Jan. 2, 2005Officials of the territorys government retirement system submitted two recommendations designed to tackle the almost $1 billion debt owed to the system by the V.I. government.
According to a letter recently sent from Sen. Lorraine Berry to Carver Farrow, Government Employees Retirement System board chairman, the recommendations will be heard at a Committee of the Whole meeting scheduled for 10 a.m. Jan. 11 at the Earle B. Ottley Legislative Hall on St. Thomas.
A provision in the Omnibus Authorization Act, signed into law by Gov. Charles W. Turnbull in September, mandated that GERS submit recommendations to the Legislature.
The provision was included after senators realized there were no appropriations providing funding for the debt in the GERS Reform Bill a voluminous piece of legislation that sparked debate in the Senate for months.
A letter Carver sent recently to Berry outlines that GERS primary strategy is to ask senators approval for the issuance of $600 million in pension obligation bonds and a $49.9 million increase in the government's annual contributions to the system. At a Senate meeting held in November, Farrow testified this solution would bring the unfunded liability down to $431.8 million and keep GERS from collapsing within the next 20 years.
The GERS board's other recommendation is: a $550 million bond issue, an extra $43.9 million in annual government contributions and an allocation to GERS of $25 – $50 million annually from HOVENSA's tax payments to the government over a 20-year time period. Carver wrote in his letter to Berry that this solution would bring the unfunded liability down to $300 million.
In September, after hearing testimony given at committee meetings by Willis C. Todmann, GERS' acting administrator, senators also voted to include provisions in the Omnibus Act, which appropriates $6.3 million and sets aside 15 percent of all excess government revenues toward the unfunded liability (see Senators Move to Reform GERS and Regulate Their Own Allotments).
"We [GERS] pay out about $130 million in benefits every year without being able to do so," Todmann said at a Senate meeting in September. "We've had to continually liquidate our assets in order to keep up with the benefits we supply to over 6,500 retirees and their dependents."
At the meeting, Todmann added that if the system collapses, there would be a negative impact for the community as well as GERS members.
"If conditions don't improve, the repercussions in the community would be devastating, and much of the good life, as we now know it, would vanish immediately," he said.
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