MISSA Board approves FY 2010 budget
posted September 24, 2009
In what could be a preview for the most difficult test the current Administration will be taking in the coming months, the MISSA Administrator presented to the Board a gloomy FY 2010 Budget during their meeting held on September 23, 2009.
Prior to the meeting, the Administrator met with her senior managers several times to ensure that all proposed figures are realistic and reflect the true picture of what lies ahead.
With an impending cash deficit of at least $1.2 million in the coming fiscal year, the Administrator and the entire MISSA staff shared a common conviction that belt-tightening must start from inside MISSA. Thus, the budgeted administrative expenses were closely scrutinized to reflect only the expenses that were deemed necessary in the course of MISSA operations. This cost cutting measure resulted to a 12.6% reduction (more than $150 thousand) in budgeted administrative expenses for FY 2010 when compared with the budget for FY 2009. The cuts were comprised of reduction in payroll (MISSA will no longer hire an in-house lawyer), off-island travels and trainings, utility costs and supplies. All MISSA personnel, particularly the department managers, were made aware of these cost cutting measures to ensure that any administrative expense that is spent is within the budgetary limits.
The FY 2010 revenue budget is entirely different from those of previous years for the simple reason that it lacks the forethought that MISSA will "again" surpass the previous year’s financial performance. On the contrary, the bottom line of the budget which normally reflected a positive amount in the past, now shows a net decrease in assets of $1.6 million before investment gain(loss). This simply means that in FY 2010, it is projected that benefit payments and administrative expenses will exceed contributions and other income by $2.6 million. This is the first time that the Administration will experience a deficit [before investment gain(loss)] since FY 2002, when the administration of the Health Fund was transferred to the Ministry of Health.
The Board is aware that FY 2010 will be the most difficult and challenging year since 2000. But the challenge this time is entirely different. It is a situation beyond the control of the MISSA Board, management and staff. It is the aftermath of a global and local downturn that spared no one. Making things worse are flaws in the social security laws and weak enforcement of the law that have been used and abused by certain employers and individuals in order to illegally evade paying taxes. The situation is further aggravated by proposed legislations aimed to increase benefits which the Administration can not afford at the moment.
The Administrator also presented to the Board a detailed action plan on beneficiary screening for continued entitlement. This plan is aimed to reduce benefit payments via identification of current beneficiaries who may no longer qualify for benefits as they may have already died, remarried (in the case of surviving spouses) or beyond benefit age (in the case of surviving children).
The Board approved the FY 2010 budget in its entirety, including a budget for the purchase of a back-up generator in anticipation for possible power outages in the near future.
The highlight of the approved budget follows, with comparative figures for FYs 2009 and 2008:
Note 1 - FY 2009 actual was based on unaudited financial statements as of September 30, 2009
Note 2 - By law, the budget for administrative expenses for any fiscal year shall not exceed 20% of contributions.