Government of the Federated States of Micronesia

Presidential Order to release CIP Funds to Chuuk Municipalities

Palikir, Pohnpei (FSM Information Services): January 20, 2010 - President Mori signed a Presidential Order on January 14, 2010, that has finally found a way to release over $2.4 million worth of Capital Improvement Project (CIP) funds to the municipalities of Chuuk State. The FSM National Government has holding these CIP funds on behalf of the various municipalities of Chuuk State as they could not be released due to a failed "Agreement" between Chuuk State and the FSM National Government. With this Presidential Order, these funds are now to be released within 30 days of the receipt of advice from each of the municipalities.

As background, under the provisions of the Compact of Free Association between the Government of the United States and the Government of the FSM, beginning in 1986, the Chuuk State Government (and all of the other FSM States as well) received a certain amount of money for Capital Improvement Projects. In Chuuk, CIP is a development fund recognized under article VII, section 6 of the Chuuk State Constitution that is subject to a distribution formula whereby the municipalities of Chuuk State receive at least 40% through appropriation by the Chuuk State Legislature. CIP funds provided under the initial Compact that have lapsed are awaiting redistribution to the Chuuk State Municipalities.

During the 13th FSM Congress in 2004, Congress passed Congressional Act 13, which became Public Law 13-51 and made which allowed for available Compact capital project funds that were allotted to the States, their municipalities, or the National Government that have lapsed or are de-appropriated pursuant to the laws of the respective governments, to revert to the current account of the respective government upon presentment of the relevant legislation to the Secretary of Finance.

In 2007, under President Urusemal, the FSM National Government attempted to release the CIP funds by entering into an agreement with the Chuuk State Government. That "Agreement" was called "An Agreement to Establish Procedures for the Administration and Disbursement of Compact I funds for the Municipalities in Chuuk State". It was signed in January of 2007 and required Chuuk State, upon consultation with the Chuuk State leadership, including the mayors, to submit an apportionment plan showing how the remaining Compact I funds will be apportioned among the municipalities that still have funds.

Eleven months after the signing of the "Agreement", Chuuk State signed a "Memorandum of Understanding Between Chuuk State Government and the Several Municipal Governments Re: CIP Fund Balance Distribution" (MOU). To date, this MOU has failed to accomplish its objective because it has not been signed by all the required signatories, and so the objective of the "Agreement" remains unfulfilled. Upon review of the "Agreement" by the Mori Administration, it was decided that both the "Agreement" and the MOU will not produce any results and has therefore has issued this Presidential Order to rescind and cancel the "Agreement" between the FSMNG and Chuuk State, and charges the FSM Department of Finance and Administration to calculate the amount of CIP funds for each municipality that still has funds and to release these funds directly into the bank accounts of the respective municipal governments within 30 days of receiving the specific account information.

In his Presidential Signing Statement, President Mori explains that the CIP funds for Chuuk have been at issue since the first half of this decade and covered several administrations. The President has been pushing for the Chuuk State municipalities, the rightful owners of these funds, to get their money distributed to help address the current economic hardships. He ends his statement by encouraging all of the municipalities in Chuuk to coordinate with the FSM National Government on this issue for it to be finally resolved.