Point of contention between the Legislature and the Retirement Fund
Pago Pago, AMERICAN SAMOA — A resolution introduced in the House last week requests the Board of the American Samoa Government Employees' Retirement Fund (ASGERF) and its Executive Director to follow the provision of P.L 30-5; P.L 30-14 and P.L 30-29 — specifically the reversion of the limit on Fund assets that may be obligated and invested, from 17.5% to 10%.
The resolution is sponsored by Rep. Samuel Ioka Ale Meleisea, who is also the Chairman of the House Retirement Committee.
According to the measure, Gov. Togiola Tulafono signed into law (P.L 30-5) on Apr. 6, 2007, a bill that approved a loan of $20 million from the ASGERF to fund various infrastructure projects for the government.
Prior to the passage of P.L 30-5, the limit on Fund spending and investment was 10% of total Fund assets. In order for ASGERF to loan out the $20 million, the law, under 7.1444 A.S.C.A, was amended to increase the limit to 17.5%.
Included in P.L 30-5 was a sunset provision that would revert the spending limit back to 10% once the $20 million loan was paid in full.
The measure says that on Apr. 10, 2008, 7.1444 A.S.C.A was amended in P.L 30-14 to include additional projects to be funded under the $20 million loan; however, the sunset provision remained intact to revert the spending and investment limit back to 10% once the loan was paid in full.
On. Oct. 29, 2008, more amendments to the loan were made under P.L 30-29 to include other additional projects that would be paid from the $20 million loan, and the sunset provision was also included in P.L 30-29 requiring the reversion of the spending limit back to 10% upon full repayment of the loan.
Again on Dec. 19, 2008, then Gov. Togiola signed into law P.L 30-34, which authorized additional projects to be funded with the $20 million loan.
According to the measure, “The sunset provision reverting the spending limit for ASGERF back to 10% from 17.5% was left out of this law and has now become a point of contention between the Legislature and the Fund.”
On Sept. 4, 2018, Attorney General Talauega Eleasalo E. Ale sent an official memo to the Senate Retirement Committee wherein he explained that, in his opinion, the omission of the sunset provision in P.L 30-34 effectively removed it from the previous laws in which they were included.
According to the measure, the House Retirement Committee rejects this assertion for the following reasons:
“The only way to amend a law is to do so by way of a bill that is passed by the legislature and duly signed and approved by the governor.
“The omission of the reversion clause in P.L 30-34 does not effectively amend or repeal the requirement set out in P.L 30-5, 30-14 and 30-29 to return the spending limit to 10% upon full repayment of the $20 million loan.”
“Like ‘effective dates’ and ‘repealers’, a sunset provision is unofficial language that has the force of law but are not included in the publications of the American Samoa Code Annotated.”
For this reason, there is no mention of a sunset provision in 7.1444.
The sunset and reversion provisions set out in P.L 30-5; 30-14 and 30-29 is law and its omission in P.L 30-34 does not negate its enforceability, according to the measure.
“The $20 million loan from ASGERF has been satisfied and paid in full. The spending and investment limit has returned to 10%. ASGERF should take notice of the controls on spending and investment,” the measure says.
If current or future spending requires an increase in the limit, the Fund should request an amendment to current law.
The resolution was assigned to the House Retirement Committee, chaired by Meleisea. The House and Senate are currently on a four-week recess, so any discussion of the measure will have to wait until lawmakers return to work.
The issue with the sunset provision was brought to light when Gov. Lolo Matalasi Moliga proposed changes in the Retirement Fund’s cap on investment back in August 2018.
At the time, Gov. Lolo, in his letter to Fono leaders outlining proposed changes to the Retirement Fund, wrote that the local investment cap of 17.5% of Retirement Fund assets had been there since its inception; and that it was now time to change it in order for the Fund to take advantage of an opportunity to invest in a local ‘game-changing’ project — the Hawaiki Cable Project.
To facilitate the opportunity, Lolo said it was necessary to hike the investment cap in American Samoa, and proposed the increase from 17.5% to 35%. “This will accommodate the Fund’s current position along with the new Hawaiki investment,” he said.
During Fono discussions on the measure, it was noted that not only did the loans to ASTCA for the Hawaiki Cable from ASGERF already exceed the 17.5% cap, but that the sunset clause on the $20million loan made during the Togiola Admin reverted the cap to 10% of assets, not 17.5%.