THURSDAY, MARCH 9, 2017

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A Pulitzer Prize-Winning Newspaper ST. CROIX ST. JOHN ST. THOMAS TORTOLA A 36-page Daily News Special Investigative Report By Senior/Investigative Reporter Joy Blackburn GERS at Risk Who’s to Blame? The V.I. Government Employees Retirement System $4,070,000,000 unfunded liability Inside Part 1: What’s the problem? | Page 3 Part 2: who’s to blame? | Page 11 Part 3: how will gers insolvency impact you? | Page 25 Part 4: can gers be saved?| Page 29 Timeline of trouble| Page 32 How we did this report| Page 36

CELEBRATING THE PEOPLE, CULTURES AND HISTORY OF THE VIRGIN ISLANDS SINCE 1930 2 The Virgin Islands Daily News Thursday, March 9, 2017 GERS at Risk Who’s to Blame By Daily News Senior/Investigative Reporter JOY BLACKBURN Words to Know

ACCOUNTS RECEIVABLE asset over time. money will come from. The V.I. the required payments on a loan or 2005. In general, Tier 2 employees — Money an entity has a right to ANNUITY — A financial government has used its anticipated bond. get lower pensions and have to collect for goods or services it has product that provides guaranteed revenue from gross receipts taxes FUNDED RATIO — A pension make higher contributions than Tier already provided. periodic benefit payments, typically and rum excise taxes as security for plan’s level of assets in proportion 1 employees. ACTUARY — A professional for a retiree’s lifetime. bonds. to its level of liability, or obligations PFA — The V.I. Public Finance who measures and manages ASSETS — Something owned BOND RATING — A “grade” to pay. Authority is a public corporation risk. Pension actuaries assess that has economic value, especially that a credit rating company FLOATING BONDS — A term and autonomous agency of the V.I. the financial impact of future items that can be converted to assigns to a specific set of bonds used when bonds are being sold. government that raises capital for events (retirement, termination, cash. For example: cash, stocks or to a bond seller, based on the GOVERNMENT EMPLOYEES’ government projects and issues disability and death) and future and bonds, commercial inventory, level of risk to buyers. Rating RETIREMENT SYSTEM — The bonds for the government. economic conditions (interest office equipment, real estate and companies evaluate the likelihood method of providing pensions PLAN SPONSOR — The entity rates, investment returns and vehicles are assets. that the seller will not be able for V.I. government employees. that sets up a pension system. The salary increases) to measure, BENEFIT MULTIPLIER — to pay (default). Generally, the Participation is mandatory, and the V.I. government is the plan sponsor among other things, the amount of the factor in a defined benefit riskier the bond, the lower the government takes the employees’ of GERS. money a pension needs to pay its plan that helps determine the credit rating. Each of the three contributions out of their paychecks POINT IN TIME SNAPSHOT — obligations. size of a retiree’s annuity. In the major rating services — Moody’s automatically. A record of what a particular place ACTUARIALLY DETERMINED case of GERS, for regular Tier 1 Investor Service, Fitch Ratings, HEDGE FUNDS — Pooled or situation is like at a particular CONTRIBUTION — The pension employees, the multiplier is 2.5; and Standard & Poor’s —has its funds that make a wide range of time. actuary’s assessment of how much for regular Tier 2 employees, the own grading scales. The companies riskier investments hoping they RATE OF RETURN — The money should be put into the multiplier is 1.75. make their research and ratings will perform better than the market value of earnings from investments, retirement system in a given time BOND — A debt created to available to potential investors. average. They are called hedge based on interest, dividends and period to pay for current and future raise capital. Bonds are basically BOTTOM LINE —The ultimate funds because their successful capital gain and loss adjustments. It pensions. promissory notes for a specific financial condition of a government investments make enough profit to is expressed as a percentage. ALTERNATIVE INVESTMENTS amount of cash. In order to get that or company after factoring in provide protection — a hedge — SPECIAL INTEREST — Investments outside the cash, the bond seller (for example assets, income, debts, expenses and against market ups and downs. LEGISLATION — A law that traditional and fixed-income capital the V.I. government or the V.I. other liabilities. HYBRID PLAN — A pension benefits only one person or a small markets. Alternative investments Water and Power Authority) agrees CASH BALANCE PLAN — A plan that combines elements of group, often at the expense of the have potential for higher returns to pay back the bond buyer the pension plan that requires the defined benefit plans and defined rest of the population. than the public markets, but they same amount, plus a set number employer to credit the employee’s contribution plans. SUBSIDIARY — A company also carry higher risk and can result of interest payments over a pre- account with a set percentage of INSOLVENT — Inability to that is owned by another company. in losses for the investor. determined period. At the end of the employee’s compensation, plus pay money owed. GERS will be The owner is called a parent AMORTIZE — Pay off a debt that period, the bond matures and interest, annually. Participants get insolvent when it has sold off all its company or holding company, and gradually by making periodic the original investment is returned a defined rate of return that is not assets and has nothing left except it owns at least 50 percent of the payments of principal and interest. to the buyer. Bond buyers need to affected by the ups and downs in incoming contributions to use to subsidiary. Home mortgages typically are feel secure that the seller will be the value of the plan’s investments. pay pensions. As more employees UNFUNDED LIABILITY — The amortized over 30 years. In finance, able to pay them back, so the seller It is a variation of the defined retire, and less contribution money difference between the total amount amortize also can mean gradually has to show where the payback benefit plan. The annuity is based comes in, the pension amounts will owed to current and future retirees writing off the cost or value of an on the cash balance of the plan. decrease. and the actual amount of money on COST OF LIVING LIABILITY — A legally binding hand to make those payments. ADJUSTMENT — Increases to debt payable to another entity. VESTED — Eligible to receive pension amounts based on the GERS’ main liability is the benefits after retirement. A V.I. cost of living. The GERS board pensions it is obligated to pay. government employee must work can set a cost of living adjustment NASRA — National Association 10 years to become vested in (COLA) amount based on the of State Retirement Administrators. GERS. consumer price index, economic PENSION OBLIGATION VIATICAL — A form of studies and other evaluations the BONDS — Bonds that a alternative investment in which board considers relevant. The government sells to raise money to the investor buys the life insurance board suspended retirees’ COLA pay its debt to its retirement system. policy of an old or terminally increases in 2013, except for The goal is to reduce the retirement ill person for a percentage of disabled pensioners, and has not system’s unfunded liability. When the policy’s payout at death. The reinstated them. the retirement system gets the investor pays the premiums and DEBT SERVICE — The cash money from the bond sale, it receives all the insurance money needed to repay interest and invests that money to potentially when the beneficiary dies. It is principal on a debt during a build up the pension fund. These risky because insurance companies particular time period. bonds are considered risky because may find a reason not to pay DEFINED BENEFIT PLAN to work properly, the invested bond and because the person may live — A pension plan in which sale money has to earn at a higher longer than expected, costing the the employer pays retirees a set rate than the interest rate on the investor more in premiums than amount until they die. GERS is a bonds. The V.I. government has the insurance is worth. GERS defined benefit plan. been authorized since 2006 to issue is invested in a viatical, but has DEFINED CONTRIBUTION $600 million in pension obligation suspended new investments in that PLAN — A pension plan in which bonds to help GERS, but it has category. the contribution — by employer never done so. — Sources: GERS; V.I. Code; or employee or both — is a set TIER 1 — Employees who Pew Charitable Trusts; U.S. amount, which the retirement started working for the V.I. Department of Labor; Government plan invests. Pension amounts government before Oct. 1, 2005. Finance Officers Association; vary depending on the investment TIER 2 — Employees who Actuarial Evaluation and Review of earnings. started working for the V.I. GERS, 2015; Investopedia; AARP, DEFAULT — Failure to make government on or after Oct. 1, Merriam-Webster Dictionary. Thursday, March 9, 2017 The Virgin Islands Daily News 3 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN — $4,070,000,000.00 unfunded liability —

What’s The Problem? • GERS pays out more than twice as much as it gets from contributions. • V.I. government officials illegally withhold money from GERS. • Politics play with retirees’ futures.

Inside Part 1 The Truth About GERS and What’s Gone Wrong | Pages 4-7 Numbers Don’t Lie | Page 6 Contributions to GERS | Page 6 How Does GERS Compare Nationwide | Page 6 How to Spot a Pension System at Risk | Page 8 “ Governor and Lt. Governor Pensions | Page 9 It’s going to collapse, definitely. Special Pensions for 6 Judges | Page 9 And ain’t nobody really trying to fix it. Loan Program Shutdown | Page 10 A lot of lip service and no action. Financial Terminology | Page 10 So eventually, the bottom is going to fall out. — Eurman Fahie, St. Croix, GERS retiree 4 The Virgin Islands Daily News Thursday, March 9, 2017 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN

GERS Administrator Austin Nibbs, left, speaks with Sen. Terrence Nelson, Sen. Kenneth Gittens and 30th Legislature President Shawn-Michael Malone in 2014 in Ottley Legislative Hall on St. Thomas. The Truth About GERS and What’s Gone Wrong

or years the Virgin Islands government’s pension plan has have less — or nothing — to Fbeen sinking deeper into a debt it cannot pay. Active to Retired members Fig. 1 spend, then businesses, jobs and Retirees are anxious, and active government employees are Active Members Retired Members Ratio wages all could decline. uncertain whether the pension plan even will exist when they 1983 6.7 to 1 GERS’ downward spiral has retire. 1984 4.9 to 1 quickened in recent years, fueled V.I. Government Employees’ Retirement 1986 4.5 to 1 by multiple devastating factors: 1987 4.5 to 1 • The government’s decades- System Administrator Austin Nibbs summa- 1989 4.3 to 1 long failure to pay what it owes rized the future this way: 1991 4.1 to 1 the system; “By 2019, we will have exhausted and liq- 1993 3.4 to 1 • The impact of more and more uidated all our equity, which are stocks. 1994 3.3 to 1 retirees drawing money out while 1995 2.6 to 1 fewer and fewer active members “By 2023, we will run out of cash. 1997 2.5 to 1 are paying in. (Fig. 1) “After 2023, we can only pay what we take 1999 1.7 to 1 • And politicians pandering for in.” 2001 1.7 to 1 votes by expanding early retire- 1.6 to 1 Austin Nibbs 2003 ment eligibility without provid- At that point, GERS would be considered 2006 1.5 to 1 insolvent, and officials estimate that retirees’ 1.4 to 1 ing the money to make up for 2011 the amount those retirees and 2013 1.2 to 1 pension payouts would be cut to less than half what they are the government would have put now. 2014 1.1 to 1 2015 1.1 to 1 into GERS if they had continued Nibbs warned that insolvency promised to pay and the amount 10,000 0 10,000 working. could come even sooner, depend- of money GERS has to pay them. Issues within GERS itself — ing on investment returns and This shortfall affects not only the Source: Actuarial evaluations of GERS by Segal Consulting including questionable investment factors outside GERS’ control. retirement system but also the decisions, inept record-keeping That grim future looks likely V.I. government’s bottom line and Islands, is struggling to borrow status. and inefficient collections — have considering GERS’ present credit ratings. money to pay its current operat- The economic impact of added to the problems. problems: • A desperate need for a large ing costs and does not have funds insolvency will reach far be- The safety net for GERS • The $4.07 billion unfunded cash infusion but no place to get of such magnitude available for yond retirees. The Virgin Islands retirees is supposed to be the liability, which is the differ- it. GERS. The territory’s bond rat- economy depends in no small part V.I. government, which by law ence between the amount of the The plan’s sponsor, the cash- ings have been downgraded again on the money thousands of GERS pensions the V.I. government strapped government of the Virgin and again and have reached junk retirees spend. When the retirees See TRUTH, page 5 Thursday, March 9, 2017 The Virgin Islands Daily News 5 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN

