DOF Disputes Senate Claims, Says Retirees’ 25% Benefit Still Faces Funding Shortfall

Dear Chairman Hofschneider,

In your press release issued on July 10, 2026, multiple statements were made that are false and misleading. The Department of Finance respectfully responds to those claims providing clarification to all stakeholders and reaffirms that there is insufficient funding for continued payments of the 25% to retirees’ pension benefits.

Assumed Discrepancies

The Senate’s claims that funding is “more than sufficient” is false. The Senate’s “investigation” and findings of $15.543 million in available funding is incorrect. The anticipated reimbursement from the NMI Settlement Fund of $4.015 million is not new revenue, it is a reimbursement of cash – cash that has already been recorded and reported as revenue in the first quarter of FY 2026. As explained in our communications and public meetings, I have directed the NMI Settlement Fund to apply the reimbursement of this cash to pay the 25% retirees benefit directly, as appropriated in the current budget per Public Law 24-20. Treating this cash as an additional revenue violates generally accepted accounting principles in which revenue cannot be recognized twice or “doublecounted”.

Reduced Budget Authority

The FY 2026 proportionate budget reduction issued by the Office of Management & Budget on July 1, 2026 has decreased the general fund appropriation in PL 24-20 to the retirees 25% pension benefit from $5.4 million to $ 4.4 million. Further, the reimbursement from the NMISF depends on budget authorization to be applied to the 25% pension payment. The updated available balances from authorized funding sources are as follows:

• General Fund (PL 24-20): $ 4,415,286

• Casino Fund: $ 1,002,674.37

• OIA Federal Grant: $ 3,881,200

• Total Funds Available: $9,299,160.37

• Estimated Funds Needed through September 30, 2026: $11.9 million

As you can see, there is an estimated shortfall of $2.6 million. Funds identified in H.B. 24-84 would go towards closing this shortfall. The Senate’s claims that the funding is “more than sufficient” is again incorrect and false.

Fund Certification for HB 24-84, $2.1 million to the Retirees 25%

The press release states that the Senate cannot “legally, or in good faith, pass House Bill 24-84 because the DOF has confirmed that the funds were already appropriated under Public Law 24-19 in November 2025 to fund the GHLI program …and that the DOF has stated funds are no longer available”. This is false.

The Senate has confused H.B. 24-84 and the fund certification of Public Law 24-19.

The $3.7 million appropriated in P.L 24-19 was a revenue surplus or “additional revenues” identified in FY 2025 and DOF has informed you this is no longer available as it is already appropriated by PL 24-19 and used for payments to the Group Health & Life Insurance Program (GHLI) and the Public School System (PSS).

The $2.1 million proposed in H.B. 24-84 has been identified as a budgetary lapse from FY 2025 that still requires appropriation. These funds came from the Administration reducing expenditures and having “left-over” budget authority to be used in the next fiscal year. These funds are available and validly passed the House of Representatives in January.

No further fund certification is necessary as Governor Apatang has formally informed both presiding officers of the legislature of these available funds pursuant to 1 CMC §7209 in his FY 2025 Annual Report to the Legislature, dated December 31, 2025.

The Senate’s accusation that numerous discrepancies in fund certification regarding H.B. 24-84 and its availability is false and misleading.

Communication & Dialogue

The Department of Finance has been and continues to be open and transparent in this legislative process, providing multiple letters and email communications to the Senate committee and clarifications to our reports. It appears in the recent press release that further dialogue and guidance is needed to avoid misinterpretation of financial information provided. The Department of Finance has supported all its reporting and communications; however it is critical that the Senate fiscal team comprehend, interpret and translate the reports and relative information correctly to provide sound advice to the committee and avoid misleading and incorrect statements. 2 As Secretary of Finance, I will continue to uphold my constitutional duty to manage and control public funds, including correcting misleading and false statements regarding availability of funds for appropriation. I encourage open and honest dialogue so that timely legislative action can be taken. Again, the Department of Finance stands ready to provide information, guidance and clarity in this legislative process.

Sincerely,

Tracy B. Norita

Secretary of Finance