ASGERF Board members

by Asi Andrew Fa'asau
andrew@samoanews.com
The Senate has decided to postpone further consideration of legislation that would convert the American Samoa Government's more than $30 million debt to the American Samoa Government Employees Retirement Fund (ASGERF) into a formal loan arrangement, amid concerns over how the loan would ultimately be repaid.

The measure, introduced by Senate President Tuaolo Manaia Fruean, who also happens to be president of the ASGERF board, seeks to address the government's longstanding obligation to the Retirement Fund by authorizing a loan of up to $31 million from ASGERF to the American Samoa Government (ASG). Under the proposal, the American Samoa Telecommunications Authority (ASTCA) would be responsible for providing financial assistance toward repaying the loan.

Before any loan agreement can be finalized, the bill requires the ASG Treasurer and the Executive Director of the Retirement Fund to verify the exact amount owed by the government.

During a hearing on the measure yesterday morning, ASGERF Executive Director Vaitautolu Talia Faafetai I'aulualo voiced strong support for the proposal, describing it as a significant step toward resolving a debt that has weighed on the Retirement Fund for years.

I'aulualo thanked lawmakers for pursuing a solution and said he hopes the legislation will ultimately become law.

ASGERF attorney Mitzie Jessop-Ta'ase told senators that the proposal was patterned after previous legislation that authorized a $20 million Retirement Fund loan for territorial infrastructure projects. That loan, she noted, was also repaid with assistance from ASTCA.

While senators generally agreed that the government's debt to the Retirement Fund needs to be addressed, several lawmakers questioned whether the bill provides sufficient safeguards to ensure repayment.

Leading the discussion was Senator Togiola T.A. Tulafono, who expressed concern over a provision authorizing the government to pledge the full faith and credit of ASG for repayment of both the principal and interest on the proposed loan.

Togiola said he supports the objective of protecting the Retirement Fund and resolving the government's debt, but argued that the repayment mechanism should be structured more clearly and securely.

He noted that ASTCA's third-quarter financial report reflected a deficit of more than $200,000 and questioned whether the authority would have sufficient resources to meet future repayment obligations.

According to Togiola, the legislation should specifically identify a dedicated revenue stream from ASTCA to fund repayment, similar to the way debt-service accounts are established for bond obligations.

"It is our duty to protect the government; it is our duty to protect ASTCA; they belong to us, just as well as the Retirement Fund," Togiola said.

He emphasized that he was not opposed to the legislation itself but wanted stronger protections written into the law to ensure repayment of the loan.

"I'm happy that you've worked out the solution," he stated. "But I want to formulate a proper structure for the repayment so that it is secure."

Togiola suggested creating a legally mandated debt-service account funded by designated ASTCA revenues, with those funds set aside specifically for repayment of the Retirement Fund loan.

He also proposed adding language to ensure that once the legislation is enacted, member accounts within the Retirement Fund would immediately receive credit for the amounts owed by the government.

In response, Jessop-Ta'ase explained that the details of the loan, including repayment terms and conditions, would be negotiated later between the Governor and the ASGERF Board of Trustees. Togiola, however, argued that those provisions should be incorporated directly into the legislation rather than left to future negotiations.

Several senators echoed his concerns.

Senators Magalei Logovii, Gaoteote Palaie Tofau, and Utu Sila Poasa all voiced support for identifying a specific ASTCA revenue source to guarantee repayment of the proposed loan.

Although Senate President Tuaolo urged lawmakers to move quickly on the measure so it could be transmitted to the House of Representatives before the current legislative session ends next week, senators ultimately favored a more cautious approach.

Tuaolo described the proposal as an emergency measure designed to protect the financial health of the Retirement Fund and ensure that the government's outstanding obligations are formally addressed.

However, Togiola recommended that lawmakers defer action on the bill and instead ask Governor Pulaali'i Nikolao Pula to call a special legislative session devoted to its consideration. He argued that the additional time would allow senators to refine the legislation and strengthen its repayment provisions.

His recommendation received support from fellow senators, effectively postponing further action on the bill until a later date.

The delay means lawmakers remain in agreement on the need to resolve the government's multimillion-dollar debt to the Retirement Fund, but differ on the best method for ensuring that any repayment plan adequately protects ASGERF, ASTCA, and taxpayers alike.

Samoa News points out that this proposed bill comes on the heels of the use of ARPA interest money — $10 Million — to invest overseas, while Fono leadership believed it had been promised to be used to pay down the ASG IOU to ASGERF.