Prior to more legislative hearings Friday where the topic of discussion will be reforms to save the financially challenged pension system, the V.I. Government Employee Retirement System Board of Trustees met Thursday on St. Thomas in their standard monthly session with not much different news to report when it came to the system’s beleaguered finances.
Disbursements continue to outpace collections and, as GERS Administrator Austin Nibbs testified to the Committee of the Whole earlier in the week, if nothing is done, the system will have sold off all its assets and be unable to meet retiree pension payments by 2022.
For the month of April, the net deficit stood at just shy of $6 million with total collections for GERS equaling $19.9 million and total disbursements numbering $25.8 million.
For the fiscal year, the deficit currently stands at $81.2 million with collections totaling $92.5 million and disbursements numbering $173.7 million.
The dismal financial truth led board member Edgar Ross to question what would have happened had an earlier plan been implemented that the board passed and later repealed.
That plan called for an increase in contributions from both the V.I. government employer and its employees that would have begun Jan 1.
The government would have had a 3 percent increase in its contributions with employees seeing a 1 percent notch upward.
According to Ross and his “rough calculations,” those increases that both employee and employer would have incurred would have meant an increase of collections by GERS of at least $3 million per month.
“Look at our deficit. If we had done the right thing and what the law permitted us to do – raise the contribution rate effective January – our deficit would not have been $5 million,” Ross said. “It would have been less and we would not have the senators ask us, ‘What did you do to stop this calamity from happening?’ We would have done our share that the law provides.”
Ross continued, “I mention this because the board may want to reconsider its repeal and see if we should not take action now to at least stop the bleeding at this point.”
No motions were made, and as such, there were no actions taken on Ross’ suggestion, although Board Chairman Vincent Liger encouraged Ross to make a motion at a future meeting.
When GERS’ investment officer Bruce Thomas gave his report, he was asked to clarify what some retirees do not seem to understand regarding the GERS portfolio and its investments’ performances versus the monies being withdrawn to meet financial obligations and payments to retirees.
The clarification came in response to a retiree remark made during Senate testimony earlier in the week that questioned why the GERS portfolio had more money last year than it does now.
“If I can recall for 2013, we’d withdrawn approximately $130 million from the system,” Thomas said. “Year-to-date through March we’ve withdrawn $26 million and fiscal-year-to-date approximately $100 million.”
Thomas explained those remarks. “We are seeing positive returns in the portfolio, but since we’re withdrawing from it (to meet financial obligations), the level of the assets in the portfolio continue to decline,” he said.
In other business, the board approved a Fiscal Year 2014 supplemental budget of $996,453, which was a reduction of $550,000 from the original requested amount.
Board member Carol Callwood was the lone member to vote against the additional budget.
She offered her justification following its approval. “A budget is for you to have so you don’t come ask for it (money) later,” Callwood said.
The legislative reform hearings for GERS continue Friday on St. Croix.
Following the session earlier in the week on St. Thomas, Senate President Shawn-Michael Malone said, “Hopefully we will have some type of legislation" following Friday’s session.
He added that legislation would then go through another set of hearings and be voted on later in the year.
With 2022 and a potentially broke system a mere eight years away, the clock continues to tick.
