Hofschneider seeks expanded CEDA lending, revives limited-term pension proposal

Sen. Jude U. Hofschneider is advancing legislation that would expand lending authority at the Commonwealth Economic Development Authority while also renewing a proposal aimed at reducing government payroll obligations through a limited-term pension plan.

The Tinian lawmaker said Senate Bill 24-25, which is before the Senate Fiscal Affairs Committee that he chairs, seeks to raise the threshold for CEDA loan and loan guarantee approvals by the agency’s executive director.

“The bill is Senate Bill 24-25 that seeks to amend a certain statute to allow the board of directors to authorize the executive director of CEDA to review and grant loan and loan guarantee applications of up to $25,000 as it currently is right now to $50,000,” Hofschneider said.

He said the measure is intended to provide greater access to capital for small businesses and allow CEDA more flexibility in responding to loan requests.

“So the intent of this is to kind of give opportunities for our small businesses here in the CNMI to potentially get assistance from the agency itself and it also allows the executive director more flexibility to entertain those kinds of proposals,” he said.

Hofschneider described small businesses as central to the local economy, particularly during economic downturns.

“As we all know, it’s been challenging times ahead of us and you know in the last couple years so I want to make sure that we don’t forget of the small businesses here in the CNMI where you know when times are rough they’re here and when it’s a good time they’re still here so we need to take care of them,” he said.

“I believe that our small business here in the CNMI is the backbone of our economy,” Hofschneider added.

The Fiscal Affairs Committee is scheduled to take up the bill on Feb. 10. Hofschneider encouraged public participation, particularly from the business community.

In the same interview, Hofschneider also revisited a separate proposal he has reintroduced this term that would establish a limited-term pension plan for certain government employees who previously withdrew from the defined benefit system.

“This is primarily one of the ways that could potentially reduce the size of the government obligation and by way of the number of employees,” he said.

He said the proposal is aimed at former Defined Benefit members who remain in government service but want to separate with some form of pension income.

“There’s still that level of desire and a lot of our employees, especially those that are former DB employees to be able to separate from the government but at least have some sort of a pension coming in, for you know once they separate,” Hofschneider said.

Under the proposal, eligible employees would be allowed to separate from government service at age 55 and receive a pension for a limited period.

“The way it’s written, it’s 15 years, and the idea is to allow, if it becomes law, to allow the employee to retire separate from the government at age 55, and then it should drop off by the age of 70,” he said.

“We want to make sure that they were looking at maybe 50-60% of what they earned in the Top 3 salaries that they earned during their active years,” he added.

Hofschneider said the plan could reduce government costs by encouraging voluntary separations.

“The idea is to allow certain people, potentially in the hundreds, to separate from the government,” he said.

“Instead of getting their full pay, you know, for example, in real numbers, instead of getting $10, the government now only compelled them to be paid $5,” he said.

He stressed that the proposal is not an early retirement program and remains a work in progress.

“It’s not written in stone right now, it requires a lot of work and requires a lot of collaboration,” he added.

The limited-term pension bill, Senate Bill 24-01, is currently in committee, and Hofschneider said he is working with committee leadership to schedule a public hearing.

“I’m excited for this legislation,” he said, adding that public input will be critical before the measure moves forward.