Article published Dec 23, 2005

Retirees get COLA
$7M in allowances could be paid next week

By Steve Limtiaco
Pacific Daily News

More than $7 million in cost-of-living allowances will be paid to government of Guam retirees, possibly next week.
Lawmakers yesterday afternoon voted 12-2 to approve a bill that diverts $7.5 million from the sale of the Guam Telephone Authority to pay $1,100 allowances to about 7,000 retirees and survivors. The money is part of $11.9 million that had been set aside from the phone agency sale to pay part of the phone agency's debt to the Retirement Fund.
Gov. Felix Camacho signed the bill into law three hours after it was passed. "They can now use this money to meet their critical day-to-day needs," the governor said.

The governor's financial adviser, Andreas Jordanou, said the full $1,100 allowances should be paid to retirees next week. The money will be transferred to Guam by next Tuesday, Jordanou said, and it will take about five business days to process the COLA checks.

Checks normally are mailed, but the administration might allow the COLA checks to be picked up in person next week at a central location, said Department of Administration Director Lou Perez.

Senators during session on Wednesday were concerned that it might be illegal to use the phone money for cost-of-living allowances, since it originally was earmarked for the Retirement Fund.

But government attorneys yesterday assured lawmakers that there is nothing illegal about using the money instead for the allowances. It does not violate any part of the sales agreement for the phone agency, they said. Attorney Peter Perez, who represents the GTA Interim Transition Coordinating Committee, told lawmakers that TeleGuam, which bought the phone agency a year ago, would not have any legal reason to challenge how the money is spent.
Retirement Fund

Retirement Fund acting Director Paula Blas told lawmakers there is nothing illegal about diverting the money to pay the allowances, in part because there is no specific deadline for the phone money to be paid to retirement. But the Retirement Fund officially is opposed to the idea of diverting the money, Blas said. "As a matter or principle (the $11.9 million) is something we should fight for," she said.

Sen. Robert Klitzkie, R-Yigo, who voted against the bill, said delaying payment to the Retirement Fund for several months will cost the Retirement Fund at least $250,000 in potential investment earnings.
"I don't like to see money that's supposed to be used to pay the Retirement Fund used for something else," he said. Every penny is important to the struggling Retirement Fund, Klitzkie said, not to mention hundreds of thousands of dollars.
Sen. Judith Won Pat, D-Inarajan, also voted against the bill by failing to vote three times when her name was called during voting. She said she wanted to be excused from voting because she, like several other lawmakers, is a retiree and did not want there to be an appearance of a conflict of interest. All retirees and survivors will receive the $1,100 payment. Senators did not allow Won Pat to recuse herself, so Won Pat continued to pass when it was her turn to vote.
Sen. Benjamin Cruz, D-Piti, was absent from session.

The new law states that the Retirement Fund will be paid "immediately" after the government receives about $14.9 million in Rural Telephone Bank stock money next spring. The shares used to belong to the phone agency, but became GovGuam property when the agency was sold. The cash from the stock will be transferred sometime between March 10 and May 10, administration officials have said.

GovGuam retiree Roman L.G. Quinata, 76, said he considers himself lucky compared to earlier retirees because he retired after government employees got a significant increase in their salary. Retirement benefits are based on how much employees were earning when they retired. "Those (earlier retirees) are the people who are really hurting," he said.
Quinata, a former Talofofo village commissioner who retired from the Public Utility Agency of Guam, said he and his wife, Maria, who also is a GovGuam retiree, do not depend on their COLA checks. But it helps, he said.

Roman Quinata said his biggest expenses are health insurance, automobile insurance and homeowner's insurance. Budgeting is important, he said. "You have to sacrifice to protect yourself," he said.

His wife, Maria, knows a thing or two about budgeting. She was an accountant at several government agencies and the comptroller at the Department of Labor before retiring in 1995.

After the COLA was taken away several years ago, she said she reworked the household budget so they did not have to depend on that money. "We have to prioritize our needs," she said.

While they are able to pay their bills without the COLA, that might not be the case much longer, she said, considering rising costs. "Everything goes up, and our paycheck is standing still," she said. "We're not asking for (handouts). We're entitled to this. We've been working hard."

Retirees will get their allowance checks, but the government still has been unable to find money to pay the hospital's delinquent retirement payments. Hospital employees cannot retire because the hospital owes more than $16 million in retirement contributions.

It is very expensive to pay the delinquent contributions for even one employee, Gov. Camacho said, noting that it cost about $600,000 to pay the contributions for six hospital employees.

When asked when hospital employees will get relief, Camacho said the government just can't afford it right now. "The hospital definitely does not have the money to pay that debt down," he said.

Camacho said there need to be sweeping changes in the government's financial policy, saying the island is "giving the farm away," in tax rebates.

Efforts to borrow hundreds of millions of dollars on the bond market are being blocked by the attorney general, the governor said, and lawmakers need to take a closer a look at the annual leave policy for employees because it has become too expensive to cash those employees out when they leave.

Maria Quinata, who used to be the certifying officer for the labor department, said she is upset to hear that agencies have been taking retirement money out of employee checks but are failing to pay the Retirement Fund. If she were still working, she never would have signed off on it, she said.

"Why in the world was it not remitted to the Retirement Fund?" she asked. "That, I don't understand."



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