up hope, Nibbs said, but the sys- TRUTH tem had to develop a contingency GERS Assets CONTINUED FROM PAGE 4 GERS plan in case the government can- Cash, cash equivalents is responsible for the benefits it not provide the urgently needed and investments promised its employees. cash infusion. $828,287,000 at a Glance However, after years of bor- In Governor Mapp’s State of V.I. Government Employees’ rowing money to cover day-to- the Territory Address in January, Other assets Retirement System day expenses, the government he said he plans to host public $11,837,000 • Created by the 3rd Legislature is deeply in debt and has little hearings in both districts on Real estate of the Virgin Islands in Act revenue that is not already com- GERS reform and submit pro- $72,885,000 479 on June 24, 1959. mitted for other purposes. posed reforms to the Legislature Member loans Operative by Oct. 1, 1959. The government’s financial by the end of March. $159,218,000 • A defined benefit pension plan prospects are so dire that when “The board cannot invest in for officials and employees the government tried to sell any high risk-type investments, Total assets of the V.I. government, for the bonds last December — and like hedge funds, at this time. We $1,072,227,000 Note: As of payment of retirement annuities, again in January — the bond sale cannot take that risk. We have Sept. 30, 2015 disability annuities, and could not move forward be- members to be paid. Retirees other benefits to government cause not enough investors were must be paid,” Nibbs warned. Deficit Spending officials and employees, interested. “It is incumbent on the and to their dependents and Gov. Kenneth Mapp and the Legislature and the plan sponsor, GERS’ deficit between contributions and expenses began in 1996. beneficiaries, after stated V.I. Legislature now are looking which is the government of the In 1996 the deficit was $1.6 million and in 2015, the deficit grew periods of service and upon to generate more money with Virgin Islands, to do what they to $157.2 million. fulfillment of certain conditions. new and higher taxes and fees, have to do,” he said. Before 1996, revenue earned on GERS’ investments offset • The V.I. government, is the but the general public is ardently For years, politicians have any deficit, but the fund’s retiree payments and expenses grew. employer and therefore opposed to those and businesses made promises to save GERS, At the same time, the V.I. government was not paying its required is the plan sponsor. are warning that new taxes will but those promises have been contributions. • Originally, GERS was part of kill the goose that lays the terri- betrayed by pandering to the the Division of Personnel. tory’s golden egg: tourism. government employees’ power- Year Total Benefit payments Surplus/ • Now GERS is an independent While there has been talk of ful voting bloc. Some of GERS’ contributions and expenses (Deficit)* and quasi agency of the the possibility of furloughs and worst problems can be traced 1994 $61.7 million $46.7 million $15.0 million Government of the Virgin downsizing, those measures back to early retirement man- 1995 $74.9 million $64.6 million $10.3 million Islands, governed by a Board would also lower the money com- dates that previous Legislatures 1996 $71.7 million $73.3 million ($ 1.6 million) of Trustees. Quasi agencies ing into GERS. passed — often in election years 1997 $74.3 million $80.0 million ($ 5.7 million) are created and funded by the What GERS — without providing any money 1998 $71.9 million $91.6 million ($19.7 million) government but have operational to cover the additional cost to 1999 $71.7 million $95.4 million ($23.7 million) and political independence. needs to survive GERS. 2000 $70.2 million $103.7 million ($33.6 million) • The system has the powers and As things stand now, the cold Politics and Insults 2001 $69.1 million $121.2 million ($52.1 million) privileges of a corporation. fact is that no more than six 2002 $80.1 million $133.0 million ($52.9 million) Who is eligible? years, 2017 to 2023, stand be- Even now, leaders’ handling of 2003 $82.1 million $138.0 million ($55.9 million) • Employees of the government, tween GERS and insolvency. the system is politically charged. 2004 $84.9 million $142.6 million ($57.7 million) who are required as a “That’s a pretty short period. Mapp has started a feud with the 2005 $81.9 million $153.0 million ($71.1 million) condition of employment to That’s a short window over which GERS board and management, 2006 $99.3 million $161.0 million ($61.7 million) become members of GERS to preserve a plan,” said Keith and he has publicly called for 2007 $96.6 million $170.5 million ($73.9 million) if they are under 55 years Brainard, research director for Nibbs to be fired — although the 2008 $112.8 million $184.7 million ($71.9 million) old when they are hired. the National Association of State GERS administrator is hired by 2009 $120.3 million $193.9 million ($73.6 million) • Anyone whose position and Retirement Administrators. “You and reports to the GERS board, 2010 $117.1 million $208.3 million ($91.2 million) salary are specifically fixed in don’t want to waste a minute.” not to the governor. 2011 $123.8 million $223.0 million ($99.2 million) the annual appropriation acts. Last September at a GERS Nibbs, who has been in the po- 2012 $104.4 million $251.5 million ($147.1 million) • Anyone who is employed by summit for policymakers and sition since 2008, blames GERS’ 2013 $98.5 million $260.1 million ($161.6 million) the government who is not stakeholders, GERS actuary Rocky problems on the government’s 2014 $102.3 million $265.9 million ($163.6 million) elsewhere excluded by the Virgin Joyner said that an immediate cash failure to make its contributions. 2015 $108.5 million $265.7 million ($157.2 million) Islands Code from membership infusion of $1.4 billion to $1.7 Mapp sees it differently and Notes: * Parentheses indicate a deficit, or spending and whose term of employment billion could turn things around for says he wants to “change the more than was paid in contributions is for at least one year. the retirement system and enable it trajectory for investments”; put • New government employees to meet its current obligations. people on the board who “under- age 55 and older can join To put that into perspective: stand” investments; and install GERS Contributions Shortfall the retirement system. $1.4 billion is approximately a “credible and competent” Year Actuarially Determined Actual Employer Percentage • Any government employee double the territory’s General administrator. Employer Contributions Contributions Contributed whose services are Fund budget for this year. The Mapp also says GERS has to 2006* 131,059,471 65,061,430 49.6% compensated on a contract higher number of $1.7 billion “stop throwing our money away.” 2007 137,797,268 60,778,382 44.1% fee or per diem basis and would be necessary to pro- Nibbs counters: “What is going 2008* 138,488,871 75,871,146 54.5% who works exclusively for tect against under-performing on is that the system is severely 2009* 147,490,851 80,177,004 54.4% the government at least investments. underfunded — and the govern- 2010* 157,817,709 77,004,630 48.8% 40 hours per week. Joyner, a vice president at ment has not paid in the amounts 2011* 162,841,336 80,849,762 49.6% Who is not eligible Segal Consulting, discussed a that they should.” 2012 178,644,349 66,677,155 37.3% • Any casual employee, any variety of other scenarios for The fight expanded beyond 2013* 172,439,842 64,431,322 37.4% part-time employee who avoiding insolvency, but those words after the 31st Legislature in 2014 189,715,251 68,298,617 36.0% does not regularly work options all revolved around dif- 2016 authorized the government to 2015 200,089,791 72,387,934 36.1% at least 50 percent of the ferent combinations of increas- borrow $247 million. Senators ear- 2016 247,158,137 Not available Not available normal work period, and ing contributions and reducing marked $100 million of that money any provisional employee. benefits. Notes: Prior to 2014, this amount was the Annual Required Source: V.I. Code, GERS GERS officials have not given See TRUTH, page 6 Contribution (ARC) and based on GASB statement No. 25; * Estimated based on prior year’s actuarial valuation 6 The Virgin Islands Daily News Thursday, March 9, 2017 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN Numbers Don’t Lie On the surface, cutting government government’s payments were supposed assets GERS has in hand and the total the terms of five governors — spending by reducing the number of to total $200,089,791, but it paid only amount of benefits that have already Alexander Farrelly, Roy Schneider, employees or putting employees on $72,387,934. been earned by employees and retirees Charles Turnbull, John deJongh Jr. unpaid furloughs looks like a way to Every year that the government — benefits GERS will have to pay out. and Kenneth Mapp — as well as 14 improve the government’s financial short-changes GERS, the retirement This gap is known as an unfunded Virgin Islands Legislatures, the 19th status. system falls farther behind and the liability, which in GERS’ case now to the 32nd. The true picture is more compli- unfunded liability grows. stands at more than $4 billion. “The longer you wait to fix it, cated, though, because at this point At this point, the government is The issues have been clearly spelled the more bitter the medicine,” said a smaller government payroll will so far behind in making the required out to officials at the top level of gov- Keith Brainard, research director for damage GERS even more because payments to the system, employer ernment many times for many years. the National Association of State fewer government employees means and employee contributions would At a 2016 summit meeting that laid Retirement Administrators. fewer dollars going to GERS, and that have had to total a whopping 77.4 out the dire condition of the retirement Actuarially determined contribu- outcome would push the retirement percent of payroll in Fiscal Year 2016 system, the GERS actuary cited shock- tions are calculated using a formula system toward insolvency even faster. to pay the amount the actuary said was ing numbers: In the 16 years between that takes into consideration the future The V.I. Code sets up GERS fund- necessary. 1999 and 2015, the government has cost of benefits and the unfunded ing in the form of contributions from If the government does not pay its short-changed the pension system by liability from previous years, then both the employees and the V.I. gov- contributions, GERS has less to invest more than $1.1 billion. amortizes the results over 20 years, ernment. But since the early 1990s, the — and investing the money over the That $1.1 billion is only part of the according to the GERS actuary, Rocky “ government has failed to pay GERS a long-term is what makes it grow. picture: According to information Joyner of Segal Consulting. Any loss makes a significant part of its contributions. The contribution shortfall forces from GERS, the government has not The government’s failure to pay difference. Whether In just one fiscal year, 2015, the GERS to sell investments just so it can met its GERS funding obligations the $200 million it owed for 2015 government’s contributions fell short pay pensions. since 1991 and possibly earlier. led to a big increase in the amount it’s that person not of what GERS’ actuary said was This creates an ever-increasing gap The threat of GERS insolvency owed for 2016 — which rose to being able to buy needed by nearly $128 million. The between the amount of money and took root and has grown through $247 million. something or whether it’s that person not going out for breakfast and the Contributions to GERS ployees. Senators and judges are not Tier 2: Hired on or after Oct. 1, waitress then not Who pays? How much? subject to the cap. The rate is set by the 2005 being able to buy Legislature or GERS Board or both. Regular: Pay 11.5 percent of their Where does the money go? Contributions are made through wages. something, it all automatic paycheck deductions. The Special classifications: Early trickles down. The Virgin Islands Code in 1959 not only on the contribution money percentage rate is determined by the Retirement Program (hazardous-duty) established contributions from the but also on the profits that could have employee’s hire date, and classification pay 13.625 percent; senators pay 14 – Lisa Bhola, owner of the V.I. government and the government’s come from investing it. and sub-set within the classification: percent; judges pay 15 percent. Trends store in Christiansted employees as the means of fund- The employees’ contributions are Tier 1: Hired before Oct. 1, Employer (government) ing the V.I. Government Employees’ a set percentage of each employee’s 2005 Retirement System. earnings. Regular: Pay 11 percent of their contributions GERS uses the contribution money The law set up the government’s wages. These are in two categories, which to pay retirees’ pensions. But contri- contribution to be in two forms: a per- Special classifications: Early are calculated two ways. “ butions are not enough, so it invests centage of each employee’s earnings Retirement Program (hazardous-duty) Set-Rate Contribution — My concerns are that most of the money and puts the profits and an additional amount, calculated pay 13 percent; senators pay 12 per- Percentage rate, set by GERS board, of it’s going to collapse toward the difference. every year by an actuary, that GERS cent; judges pay 14 percent. each employee’s wages. Currently it is When contributions and the profits needs to fund the pensions. 30-year-plus: All Tier I employees 20.5 percent and we will stop from investments still are not enough, Each category and subcategory of with 30 years or more of credited ser- Actuarially Determined Employer getting annuities, the law requires the V.I. government contribution has its own formula: vice who were eligible to retire on July Contribution — An annual amount to cover the remaining costs; if it does Employee contributions 5, 2011, but did not retire, contribute that closes the funding gap between probably sooner than not, then GERS has to sell off assets to an additional 3 percent of their salary what GERS will have to pay out to they are saying. It get cash to pay retirees. These are a percentage of an em- beginning Oct. 1, 2011, and an ad- retirees and the GERS’ revenue from Unpaid contributions compound the ployee’s wages up to $65,000 a year ditional 1 percent each year, beginning other contributions and investment almost seems damage: The pension system loses out for regular and hazardous-duty em- Jan.1, 2015. profits. inevitable when you look at the numbers, at the amounts of cash under the current construct,” the legality of Mapp’s plan. The government pushed hard TRUTH Mapp said at the PFA meeting. He The government was unable to for new taxes, originally argu- money they say are CONTINUED FROM PAGE 5 made a point that GERS would borrow the money anyway — at ing the increases would enable it missing and are to go to GERS. And Mapp prevented have to undergo reforms as a con- least in part because of the condi- to sell enough bonds to close its GERS from getting it. dition of receiving the money. tion of GERS. 2017 budget gap. Selling the bonds needed. In its November meeting, the Mapp also said that if he ever Down to Junk Bond Status could still prove difficult. — Phyllis Nehlsen, Public Finance Authority, chaired does decide to move forward with The territory’s failure to ad- St. Croix, GERS retiree by Mapp, decided to float bonds the Legislature’s authorization to The Virgin Islands government equately fund GERS has hurt its for only $147 million, omitting en- borrow $100 million for GERS, he could not sell bonds when it tried borrowing ability. tirely the $100 million for GERS. would not give the money to the re- in December. It is hoping that a New accounting rules require “I’m not prepared to give tirement system: He would instead new set of taxes and fees will give pension liabilities to be stated up the Government Employees invest it to benefit GERS. investors more confidence in the Retirement System any wads of GERS officials are questioning government’s financial condition. See TRUTH, page 7 Thursday, March 9, 2017 The Virgin Islands Daily News 7 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN Numbers Don’t Lie How Does GERS Compare Nationwide?

GERS is not alone in its troubles. earnings.” Across the United States, a number Turnarounds of state government’s pension Even pensions in the worst condition among state systems are struggling, but no state plans posted funding levels far higher than GERS Kellar and Keith Brainard, pension system in America is as bad research director for the National off as GERS. has available. Association of State Retirement A snapshot of how GERS Administrators, both described suc- compares: pension debt a state is carrying per 104.1 percent. cess stories of state pension systems • GERS unfunded liability is resident. That provides a means for Those figures are for state em- that had turned things around. $38,000 per V.I. resident. comparison among states of varying ployee pensions only. The state of Maine “has a good • Nationwide, states’ unfunded population size. Still, the comparison underscores story to tell,” Kellar said. liability is $1,870 per resident Pension liability per resident the severity of GERS’ condition. Maine’s State and Teachers plan • Funded status of other plans The actual level of the GERS’ un- had a funded ratio of 1991 of 36 average is 74 percent In the Virgin Islands, the un- funded liability per capita is probably percent, and by 2016 it was funded • Funded status of GERS is 19.53 funded liability at GERS is $38,265 higher, as the $38,265 per person sum at 82.2 percent, she said. percent per resident, almost four times as was figured using the 2010 Census Maine passed a state constitution- Pension liability by state high as the highest state. count of 106,405 residents in the al amendment in 1995 that required GERS’ and the Virgin Islands’ territory. Today the actual popula- elimination of the 1995 unfunded I think we like“ to According to a September report situation also can be compared to that tion could be lower, considering the accrued liability by 2028 through from S&P Global Ratings, the average in Puerto Rico, which a Bloomberg closure of HOVENSA. mandatory annual payments and re- perform under crisis, funded status of state pension systems report from August said had the Investment losses strictions on new benefits, she said. because they’ve been nationwide for 2015 was 73.2 percent. worst-funded public pension systems “It usually takes a long time to That means the average plan had 73.2 of all the states and territories. Also working against GERS’ get a pension back on track if it has telling us for years percent of the money it will need to Bloomberg noted that Puerto financial health is its return on become badly underfunded,” Kellar now that the system meet its payment obligations. Rico’s largest public pension investments, which were worse than said. That estimate was similar to a plan — its Employees Retirement results for most states. However, She acknowledged that six years is in trouble. I guess database of 160 state and local pension System, which is expected to they varied widely year-to-year, was not much time for the Virgin we just let it go and plans. Elizabeth Kellar, a senior fellow deplete its assets and become and GERS’ investment strategy is Islands to make changes, particularly with the Center for State and Local insolvent in the fiscal year that long-term. when the plan sponsor, the V.I. gov- every administration Government Excellence, said that in begins July 1 — now has more Moody’s has predicted that state ernment, is already short of cash. just let it go and let it 2015, the average funded status in a retirees than active members. GERS public pension liabilities would “Some places have made a com- publicplansdata.org sample was 74 has been trending toward that for continue to grow in the next two mitment to speed up improvements. go. And now we’re at percent. several years. years because returns on invest- West Virginia is an example of the point where it’s By comparison, the funded status of Bloomberg said that of the $30.2 ment fell far short of 2015 and 2016 that,” Kellar said. GERS was 19.53 percent in 2015. billion the Puerto Rico Employees targets. The median return for the Brainard also pointed to West really a crisis period. Among the state and local plans in Retirement System owes to current year ending June 30, 2015, was a Virginia as a place that managed to We’ve been seeing this the database Kellar cited, 17 percent and future retirees, it had only 0.27 gain of 3.2 percent and for the year turn things around. He said he has had an actuarial funded status of 40 to percent of the assets necessary to ending June 30, 2016, was a gain of watched the West Virginia’s teacher coming for years now. 59 percent, and 2.5 percent were at 20 pay those obligations. 0.52 percent. retirement plan go from a funded Everybody just kick it to 39 percent. Based on Puerto Rico’s latest GERS’ annual rate of return for level of about 17 percent in the Only 0.6 percent were under 20 population statistics, that plan’s investments for the year ending Sept. early 2000s to about 60 percent and down the road, kick it percent, on par with GERS. unfunded liability per capita is ap- 30, 2015 was a loss of 1 percent. improving, he said. down the road, hope it Even pensions in the worst condi- proximately $8,500 — compared to Moody’s also found that half the That pension plan initially tion among state plans posted funding $38,265 for GERS. states did not contribute sufficient switched to a defined contribu- will get better without levels far higher than GERS has According to the S&P report, amounts to curb the growth of tion plan for about 10 years in an doing anything. available. the highest net pension liability per their unfunded liabilities in 2015, attempt to stop the bleeding and The S&P report, which looked at capita among the states is for New and that jurisdictions like the found it was the wrong thing to do, — Helen Hart, St. Thomas, U.S. state pensions and did not consid- Jersey, at $10,648, and the aver- Virgin Islands with big contribu- according to Brainard. retired teacher and er the territories, found that the states age net public pension liability per tion shortfalls will face increasing “It basically starved the pension president of Government with the worst-funded pension systems capita among states is $1,870. difficulties. plan of contributions from newly Retirees United for Fairness were Kentucky at 37.4 percent, New The number for many states is “Low funding levels make it hired teachers and drove up the cost Jersey at 37.8 percent, Illinois at 40.2 much lower, though, including New harder for states to make progress,” of the legacy pension plan,” he said. percent, Connecticut at 49.4 percent York state, which has a net pension according to a Pew Charitable Trust Eventually, the legacy plan was and Rhode Island at 55.5 percent. liability of $74 per resident, and report on the State Pension Funding opened back up to new hires. In “ GERS’ 19.53 percent places it Nebraska with a liability of $121 Gap for 2014. “Those with larger addition, West Virginia made a The pension system below the bottom of the heap. per resident, according to S&P. unfunded pension liabilities require concerted effort to properly fund is to a payment Another measure S&P looks at Some states such as South Dakota substantially higher contributions to the plan, including finding addi- is state net pension liability per have no net pension liability, with pay down debt because they gener- tional revenue sources for the fund, that’s supposed to capita, which shows how much their pension system funded at ate less in the way of investment he said. sustain you for the rest of your life, but it’s not to say that net deficit for Fiscal Year 2014. $3.5 billion and it continues to rise, The “big three” credit rating TRUTH That restatement made the ter- mainly because the government services — Standard & Poor’s, it’s a lucrative CONTINUED FROM PAGE 6 ritory’s financial condition look short-changed GERS for so many Moody’s Investors Service, and arrangement. front on the government’s financial approximately $2 billion worse. years. Fitch Ratings — all recently cut reports. As a result, the accounting In place of the $1.5 billion net Credit rating agencies consider the V.I. government’s bond rating — Ian Williams Jr. St. firm BDO USA had to go back and deficit that the government reported GERS’ status when they rate the to junk status, and then cut them Thomas, retiree from V.I. restate the territorial government’s in 2014, the number now is almost value of V.I. government bonds. down even further. Fire Service 8 The Virgin Islands Daily News Thursday, March 9, 2017 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN How to Spot a Pension System at Risk GERS is sounding the alarm and waving a red flag

