ASG has paid $1 million of the $9 million in unpaid contributions to the American Samoa Government Employees Retirement Fund that was reported by Governor Pulaalii Nikolao Pula in his State of the Territory address.
In testimony before the House Budget and Appropriation Committee on Monday, Deputy Treasurer Levi Reese said that the payment was made last week.
Reese, along with the Deputy director of the Budget Office, Aukuso Satia, and Acting Director of the ARPA Oversight Office, Charlene Faalevao, were called by the committee to answer questions about the status of ASG finances, progress on ARPA funded projects with just two years left before the deadline to use up all ARPA funds, and to shed light on a report given to the committee about $30 million owed to construction companies for work that was performed without going through the procurement process.
Regarding the unpaid contributions to the Retirement Fund, Reese explained that employer and employee contributions to the Retirement Fund was increased under a law passed in 2021 and has grown from 11%, when the Lemanu and Laapui administration entered office, to 20% present-day—14% from ASG as the employer and 6 % in employee contributions.
Reese said there was no revenue source to cover the increase in contributions which comes to more than $900,000 every pay period. The employer contribution is more than $600,000 and the employee contributions total $200,000. Treasury is now attempting to pay the employee contribution, as it is smaller. Reese said they are awaiting the confirmation of the Treasurer and Budget director to discuss how the debt to the Retirement fund can be paid.
House members urged that every effort must be made to pay the retirement fund pointing out that the money has already been deducted from employees’ paychecks.
Asked if FICA and Medicare are paid up, the deputy treasurer said yes. There had been an error with the reporting of FICA payments but this has been corrected. A report obtained by the House Budget and Appropriations Committee listed a litany of projects for roads, parks, seawalls, land clearing, as well as emergency access roads and buildings, which were carried out without any bidding. The total amount that is owed to contractors for these projects is $30.1 million.
As Reese explained to the Committee, these projects were not routed through Treasury or Budget Office. They only learned about them when companies came to ask for payment.
She told the hearing it was her understanding that the former Governor had given the contractors the task to carry out these projects, but they did not go through the procurement process. Budget and Treasury would then go back to the departments overseeing the projects to find out information. She said, in some cases, like the clearing of land in Manua for agriculture projects, they were told that the department was applying for grants which would cover the costs, but, in the end, there was no funding.
The deputy treasurer said contractors have been coming to seek payments, but have been told by the Governor to look for attorneys; and this is the same message from Treasury, so they can come to the table.
Asked about tax refunds, Reese said that all tax refunds from the previous year have been paid, except for tax filings with an error. In such cases, the taxpayer has to go to the Tax Office to make corrections.
The Acting Director of the ARPA Oversight Office, Charlene Faalaevao, provided a report of the ARPA funded projects, including ones to be funded with the $186 million that was reallocated from the scrapped new hospital project. She said that there are $400 million worth of projects for which money must all be spent by December 31, 2026. Faalevao said all ARPA funded projects are subject to procurement and strict reporting requirements.
Responding to questions about the Behavioral Health Center for which $24 million is allocated, Faalevao said bidding for the design is with the Procurement Office. She told the hearing that if the Department of Health doesn’t move on the project, ARPA and the Governor’s Office will take over.
Deputy Director of the Budget Office, Aukuso Satia, discussed revenue collections. He said that, usually, the first quarter of the fiscal year is slow, but will pick up in the 2nd, 3rd and 4th quarters. The ASG budget for FY2025 is based on $165 million in local revenues. Satia said with cost containment measures, including a freeze on hiring, and 10% budget reduction, along with shored up collections in the remaining quarters, total revenues would be around $143 million.
