Government of the Federated States of Micronesia

Second State-National Leadership Conference Underway in Palikir

Palikir, Pohnpei (FSM Information Services): May 13, 2009 - Yesterday, May 12, 2009, the second State-National Leadership Conference began in Palikir, Pohnpei with principals from all 5 FSM Governments. In attendance were President Mori, Vice President Alik, Chief Justice Amariach, Speaker Figir and 11 other Members of the 16th Congress and all four state governors were present along with some of the legislative leaders from the four state governments. The FSM Secretary of Resources and Development, Hon. Peter Christian moderated the start of the conference which brought these leaders together for the second time to have open discussion and collaboration on some of the most important issues facing the Nation.

To begin things, Speaker Figir, President Mori and Chief Justice Amariach, along with the governors, gave opening remarks. All of the principals agreed that this meeting should result in progress for the states and the nation. The governors, in particular, spoke of the need for more ways to generate revenue at the state level and to address the additional agenda items they had brought to the meeting. Of note were the opening remarks from Governor Robert Weilbacher of Kosrae State when he announced that the Kosrae Legislature is working on legislation to pass a partial budget for FY 2010, for only 3 quarters, because of a lack of revenue to fund an entire year of operations.

President Mori nominated Speaker Figir to be Chairman for the conference and once he was elected and took the helm, the conference immediately got into the first topic on the agenda; Social Security Reform. The FSM Social Security Administrator, Mr. Alex Narruhn, gave a presentation which clearly showed that the FSM Social Security Fund has an unfunded liability of $292 million. He gave an overview of how the Fund got into this situation, citing past contribution levels from workers 40 years ago who are now receiving benefits that surpass their contributions, and the fact that the number of workers in the FSM contributing to the fund has gone down over the years while the number of beneficiaries has gone up. He also pointed out that the fund lost approximately $10 million when the stock market crashed. He also gave an overview of the new Social Security Law, Public Law 15-73, and how it would positively affect the funding of the FSM Social Security System. This was compared to actuarial tables that showed different predictions on how long the system could last under different levels of funding including a few that showed yearly cash infusions from Congress appropriations of $2 million.

The reaction of the governors was to show how unpopular the new law is with the people of the states. There were questions about the effectiveness of the FSM Social Security Administration (FSMSSA) investment policies and the level of funding that the FSMSSA expenses for operations each year that are approaching $1 million a year. All of these issues were addressed by Mr. Narruhn.

Pohnpei State Governor John Ehsa came with suggestions of alternate things that can be done to help save the Social Security System, including infusing a larger lump sum of cash into the system this year when the four states will be realizing an increase in tax revenues from the more than $40 million worth of infrastructure projects going on in the states. Pohnpei State has shown an increase in $500,000 already this year. Governor Ehsa claimed that because the stock market is just beginning to recover, it is a more opportune time to invest and FSM should be putting more money in now versus later. Other ideas were floated, like changing the type of system altogether, but when it came time to either act or move on to the next topic, no one was ready to move on unless something concrete was going to come out of this session, so Secretary Christian moved to give the state delegations time to write up their recommendations and to bring them to the start of the session on Wednesday, May 13, 2009 so that there can be an official list of items to help direct the FSMSSA in working towards alternative solutions and potentially amending the new law.

More information on this topic will come out of the next session.