American Samoa remains on \high risk\ status says OIA budget document
American Samoa’s economy experienced “distress” in 2012 and the territory is the smallest of the four U.S. territories in terms of Gross Domestic Product (GDP), according to the U.S. Department of Interior’s Office of Insular Areas in its fiscal year 2015 budget justification document submitted to the U.S. Congress.
The 138-page document covers all territories and freely associated states whose annual federal allocation is overseen by OIA.
According to the document a U.S. territory “experiencing economic distress in 2012 was American Samoa”, and the other territory was the U.S. Virgin Islands. The budget justification says the U.S. Bureau of Economic Analysis estimates showed that the value of American Samoa’s real GDP was 7.5% percent lower than in 2002.
For the year 2011, the increase in real GDP reflected growth in federal government spending largely related to continued reconstruction efforts following the 2009 earthquake and tsunami. “Since 2011, consumer spending has fallen as residents faced increases in prices, decreases in compensation, and a downturn in territorial government spending,” it says.
Despite the “various challenges American Samoa's small and less diversified economy faces, there is a potential bright spot on the horizon,” the report says and pointed out for example, Tri Marine International, a global fish supply firm, has begun investing in American Samoa with a plan to open a cannery in late 2014. (Tri Marine’s cannery plant is Samoa Tuna Processors Inc.)
“If everything goes according to plan, American Samoa will once again have two canneries in late 2014 when Tri Marine International opens its own cannery,” OIA explains. (The other cannery is StarKist Samoa).
“With two canneries at full capacity as it was from the 1950s to 2009 when one of the canneries closed, American Samoa will once again be a major supplier of canned tuna to the nation, especially to food programs such as the school lunch program that are supported by the federal government,” OIA explains.
OIA has allocated $22.75 million for American Samoa operations which includes $855,000 for High Court operations, $7.90 million for LBJ Medical Center operations; $1.35 million for American Samoa Community College operations and the rest for basic ASG operations, according to the document.
It also shows that American Samoa operations received the same allocation in the current fiscal year while it was $22.70 million in FY 2013.
OIA informed Congress that it provides grant funds to American Samoa for the operation of the local government, including the judiciary.
“ASG does not have sufficient local revenues to fund the entire operating costs of its government. The purpose of this program activity is to fund the difference between budget needs and local revenues,” it says, adding that DOI defines “budget needs” as the cost of maintaining current programs and services.
Unless mutually agreed upon by the ASG and DOI, new programs are funded from local revenues, it says.
It also says that a secondary objective of this program activity is to promote self sufficiency. “In this regard, the Department’s policy is to maintain the operations grant at a constant level, thus requiring American Samoa to absorb the costs of inflation or costs associated with the growing population,” OIA explained.
Over the years, American Samoa has assumed an increasing percentage of the total costs of government operations. The American Samoa Operations funding currently represents approximately 15 percent of ASG’s General Fund revenue and 12 percent of the LBJ Hospital’s revenue.
HIGH RISK STATUS REMAINS
OIA informed Congress that American Samoa remains on ‘high risk’ status. It explained that in an effort to improve accountability for federal funds, OIA designated American Samoa as a “high-risk” grantee as recommended by the U.S. General Accounting Office (GAO) and the DOI’s Office of Inspector General (OIG).
This designation allows OIA to require American Samoa grantees to comply with special conditions for future or existing grants. The special conditions may include: payment of grant funds on a reimbursable basis, withholding of approval to proceed from one project phase to another until receipt of acceptable evidence of current performance, additional project monitoring, and requiring the grantee to obtain technical or management assistance.
OIA says the “high-risk” designation will be removed once ASG is in compliance with the following conditions:
• the government shall have completed Single Audits by the statutory deadline for the two most recent consecutive years, resulting in opinions that are not disclaimed and do not contain qualifications that OIA determines in its reasonable discretion to be material;
• the ASG shall have a balanced budget, as confirmed by independent auditors, for the two most recent consecutive years, without regard for nonrecurring windfalls such as insurance settlements.
(Samoa News should point out that another federal entity that has placed American Samoa on ‘high risk’ is the U.S. Department of Education—which is a major federal grantor—and the U.S. Department of Agriculture for the school lunch program).