The House’s latest coronavirus stimulus and relief bill, the Health and Economic Recovery Omnibus Emergency Solutions Act, or HEROES Act, would allocate $2.15 billion to the commonwealth of the Northern Mariana Islands, a U.S. territory with about 54,000 residents and 19 reported COVID-19 cases as of May 13. This funding would amount to nearly $40,000 per individual in the commonwealth. You can see how much each state would receive here.
The Northern Mariana Islands have long struggled with unfunded pension obligations and its public retirees are collectively owed billions from the pension plan’s collapse in 2013. In 2012, the Northern Mariana Islands Retirement Fund (NMIRF) filed a Chapter 11 bankruptcy petition after years of insufficient employer contributions. Although the bankruptcy court judge expressed sympathy for fund trustees, he nonetheless ruled that NMIRF was not eligible to use Chapter 11 because it was a governmental entity. Chapter 11 is reserved for private entities.
Plan participants and the commonwealth entered into a settlement agreement in 2013 that required government payments to a settlement fund sufficient to cover 75 percent of retiree’s promised benefits. The actuarially mandated employer payment of $43 million this year is expected to gradually decline to $3.5 million by 2057.
The Senate and President Trump say they oppose the HEROES Act so the funding may never materialize. But it is worth noting that if the commonwealth chose to allocate all of the potential funding granted in the HEROES Act to its public pension system it would be enough to cover all annual payments going forward with some money left over to restore a portion of the benefits lost in 2013. However, due to the fact that the Northern Mariana Islands government’s overall financial position was deeply in the red in its last financial audit, it is not certain that the government would choose to shore up the pension plan and restore promised benefits to retirees.
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