By JOY BLACKBURN give a false picture of what the pension Senior/Investigative Reporter Signs along the Road to Insolvency plan should expect to earn from those investments, leading to an unrealisti- The warning signs that experts say In only 20 years, GERS has deteriorated from a healthy and cally high expectation of income. characterize a trouble pension system stable pension system to almost certain death. Comparison of The fact that most public pension show up all over the Virgin Islands the pertinent statistics show the changes in glaring contrast. systems set their assumed rates of re- government’s handling of the pension Ballooning Deficits turn around 7.25 percent is a concern, plan it sponsors, the V.I. Government • $1.6 million — the annual GERS deficit in Siedle said, pointing to the example Employees Retirement System. 1996 the year the slide began. of famed billionaire investor Warren Those signs include: • $157.2 million — the annual GERS deficit in Buffett, who sets the assumed rate of • The extent to which the pension 2015 (the last year for complete data). return for his pension plans around 6.5 plan causes financial distress for the Paying in vs. Paying Out percent. plan’s sponsor. • 6.55 to 1 — the ratio in 1982 of active GERS-eligible employees “If Warren Buffett can’t make seven • The sponsor’s failure to pay (workers paying into the pension system) to retirees (who get payments and a quarter, how are these lug nuts money owed to the pension plan in full from the system), meaning that six and a half times as many people running these pension funds going to It is a monumental“ and and on time. were paying into the system as were receiving benefit payments. make it?’ Siedle said. • Controversy among officials • 2.58 to 1 — that ratio in 1995. The GERS board reduced its nearly insurmountable and the public over plan decisions on • 1.07 to 1 — that ratio in 2015, meaning that the number of assumed rate of return on invest- issue. I think this policy and investment. retired employees drawing money out (48 percent) was almost ments in recent years from 8 percent • Elected and appointed officials the same as the number of active employees paying in. to 7.25 percent to 7 percent, said should be a very high lacking the political will — or slow to Crystal Ball Administrator Austin Nibbs. The priority area for act — to raise contributions and cut • 11 out of 17— the number of times since 1999 that the territorial assumed rate of return is used in actu- benefits as necessary to keep the plan government has paid less than half the annual amount it owed to GERS. arial calculations. Governor Mapp’s in good financial shape. • 9 years — the amount of time that it took to more than triple Siedle said most state pension administration and for • Chronic declines in the plan’s GERS’ unfunded liability, the difference between money it plans set their assumed rate of return funded status — its level of assets in owes in payouts and the money it has to pay them. somewhere between 7 or 8 percent, the Legislature. It’s a proportion to its level of liability, or • $1.23 billion — GERS’ unfunded liability in 2006. but he believes they should be about big problem and 2023 obligations to pay. • $4.07 billion — GERS’ unfunded liability in 2015. 6.5 percent. • Plan managers over-estimating • 2023 — the year GERS is projected to hit insolvency. By 2023, GERS Another red flag — a big one — is right around the the rates of returns the plan will get on will have had to sell all of its assets to fill the gap between contributions indicating trouble is the use of alterna- corner. It’s upon us. It its investments or too much investing coming in and payments going out, after which time the pension tive investments, he said, describing in alternative or high-risk investments. system will be insolvent but still have thousands of retirees to pay. those as the “highest cost, highest risk” needs to be all hands “The overarching metric of a pen- investments. on deck and everybody sion plan’s health really is whether or So it is a “very bad sign” if you not it is causing fiscal distress for the ready in the plan, changes can always major changes to GERS in 2005, see “a large and growing percentage” focusing on this issue plan sponsor,” Keith Brainard, research be made for new hires. including setting up a second tier of these types of investments at a because I think this is director for the National Association of “If it’s known that the plan costs are of employees — new hires — with pension. State Retirement Administrators, said. problematic, or the plan itself is unsus- higher contribution rates and lower “Alternative investments are high the single most Also common among troubled tainable, there needs to be a willing- benefit accrual rates. risk, high cost — and most public important issue of all pension plans, according to Brainard, ness to make changes,” he said. Implementation of those reforms pensions, particularly most public pen- is “the employer’s chronic, persistent Elizabeth Kellar, senior fellow took years. Some smaller changes sions and struggling pensions, turn all the financial crises of failure to pay adequate contributions.” with the Center for State and Local since then have not significantly too often to alternative investments as this government. The Virgin Islands government has Government Excellence, pointed to pushed back GERS’ anticipated insol- sort of a ‘Hail Mary’ pass to save them not paid the full amount it owes GERS other signs of a troubled pension plan. vency date. from forseeable failure,” he said. — Troy deChabert-Schuster, since 1991. Even without paying those In a written response to Daily News Edward Siedle, is considered an GERS’ alternative investment State Director of AARP V.I. contributions, for years the Virgin inquiries, Kellar said a major sign of a expert in pension forensics, offers program was the subject of a scathing Islands government has been under troubled plan is a downward trend in another point of view on the signs of Inspector General’s audit in March immense financial strain and borrow- its funded status — a trend GERS has a troubled pension system. Forensic 2016, which found that: ing to pay its own operating expenses. seen year after year. examination of a pension system • The Alternative Investment The government’s failure to pay Funded status indicates a pension involves looking for evidence of fraud Program law as it exists does not pro- I concerned“ that the GERS has significantly eroded the plan’s level of assets in proportion to or criminal activity. vide adequate controls and protection government’s overall financial condi- how much it is obligated to pay. Controversy over board members’ against the risk of loss of the pension pension keep tion and credit rating. Other factors Kellar cited as indica- management is a red flag that a system funds entrusted to GERs. coming. I guess I’d GERS’ looming insolvency, if not tors of a troubled pension system is in jeopardy, he indicated. • GERS officials did not exercise averted by drastic measures, also include the employer not paying its Gov. Kenneth Mapp has squared proper due diligence, monitoring or have to survive means the government will be directly actuarially determined employer off publicly with the board and GERS oversight in the alternative investment somehow. Maybe I responsible for paying millions of dol- contribution every year, as well as cash Administrator Austin Nibbs over a program and entered into unauthorized lars owed to retirees. flow issues. number of funding and management loan agreements. will go on Food Brainard said that another big sign Because of unpaid contributions owed priorities. • GERS entered into an extremely Stamps. of a troubled public pension is “a by the V.I. government, many months A number of the board’s investment risky and questionable viatical invest- refusal or inability — political inability GERS sells off part of its investment decisions also have been lightning rods ment that jeopardized about $42 mil- — Lloyd O’Bryan, — to make changes to the benefit portfolio to make retiree payments. for controversy. lion of its investment portfolio. St. Croix, retiree from structure, when it’s known that those Like Brainard, Kellar also cited Siedle offered a warning about a GERS board member Edgar Ross Department of Housing, changes are needed.” failure to adjust assumptions or the pension system assuming an ar- said the board has suspended the Parks and Recreation He noted that while legal protec- plan design as needed as an indicator tificially high rate of return on its alternative investment program, tions and other factors could prevent of a troubled pension system. investments. An investment return altering benefits for participants al- The V.I. government did enact some assumption rate that is set too high will See RISK, page 9 Thursday, March 9, 2017 The Virgin Islands Daily News 9 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN Governor and Lt. Governor pensions How much do they get, and who pays? GERS does not pay pensions to • If former governors and lieutenant Government House for the last time. The 2012 act applies only to the governors and lieutenant governors. governors are elected to certain other If Turnbull had not gotten the huge spouses of governors or lieutenant In 1990, Title 33 V.I. Code offices or hold any other appointed or raise from Act 6905, he would have governors who died after June 1, 2011. Section 3080 established the Elected salaried position in the government, retired at only $64,000 a year, so the That kept Luz Luis eligible — but left Governors and Lieutenant Governors the pension payments will stop until fast work on Act 6905 ensured him out Monique Sibilly Hodge, widow of Retirement Fund in the V.I. treasury, to they leave that office. $56,000 a year more. Lt. Gov. Derek Hodge who died May be maintained and administered by the • An individual who serves two In 2011, the Legislature changed 31, 2011, and Joan Farrelly, widow V.I. finance commissioner. terms as lieutenant governor and two the1990 law’s wording for calculating of Gov. Alexander Farrelly, who died The Legislature has changed that terms as governor cannot collect a those pensions to “average” salary and Sept. 10, 2002. and other laws over the years — to pension for both offices. did away with “current.” The senators changed the benefit yet greater benefit the governors — and In December 2006, Governor Survivor benefits again in September 2014. This time now the Fund is paying out $575,000 Turnbull managed to get himself a they took away the benefits for surviv- per year. The money comes from windfall for life, thanks to a provision In a questionable series of see-saw- ing spouses of deceased governors and general revenue, not from GERS. in the 1990 law and to his skill at get- ing political moves, senators passed lieutenant governors. Governors and lieutenant governors ting the senators to pass Act 6905. special interest legislation granting However the new legislation did not must contribute 9 percent of their He had to call the senators into a large survivor benefits to spouses of take away benefits from those who had “ salaries to the Elected Governors and last-minute session, just three days be- deceased former governors. received them previously — mean- Care and attention Lieutenant Governors Retirement fore his ended, to get what he wanted. The law was designed specifically to ing Luz Luis is the only spouse of a was not given to the Fund. The Legislature appropriates ad- His stated reason for the urgency benefit Gov. Juan Luis’ widow, Luz Luis. deceased governor receiving benefits ditional money to keep the fund filled was to authorize $600,000 in pension The senators passed that law a month from the fund. system in a way that to pay out the pensions, which also are obligation bonds to rescue GERS from after former Juan Luis died on June 4, Who gets paid? would help it to called retirement annunities. the brink of ruin. The main thrust of 2011. It set the benefit at 75 percent of Elected governors and lieuten- the session was setting up huge raises the former governor’s pension. Former officials and survivors survive. Some of the ant governors start receiving their and pension benefits for the governor A few months later, the political tide receiving benefits from the Elected folks who looked pensions on the day they leave office. and lieutenant governor and senators changed, and the Senate repealed the Governors and Lieutenant Governors They also can begin collecting if they before they left office. measure. Retirement Fund are: after system said, have to resign because of illness. That’s where the 1990 law produced Then a year after the repeal, the • John deJongh Jr. — $120,000 ‘Well, there’s plenty The pensions are calculated by this the windfall: It said that regardless of senators revived the benefit for gov- annually formula: their age, the governor and lieutenant ernors’ widows — plus they added • Charles Turnbull — $120,000 of money over there • After 1 term in office, 40 percent governor start receiving their pension benefits for lieutenant governors’ annually — let’s go and use of the average annual salary during the on the day they leave office and that it surviving spouses. • Gregory Francis — $100,000 last term in office. is based on the current salary. That version, passed in late 2012, annually some of that money,’ • After 2 terms in office, 80 percent So with three days remaining on cut the benefit to 50 percent and set • Gerard Luz James — $50,000 without recognizing of the average annual salary during the the job, Turnbull got a $70,000 raise, conditions, including that the surviving annually last term in office. lifting him from $80,000 a year to spouses were: • Luz Luis — $75,000 annually or appreciating that • After 3 terms in office, 100 percent $150,000. As a two-term governor, • At least 50 years old. • Vargrave Richards — $50,000 whatever they took of the average annual salary during the he would begin receiving $120,000 • Married to the former governor or annually last term in office. a year for the rest of his life, starting lieutenant governor at the time of death. • Roy Schneider — $60,000 out of system, at There are conditions: as soon as he walked out the door of • Not remarried annually. some stage, we have to pay it back.” — Abdul Ali, St. Croix, retiree from the Labor Special Pensions for 6 Judges Department The V.I. Government Employees special retirement fund for judges, Because the benefits in Act 3924 from the V.I. Finance Department Retirement System administers governors and senators — was were more generous than those offered through an account funded by the retirement benefits for judges extremely short-lived. Passed in under GERS, the judges later sued to judicial branch. employed by V.I. Superior Court and December 1976, it had a 29-day be allowed to retire under the provi- They are: V.I. Supreme Court. life and was repealed the follow- sions of Act 3964 — and won. • Verne Hodge — $162,000 annually In my organization,“ That has not always been the case, ing month, according to a 2001 V.I. Who gets paid and how much? • Raymond Finch — $152,000 however. A handful of former judges Inspector General’s audit. annually I’ve been thinking still get retirement benefits through a Six judges were covered by the pro- Two of six judges eligible under • Eileen Petersen — $152,000 special fund administered by the V.I. gram because they were serving on or Act 3924, Antoine Joseph and Irwin annually that what we Finance Department. after Dec. 1, 1976, and before Jan. 28, Silverlight, are deceased. • Henry Feuerzeig — $83,599 probably need to be Act 3924 — which established a 1977, when the law was repealed. Four still receive retirement benefits annually. telling people is how to survive when it RISK marks for a healthy pension system is of thumb, but there are any number of Even under a different method of goes under and their CONTINUED FROM PAGE 8 an 80 percent or higher funding level, plans that are funded below 80 percent calculation — assuming that invest- although that can vary, said Brainard that are in reasonably good shape, and ments will produce higher rates of pension is cut. including the loans program, at this at the National Association of State a plan can be funded north of 80 per- returns and that the government will — Helen Hart, St. Thomas, point, so no new investments of that Retirement Administrators. cent and face trouble for a number of start paying its part to fund the system type are being made. “Some people want to say, ‘Well reasons, including the fiscal condition — GERS is still only 27.73 percent retired teacher and president of Government Signs of good health if it’s below 80 percent funded, then of the plan sponsor.” funded, according to the most recent it’s in trouble.’ And that’s not true,” GERS was at a 19.58 percent funding actuarial report for 2015, which was Retirees United for One of the more popular bench- Brainard said. “It may be a useful rule level at the end of the 2015 fiscal year. released in August. Fairness 10 The Virgin Islands Daily News Thursday, March 9, 2017 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN GERS’ Member Loan Shutdown Roils Politics Employees The GERS Board of Trustees loan programs in order to preserve suspension as “indefinite.” ing is done by the plan sponsor — we suspended its loan program in August cash to pay benefits, sell off its real The issue, according to GERS, is know we will have to sell the loans. vs Retirees 2015 and immediately was embroiled estate holdings and file a lawsuit” to the illiquid nature of the loans, mean- And at that time, we will be selling in controversy generated by the politics force the V.I. government to make its ing that the borrowers’ debt to GERS them at a discount.” Active employees and posturing of angry elected officials required annual contributions into the cannot easily be converted into cash if Advocates for the loan program and the distress of anxious government pension system. the system needs money to make pen- question GERS’ refusal to make Total: 9,303 employees. GERS administrator Austin Nibbs sion payments. loans to members and retirees at the Includes 3,553 Tier V.I. Government Employees told The Daily News in 2015 that Along with other assets such as same time it made loans to businesses 2 employees Retirement System officials’ defended the length of the suspension for the stock, bonds and property, GERS as part of its alternative investment Average age: 46.5 themselves, saying they had exercised popular loan program “all depends on could have to start selling the loans — program. Average years of credited their fiduciary responsibilities because whether there is an infusion” of cash. likely at “fire sale” rates, Nibbs said. GERS board vice president Edgar service: 14.7 years insolvency is looming and the govern- The suspension of the program Senators were unmoved. Ross says that the board also sus- Average pay: $39,560 ment has not offered a bailout. rapidly became a political hot potato In May 2016, the Legislature passed pended GERS’ alternative investment The GERS board issued a state- as politicians lined up on one side of a bill — sponsored by Gittens, Sen. program. Some money, however, Retirees ment saying it suspended the program the issue and GERS officials on the Kurt Vialet and Sen. Janette Millin remains outstanding in those loans to “to immediately address the liquidity other. Young — mandating that GERS rein- businesses. Total: 8,295 retired issues affecting the system, to ensure Senators argued that the loan state the loan program within certain For active government employees members and the availability of liquid funds to pay program had been successful and that limits. Gov. Kenneth Mapp signed the and retirees, the larger and more criti- 170 beneficiaries, benefits, and to ensure the survivability their constituents depended on the measure into law. cal question is not about the loans, it is receiving total semi- of the system.” loans. They also argued that the loans GERS, again, was unmoved. about whether the retirement system’s monthly benefits At the same meeting in August poured money into the local economy. In June, the GERS board members financial situation is as dire as GERS of $10,004,807 2015, the board passed a resolution Sen. Kenneth Gittens called the pro- said “No” and voted not to re-establish claims it is. Average semi- urging the government to immediately gram’s suspension “unconscionable.” the loan program. They relied on the “I think that this stopping of monthly benefit for issue $600 million in pension obliga- GERS officials, while acknowledg- section of the V.I. Code that requires the loan program was just to get retirees: $1,197 tion bonds — which had been autho- ing the program’s popularity, pointed the GERS board to “make invest- everyone stirred up so the govern- Average age of rized by the Legislature in 2006 but to the system’s deteriorating financial ment decisions in accordance with the ment would put more money into retirees: 69.9 never used — and urging lawmakers condition and the need to preserve ‘prudent investor standard.’” GERS,” said Phyllis Nehlsen, a St. Average age of to approve pension reforms pending cash to pay out pensions. “Would it be prudent,” Nibbs said, Croix retiree and GERS member. beneficiaries: 77.7 before the Legislature. The board members stood firm. “to bring back a loan program, which “And of course they just don’t have Average semi- The resolution made clear that if the In November 2015 they unani- would be drawing funds from the port- the money for it,” she said, referring monthly benefit for cash infusion and the legislation were mously reaffirmed the decision to folio, for loans with a payback period to the government and its contribu- beneficiaries: $439 denied, GERS would “have no choice put the personal loan program on greater than 2023?” tions, which it has not made in full but to permanently suspend all of its hiatus, and they reclassified the “Come 2023, 2022, 2020 — if noth- for many years. Notes: All data is from Sept. 30, 2015: Source: Government of the Virgin Islands Financial Terminology is Complex, Imprecise and Confusing Retirement System What exactly is GERS’ unfunded a pension system’s financial health. A Joyner, the board’s actuary, says will propriately fund the plan. It assumes a Actuarial Evaluation and liability? plan that is 100 percent funded has a happen in 2023 if nothing changes. 7 percent rate of return on investments Review for 2015, Segal There’s more than one answer. funded ratio of 1. By then, all the system’s assets instead of the much lower rate of Consulting, published What is the funded ratio? Different experts use different cut- will have been liquidated to pay the return used in the net pension liability August 8, 2016 There’s more than one answer to off points to indicate whether a system pensions, and the money coming in to figure. that, too. is healthy, but 80 percent funded is GERS would go out immediately to It also assumes the government will For this report, The Daily News common — meaning a healthy plan pay expenses and benefits — likely at start paying actuarially determined Retirement is using the figures from the 2015 would have a funded ratio of 0.8. a level of 50 percent or lower. contributions. Actuarial Evaluation of GERS, GERS has a funded ratio of 0.1958 The government would be respon- “That number makes the pre- Benefits released in August along with an ex- (19.58 percent). sible for paying the difference in the sumption that the plan will get the planation from Rocky Joyner of Segal benefits promised and what GERS contributions necessary to pay for • Defined pension annuity Consulting, the actuary for GERS. Unfunded liability projections could pay. the benefits that are due, and that the after retirement. It can be easy to get lost in the Recent changes in accounting stan- “You fix nothing, you run out of plan will earn 7 percent for the rest • Government group weeds trying to follow the terms used dards set by the national Government money … and you’re stuck with just a of its existence,” Joyner said. “Now health insurance after in the financial reports, so first, here Accounting Standards Board have pay-as-you-go system,” Joyner said. in reality, they haven’t been getting retirement. Once are some basic definitions: changed the way government pension How much is it? the money.” a retiree is eligible • Unfunded liability is the difference system information is reported, so the Nibbs used the figure $3.1 billion for Medicare, the in promised payments — the money latest GERS actuarial report provides in Senate hearings in 2016, but that Funded ratio estimates government health the retirement system is obligated to two different measurement figures to figure corresponds with the system’s The 2015 actuary report takes two insurance becomes pay out — and the money and assets it illustrate unfunded liability. net pension liability for 2014. different looks at funded status, one secondary. has in hand to make those payments. They are used in different ways and Now, the 2015 net pension liability, under the previous accounting rules • Duty-related disability Unfunded liability is one of the core assume different outcomes, Joyner said. released in August, is much higher: and one under the new rules. benefits. indicators of a pension system’s finan- • Net pension liability $4.07 billion. GERS’ funded ratio under the new • Non-duty-related cial health. GERS has an unfunded One measurement figure is “a • Unfunded actuarial accrued rules, which assumes a lower rate disability benefits. liability of $4.07 billion, which means point in time snapshot” of the system, liability of return, is 0.1958 ( meaning 19.58 • Death benefits. it is in critical condition. reflecting the current state of the sys- The 2015 actuarial report includes percent) for 2015. • Loan program, • Funded ratio is a comparison tem – its net pension liability — and a second measurement number – the “That’s the snapshot. That’s the real- authorized by the of the retirement system’s assets to assumes nothing will change. “unfunded actuarial accrued liability” ity of where we are right now today,” Legislature but its liabilities. Liabilities, also called The net pension liability, which — which is $2.5 billion. Joyner said. suspended by obligations, are the system’s promised is a new measure created by the Joyner said unfunded actuarial ac- GERS’ funded ratio under the older GERS board. payments and its expenses. Its assets Government Accounting Standards crued liability is the amount actuaries rule is 27.73 percent. That assumes a — Source: GERS are the funds it will have available to Board, indicates what will happen use in determining the recommended 7 percent return rate on investments, pay. This is another core indicator of when the system goes insolvent, which amount of contributions needed to ap- according to Joyner. Thursday, March 9, 2017 The Virgin Islands Daily News 11 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN — $4,070,000,000.00 unfunded liability —

