Guam - It was late last month when the Government of Guam Retirement Fund testified in opposition to the Governor's Spending Cuts Bill during a public hearing. Bill 507 contained provisions impacting the Retirement namely proposing an early retirement program and an extension of the amortization period to pay down the unfunded liability by a decade reaping in a savings of over $60 million.
It was then that Committee on General Government Operations Chairman Vice Speaker BJ Cruz gave both organizations some time to come up with alternative solutions that both could agree on. In a letter to the Vice Speaker Monday, Retirement Fund Director Paula Blas writes that discussions between the Retirement Fund and members of the executive and legislative branches were productive in devising several proposals in which the Retirement Fund was willing to support. Its three alternatives are estimated to save GovGuam about $43 million.
The three alternatives include (1) implementing both a Voluntary Separation Incentive Program and a Hybrid Retirement Plan proposed under Bill 453 with a projected savings of $15 million, (2) furloughing one Friday every pay period for Government employees for a projected savings of $20 million; and (3) implementing a pension bond which would immediately infuse a sum of cash into retirement fund allowing the government to reduce its contribution rate. According to the Retirement Fund, the savings experienced by a reduced contribution rate would place the general fund in a better cash positions adding that while preliminary estimates indicate approximately $8 million in savings, more analysis regarding the debt ceiling and its limitation must be conducted.
Blas adds the Retirement Fund did further discuss with BBMR Director John Rios the administration's Early Retirement Incentive Program however concluded that none of the options were viable due to its impact to the Retirement Fund and along with realizing that none of the alternatives provide cash savings.
Vice Speaker Cruz meanwhile wants the Calvo Administration to weigh-in on each of the options presented. He adds while both representatives from the administration along with his office have been involved with the ongoing discussions with the Retirement Fund, he still plans to have a public hearing on the proposals which should be announced by the end of the week.