Clark fires back after Retirement Fund salvo - KUAM.com-KUAM News: On Air. Online. On Demand.

Clark fires back after Retirement Fund salvo

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by Sabrina Salas Matanane

Guam - It's open mic night at the Guam Legislature as the community is invited to speak on any portions of the governor's $70 million spending cuts bill. Tuesday night, however, the provisions in the legislation related to the GovGuam Retirement Fund were on blast, taking aim the GGRF and its' consultants.

But firing back was the governor's senior policy advisor.

Armed with their consultants, representatives from the Retirement Fund testified in opposition to Bill 507 during Tuesday night's roundtable discussion. The legislation includes two provisions related to the GGRF; (1) an early retirement program, and (2) and extension of the amortization period to pay down the unfunded liability by ten years. The Calvo Administration maintains that combined the provisions would cut spending by more than $60 million.

"I think the perceived savings is fictitious," said Maggie Ralbovsky, the Fund's lead investment consultant from Wilshire Consultants. She said the bill would have significant and negative impacts, adding, "The perceived savings is not there. In reality it is actually going to significantly increase the contribution to the plan, the cost to GovGuam and the cost to taxpayers may reach a point of unbearable level."

Ralbovsky told senators the retirement provisions would actually increase long-term spending by an estimated $1.2 billion in fund contributions, and if implemented would send the GGRF down the same path of the Retirement Fund in the CNMI.

Ralbovsky said, "That started the same way as this 10 years ago when somebody decided that the contribution was too high they needed to reduce the contribution well when you reduced contributions there are consequences to the investment program that may cause you to enter a point of no return. And that's a slippery slope."

Retirement fund board chair Joe T. San Agustin said the legislation is like a dagger to the heart of the Retirement Fund, he suggested the governor implement furloughs and layoffs instead of having the fund bail out the government.  "Why is the Retirement Fund brought into the picture it seems to be the only game in town or something. Why can't they resort to 1-E reorganize, restructure cut down the staff realignment them go to RIF notices, go to RIF if you don't need all those people, and if you need more money you increase the tax base. Or go and borrow money use your bonds," he said.

Governor's senior policy advisor Arthur Clark appeared before senators to dispel what he called these doomsday scenarios. "We think those scenarios are actually aren't really germane to this issue and we actually don't think that they apply, quite frankly," he stated.

Starting with the NMI Retirement Fund, Clark argued that contributions weren't being made because money was being spent elsewhere, but because NMI's General Fund is broke, something that could happen on Guam if spending isn't cut.

He said, "We start risking the overall health of the government, which includes the Retirement Fund when we don't take into consideration of the General Fund. And we've had three successive years of deficits budget deficits in prior 15 to 20 years prior now we've grown accustomed to relying on the taxpayers to essentially loan money forcibly they didn't offer it to loan money to the Government of Guam to make up these shortfalls and yet not withstanding that we're still falling short. Especially now in light of the district court decision. I mean, that's just a practice that just has to end."

In terms of a reduction in force, Clark told senators that he thought that was something they were all trying to avoid. "Instead of forced layoffs the governor has come up with an option of voluntary separation. Instead of force layoffs let the people decide if they're ready to retire, stop full-time employment with the Government of Guam and let them decide whether they can take care of themselves. Otherwise if we force people out, and we start laying them off we put families in situations where we don't know there individual circumstances and whether they're able to accommodate the loss of income," he said.

By the end of the hearing, Retirement Fund board member Gerard Cruz said they're willing to work together. "We understand the issues that are happening in the overall government and we want to do what we can in order to try to help solve those problems. And I think that if we were able to run some numbers there are other ways to go about this and if we're able to find some compromises we may be able to find a happy medium somewhere. It's just that as presented this bill as we've tried to demonstrate creates a situation that puts us makes us very risky," he said.

Vice Speaker B.J. Cruz is giving an additional ten days for the Administration to work with the Retirement Fund to come up with alternatives and to report back to the Legislature.

Additionally, 1,800 GovGuam employees are eligible for the early retirement program, but realistically the Administration based on initial surveys estimate a little over 1,000 will elect to take advantage of the proposal.

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