Who’s to Blame? • Government House’s diversion of monies rightfully owed to GERS. • Politicians’ self-dealing and special-interest legislation • GERS’ bad decisions and bad management. Inside Part 2 Who’s to Blame | Page 12 The Long Shadow of Act 6905 | Page 16 The Tease and Truth of $600 million from Bonds | Page 17 Desperately Clinging to a Bad Idea | Page 18 Costly Mistakes | Page 19 A Long Wait | Page 20 Carambola — A Symbol of GERS’ Bad Deals | Page 21 No money. They say there’s“ no money, but there The Dark Side of the Carambola Loan | Page 22 shouldn’t be money for some and not others. To me, it just seems the system is unfair, very unfair, very one-sided. – Barbara Isaac, St. Croix, retired teacher 12 The Virgin Islands Daily News Thursday, March 9, 2017 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN

GERS has purchased considerable real estate including Havenishgt Mall, on St. Thomas, and Coakley Bay, on St. Croix, and has given V.I. Finest Foods a loan to build a supermarket near the Uni- versity of the Virgin Islands campus on St. Thomas. So much done wrong, so little done right Many politicians, officials and bad ideas eroded GERS ERS’ descent into jeopardy did not happen suddenly. For years the money the government uses to Early retirement Git was undercut by: pay those pensions is not money the Investment For at least 26 years, the V.I. government has chosen not to government owes GERS. The U.S. Department of the On the other hand, those pension Interior Office of the Inspector Returns properly fund the system, as required by law. Now the cost of payments add to the depletion of the General’s 2011 audit of GERS fixing GERS has reached staggering proportions. 2006 to 2015 government’s revenue and leaves blamed the retirement system’s 20 High: • Today, GERS teeters near the edge of insolvency. Only six it less able to pay what it does owe massive and growing unfunded ’07 17.5 years remain before the doomsday. GERS for others’ retirement benefits. liability on laws the V.I. Legislature 15 percent • Today, the central government is struggling to stay afloat Far and away, the greatest damage passed between 1984 and 2001 that in 2012 to GERS is done by governors and encouraged government workers to 10 without destroying the territory’s economy. government as they actively take retire early. • Today, many of the territory’s leaders are looking for easy money that should go to GERS and When the government reduced its answers and playing the blame game. use it for other purposes. This has workforce, “each of the laws passed 5 There’s plenty of blame to go around. become a common and continual either made lucrative provisions practice, and it has been going on for for early retirement or significantly 0 At the times when small changes and small, manageable decades. increased benefit packages,” the ’15 amounts of additional funding could have rescued GERS, senators GERS itself is to blame for some audit found. -5 and governors used GERS as a political tool, approving early of its troubles. It has consistently The audit looked at the cost of retirement laws when it was to their advantage, politically popular failed to maintain accurate records, just one of those laws — the Early -10 thus creating costly problems for Retirement Incentive, Training and Low: -15 percent and easy to do. in 2008 retirees and the system both. By Promotion Act of 1994 and a later -15 Even worse, the senators and The senators gave themselves a making bad investment decisions amendment — and found that it governors never adequately funded sweet retirement package, plus big without proper research, GERS prevented the retirement system Source: GERS audited financials the early retirements. Not only raises in the infamous Act 6905, has failed to protect the retirement from collecting $121 million, money was GERS forced to start paying which they passed in 2006 in an system’s interests and the that would have been invested and pensions sooner than expected, it 11th hour-special session as their government employees’ pensions. likely grown. lost out on the contributions into term was ending. Such failures have made the The senators appropriated only the system that those early retirees That bill also gave huge raises GERS board of trustees, past and $30 million to cover the effects of would have made if they had worked and pensions to the governor and present, the subject of harsh and those laws, and GERS officials the regular number of years before lieutenant governor. Their pensions biting audit reports that raise the retirement. do not come out of GERS funds, so public’s ire and erode public trust. See SO MUCH, page 13 Thursday, March 9, 2017 The Virgin Islands Daily News 13 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN

SO MUCH without any significant reforms, then CONTINUED FROM PAGE 12 we will do it and put the proceeds in I think we ought to be clear“ that there’s no expectation by the an investment instrument, matured typically refer to the nine different to the interest of the GERS, meaning laws as the “unfunded mandates.” central government that we’re going to float $100 million in they will be able to carry it on their “I know how we got the unfunded bonds and then hand the cash over to the GERS. books. We’ll put it in the market to liability, said former Sen. Craig work for them, and the retirees in the Barshinger. “It was primarily due That’s not going to happen. And if they’re sitting there waiting system will get the benefits of the to previous legislatures looking for the money, they should pack a lunch. money,” Mapp said in November. at this multimillion-dollar pot of Mapp did not identify “the — Gov. Kenneth Mapp money and just thinking that it members of the Senate” he made the was something they could use agreement with or clarify why the for political ends, such as giving in month-to-month. That will not Finance Commissioner Valdamier bill into law in November, Mapp, legislation was passed the way it was early retirement to people in be enough to pay the full pensions. Collens pointed out the steady who heads the PFA, said he would if they had made the deal. the Department of Education or Inevitably, retirees will get smaller rise over the years in the amount seek to borrow only the portion of It also was not clear to whom wherever.” and smaller pension checks until the actuaries have determined the the money that would go toward Mapp was referring when he said “This was political ‘plummery’ they level out at about 50 percent government had to pay to fund the financing the territory’s deficits. that “we” would put the proceeds — political plums for people. They or less. That will occur when the retirement benefits. He said he would not seek to from the bond in an investment threw actuarial science to the wind. money coming in equals the money Yet after year, the funds to pay borrow money for GERS. “I think instrument for the benefit of GERS. That’s how we got in trouble,” going out. those amounts do not appear in the we ought to be clear that there’s GERS board vice chairman Edgar Barshinger said. Deadbeat government government’s budget, Collens said. no expectation by the central Ross, a retired Superior Court judge, Senators in the 15th, 20th, 21st “If the actuaries are telling you in government that we’re going to float said that he does not believe Mapp’s 23rd and 24th Legislatures enacted While generous with early all those previous years, ‘You should $100 million in bonds and then hand plan would be legal. the unfunded early retirement retirement benefits, the Legislature actuarially contribute this,’ but we the cash over to the GERS,” Mapp “The governor should read the mandates, according to information and Government House have were doing the whole pay-as-you-go said. law,” Ross said. “The instrumentality from GERS. ignored the law’s requirement that thing. Then, how?” Collens said. “That’s not going to happen. And created by the law to do the Retirees not to blame the government pay all it owes to “The budget itself is a document if they’re sitting there waiting for the investments of any money belonging GERS every year. riddled with politics,” he said. money, they should pack a lunch.” to GERS is the board, not the Retirees who spoke to The Daily Senators typically appropriate Mapp punishes GERS Although the Legislature made it governor.” News pointed out that they had money to cover the government’s set- clear the money was to go to GERS, Notably the law gives the paid their share, lived up to their rate payroll contribution to GERS. Late last year, senators did Mapp said that even if the PFA GERS board, not the governor, the side of the bargain, and earned their However, that contribution is a small approve $100 million to go to eventually issued the $100 million duty of supervising the system’s retirement benefits and thus are part of the total that the government GERS as part of a larger borrowing in bonds for the GERS money, he administrator. Mapp called for the not to blame for GERS’ funding is legally obligated to contribute to package to cover anticipated budget would not give the money directly firing of the GERS administrator late problem. GERS every year. deficits. But Gov. Kenneth Mapp to GERS. last year, but the board did not bow They said they realize that In a motion filed late last year and the V.I. Public Finance Authority “My agreement with the to his demand. eventually someone will have to pay in an old court case, in which the balked at giving the pension system members of the Senate is that if we Although Mapp had plans to for the past actions of the territory’s retirement system tried to force the the money. do any financing under the current issue bonds to finance the territory’s elected leaders. The retirees just V.I. government to pay what it owes, After signing the borrowing construction of the Government deficit for this year and next, so don’t think it should be them. GERS described the government’s Employees Retirement system, “Should I pay for the contribution as having three See SO MUCH, page 14 mismanagement of money, for components: legislators passing nine unfunded • A set percentage rate of each mandates and knew full well employee’s compensation. The they were passing nine unfunded Legislature typically appropriates mandates?” said retiree Barbara this during the annual budget Isaac. “Should I pay for their process. foolishness, their carelessness?” • The mandated government funds However, if the government does necessary to pay the cost of special not rescue GERS soon, the retirees early retirement programs. indeed will have to pay. GERS is • An amount “sufficient to provide having to liquidate assets and after adequate actuarially determined those are gone, GERS will have reserve for the annuities,” as the V.I. nothing but the contributions coming Code puts it. 14 The Virgin Islands Daily News Thursday, March 9, 2017 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN

the under-funding is too large.” SO MUCH The way that Barshinger recalls CONTINUED FROM PAGE 13 it, for a while in 2011, the pressure far he has been unable to do so. A was on to enact reform, but then Gov. combination of factors, including the John deJongh Jr. convened a pension territory’s plummeting bond ratings reform task force “that rehashed and worsening fiscal condition, what we’d already done.” forced the government twice to call a Barshinger was not alone in halt in its attempt to sell the bonds. regarding the task force as redundant. No way out GERS officials had testified Charles John Kenneth Austin Willis Usie repeatedly to the Legislature over the At this point, to provide adequate Turnbull deJongh Jr. Mapp Nibbs Todman Richards years about proposed changes that funding for GERS, the government would to help stave off insolvency. will have to pay far more than just its employees who accrued benefits investment that jeopardized about Turnbull called the session at the DeJongh provided a letter in mandated set-rate contributions. while working for the federal $42 million of its investment end of his term, pointing to the need response to the Daily News request The government also must make government from receiving full portfolio. for the bonds. to interview him for this special hundreds of millions in additional benefits from GERS. • The retirement system entered However, the complex 49-page report. He wrote that he had hoped contributions to meet the amounts • It created a committee to into numerous agreements and bill that Turnbull asked senators to to use the Diageo rum matching necessary to fully fund the retirement evaluate all medical and disability investments without performing the pass was an amalgam of several funds as a revenue stream for GERS, benefits that the government has claims. necessary due diligence to ensure a proposals, including some pension but then the recession hit, followed promised to deliver to its employees. • It established the alternative reasonable rate of return. reforms, the bonds that were used by HOVENSA’s closure, and the For decades, though, the investments program, enabling the • The retirement system did not as the reason for the session, and rum revenue had to go toward government has not funded the board to invest in bonds rated BBB adequately monitor and oversee controversial self-interest raises and government operating expenses. system to back up its promises. or better and make more real estate investments under the Alternative retirement benefits. Following a recommendation in Every year that the government and alternative investments. Investment Program to protect its The Legislature passed Act 6905, the 2011 audit, deJongh convened failed to adequately fund the system, Sen. Usie Richards amended interest. but the pension obligation bonds that the pension reform task force in it became more expensive. the bill before it was passed in • V.I. Code related to the GERS Turnbull said in 2006 were necessary 2012. That group released a final The government’s obligations to September 2005 to give the GERS alternative investment program does to rescue GERS have never been report in 2013. GERS each year do not go away board the option of investing in not provide adequate controls and issued and are discredited as highly In March 2014, deJongh just because they have not been viatical contracts. In viaticals, the protection against the risk of loss risky by some financial advisers submitted a proposed pension reform paid. Instead they get folded into investors buy life insurance policy of the pension funds entrusted to Lip service to reforms bill to the Legislature. That was an the unfunded liability, compounding benefits from terminally ill or elderly GERS. election year, and deJongh was near the damage, and increasing the people and pay the policy premiums In a written response, the GERS Retiree Barbara Isaac said she the end of his last term in office and obligations for coming years. in exchange for the insurance payout board disagreed with V.I. Inspector wonders why senators have not made could not run for re-election. That For example: Fiscal Year 2016 when the beneficiaries die. General Steven van Beverhoudt’s more comprehensive reforms at meant he would not have to deal with estimates show the government’s By August 2006, the GERS assessment and said proper due GERS. the political fallout or the impact of employer contribution to GERS board had entered into a viatical diligence had been conducted. “Is it because they realize if pension reforms on the government’s as $75.4 million and employee investment. That viatical and other Van Beverhoudt replied in his they try to fix GERS and come up General Fund. contributions of $37.6 million for a decisions the GERS board made report that the GERS response was with comprehensive reforms, that He said that the task force looked total of $112.1 million going into the after senators enabled and expanded “confusing, contradictory and very everybody would have to be affected into pension obligation bonds, but retirement system. GERS’ alternative investment general in addressing our serious across the board, and not just The Center for Retirement Research That’s not enough for GERS to program were the subject of a concerns and recommendations pensioners? Is it that? I don’t know,” had “concluded that most pension have adequate funding, however. The scathing V.I. Inspector General’s regarding the millions of dollars she said. bonds issued are in the red, and thus actuary determined a total of $284.8 audit report in 2016. invested in alternative and viatical “What I’m beginning to feel is have increased system costs.” million was needed for 2016, which That audit found that the GERS investments.” maybe that’s why our legislators A poison pill leaves a $171.7 million shortfall. The board invested in “an extremely risky Although the audit report really haven’t addressed the issue government is obligated to pay the and questionable viatical investment recommended changes to the law, of GERS, haven’t really done His proposed 34-page bill difference but has not, so the $171.7 that jeopardized about $42 million senators did not do so. In fact, comprehensive reforms to GERS,” contained a variety of unpopular million will be rolled into GERS’ of its investment portfolio.” GERS is several months before the audit Isaac said reforms, which he anticipated in the unfunded liability. planning to write off the loss in the was published, the Senate actually By the time the Inspector letter he sent to the Senate along with Senate enables risky moves coming years. expanded the types of alternative General’s audit report on the the bill. It said: In an October interview, Nibbs investments GERS can get involved unfunded liability came out in 2011, “The corrective measures to be GERS administrator Austin Nibbs concurred that the viatical was a in. senators had already taken testimony implemented will not be pleasant for said that while the territory’s leaders mistake. The GERS board has suspended from GERS officials about changes any of the parties involved. Increased have made some pension reforms in “I think that was the worst new investments in its alternative needed to reform the system. contributions will be required by recent years, they have dodged the investment the board has ever made,” investment program for now, vice- “They ran up the red flag and current employees and, to a much hard fixes. he said, adding that the board and chairman Edgar Ross said. they said, ‘Danger, Will Robinson, larger extent, by government “The can has been kicked down the investment adviser did not have After enacting the 2005 GERS danger!’” former Senator Barshinger employers, which will necessarily the road so long, it has a lot of dents experience with viaticals. “That’s the reform — which set up the said. “We were told exactly what was have a material and growing impact in it,” he said. “You put it at the top only investment that I see as a bad alternative and viatical investments happening.” on the General Fund budget over the of the hill, it would not even come investment.” — senators did a little more pension The Legislature was given coming years, and therefore, impact down. It wouldn’t roll down.” The audit, however found that system reforming late in 2006, different options that would help save all across our community.” In 2005, the 26th Legislature GERS’ alternative investments making changes that sweetened the the retirement system, he recalled. “It The bill would: passed the Retirement System were risky, unmonitored and not deal for their own retirements. was a joy to have somebody come • Raise employers’ and employees’ Reform Act. It included provisions authorized by law. In late December 2006, Gov. and tell us there’s a serious problem, contributions to GERS, that set up a second tier of employees Among the audit findings: Charles Turnbull called the 26th but we’re telling you in advance • Raise the minimum retirement — those hired after Oct. 1, 2005 — • The retirement system entered Legislature into a special session when the problem is still solvable.” age. who would pay into the system at into loan agreements that are not to consider legislation that, among “What we did was, as a government, • Increase the required number of higher contribution rates and earn authorized under the Alternative other things, authorized the issuance as a legislature and as a government, years of work before retirement. lower benefits. Investment Program or any other of $600 million in pension obligation we kicked the can down the road. And • Limit the annual cost of living The new law made a number of authority as defined by the V.I. Code. bonds to help lower the GERS now, it’s really hard to fix,” Barshinger increase. changes. • GERS entered into an extremely unfunded liability, which was around said. “At some point in time, it • It prevented V.I. government risky and questionable viatical $1 billion at the time. becomes very difficult to fix because See SO MUCH, page 15 Thursday, March 9, 2017 The Virgin Islands Daily News 15 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN

