• The San Juan Daily Star

Pierluisi looks to allay concerns over fiscal board petition on pension cuts

U.S. District Court Judge Laura Taylor Swain

By The Star Staff

Gov. Pedro Pierluisi Urrutia said Wednesday that the public should not be worried about a request made earlier this week by the Financial Oversight and Management Board to the Title III Bankruptcy Court asking the judge to rule that Act 53 of 2021 would only ban cuts to existing pensions in the plan of debt adjustment and nothing more.

“The board has been insisting for years that the pension systems for teachers and judges should be reformed and that has been in the certified Fiscal Plan for years,” the governor said. “My position is that this matter can be addressed through the legislative process. Right now, the board is asking Judge [Laura] Taylor Swain so that she can make those changes to the teachers’ and judicial retirement systems without going to the Legislature. That is being litigated; the Teachers Association has objected, the Courts Administration Office has objected and the judge is the one who is going to decide it.”

On Oct. 26, the governor enacted Act 53-2021, which provides conditional authorization for the issuance of new general obligation (GO) bonds and a contingent value instrument (CVI) to enable the debt adjustment plan. The law is a condition required by certain creditors. Without legislation authorizing those new debt issuances, the plan cannot be confirmed without modification.

Contrary to what the executive branch and the legislative leaders have said, the oversight board maintains that Act 53-2021 authorizes the issuance of the new GO bonds and CVIs “subject to the [oversight board] filing an amended Plan for confirmation by the Title III Court that eliminates the Monthly Benefit Modification” for current pensions. The plan calls for an 8.5% cut to pensions higher than $2,000 per month.

However, the oversight board in its petition filed Monday maintains that the phrase “zero cuts to pensions” does not require removal from the plan of either the freeze of future pensions or the elimination of cost of living allowances.

Previous rulings by Swain have stated that the government cannot enact laws that are inconsistent with the fiscal plan. As part of the plan’s approval, the oversight board is seeking a declaration that the plan preempts some 100 laws.

Pierluisi said that after the debt adjustment plan is approved and finances improve, the government will find alternatives for dealing with the concerns of public servants about their future pensions.

“But no matter what the judge’s decision is, as soon as the government’s finances improve, and that will be as soon as this adjustment plan is confirmed, we will be able to address the claims of our public servants,” the governor said. “So everyone rest assured that the important thing here is for the debt adjustment plan to be confirmed for the government to be in a better financial condition so that it can then tackle all legitimate claims no matter where they come from.”

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