At VIFreep Breaking News Business News Consumer News St. Croix News St. John News St. Thomas News Superior Court News Technology News

GERS Chief Preparing $7.7 Million Lawsuit Against WAPA For Payment Failures

CHARLOTTE AMALIE The Government Employees Retirement System of the Virgin Islands is preparing a lawsuit against the financially-strapped Water and Power Authority for about $7.7 million in past due money.

At issue are past due employees’ and employer’s contributions and employees’ loans as well interest on these sums. WAPA has failed to forward the employee and employer contributions since June 24, according to GERS Administrator Austin Nibbs.

Nibbs told The Bond Buyer on Monday that GERS is preparing to file a lawsuit in the Superior Court in the Virgin Islands.

The GERS head honcho said WAPA owed GERS $2.4 million in employee contributions and $188,000 in interest on this, $4.5 million in employer contributions and $347,000 in interest on this, and $311,000 in employee loan deductions and $8,000 in interest on this.

The GERS board voted Friday to authorize the administrator “to file legal action to collect the outstanding amounts that are owed to the GERS that have been past due since June 24, 2021,” Nibbs added.

GERS had previously raised the issue with new WAPA CEO Andrew Smith, who responded in a letter on March 29, proposing a 36-week payment plan because WAPA doesn’t have the cash to make the full payments.


At VIFreep Breaking News Business News Government House News St. Croix News St. John News St. Thomas News V.I. Legislature

Bryan Hopes Refinancing $800M In Bonds Will Stake GERS System For The Next 30 Years

CHARLOTTE AMALIE — Governor Albert Bryan is refinancing more than $800 million worth of bonds following numerous attempts to save the GERS pension system that officials say faces certain collapse otherwise.

Governor Bryan signed the bill this week and says the savings from improved interest rates will help stabilize the Government Employees Retirement System for at least 30 years.

Nearly 9,000 government retirees and 8,000 active workers rely on the GERS system, which officials warned could run out of funds by 2024 or sooner without a fix.

The signing marks Bryan’s fourth and final attempt to save the pension system, which has nearly $6 billion in unfunded liabilities.

Bryan Hopes Refinancing 0M In Bonds Will Stake GERS System For The Next 30 Years

If the refinancing is successful, it’s expected to generate some $4 billion total for the system.

Given poor credit ratings in recent years, the territory hasn’t been able to access the bond market to raise money for things including infrastructure improvements and the public pension system.

The GERS system has been prone to widespread abuse over the years with retired government employees rejoining government service while actively receiving their retirement benefits, known as “double dipping.”

“When we first introduced this concept to create a special purpose vehicle corporation to refinance our rum bonds 18 months ago, we did it with the people in mind,” Governor Bryan said. “We did it to protect the pension benefits of our almost 9,000 government retirees and with the goal of protecting the pensions of the more than 8,000 other active employees who are relying on the Government Employees Retirement System to be able to achieve a decent quality of life in retirement.”

“Today is about them: The retirees who are the breadwinners in their respective households and who rely on their pension benefits to provide for their families; the retirees confronting inflation and the rising cost of goods, and whose pension benefits are their only source of income,” Governor Bryan said. “We did it to protect the pensions of the active, vested employees so they too can realize the promise of benefit funds when they retire.  And this assurance also enhances our ability to retain and attract new employees to government employment.  Today is about them, and the promises made to them that our Administration is ensuring the Government of the Virgin Islands keeps.”

Governor Bryan first submitted a bill in August 2020 to authorize the Securitization of the Matching Fund Receipts to enable the reduction of the Government of the Virgin Islands bonded debt, the proceeds of which would be applied to a reduction of the Government Employees Retirement System unfunded liability.

Although that bill and two subsequent revisions failed to make it to completion, it led to the Senate’s formation of a Senate Subcommittee on the GERS, ultimately resulting in Act No. 8540, which is a collaborative effort between the Governor’s Executive Team, the Senate Subcommittee, the GERS board and the GERS actuary Segal and Company.

In the first official function at Government House on St. Thomas since the building was destroyed by the 2017 hurricanes, Governor Bryan signed the “historic” legislation that allows the government to refinance the Rum Cover-Over Matching Fund bonds and use the savings from better interest rates to stabilize the Government Employees’ Retirement System (GERS) for at least the next 30 years.

At VIFreep Breaking News Business News Government House News Health News St. Croix News St. John News St. Thomas News V.I. Legislature

Governor Bryan Calls 33rd Legislature into Special Session To Act On 2nd Securitization Proposal

CHARLOTTE AMALIE — Governor Albert Bryan, Jr. has called the 33rd Legislature into a Special Session to take action on his proposal to reauthorize the Matching Fund Securitization, as well as to address two other legislative matters.  

Bryan set the date for the session as December 3.  

