs incurred by Tang’s firm are reasonable and the reimbursement of such costs are subject to the court’s review and approval.
On Guerrero’s suggestion to appoint a lawyer who resides within the CNMI, Pangelinan said the minimal extra costs of Tang being in Guam are more than offset by the benefit the Fund and retirees receive from her leadership and single-minded devotion to the protection of the Fund and the wellbeing of retirees. She said whatever extra costs there may be because she is in Guam are negligible.
Pangelinan said the reason the judge selected a Trustee from Guam is that the candidates from the CNMI all had conflicts of interest.
Pangelinan said Tang administers the Fund under the exclusive jurisdiction of the District Court and that the Legislature does not have the power to replace or appoint a Trustee.
She said payments owed to Tang’s law firm have no bearing on benefit payments made to the retirees.
As required under the settlement agreement, she said, each member is receiving at least 75% of what they are entitled to receive.
As of this date, Pangelinan said, the class members are receiving 100% of their full benefits (75% owed under the settlement agreement, plus 25% optional payment by the CNMI government). The Fund is obligated to pay 75% of the benefit payments. The CNMI government has the discretion (not obligation) to cover the remaining 25% balance.
Pangelinan noted that Guerrero suggested that it would be appropriate to increase the Fund’s obligation to 80% payment of the retirees’ pension while decreasing the CNMI government’s obligation to 20%. Pangelinan said this suggestion is reckless and dangerous and harmful to the retirees. When Tang was appointed as Trustee on Sept. 25, 2013, the experts expected the Fund to run out of money by 2019, Pangelinan said. In other words, she said, the experts predicted there would be no money to pay retirees unless the government came up with a way to pay retirees out of each year’s current budget—”an obvious impossibility.”
Pangelinan said that, through the hard work of the entire Fund team, and with the support of Gov. Ralph DLG Torres, Lt. Gov. Arnold I. Palacios, and Legislature, the Fund has not gone broke and is, in fact, in a stronger position today than when Tang was first appointed.
Pangelinan said part of the reason for this is that Tang, along with the Fund team, has been ferocious in fighting off efforts by some in the government to dip into the Fund or to place added burdens on the Fund.
Pangelinan said Guerrero’s suggestion that it “would be highly appropriate to increase the Fund’s obligation to 80%” without first considering the actuarial impact the increase would have on the Fund’s investment horizon is “exactly the type of reckless action” that got the Fund into such trouble in the first place.
“Obviously, increasing the Settlement Fund’s obligation from 75% to 80% will deplete the Settlement Fund’s investment balance at a much quicker rate,” Pangelinan said. This will not only create stability but it will not benefit the retirees for years to come. “What it will do is lead to the Settlement Fund running out of money more quickly, with the very real risk that the day will come when the government cannot pay the retirees what they are owed,” she said.