PSS to cut personnel expenses by 40%

BUDGET HEARING: Board of Education Chairwoman Janice Marie Tenorio, far left, Commissioner of Education Alfred Ada, far right, and other education officials attend Monday's budget hearing in the House chamber. Photo courtesy of the Public School System

SAIPAN — The Public School System of the Commonwealth of the Northern Mariana Islands must reduce personnel expenses by 40% to keep its schools open in the new school year, Associate Commissioner of Administration Kimo Rosario said.

The administration said $82.6 million is available for government appropriation in fiscal year 2021, which will start on Oct. 1, 2020.

Of this amount, the administration has proposed about $20 million for PSS which, under the Constitution, is entitled to at least 25% of the general revenues.

Rosario said, because PSS has $6 million left from the $23.1 million Education Stabilization Fund it received from the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, the school system will have a total budget of $26.6 million for fiscal 2021.

In fiscal 2020, PSS requested a $66.8 million budget and was allotted $37.7 million – about $34 million for personnel and $2.9 million for operations.

But due to the COVID-19 pandemic that devastated the economy, the commonwealth budget amount for fiscal 2020 dropped to $77.1 million from $148.8 million. In line with other agencies, allotments for PSS were reduced significantly.

According to the recent budget submission of the administration, PSS requested $40.6 million for fiscal 2021, but the administration could propose only about $20 million for the school system.

Rosario said PSS should bring down its payroll from $1.3 million to $884,000 biweekly to ensure that "we live within our means and spend within budget authority to avert payless paydays, furloughs, reduction in force and incurring a shortfall and deficit next fiscal year."

Reduced hours, salaries

PSS has already implemented a 64-hour work schedule and a 20% pay cut affecting 654 certified and noncertified employees.

This will save about $6.7 million annually, Rosario said.

On Monday, July 6, PSS implemented a new organizational chart, which, in effect, reduced the salaries of school administrators, directors, program managers, education specialists and coordinators by 25%, which will save $1 million.

Rosario noted that "even if we reduce the salaries (of key managers) by 100%, PSS will realize 3%-5% in savings only."

He said the other classes of employees outnumber PSS officials 7-1. "Contrary to the misguided belief that PSS' upper management is 'top heavy,' the truth is the bulk of our personnel expenses (goes to our) certified employees."

Employee insurance

PSS may also stop paying the employer share of an employee's insurance, adding that this may reduce payroll costs by 14%, or $3.6 million, annually.

"Employees must get their own (health and life insurance) individually," Rosario said. "At this juncture, and like the rest of the government, PSS can no longer afford a 70-30 cost-share payment plan."

PSS is paying $140,000 biweekly as its share of the employees' insurance payments, while employees pay $40,000.