General’s report had to rely on a SO MUCH The $4.07 billion unfunded liability, insolvency less than six years away, and the 2006 actuarial evaluation, the most CONTINUED FROM PAGE 14 recent that was available at that time. • Change the formula used to government still not offering any solutions, they had to halt the loan program. The 2006 actuarial evaluation, calculate benefits. The suspension of the program generated anger among GERS participants, however, was not done in 2006 While those changes were not or 2007. According to the 2011 popular, the bill also contained who questioned loans that were given to businesses. It also sparked Inspector General’s report, the 2006 change that was a poison pill. It controversy with the Legislature as well as with Gov. Kenneth Mapp. actuarial evaluation was “conducted would kill the bill before it reached in 2009 based on conditions as of the Senate floor. The issue, Austin Nibbs said, is not about whether the loaned money will be September 30, 2006.” That change was: paid back, but rather about liquidity and about maturity dates that exceed That situation has now been • An across-the-board 10 percent resolved, but for many years as the cut in GERS pensions, starting Oct. the system’s insolvency date. At some point before 2023, on the road to government underfunded the system, 1, 2014. insolvency, GERS will need to sell off the loans for whatever it can get while it was not clear whether up-to-date • The cut would apply to existing actuarial evaluations and financial pensions for retirees and future liquidating assets, Nibbs said. audits were available to provide an pensions for active employees. accurate reference point for what “GERS never asked for cuts and the government still not offering lead to incorrect pension payments the law. should have been paid. in existing pensions,” said board any solutions, they had to halt the or wrong retirement dates. He offered this explanation for Blame the man in prison member Edgar Ross. loan program. That audit found that the why it took so long to implement the “It was a politically hot potato.” The suspension of the program retirement system was often unable reforms: Nibbs said that when he came “There are over 8,000 retirees in generated anger among GERS to determine whether contributions “You had to program everything into the post, the annual financial the Virgin Islands, which you would participants, who questioned loans were made. in the code, you had to program audits were behind, and the actuarial assume that at least 7,000 of them that were given to businesses. It “To test the integrity of member everything in the procedures that evaluations cannot be done without vote,” Ross said. “Why would you also sparked controversy with the information maintained by the you had. You were doing things the financials. tell people on a fixed income that Legislature as well as with Mapp. retirement system, we selected a manually, now you’re doing things The audits were behind when you’re going to cut their monthly The issue, Nibbs said, is not about sample of 50 active members and electronically, so everything had to the previous administrator, Willis pension by 10 percent, when the whether the loaned money will be reviewed their official personnel be coded. We had to image every Todmann, was still in charge, cause of them not having the pension paid back, but rather about liquidity records,” the report from that audit piece of documents in a member’s Nibbs said. Todmann had served as is the government’s failure to pay and about maturity dates that exceed said. “We compared that information file. Do you know how many both chief financial officer and as what it should have? The Legislature the system’s insolvency date. At to the retirement system’s computer- millions of documents there are?” administrator. refused to do it.” some point before 2023, on the road generated contributions history The system, he said, had to Todmann resigned in April DeJongh said he did not recall to insolvency, GERS will need to sell report. We found that discrepancies be programmed to adhere to the 2007 after the board placed him exactly what happened but he off the loans for whatever it can get existed in 38 of the 50 active- complexities of V.I. Code as it relates on administrative leave. In January did remember that the Senate did while liquidating assets, Nibbs said. member files reviewed.” to the Government Employees 2008, Todmann was arrested and not invite his cabinet members or Ross said GERS was already The report points out different Retirement System. charged with stealing money from representatives from the task force having to sell off its portfolio instances when auditors learned that “We still have issues right now,” GERS through a forgery scheme that to testify. to provide the loans, and with GERS had not maintained proper he said. allowed him to collect two salaries. The computerized bill tracker on insolvency looming, the loan data, including key information that GERS had a computer system In 2011, Todmann was convicted the Legislature’s website shows that program was no longer fiscally affected benefits. before, but it was not used the way of the crime and was sentenced bill was never even assigned a bill responsible. Blaming the computer the new system is, he said. in 2012 to five years in prison. number. Mapp has not quantified how the Because the computer system Governor deJongh pardoned him on Legislatures eventually did pass a changes he has alluded to might And while GERS had pushed wasn’t ready, those employees who Dec. 31, 2014. few of the changes, but those started turn around the insolvency date for for the 2005 reform legislation were hired under the new Tier 2 The audits “were behind before with GERS, Ross said. GERS. that senators passed, six years later starting Oct. 1, 2005 — employees he left, and after he left they were No loans, much anger “Reform the system, change in 2011, GERS had still not fully who were required to make higher behind because there were issues the trajectory for investments, put implemented the reforms. contributions — did not start making with changing auditors from KPMG Gov. Kenneth Mapp has steadily people on the board who understand The audit indicates that Tier 1 the higher contributions until years to the auditors we have,” Nibbs said. taken aim at GERS officials and investments and find a credible and changes had been implemented in later. “Because of what he was charged board members, stepping up his competent administrator to manage January 2010, but implementation of Nibbs contended the delay was not with, as the CFO, there were a lot of verbal war with them, calling for the the system, those are the reforms Tier 2 changes was postponed at the a problem. issues with the financials.” ouster of administrator Austin Nibbs I want to see done,” Mapp said in governor’s request. Because he said “What harm was it to the system? Nibbs said there were also and insisting that the government October. the government needed to plan for it. We got our monies,” he said. “We problems with the data used for the will give them no more money GERS’ errors and omissions GERS administrator Nibbs said increased the employer contribution actuarial evaluations. outside of the payroll contributions that the reason for the long delays 3 percent right away, from 14 to 17, “There were some problems with without reform. GERS and its trustees over the in the reforms was in part because to pay their share and make it up.” the census. It was corrupted, so we His attacks have assumed motives years also bear blame for the current the pension plan did not have a Always running behind had to do a lot, a lot, a lot of cleaning that GERS officials deny. state of the retirement system. computer system in place that would up of the historical data, which the “It is their belief that if they The system was the subject of allow GERS to implement the two As for record-keeping, GERS has actuary uses to compute and make continue to hold the employees five Inspector General audits in the different tiers and make the changes not always been timely in either its his assumptions,” Nibbs said. hostage, if they deny them the access last 30 years, and all pointed out a that the new law required. annual financial audits or its actuary There also were problems to borrow their own money, which multitude of problems in the way the “There was no system in place reports. transferring data from the old system 97 percent of those monies are paid system has been administered, its to implement the two sides of the Those two reports contain the key to the new, Nibbs said. on time, that somehow they will record-keeping, and its procedures, contributions,” Nibbs said, adding information on the financial health It was cleaned, but then got force the government to float the which the audits found failed to that when he came in in February of the retirement system and exactly corrupted somehow, he said and then $600 million bond and give them the adequately protect the interests of the 2008, the GERS board had already how much money the government that problem had to be cleaned up too. money so they can throw it away,” system. selected the system. The contract, he should be giving it. As of now, GERS has audited Mapp said at a press conference The 2011 audit — which called said, was signed two months after he The audits are supposed to be financials and actuarial evaluations in October. “That’s not going to on the government to quickly make came on board and implementation done annually and the law requires that are current through Fiscal Year happen.” drastic reforms to avoid insolvency of the 2005 reform law started in the actuary report to be done once 2015, and because the GERS financial GERS officials say that with a — found that GERS did not always February 2008. every two years. condition is so dire, the board has $4.07 billion unfunded liability, maintain accurate information about “It lasted four years, until 2012,” That did not always happen. the actuarial evaluations done yearly insolvency less than six years away, its members and that problem could he said of the move to implement In fact, the 2011 Inspector instead of every two years. 16 The Virgin Islands Daily News Thursday, March 9, 2017 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN

The salaries“ — for the governor and senators — from Act 6905 are ridiculous and that