The governor’s proposal seeks to increase revenue for the territory by refinancing the existing Matching Fund debt for savings and allowing the USVI to re-enter the public bond market. The cash flow from the refunding of the bonds, in collaboration with the Legislature, will be assigned to priority areas, such as the Government Employees’ Retirement System and infrastructure projects in the territory.  

“The proposed securitization of the Matching Fund Receipts, which is not an uncommon practice in the marketplace and has been used in the industry with great success, is expected to significantly increase cash flow to the government of the next three fiscal years by replacing higher interest bonds with lower interest bonds, generate significant savings from the proceeds of the bonds, achieve an investment-grade rating that would return a government entity to the bond markets, and create a vehicle for the government’s future bond needs,” Governor Bryan wrote in his transmittal letter to Senate President Novelle Francis, Jr. 

On a separate matter, Bryan also submitted proposed legislation amending Act 8310, which addresses the governor’s authority to borrow monies from public funds of the Virgin Islands to offset cash flow problems caused by shortfalls in the collection of revenues resulting from the COVID-19 pandemic for fiscal year 2021 instead of the previously authorized fiscal year 2020. 

The 33rd Legislature had passed a previous version of the bill earlier this year that authorized the government to access a line of credit to be used for Government operations affected by the financial fallout from the virus pandemic. That bill, which was not used, authorized borrowing based on FY2020 revenues.  

The third matter Bryan has asked the 33rd Legislature to take up is a bill to provide for the enforcement of orders during a State of Emergency. The proposed legislation adds new sections to the Nuisance Chapter 73, under Title 14, to enable enforcement of provisions of Executive Orders for the protection of the community during the current COVID-19 State of Emergency and provide protection against any future emergencies or disasters. 

The proposed amendment expands the definition of what is deemed a public nuisance and adds further penalties regarding a public nuisance and relating to its removal. 

At VIFreep Breaking News Business News St. Croix News St. John News St. Thomas News Territorial Affairs

V.I. Government Has Until Wednesday To Tell Feds How It Will Come Up With $213 Million Owed To GERS

V.I. Government Has Until Wednesday To Tell Feds How It Will Come Up With 3 Million Owed To GERS

CHARLOTTE AMALIE — The Government Employees’ Retirement System of the Virgin Islands (GERS) is seeking a court order for the government to pay at least $213 million allegedly owed to the system.

U.S. District Court Judge Curtis Gomez said on Tuesday that the Virgin Islands government owes at least $41 million and he gave until 3 p.m. March 21 for the two sides to propose how the government should make this payment, according to retirement system attorney Robert Klausner.

Gomez decided on the government’s liability for unpaid employee, employee loan, and fixed employer contributions. He left for a future date a decision on the validity of the system’s claim that the government is legally required to make “actuarially-recommended” contributions.

The retirement system’s filing of a pre-hearing brief on Thursday in U.S. District Court of the Virgin Islands brought to a head a suit first filed in 1981. The case was administratively closed in 1984 after a consent decree.

However, the decree had no sunset period and the court has the right to oversee its enforcement. The system filed papers under this provision.

The system asked the judge to order the government to immediately repay employee contributions and loan repayment money it “has stolen from its employees.” Further, it asked the judge to order the government to immediately pay past due employer contributions. Finally, it asked the judge to come up with a timeframe for making additionally actuarially-recommended contributions, as required by the law that set up the system in 1959.

The Virgin Islands and its Water and Power Authority (WAPA) have more than $2 billion in bonds outstanding. S&P Global Ratings and Fitch Ratings withdrew speculative grade ratings of their bonds in 2017 when the Virgin Islands government stopped sharing financial information with them.

The islands’ senior matching funds (rum tax) bonds are rated Caa2 by Moody’s Investors Service.

“While assistance from the federal government in response to the hurricanes has provided some near-term relief, we believe the severity of the territory’s fundamental fiscal and cash challenges, combined with the pending insolvency of the territory’s government employees’ retirement system, make a debt restructuring highly likely,” Moody’s analyst Kenneth Kurtz said in a Jan. 31 report.

As of August 2016 the system had a funded ratio of 27.7 percent, the system reported in its court filing. Its total assets are less than $900 million.

The system says that without a change to the level of contributions it expects to run out of money in late 2020 or early 2021.

The Virgin Islands government didn’t immediately respond to a request for a comment on the retirement system’s brief.

In late January, Gov. Kenneth Mapp said in his state of the territory speech, “Along with recovering from the hurricanes, the continued viability of the GERS must be one of our highest priorities. Let me be clear; no single action or set of actions will rescue our public pension program.”

Mapp said he was looking for qualified people to join the pension system’s board of directors and for suggestions from a government-commissioned Capital Markets Advisors report on how to deal with the underfunded pension system.