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  • Writer's pictureThe San Juan Daily Star

Fiscal board, gov’t fail to reach consensus on early retirement program

By The Star Staff

The Financial Oversight and Management Board for Puerto Rico told the island government recently not to implement a law that establishes an early retirement program for public workers after the officials failed to provide complete information for an analysis.

“The Oversight Board has now spent over 4 months endeavoring to reach an agreement with the government consistent with the court’s order. The effort has been futile,” oversight board counsel Jaime El Koury told Nelson Peréz Méndez, deputy executive director of the Fiscal Agency and Financial Advisory Authority (AAFAF by its Spanish initials), in writing. “The order required the government to engage in the fiscally responsible exercise of determining the actual cost of implementing Act 80 and to identify, if possible, savings above and beyond the savings required in the Fiscal Plan.”

“To date, the government has failed to provide the information and analysis necessary to conclude whether Act 80 could actually generate savings,” El Koury continued. “Accordingly, the Oversight Board proposes to inform the Title III Court, by agreement with the Government, that the Oversight Board and the Government have attempted to reach an agreement without success.”

Act 80 and two other proposed retirement laws were the target of court processes because the oversight board successfully nullified them. On Dec. 28, 2021, the Title III Bankruptcy Court entered an order that provides a process for exploring whether Act 80 could be salvaged, by agreement, to achieve real cost savings above and beyond the savings already required by the certified Fiscal Plan.

“Pursuant to the order, Act 80 was invalidated subject to a possible future agreement between the Government and the Oversight Board which might yield some of the benefits originally provided by Act 80,” the oversight board letter from last week reads.

The first step to reach a potential agreement was for the government to provide, per agency level, descriptions of the position proposed for elimination and the projected net.

The order contemplated a 45-day period for the oversight board and the government to work to reach an agreement but in February the board had to remind the government to provide the information.

“The Government finally submitted some data to the Oversight Board, but that information was incomplete,” El Koury said.

On March 1, the oversight board sent a letter detailing the deficiencies in the government’s Feb. 11 submission and proposing a timeline for the conferral process. The board also requested that the government advise it of its timeline for providing the necessary data and analysis. The government’s response, dated March 6, was not responsive to the board’s requests, the letter says.

On March 14, the oversight board informed the government that its March 6 submission failed “to provide a timeline for the Government to furnish the two data sets” required by the order and that the government has “not fulfilled its most basic obligations” under the order.

“The Oversight Board notified the Government that if the Government did not provide to the Oversight Board the information specified in the Order by March 28, 2022, the Oversight Board would have no choice but to conclude the Government is unwilling or unable to comply with the Order,” the letter states. “The Government subsequently provided some — but not all — of the required information on March 28, 2022.”

After reviewing the information the government provided on March 28, the oversight board concluded it continues to fall short of the requirements established in the court order.

“To provide context for the data you submitted to the Oversight Board, AAFAF identified almost 11,000 employees across almost 150 agencies and municipalities that elected to participate in the early retirement program contemplated in Act 80, as of April 1, 2021. Nevertheless, the analysis included in your March 28, 2022 letter relates to a small fraction of those employees and agencies — without any explanation or commitment to limit Act 80 to just those employees,” the board said. “More specifically, your March 28 analysis, which was intended to satisfy the order, only considers approximately 1,100 employees from 7 agencies. In none of your correspondence with the Oversight Board have you indicated that the Government now proposes to limit the early retirement programs to this group of agencies, as opposed to the 150 agencies included in your April 2021 correspondence.”

“Even for the seven agencies encompassed by your March 28 submission, the analysis is incomplete,” the oversight board said.

While the government said it intends to transfer employees from other agencies to fill the positions designated as “essential,” the government has not identified who those transferring employees will be, the board noted.

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