needs to go. Their Daily News file photo retirement agreement When Gov. Charles Turnbull entered the Senate Chamber to deliver his State of the Territory address in 2005, GERS was in dire financial trouble. In December 2006, GERS was still struggling, but Turnbull and seven senators engineered Act 6905 to vastly increase their pensions needs to be looked at. and give themselves huge raises. There’s a whole lot of fat to cut before you start cutting services, The Long Shadow of Act 6905 because people need casino, which 10 years later has yet to — but an eventual drain on GERS’ the services. Self-dealing legislation’s pensions break ground. funds — was the way Act 6905 raised — Phyllis Nehlsen, • Huge raises for the governor, the their maximum pension amount. St. Croix, retiree and raises still affect GERS lieutenant governor and the senators. Whereas before, the most they could This self-dealing component has long get was 75 percent of compensation, In less than 24 hours at the end legislation and instead shuffled the been viewed as swaying the Senate to Act 6905 raised it to 100 percent. of 2006 — in the week between bills off to committee. pass the whole package. That meant senators with enough Christmas and New Year’s, when one Turnbull, however, was determined. The governor got a $70,000 raise years of service could keep drawing What GERS“ is administration was on its way out As the sun was setting on Dec. 27, that immediately boosted him from their full pay for life. If a senator and another was coming in — special he ordered the senators back from $80,000 a year to $150,000. making $85,000 annually served long continuously saying is interests took root in GERS funding their holiday for a special session. The lieutenant governor got a enough, the pension difference would that they need a lump and in the government’s spending When the sun rose the next morning, $50,000 raise, from $75,000 to be more than $21,250 per year. priorities. the senators were back in their seats, $125,000. That Dec. 28, 2006, special session sum of money in the Act 6905 — the very name has looking at his new, 49-page financial The senators each got a $20,000 was, according to The Daily News’ system to make it become synonymous with self- package, which he expected them to raise, from $65,000 to $85,000, report at the time, full of “passionate dealing and special-interest legislation pass then and there, while he and they because the bill made their salaries debate, biting salvos and pleas for work. I believe that is — was rushed into law, and its effects still were in office. equal to the salary of the lowest-paid colleagues to vote their conscience.” what is needed, but still are felt today. On the night the governor executive branch commissioner, The bill passed by one vote: seven Public attention and vocal announced he was convening that which at the time was $85,000. senators for it; six against. None of somehow they’re not anger focused immediately on the special session, Daily News reporters An additional — and extraordinary the seven who approved Act 6905 getting what they’re act’s extravagant raises for Gov. called senators to find out what was — part of Act 6905 was the generous is still in the Senate. One who voted Charles Turnbull, Lt. Gov. Vargrave on the agenda, only to discover that new pension formula for senators. It against is still in office. asking for from the Richards and the senators of the 26th some were surprised; they said they increased the speed at which senators Senators voting “YES” were: governor and the Legislature, but Act 6905 contained first learned about the session when could earn retirement benefits and • Lorraine Berry, now deceased. much more in its 49 pages. The Daily News contacted them. become eligible to receive pensions. • Roosevelt David, now a Legislature. It’s money A prologue occurred in late The voluminous, complex bill they Act 6905 bumped up the senators’ consultant to EDC applicants. they need to keep the November 2006, when Turnbull would consider included measures pension payout benefits by increasing • Pedro Encarnacion, now retired. called the Legislature into special previously discussed — in particular their multiplier — the percentage • Juan Figueroa-Serville, now a system going. session to consider several financial the authorization to issue $600 number that is multiplied by the deputy commissioner with Property — Helen Hart, St. Thomas, bills, including one that authorized million in pension obligation bonds years in office and the salary amount and Procurement. retired teacher and president floating $600 million in pension — and some that the senators had to determine the size of the retiree’s • Louis Hill, now residing outside of Government Retirees obligation bonds that were urgently never seen before. Those included: pension. the territory United for Fairness needed to cover part of GERS’ • Giving a $15 million bridge loan The senators gave themselves a • Norman Jn Baptiste, ran unfunded liability. to Golden Gaming LLP, a classic multiplier that starts higher and ends unsuccessfully in 2016 for a Senate The senators, however, for reasons special-interest appropriation, to higher than before. of their own would not pass the support Paul Golden’s planned Equally lucrative for the senators See ACT 6905, page 18 Thursday, March 9, 2017 The Virgin Islands Daily News 17 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN The Tease and the Truth of $600 million from Bonds would not have been his first choice Once promised as the way to rescue GERS, because the bond money would not fix what ails GERS. Bond issue falls victim to governors’ other priorities “Pension obligation bonds are very risky propositions, OK?” he said. Why hasn’t the V.I. government obligation bonds. He said GERS Before 2012, the first year that “All I was trying to do was get the issued the $600 million worth of needed major reforms before getting a federal matching funds from Diageo- law enforced, because that’s what the pension obligation bonds it authorized cash infusion. produced rum started arriving, those Legislature and governor intended.” over 10 years ago? During deJongh’s administration, funds would not have been enough to By the time of Mapp’s second State In 2006 the GERS board came up GERS’ financial outlook steadily pay the debt service on a $600 million of the Territory Address in January with the idea for the pension obligation grew worse, and the V.I. government’s pension obligation bond. 2016, he was not talking favorably bonds as result of legislation that employer contributions increased. Financial modeling showed that about pension obligation bonds idea. mandated GERS to lay out options to A year into office, deJongh said, he using the same cash Mapp said in that reduce its unfunded liability. changed his mind and planned to issue flow to make a direct Gov. Kenneth speech that fixing Gov. Charles Turnbull’s financial the bonds. contribution to GERS problems at GERS team at first disagreed about the In a written response to recent Daily would have extended Mapp said in would be one of his bonds’ feasibility, on the basis that News inquiries about the bonds in GERS slightly longer that speech that top priorities but that the V.I. government did not have the preparation for this report, deJongh than a pension bond fixing problems floating $600 million debt capacity to issue $600 million in said an initial concept behind the and “with a more solid in pension obligation Tell the government“ to pension obligation bonds and that the massive corporate tax breaks deal footing via pension at GERS would bonds and turning plan was flawed. with Diageo was to dedicate half of reform,” deJongh said. be one of his the funds over to the pay its money, Later, the Turnbull team worked the federal matching fund revenues He characterized retirement system to because all they’ve with the GERS board to come up with from rum produced at the new Captain that model as a $600 top priorities, purchase an additional a plan that went to the V.I. Legislature. Morgan distillery to GERS to offset million bond placed but that floating 22 years of life for been doing is That plan was for the government the unfunded liability. The other half directly within GERS, the system was not a accelerating the to enter into a service contract with the was to be used to address the General with a pledge that $600 million genuine fix. V.I. Public Finance Authority or with a Fund’s structural deficit. would force surplus in pension He said he would ask decline of the GERS single-purpose subsidiary established Then the bottom dropped out. matching fund the Senate to add two system by not paying by the PFA. The government would The worldwide economic collapse revenues into GERS. obligation bonds members to the GERS make payments to the PFA, or the in 2008 caused a sharp decline in the None of that and turning the board who would bring its contributions. The subsidiary, in exchange for the service V.I. government’s tax and fee revenues, happened, however. investment and hedge public needs to know of reducing GERS’ unfunded liability, so the uses of the money had to By 2014, most of the funds over to fund management which at the time was $1.23 billion. change, deJongh said. matching fund revenue the retirement expertise to the board. that it also affects the Essentially, the PFA would send “Sustaining ongoing government was going to the benefit Hedge funds are people who are the bond proceeds to the retirement functions and employment became the of the General Fund, system to alternative investments system and then be responsible for overriding priority. It is important to he said, and was used purchase an and may carry more waiting to collect making payments on the debt to acknowledge that the GVI and GERS to pay debt service on risk than traditional annuities. investors. are a closed and connected system; a other bonds, which additional 22 investments. The governor’s financial advisers dollar out of one has implications for the government had years of life for The governor also — Mary Moorhead, contended that the pension obligation the other as both are sustained by the issued just to pay for said a year ago that St. Croix, retired from the bonds would not affect the territory’s same funding streams,” he said. operations. the system was he would work with Education Department statutory debt limit, although the debt The pension obligation bonds Through it all, the members of the GERS service would affect the government’s would have taken resources out of the authorization for the not a genuine fix. board to present to cash. Testifiers in 2006 said that the General Fund because there was no bonds has remained the community and transaction would merely trade one designated revenue stream to pay the intact, waiting for the green light. retirees a comprehensive GERS liability for another, not incur new debt service, he said. No money, no bonds reform plan to fix the problems once Our legislators“ really debt, but they would affect cash flow. The recession, the 2012 shutdown and for all. Turnbull called the Legislature of HOVENSA’s refining operations, During his successful 2014 During 2016, he did not make haven’t addressed the into special session to get the pension plus federal actions that curtailed the campaign for governor, Kenneth Mapp public a plan and instead picked a fight issue of GERS, haven’t obligation bonds passed, and he Economic Development Commission expressed support for the pension with the GERS managers and board. emphasized the importance of the program, all depleted government obligation bonds, but he emphasized Daily News requests to Government really done bonds in a letter to Senate President resources, deJongh said. that a funding source to repay the House for specifics about Mapp’s plan comprehensive Lorraine Berry that accompanied the His administration and the bonds would have to be identified. to reform GERS, or about any GERS bill. Act 6905 was the result. Legislature moved to increase That’s because the 2006 legislation legislation he might propose, went reforms to GERS. Is it In a recent interview for this report, government revenues and cut authorizing those bonds was vague: unanswered. because they realize if Turnbull said he did not recall the expenses. Among the measures were it just said gross receipts or income Meanwhile, the territory in specifics of why he felt the special two Gross Receipts Tax increases, taxes. December and January tried to float they try to fix GERS, session at the end of his term to get which together raised the tax Governor Mapp also said he also bonds for other purposes and failed to and come up with authorization for pension obligation from 4 percent to 5 percent, and a wanted to look closely at the pension attract investors. bonds was necessary and urgent. government-wide 8 percent salary system’s portfolio and stop GERS In his 2017 State of the Territory comprehensive “I know that the retirement system cut that lasted two years. Governor from making risky investments and Address, Mapp said he planned to reforms, that was in trouble. We felt we should do deJongh also laid off workers and business loans. submit comprehensive GERS reform whatever we can to help,” Turnbull repeatedly borrowed money to keep GERS Board Of Trustees Vice legislation to the Senate by the end of everybody would have said. “That was the general idea government operations afloat. Chairman Edgar Ross, a retired judge, March. to be affected across behind it, but I don’t remember all the The 8 percent salary cut and layoffs said he had championed pension As of today, the pension obligation particulars.” did reduced government spending, obligation bonds “because it was bond authorization exists but has not the board, and not Plans disrupted but had a negative effect on GERS the law, considered by a Legislature, been implemented, the promised plan just pensioners? because lower salaries and fewer passed and signed by then-Governor to reform GERS does not exist, and Turnbull’s successor, Gov. John workers meant lower contributions Turnbull. I wanted them to enforce it.” GERS’ $4.07 billion unfunded liability — Barbara Isaac, deJongh Jr., opposed the pension into the system. However, Ross also said the bonds is steadily growing. St. Croix, retired teacher 18 The Virgin Islands Daily News Thursday, March 9, 2017 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN Desperately Clinging to a Bad Idea as hoped. territory would pay more in borrowing Pension obligation bonds “They’re risky, very risky, because costs because of its financial condi- remember it’s all based on arbitrage, tion and credit ratings — and because it’s all based on hoping that your bets the territory doesn’t pay its actuarially would do more harm than good are going to come to fruition, and those determined contributions to GERS Over the last two years, an old • The V.I. Government’s current bets have to be able to meet a certain in- anyway. bonding authorization has been all the financial condition. The government vestment criterion for the GERS to con- Therefore, he said, unlike most talk as a potential means to get new has tried twice to borrow money in tinue to be sustainable,” said Finance governments that issue a pension obli- money into the Government Employ- the bond markets recently, just to stay Commissioner Valdamier Collens. gation bond, pension obligation bonds ees Retirement System. afloat this year and was unable to. The Attorney Patricia Goins, of Hawkins issued by the V.I. government would The GERS governing board in Au- government for years has operated Delafield & Wood, the V.I. govern- “increase the costs to the government gust 2015 passed a resolution urging this way – living beyond its incoming ment’s bond counsel, said that pension vs. the status quo, not reduce them.” the V.I. Government to take immedi- revenues and taking on 30-year debt to obligation bonds had been popular The Government Finance Officers ate action to issue the $600 million in pay current bills. in the past, but historically, have not Association, a professional associa- pension obligation bonds and for the Why are these bonds risky? performed well. tion for public finance officers in the Legislature to approve pending pen- Pension obligation bonds work dif- “It’s not risk-free. In fact, it’s con- United States and Canada, strongly sion reform legislation that had been ferently than most bonds the territory sidered a very risky investment. It’s an advises against state and local govern- on the table for years. issues, and different rules apply. arbitrage interest rate risk,” she said. ments issuing pension obligation “ And still the bonds, which the 26th The basic idea is this: A government “The timing is critical. You are talking bonds for these reasons: I can’t see how we’re Legislature authorized 10 years ago borrows money by issuing pension about exchanging a soft obligation – • The invested bond proceeds may going to rescue this. in Act 6905, have not been issued and obligation bonds. The bond proceeds your requirement to fund the pension fail to earn more than the interest rate GERS’ vision of the $600 million cash go to the pension system to invest, UAL — against a hard obligation, the owed over the term of the bonds; We just keep infusion is proving to be an illusion. with the idea that the rate of return on principal and interest on bonds.” • Pension obligation bonds are borrowing, and we Among the reasons: the investments will exceed the interest UAL stands for unfunded actuarial complex instruments and carry consid- • The risky nature of pension obliga- rate that the government owes on the liability. Notably, the V.I. government erable risk; just keep raiding the tion bonds. bonds, earning money for the pension has not taken action to pay down the • Pension obligation bonds increase retirement system. • The V.I. Government’s existing system and lowering the government’s unfunded liability it owes the retire- a jurisdiction’s bonded debt burden level of debt and the fact that it is unfunded liability. ment system, and instead has let it and potentially use up debt capacity — former V.I. Sen. rapidly approaching statutory and If the gamble doesn’t work, though, grow larger and larger each year. that could be used for other purposes; Craig Barshinger, St. John, contractual debt ceilings, after which it and a high enough rate of return is not Former Gov. John deJongh Jr., in • Pension obligation bonds are often now retired will not be able to borrow more. achieved, the government is left hold- a written response to a Daily News structured in a way that increases the • The territory’s bad credit rating, ing the bag – still owing all the interest inquiry, pointed out that pension sponsors’ overall costs; and which means any borrowing the Virgin on the money it borrowed, as well as obligation bonds are inherently more • Rating agencies may not view Islands does is likely to cost more in the unfunded pension liabilities be- problematic for the Virgin Islands than issuing pension obligation bonds as a Governor Mapp“ says the form of higher interest rates. cause the investments did not perform for states for two reasons: because the positive. he wants to change, to fire people on the They voted for Act 6905 board, in the system, Mr. Nibbs. I don’t know if that’s the solution. It might be. But start putting the money in, as much as possible. Lorraine Roosevelt Pedro Juan Louis Norman Ronald – Phyllis Nehlsen, St. Croix, Berry David Encarnacion Figueroa-Serville Hill Jn Baptiste Russell retired teacher ACT 6905 appointed member of the V.I Casino increases in senators’ pensions stayed governor a bump. Richards’ pension CONTINUED FROM PAGE 16 Control Commission. in place and continue to impact GERS. went up from $30,000 to $50,000 per “ • Celestino White Sr., now a Governor’s pension boosted year. People are afraid. There seat, now a radio talk-show host he ran consultant. While pensions for senators were administrations unsuccessfully. Two senators were absent and so For Turnbull, getting the bill passed impact GERS, the pensions for • Ronald Russell, now working in did not vote: Craig Barshinger, now guaranteed his pension would be far Turnbull and Richards — as for all in the past that put the his private law practice. retired, and Neville James, who is still larger than his salary on the job as governors and lieutenant governors fear of God in people. Senators voting NO were: in the Senate. governor. — do not. Those pensions are • Liston Davis, now a talk radio Public outcry over Act 6905 ensued At an $80,000 annual salary for his drawn from a special fund, not from They made people so host. immediately. Recall petitions spread eight years in office, Turnbull had been GERS, and are paid through the V.I. afraid to speak out. It’s • Adlah Donastorg Jr., now in quickly, but in the end they fell short facing a pension of $64,000 a year. Act Finance Department. private business. of the more than 8,000 signatures that 6905 changed that by setting $150,000 The pension obligation bonds that a small community. You • Shawn-Michael Malone, now Elections officials said were needed. a year as his salary, which gave Turnbull Turnbull urged the senators to pass in speak out, they get you working for Governor Mapp at Although the incoming 27th a lifetime pension of $120,000 a year. order to rescue GERS — and that he Government House. Legislature amended a few provisions In additional generosity, the Senate used as the pressing reason for calling back. • Positive Nelson, remained in in Act 6905 — including changing made Turnbull’s $150,000 salary them into the 11th-hour special – Joyce Rohlsen, St. Croix, office; now in the 32nd Legislature. GERS benefits for hazardous-duty retroactive three months. session — are still authorized but retired school nurse • Usie Richards, now a Mapp employees — all the raises and the Act 6905 also gave his lieutenant have never been issued. Thursday, March 9, 2017 The Virgin Islands Daily News 19 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN

I’ve never gotten“ a statement from GERS Myrna van Beverhoudt taught in V.I. schools for 30 years, when she retired, GERS told her she owned more than $11,000 in contributions. That number turned out to be incorrect. that they would stand behind. — Pat Oliver, librarian at St. Costly mistakes Croix Educational Complex. of the Virgin Islands in the 1980s, he GERS told her she owes They messed with the wrong government employee, said. UVI reported that it made the the retirement system more employer payments, but to a different than $8,000 — without plan they were using at the time in saying why that money is wife of a paragon of accurate documentation place of GERS. owed or in what time period It should come as no surprise to V.I But when Myrna van Beverhoudt He also obtained copies of GERS’ Van Beverhoudt said he and his it was under-paid residents that longtime V.I. Inspector resigned at the end of 2012 and went records showing his wife’s contribu- wife discussed it with GERS and General Steven van Beverhoudt is a into retirement, GERS came back and tions and compared that with his data. agreed to pay the $3,900 in missing meticulous record-keeper. said she owed an additional $5,000 in In the end, the time van Beverhoudt UVI employer contributions — That came in contributions, the inspector general spent with the documents paid off. even though she had already paid “ handy when his wife, said. “I came up with her employee Cut out some frivolous Myrna, who worked That claim — after his wife had her not owing contributions. spending that we see for the V.I. Educa- already paid the amount GERS ini- any money,” he Van Beverhoudt tion Department for tially said she owed — prompted van said, noting that They come“ and tell said he is worried every day. Make the more than 30 years, Beverhoudt to get involved. he compared the about GERS’ Carnival support itself. decided to retire at “That’s when I questioned it,” he documents, pay you this is how much record-keeping. the end of 2012. said. period by pay you owe. “I feel sorry for Have people go on Several years “I said, you guys did your assess- period, and found the average per- leave without pay if before that, GERS Steven van ment years ago, and she got into a discrepancies. Then, on the verge of son, the Joe Blow. Beverhoudt advised members payment plan and started paying the “I found numer- retiring, they tell you, You’re focused, they want to take a that if they were money,” he said. “How can you now ous instances you’re working, trip. Don’t have us planning to retire, they should find turn around and say she owes more where the money ‘No, that’s not correct, you’re barely out ahead of time whether they owed money again? I don’t agree with that.” was taken from you owe more.’ making $20,000,” paying for it. Fix GERS any additional contributions, Van Beverhoudt, who has been her, but for some he said. “And if Government House so van Beverhoudt said. V.I. Inspector General since 1989 and reason, it wasn’t That’s not right. they screwed up we’re not paying a So Myrna van Beverhoudt asked recently was confirmed for seven more recorded in their — Steven Van Beverhoudt hers, they may GERS do an analysis of her contribu- years, noted that he is “very particular” system,” van Bev- have screwed up hotel bill every month. tions. In April 2008, GERS provided with his own documents. erhoudt said. everybody in the her with a figure of approximately In fact, he said, he has every pay- Van Beverhoudt said that when he government during that time period.” That $1.5 million $11,900, which GERS said was the check stub for his wife from the first took his spreadsheet into GERS, of- He also is concerned, he said, about going to the senators, sum of contributions she owed. day she started working for the V.I. ficials there did their own analysis and the way GERS handled the matter. “She worked up a plan where she government. then did an adjustment. “They wiped “They come and tell you this is how that was ridiculous. would pay them every payday,” Steven So when GERS said his wife owed out that $5,000 they said she owed,” much you owe,” he said. “Then, on the We’re acting on one van Beverhoudt said. Approximately the system even more money, van he said. verge of retiring, they tell you, ‘No, $90 extra would be deducted from her Beverhoudt hauled out the pay stubs His wife retired in December 2012 that’s not correct, you owe more.’” hand like we have paycheck every two weeks to pay off and went to work putting together a and got her first retirement check in “That’s not right.” plenty of money, and what GERS said she owed. spreadsheet. May 2013. It was a retroactive pay- Van Beverhoudt said that when he In 2010, she increased the extra “I sat down, and I input every ment covering January through April retires, he’s ready to make sure every- then we say we have deduction to $300 every two weeks single one, what her payments were of that year. thing GERS says is correct. nothing when it’s until she owed nothing — and GERS and what they should have been,” van A small amount had been taken “I have every single pay stub from confirmed that, he said. Beverhoudt said. “Whatever year the out of that first check for employer when I started work in the govern- another situation. “It was paid off before she retired,” law changed and they increased the contributions, stemming from a one- ment in 1978. Every pay stub,” he — Phyllis Nehlsen he said. percentage, I increased it too.” year stint she worked at the University said. 20 The Virgin Islands Daily News Thursday, March 9, 2017 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN

Former Sen. Craig Barshinger has struggled with GERS for two years to receive I feel like I “am a pawn. his pension. I’m being used. I feel that GERS is using me to squeeze the government. Nobody can live in this world A Long Wait without money. I’m it still is significant.” praying to God, GERS’ inability to compute former senator’s pension Barshinger said he went again to the knocking on every GERS office in December to assess spotlights a source of retirement system’s trouble the situation. door, trying to get the “They’re back to the thing where problem resolved. How long should it take for find records for three of those years, government employees. they say that their computer can’t government employees who have Barshinger said. The records make a Under V.I. law at the time that process people who have two kinds of — V.I. Police Sgt. (ret) retired to start getting their GERS difference because the number of years Barshinger left office, senators were service,” he said. “I don’t think they’re Patricia Tranberg Stevens, benefits? of service have a direct impact on how eligible after three terms – six years – really confused as much as they don’t St. Thomas. When she A week? A month? Six months? A much pension a retiree receives. for some level of retirement benefits really know what to do.” retired, GERS withheld her year? Barshinger said he went to a GERS once they are no longer employed by Barshinger said he again pushed for first pension pay for a year Delays sometimes stretching on for pre-retirement workshop about a year the government and have reached the concrete information and explanations. because the government years — and often blamed on funding, before he retired. When he retired, he age of 50. More than 10 months after “They were soft on everything that had not paid its share of her paperwork or computer errors — followed the instructions, he said. Barshinger retired, a new law raised was specific,” he said. “I pushed it affect retirees who had worked at all benefits He left office in January 2015, as that age to 60. hard, and the only thing I walked away levels of the government — even the the 31st Legislature was sworn in. By about the end of 2015, with was a paper that shows why they top. “In the first month that I was retired, Barshinger said GERS told him they’d say I haven’t had enough service.” Former Sen. Craig Barshinger, who I went in to the GERS, and I signed worked out the software problem, He also said he signed a document retired after leaving office in January all the paperwork with the benefits but contended they’d found a “new” saying he wanted the Legislature to “ 2015, has been waiting more than two analyst,” he said. problem: that the Legislature owes pay its employer contributions. Since I still don’t years and still has not seen a dime, he “And they said, ‘You know, it might employer contributions for him. Virgin Islands law requires payment understand why the said. be a while until you see this.’ How much was not clear. of employer contributions, why a GERS staff keeps changing the I said, “Yes, I’m prepared.” “It’s a new excuse every few document like that would be necessary first thing in the story on why his retirement payments They said it could be six months. months,” he said. “They say, ‘Wait a was unclear. Board of Trustees’ have not started yet, he said. I said, ‘I’m prepared.’” few months and we’ll work out this Barshinger said he has been trying Barshinger not only was a senator, After six months, though, nothing problem.’ Then, when that’s worked to avoid having to pay an attorney to vocabulary is they he was elected four times as senator at came. out, there’s a new problem.” get what he is due from GERS, but should cut annuities large, representing the entire territory. So Barshinger went back to check Even now, Barshinger said, GERS that eventually may prove necessary. His eight years in office make him with GERS. will not give him a full accounting of His next step, he said, is to of pensioners. Why is eligible for the V.I. Legislature’s “They said, ‘Oh, well, we’re what they say the Legislature did not contact all the members of the 32nd that your first option? pension program — Yet still he waits. working on it,’ ” he said. “And when pay in employer contributions for him Legislature about the problem since he What is the problem? eight months had passed, they said, GERS staff have instead suggested and they are part of the same class of Isn’t there anything For two years GERS staff have ‘We have a problem, and you’re not the that Barshinger pay what the employees. else you can do? alternated back and forth on what’s only senator who has this problem, but Legislature should have paid, he said. Barshinger, who became a father in to blame. They cite missing employer our software won’t allow us to issue Barshinger refuses to pay the 2015, said he needs the income and – Barbara Isaac, St. Croix, contributions or they say the retirement you a check. It’s for anyone who has government’s share. had planned on having it by now. retired teacher system’s software can’t handle benefits both government service and Senate “I have no interest in that,” he said. “I need my retirement — just for a retiree with two different kinds of service. It’s two different things.’” “My interest is in fixing the problem.” something. I’m getting nothing right government service. The two types of benefits are Barshinger said he feels like “the now,” he said. “But I’m not going to Before his work as a senator, calculated differently. Senators pay only senator who’s retired who hasn’t let the fact that they’re not paying it at Barshinger worked 12 years for the more in contributions, but also have gotten his money. It’s a reasonable all cause me to make a deal and accept V.I. government — but GERS can’t much higher benefits than regular amount. It’s under $30,000 a year, but less than the law says.” Thursday, March 9, 2017 The Virgin Islands Daily News 21 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN

Active loans Loan to ATTILANUS (viaticles) Loan amount: $10 million Maturity date: July 10, 2017 Interest rate: 15% Interest paid: $1,988,708.37 Principal paid: $0 Amount now due: $10 million Loan to GOVERNMENT Loan amount: $13 million Maturity date: Dec. 15, 2016 (extended to Dec. 15, 2018 Interest rate: 4.91% Interest paid: $1,949,773.49 Principal paid: $8,079,867.17 Amount now due: $4,920,132.83 Loan to KAZI FOODS (KFC & Pizza Hut) Loan amount: $6 million The former management of the Carambola Beach Resort and Spa on St. Croix filed suit against the Government Employees’ Retirement Maturity date: Oct. 1, 2023 System, claiming it failed to pay management fees and other reimbursements. Interest rate: 6.25% Interest paid: $1,165,150.66 Principal paid: $700,024.61 Carambola – a Symbol of GERS’ Bad Deals Amount now due: $5,299,975.39 Loan to Hints of political pressure and evidence of improper decision-making V.I. FINEST FOODS (St. Thomas supermarket have made the loan to the resort a catchphrase for GERS’ problems near UVI campus) Loan amount: $11 million How did GERS wind up owning property owner did not keep up with Maturity date: Mar. 31, 2025 the Renaissance St. Croix Carambola its payments to GERS. Interest rate: 6.40% Beach Resort? In August 2011, GERS Interest paid: $508,777.78 It all started when the retirement Administrator Austin Nibbs informed Principal paid: $324,232.40 system gave the struggling resort $15 a Senate committee that Carambola Amount now due: $10,675,767.60 million so it could pay off a mortgage had not paid principal or interest for Loan totals in default and make renovations. the last two months and had defaulted GERS lent: $40,000,000.00 That loan was exactly the sort that on the loan. Interest paid to GERS: the V.I. Inspector General criticized In December 2011, the GERS board $5,612,410.30 in a 2016 audit. He said Virgin voted to refinance Carambola’s loan Principal paid to GERS: Islands law bars the V.I. Government and cut the interest rate from 10.5 $9,104,124.18 Employees Retirement System from percent to 6.3 percent, but in just a few Amount now due: $30,895,875.82 making such loans. months, Carambola again defaulted. GERS officials disagreed. They GERS took over ownership of the argued that commercial loans to new, resort in May 2012. Investments expanding, or financially troubled The V.I. Inspector General’s audit businesses were allowed because report, published in March 2016, Mesirow Fund V GERS committed $10 million they fall under the law’s definition of sharply criticized GERS for failing GERS put in $7.65 million “private equity investments in special to perform adequate due diligence situations.” Daily News file photo and failing to sufficiently monitor its Mesirow Fund IV The retirement system ultimately Tables full of senators, their staff, family and friends filled the dining room alternative investment loans. GERS committed $15 million made seven such loans, and the at Renaissance St. Croix Carambola Beach Resort in January for a private GERS officials countered that they GERS put in $13.8 million Inspector General criticized all of them celebratory dinner, at V.I. taxpayers’ expense. carefully evaluated all agreements and as illegal and as bad investments. The investments before making decisions, Attilanus profits GERS received from most of General reported. 10.5 percent interest. “Due diligence” but the Inspector General found GERS put in $50 million the loans were below expectations. GERS’ entanglement in Carambola is the process used to gather facts specific evidence that GERS had not Received a return of $8 million “GERS engaged in highly began as far back as 2009, when the and evaluate a possible business done so before giving Carambola the $42,000,000 being written off speculative and risky activities by board agreed to make the loan. In transaction. $15 million loan. The IG said in the entering into these loan agreements January 2010 when Gov. John deJongh The GERS statement described how audit report: without performing sufficient due Jr. announced the deal and praised Carambola would use the $15 million: • The financial consultant reported Real estate diligence or having a mechanism to the GERS board for making the loan, $8.2 million to pay off existing bank that because of the expedited nature Hoffman/Nullyberg adequately monitor these questionable plus a loan to Seaborne Airlines, some loans, judgments and priority liens of the loan, the binder of required Bought for $4.595 million activities,” the Inspector General said questioned whether politics influenced against the property and $6.8 million documents was not complete. These Coakley Bay in his March 2016 audit report. the loan decisions. to pay for upgrades so the resort could documents include critical financial Bought for $5 million “In addition, GERS has been The GERS board then issued a meet hospitality company Marriott and legal paperwork that are used to forced to liquidate millions of dollars statement saying it had conducted Corp.’s standards. determine an entity’s ability to pay. Havensight Mall from traditional investments to five months of due diligence before The renovations were completed, • GERS had to pay more than $1 Bought for $32 million disburse large sums of money to these the July 24, 2009, vote to make the and Carambola received Marriott’s Carambola commercial borrowers,” the Inspector loan to Carambola Northwest LLC at Renaissance Hotel designation, but the See CARAMBOLA, page 22 Default on $15 million 22 The Virgin Islands Daily News Thursday, March 9, 2017 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN The Dark Side of the Carambola deal Inspector General’s report. GERS let itself get bilked of $15 million by former owner Among those “fraudulent, manipu- lated expenses” that GERS alleged in GERS relied heavily on information court were: from Larry Vaughn, the sole owner • More than 16 payments total- of Carambola Northwest, LLC, when ing $78,968 made to a company that agreeing to a “friendly foreclosure” GERS contends was connected to after Carambola defaulted on a $15 Vaughn. million loan GERS made to the • More than 138 payments worth company. $1,272,905, for which no expense Vaughn defaulted on the loan and justification records existed. later declared bankruptcy in Florida. • More than 26 payments worth Then GERS filed a lawsuit in Florida $31,421 with duplicate check against the borrower after a forensic numbers. review of Carambola’s books and • Payroll payments of $37,236 to records. four employees — after their termina- The court filing sheds light on tion dates. GERS’ improper handing of the loan, • $1 million that GERS gave to Get somebody“ else in despite GERS officials vigorous Carambola for a sprinkler system that defense of its actions. Larry Vaughn, left, is joined in 2010 by Gov. John deJongh Jr. during the had never been installed. there to run it. Why GERS said in the filings that grand re-opening of the Marriott Renaissance Carambola Beach Resort and In his own court filing, Vaughn should anybody wait Vaughn’s representations after the Spa on St. Croix. Vaughn would shortly default on his loan from GERS that denied those allegations. loan went into default encouraged paid for the upgrades to secure the Marriott Renaissance branding. He also contended that GERS was a year to be paid? the retirement system to agree to a “well aware” of the outstanding tax “friendly foreclosure” under which million tax debts and $40,000 to a law it been aware of those debts. debt before executing the final dis- — V.I. Police SGT (Ret.) Patricia Vaughn assigned ownership of the firm, GERS complained in the court The system claimed that Vaughn position agreement and that the debt Tranberg Stevens, St. Croix hotel to GERS. filing. As a result, GERS not only lost had manipulated to defraud GERS to the attorney had been disclosed Vaughn had represented to the its $15 million, it had to pay Vaughn’s out of the loan proceeds by organiz- as well. GERS board that Carambola had no debts when it took over the property. ing “sham contractors” to perform The GERS lawsuit against Vaughn outstanding debts or liens unpaid bills GERS said in its filing that the repairs and bill for work that was never ended in January with both sides “ through November 2012, but to the system never would have agreed to completed — but for which GERS agreeing to a dismissal of the action I’ve gone a year contrary, Vaughn’s company owed $1 take over ownership of Carambola had paid. That claim echoes findings in the and paying their own attorney fees. without pay. – Ian Williams Jr., St. management between December 2009 Thomas, retired from the V.I. CARAMBOLA and March 2013. CONTINUED FROM PAGE 21 Fire Service, whose pension • There was no documentation in was withheld because the million in hotel room tax liability for accounting journal entries relating to government did not pay its periods from 2005 to 2012, a liability GERS’ wire transfers from December share of his benefits. that was not disclosed in the Dec. 8, 10, 2012, to August 26, 2013. 2009, closing documents. Those findings raised questions • “In our opinion, if the financial about whether funds were expended advisor was not pressured to submit for their intended purposes, the incomplete work, the issues regarding Inspector General said. I hear the governor“ is unpaid taxes, future repayment ability, His report lays the blame on and character of the proposer(s) would GERS: “Despite these findings, using the excuse of have surfaced during the due diligence we found no evidence that GERS mismanagement as a research. The results of such efforts took steps to address the concerns. would have allowed the Board of Instead, GERS continued to fund reason not to give Trustees to make a more insightful various operations at the hotel and GERS money. But decision regarding this investment.” invested an additional $12 million, The audit also found that GERS through June 2015, without ensuring that’s not the answer. paid numerous expenses for Daily News File Photo that basic internal controls were They need what was Carambola — in addition to the $15 The Renaissance St. Croix Carambola Beach Resort and Spa underwent a developed and implemented to million loan — and that as of June renovation that was funded by a $15 million loan from GERS. The retirement reduce or eliminate questionable due, and then they 2015, those extra disbursements system ended up owning the resort in 2012 when the owner defaulted. transactions, minimize the risk to need to be monitored. totaled $12 million, racking up a members, and maximize the rate of total cost for the Carambola venture • Twelve payments totaling $83,626 $8,195 that could not be located. return on the investment. Or change the board. of more than $27 million — and from the hotel owner at the time to his The Inspector General observed GERS officials disagreed with the — Phyllis Nehlsen, counting. three other business operations. that the forensic audit that GERS Inspector General’s conclusion they In the audit report’s section about • Goods supplied to the hotel that commissioned was limited in scope had not conducted efficient monitoring St. Croix, retiree GERS’ inadequate monitoring of were not in the line of business of because: and oversight. alternative investments, the Inspector the items supplied: for example, an • There were no supporting The GERS board voted in 2014 to General noted that GERS’ 2013 electronics shop was supplying towels. documents for a sample of 23 wire put the resort up for sale and continue forensic audit of the hotel operation • Instances where landscaping transfers totaling almost $7.6 million. investing in it until it is sold. As of identified high-risk transactions, services totaling $23,843 were • There was no listing of aged now, there are no buyers. including: procured from Florida-based service accounts receivable from December The board suspended its alternative • Payment in 2010 of $1.2 million providers whose invoices included 2009 to December 2010. investment program in September for a fire detection and sprinkler travel costs from Florida to St. Croix • Financial statements were 2015, saying it did not want to tie up system that was not operational. as well as a custom waterfall for not certified as accurate by senior additional funds. Thursday, March 9, 2017 The Virgin Islands Daily News 23 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN

Inspector General audits of GERS Summary of Findings made on delinquent loans. salaries, which resulted in the need which could lead to GERS paying U.S. Interior Department • GERS personnel did not to refund about $104,000 annually. incorrect pension amounts Inspector General ensure that automobiles and • GERS lost about $1 million in or employees retiring earlier real property purchased by interest income because of the or later than they should.. September 1985 members through GERS loans government’s delays in submitting The 2005 GERS reform legislation • The retirement system may not were adequately insured, biweekly contributions. had not yet been fully implemented. have accumulated sufficient • Although some improvements • GERS did not implement reserves to guarantee the payment had been made in reserve the recommendations and V.I. Inspector General’s of promised retirement benefits. funding, personal loan interest therefore did not adequately Inspection of GERS’ • Loan procedures were not computations, investment administer loans and sufficient to prevent lost management and disability • did not initiate collection Alternative Investments revenues and protect the annuity calculations, additional actions on delinquent loans. March 2016 retirement system’s interests. improvements were needed • did not have accurate and • V.I. Code related to the GERS • Annual revenues of more than in loan administration. reliable loan information on alternative investment program $164,000 were not realized Based on the governor’s its computer system. does not provide adequate controls because of the procedures response to the followup audit • did not implement standardized and protection against the risk used to compute interest report, auditors decided: written policies and procedures of loss of the pension funds. Austin Nibbs on personal loans. • 2 of the 15 unresolved for loan processing. • GERS entered into loan agreements • GERS did not correct poor recommendations from the • did not ensure that all automobile that are not authorized under GERS performance by investment 1985 report were resolved and mortgage loans had the Alternative Investment managers in a timely fashion. and implemented. current insurance policies. Program or any other authority Administrator • Internal controls were insufficient • 13 recommendations from 1985 as defined by the V.I. Code. to detect and minimize errors plus 3 new ones were unresolved. September 2011 • GERS entered into an extremely Austin Nibbs is the GERS in computing duty-connected • GERS is at critical risk due risky and questionable viatical administrator. He was appointed disability annuities. March 1999 to a growing unfunded investment that jeopardized to the post by the board in • Inadequate controls over reserve • GERS did not fully implement liability. At the time, it was about $42 million of its October 2007 and confirmed by funding, loan policies and 15 of the 16 unresolved more than $1.4 billion. investment portfolio. the Legislature in March 2008. administration, interest income, recommendations contained in • Factors in the unfunded liability • GERS entered into numerous performance of professional the 1991 followup report and include insufficient contribution agreements and investments Duties of the administrator investment managers and duty- therefore did not adequately levels, an unhealthy ratio of without performing the necessary • Administering the business connected disability annuities. administer loans to members. active to retired members, and due diligence to ensure a of the system, responsible • GERS’ bank account had not unfunded legislative mandates. reasonable rate of return. for its proper operation and September 1991 been reconciled since 1995. • Unless the government acts quickly • GERS did not adequately monitor in charge of the detailed • GERS had not implemented 15 As a result, a difference of $15 to implement drastic reforms, and oversee investments under affairs of the system. of the 24 recommendations million existed between the bank employees who have made the Alternative Investment • Following orders, resolutions contained in the 1985 report. statement balance and the cash mandatory retirement contributions Program to protect its interests. and directives of the board. • GERS did not have current balance shown in the Retirement for years may find themselves • Employing clerical, and accurate records of System’s internal records. with no retirement income at all. Source: U.S. Department of Interior professional and technical the status of loans. • Erroneous contribution amounts • GERS does not always maintain Office of Inspector General, Virgin support services as the • Minimal collection efforts were were deducted from employees’ accurate member information, Islands Office of Inspector General board determines necessary for operating the system. • Establishing a GERS office and providing for a complete GERS 2011 Reforms and adequate system of accounts and records. 31st Legislature’s changes For Tier 2 employees: average wage over the most • Dedicated funds the government • Adopting the required to GERS include: • Increased the early retirement recent five years to the average receives from the Lonesome actuarial tables and compiling • Made new government age from 50 to 60. wage over all the years worked. Dove petroleum company, statistical data necessary employees eligible to join • Increased the regular retirement • Increased the contribution rate after the first $500,000, to for periodic actuarial GERS immediately, instead age from 60 to 65. for judges and senators to go to pay unpaid government valuations and surveys. of after a month. • Increased the retirement age 15 percent. Tier 2 senators contributions to GERS or to • Certifying payments to be • Allowed people who work for hazardous duty personnel still contribute at 14 percent, assist GERS in paying down made and maintaining exclusively for the government from 55 to 60 with at least which the GERS board set. the unfunded liability. the system’s accounts. on a contract fee or per diem 10 years of service, or age • Increased the age at Lonesome Dove petroleum • Making recommendations basis for at least 40 hours 58 with 25 years of service. which senators can start company went into receivership to the board. a week to join GERS. • Removed the provision that receiving retirement in 1992 as part of the V.I. • Preparing and submitting • Allowed any member who is lets people who have not benefits from 50 to 60. government’s efforts to the annual report. vested to buy up to five years reached retirement age Other provisions collect $21.8 million in taxes, • Providing reports the of additional service credit by retire with full benefits after • Raised the mandatory penalties and fees. The V.I. board requests. paying employer and employee 30 years of service. retirement age for police, government recently got the • Issuing a statement of contributions, along with a charge • Changed the formula for firefighters and corrections corporate shares when the accounts showing the amount to be determined by the actuary. calculating pensions from the officers from 55 to 63. receivership action ended. of a member’s contributions to the system within 30 days of the date of a request. • Issuing to each retiring Board’s actions to save GERS member and the Internal As the GERS’ funding situation adjustment for retirees, • Raised employer and employee for employees who retire but Revenue Bureau a statement has grown worse, the Board of starting in 2013. contribution rates. have missing contributions. of the amount of the retiring Trustees has made changes to • Suspended the alternative • Started billing the central members’ contributions. stave off insolvency. Those include: investment program. government for the cost of Source: Daily News archives and • Suspended the cost of living • Suspended the loan program. benefits GERS is giving, including GERS vice chairman Edgar Ross Source: V.I. Code 24 The Virgin Islands Daily News Thursday, March 9, 2017 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN

People when“ they can’t retire want to blame the GERS, when the problem is in the executive branch. And we see it now. All they’re doing

is moving up the date Government Employees’ Retirement System office operations coordinator Linda Nanton, left, leads a tour of the boardroom at the retirement system’s that this system is St. Croix Office Building in Estate Orange Grove shortly after the building’s dedication in 2010. going to go down. GERS Board of Trustees 2017 — Mary Moorhead, St. Croix, retired from the Education Department

There needs“ to be a moratorium on lending our money to Edgar Ross Desmond Wilbur Carol Leona Michael Vincent vice chairman, Maynard Callender Callwood Smith, McDonald Liger failing businesses. elected retiree private sector Chairman, elected Central Labor active employee retiree Central Labor — Barbara Isaac, St. Croix, retiree Council Council retired teacher Term of service • Entering into contracts, of the Legislature or delete benefits without 5 years. leases, and agreements • Setting contribution the Legislature’s approval Duties, powers, responsibilities • Recommending to the governor rates for employer and How the members are chosen • Setting policies and Legislature an adjustment employee, within limits 2 Elected by GERS retirees The GERS “system was • Making investments to in benefits for all annuitants and • Sitting as a panel at least once • 1 retiree from St. Croix district. maximize investment returns pensioners at least every two a month to hear suggestions of • 1 retiree from St. enacted from 1959 • Determining investment years, based on a review of cost of retired government employees Thomas-St. John district. and it was a well-oiled asset allocations living and other economic factors on improvements to the system 5 Appointed by governor, • Authorizing the purchase • Retaining a nationally recognized and deciding grievances of confirmed by Legislature machine until you got and sale of investments Certified Public Accountant, with retired government employees. • 1 from St. Croix different people come • Holding regular public meetings experience in pension and trust • Buying and selling property, • 1 from St. Thomas • Investigating and deciding appeals accounting, to audit the financial including real estate • 1 from St. John. in and they decided to at the request of a member on statements of the system • Borrowing money and issuing • 2 members (1 from St. get creative and do decisions by the administrator • Accepting, receiving, depositing, bonds for any corporate purpose, Thomas-St. John District, 1 from • Transmitting an annual report controlling, investing and provided that the authorization St. Croix) appointed from a pool this and do that. on the operations of the managing appropriations, for the issuance of the bonds of at least six who are members — Ian Williams, St. Thomas, system, and publishing in a gifts, devices, bequests, or shall not exceed 10 percent of of the Central Labor Council, retired V.I. firefighter newspaper of general circulation contributions regardless of the the market value of the total active members of GERS and a summary of the annual report source, on behalf of the system investments of the system recommended by Central Labor • Can sue or be sued in the name • Appointing the administrator, Note: The board does not have Council executive committee. of the retirement system with the advice and consent the authority to add, change Source: V.I. Code, GERS Thursday, March 9, 2017 The Virgin Islands Daily News 25 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN — $4,070,000,000.00 unfunded liability —

How Will GERS Insolvency Impact You? • Sharp pension cuts for retirees • Uncertain future for active employees • Economy setbacks worse than HOVENSA shutdown

Inside Part 3 What GERS Insolvency Would Look Like | Page 26 Economic Chaos | Page 27 Insolvency Spurs ‘Life or Death’ Concerns for Retirees | Page 27 GERS Unfunded Liability Sours Experts on V.I.’s Long-Term Financial Outlook | Page 28

In my organization,“ I’ve been thinking that what we probably need to be telling people is how to survive when it goes under and their pension is cut. — Helen Hart, St. Thomas, retired teacher and president of Government Retirees United for Fairness 26 The Virgin Islands Daily News Thursday, March 9, 2017 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN What GERS Insolvency Would Look Like Pensions would fall, likely down to half the promised amount nsolvency. The collapse of the retirement system. pay what is required by law into the sell off the assets that we have to use I It has loomed, a vaguely alarming but distant specter, for pension system on a timely basis. The GERS federal to pay benefits,” Ross said. decades when officials have warned about the troubles of the The GERS filing also included court filing included Recent reform measures territory’s pension system. this bleak description: “Current implemented by the board or enacted member contributions will be this bleak description: by the Legislature have helped slow The V.I. Government Employees Retirement System has been on absorbed completely for the payment ‘Current member the sell-off, but it continues at a pace the road to insolvency for at least two decades, but now it is no of accrued liabilities to retired of tens of millions of dollars a year. longer a distant apparition many years down the road. members, effectively reducing contributions By the end of the 2016, fiscal GERS’ actuary predicts insolvency in five to six years — during the System, beginning in 2023, will be absorbed year, the schedule of receipts and Fiscal Year 2023. to a government sponsored Ponzi disbursements GERS issues monthly scheme.” completely for the showed that the system had paid out The timing depends on a territory’s credit risk. Ponzi schemes are a form of fraud payment of accrued $90 million more than it had taken in variety of factors and could shift Insolvency, though, does not mean that, among other things, promise through the year. somewhat depending on investment that retirees would get nothing from investment returns that can never be liabilities to retired Without major restructuring, performance, whether the Virgin the system. Officials say they would paid. Ponzi schemes generate returns members, effectively eventually there will be no more Islands government meets more or be likely to see greatly reduced for long-term investors by acquiring stocks and bonds to sell. The board less of its funding obligation, and if benefits. GERS board vice president new investors who put money in, reducing the System, then would have to try selling less reforms passed in the last two years Edgar Ross described the conditions rather than through profit earned beginning in 2023, liquid assets such as the collection help slow the outflow of money. created by insolvency this way: from legitimate sources. value of the remaining unpaid loans Nevertheless, insolvency appears Pay-as-you-go pensions No matter how much or how to a government made through its loan program and inescapable unless the government little an insolvent GERS might pay sponsored Ponzi other holdings. takes action. “If nothing is done to the system out, however, the V.I. government “We will have to look at the physical What would that look like? between now and then, we can only remains on the hook for all the scheme.’ assets we have and try to sell them, What would it mean to retirees pay out the monies that we have retirement benefits it has promised convert them to cash,” Ross said. and employees looking ahead to available, which would be limited to its employees. That obligation does Farewell to assets Physical assets that GERS owns retirement? the contributions that come in from not go away, and the government is include Havensight Mall on St. At the point of insolvency and the employer and employee, which responsible for the full amount of GERS has for years been selling Thomas, GERS office buildings afterward, GERS would be reduced may amount to less than 50 percent benefits, Ross said. its investments in the stock market to on St. Thomas and St. Croix, to taking whatever money comes in of present benefits,” he said. “GERS would continue to pay pay current benefits. Carambola Beach Resort on St. as contributions and immediately Numbers that GERS submitted in out what comes in and request The amount that needs to be Croix and land on St. Croix and St. paying it back out as benefits and an ongoing court case estimate that central government appropriations turned to cash varies month to Thomas. The board would have to for expenses of running the system benefits to retirees would be cut even to fund the deficit,” Ross said. “The month, but the overall trend of choose what to sell and when, but without ever investing it. further. GERS would not have to go into the system’s portfolio has been the pressure of insolvency would “After Fiscal 2023 is basically “Absent a unilateral reduction bankruptcy, because the primary downward from year to year lower the chances of getting the what we call a pay-go system, in vested benefits, the current rate obligation for the pension obligations because of the frequent need sell off best prices. where they’re not accumulating any of contribution will support only is the central government.” investments in order to pay benefits “The purpose of the board, the monies, as in assets. They’re just 40 percent of the statutory level of If insolvency caused lawsuits, to retirees. existence of the board, is to pay paying the liabilities out from what benefits on a forward-going basis,” as might be expected, GERS then As GERS moves farther down benefits,” Ross said. “If we have to they receive in cash flow every year,” GERS states in a request to a federal would have to use some of the the road to insolvency, the sell-off of sell all the physical assets and move said Marcy Block, a senior director judge to enforce a consent judgment money coming in to defend itself assets will continue. to a smaller place and reduce staff, at Fitch Ratings who does much of that required the V.I. from those lawsuits, he said. “As part of the liquidation plan, if we will do so to accommodate the that rating company’s analysis of the government to nothing else happens, we will try to needs we have.” Thursday, March 9, 2017 The Virgin Islands Daily News 27 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN Economic Chaos effect of retirement benefits was Islands’ gross domestic product in Insolvency would take away approximately 2.4. That means 2015 was over $3.7 billion. Gross that each dollar paid out in pension domestic product is the value of the $600 million circulating in V.I. benefits supports approximately goods and services produced by $2.36 in total economic output. the V.I. economy, less the value of Using that figure, the $250 million the goods and services used up in V.I. Government Employee’s That is because the system’s in annual benefit payouts — if it production. Retirement System officials have payments of approximately $250 were paid solely to people who The $600 million in estimated warned that the pending insolvency million per year contribute a reside in the territory — would economic activity stemming from of the system would create financial significant amount of the cash that translate into almost $600 million in GERS pensions in the territory is havoc in the territory. circulates through the territory as economic output. equal to almost 16 percent of the Retirees and active government GERS retirees and beneficiaries pay Even taking into account the fact territory’s total gross domestic employees’ weakened buying power rent, buy groceries, support churches that some GERS beneficiaries live product. would mean a loss of gross receipts or in other countless ways engage in outside the territory or spend at least However, if the retirement system tax and income tax revenues for the commercial activity. some of their GERS payments off- becomes insolvent in 2023, retirees V.I. government. “When those monies go into the island, the pension plan’s economic could see their annuities cut in half But the impact would not stop economy, there’s a multiplier effect, contribution to the territory amounts or worse, and the loss to the local there. let’s say maybe two times, maybe to hundreds of millions of dollars economy could be on par with the “If this system is allowed to three times,” Nibbs said. each year. Great Recession that began in 2008 It would be“ fail, it’s going to cause economic A report from the National According to information the or the HOVENSA refinery shutdown chaos in this territory,” said GERS Institute on Retirement Security U.S. Bureau of Economic Analysis in 2012 that caused crashes that still devastating for every administrator Austin Nibbs. estimated that the multiplier released in December, the Virgin echo in the territorial economy. business in the Virgin Islands. People wouldn’t have money Insolvency Spurs ‘Life or Death’ Concerns for Retirees to spend. They would Some retirees already have felt the “There are so many things I would be spending their Thousands dread losing half or more impact of disruptions to their promised have to stop doing because of my pension benefits. pension,” she said. “What’s going to money on rent or of their already-small GERS pension Patricia happen to those mortgages and food Tranberg Stevens, businesses? The V.I. Government Employees well as the threat of even higher cuts a retired police What’s going to and power bills. And Retirement System pays pensions to that would come with insolvency. sergeant, had to Retirees ‘will“ have to happen to social then if there was more than 8,000 retirees — what will She said some retirees are barely wait almost a year programs in the happen to them if the pension system making it and any cut — even as little after retiring be- consider whether to Virgin Islands?” anything left over becomes insolvent? as $50 a month — could send them fore GERS finally buy medicine or not, “What am I they would have to Benefits would be slashed by half or over the financial edge. started paying her. supposed to do? more, according to officials who esti- About one-fourth of the retirees She experienced whether to drive their Not save money buy very carefully and mated that money coming into GERS who rely on GERS get less than the same difficul- car or not.’ and use all my as- frugally. I believe a lot after it sells its last assets would cover $10,000 a year. ties — stemming sets to live? What only 40 percent to 50 percent of what Information provided by GERS from the V.I. — Barbara Isaac, GERS retiree if I live another 20 of people will leave is owed to retirees. shows that during August 2015 the government’s years?” she said. — again. Without a massive cash infusion or system made payments to 8,457 retir- failure to pay the “What if, in an- other drastic change to contributions or ees. The net annual earnings for 2,291 full amount it owes GERS — as did a other year or two, I get a stroke? I may — Peyton Bryant, owner of benefits, GERS will become insolvent of them — about 27 percent — totaled number of other hazardous duty em- need care. What happens then?” Small Wonders, a children’s in 2023, six years from now. Although less than $10,000. ployees eligible for early retirement. Isaac helps out her granddaughter clothing and toy store in the Virgin Islands government still Among those receiving the least Stevens is the caregiver for her who is in college, and she wondered Christiansted would be legally responsible for the amounts: elderly father, but his pension was not whether she would have to cut back full amount of pensions promised to • 394 those retirees received less enough to sustain them, she said. on that if the territory’s leaders do not retirees, its cash-strapped position than $2,400 annually. “Nobody can live in this world with- implement reform before it is too late. shows no indication that it could make • 570 got between $2,400 and out money,” she said. “It’s a complex problem, and I “ up the difference. $4,800. By the time Stevens started receiv- understand that. But I would like The impact would be Retirees watching and worrying • 660 got $4,800 to $7,200. ing benefits, she had depleted her to see our leaders start to tackle the devastating to each about GERS’ future fear dire con- • 667 got $7,200 to $9,600. checking and savings accounts and was problem, and not just do the first sequences for many who depend on “It would be catastrophic for some barely getting by. She was concerned thing that comes into their heads, and every retiree, their government pensions. people,” Nehlsen said of the cuts that about losing her house, she said. cut the annuities of the retirees,” she entire family and the “For some people, 30 percent could insolvency would force. If insolvency forced GERS to cut said. “I would like to see our leaders almost be a death sentence because While people getting annuities annuity benefits by 50 to 60 percent, attack it, at least begin to attack it. entire economy and they’ll need to go on public welfare,” of $10,000 or less might be least Stevens said she again would be in One step at a time.” community. Many said Phyllis Nehlsen, a St. Croix equipped to handle a 50 to 60 percent financial straits. “The picture is dim and I may be retiree. “They might be developing reduction of their benefits, cuts that “It would put me right back in the one of those that it may not shake people would be illnesses at that certain age that are severe would change the lives of same hole,” she said. “How am I going as hard. But what about the other plunged into poverty expensive. It would be a total collapse, virtually all GERS beneficiaries, V.I. to operate at that level?” people whose pension may not I think, of the economy here. We’ve government retirees told The Daily St. Thomas retiree Barbara Isaac be as much as mine, who actually immediately. How already been through some of that.” News. said she thinks the type of cuts that barely survives right now?” she would they survive? Nehlsen was concerned about “I would feel it. It would cut out my would happen under insolvency would said. “They cut their pension, and proposed cuts of 30 percent that GERS travel, it would make me tighten my devastate the V.I. economy as other they will have to consider whether — Troy deChabert-Schuster, considered in November — which the belt,” Nehlsen said. “But I know for retirees cut back on the services they to buy medicine or not, whether to State Director of AARP V.I. board voted not to implement — as some people, it would be life or death.” use and the goods they buy. drive their car or not.” 28 The Virgin Islands Daily News Thursday, March 9, 2017 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN GERS Unfunded Liability Sours Experts on V.I.’s Long-Term Financial Outlook After decades of V.I. government officials failing to adequately fund the Government Employees Retire- ment System and at times wielding it for their own political advantage, the problems created by their actions — and inactions —finally have come home to roost. The unfunded liability that the gov- ernment owes to GERS has suddenly become much more visible in the government’s own financial statements under new accounting rules, bumping an already bloated deficit by more than $2 billion. Everybody“ is to The pension system’s troubles also played a significant role in credit blame: every agencies’ decisions over the last few elected official months to downgrade V.I. bonds from investment grade into speculative for the past 20 status — junk bond territory. years, every And at least one rating agency sees the potential GERS insolvency in 2023 board member — as an increasingly likely scenario. especially those New accounting rules Eurson Fahie, a retiree, addressed V.I. government active employees and retirees in October at a rally in opposition that voted so The Governmental Accounting to potential GERS benefit cutbacks. The rally was sponsored by Government Retirees United For Fairness. foolishly to put Standards Board, or GASB, has set new standards aimed at greater trans- in a written response to Daily News The Virgin Islands has been try- ment revenue and expenses, the money where it parency for government finances. inquiries. ing to borrow $147 million to fund government’s continued reliance on shouldn’t have Such rules are known by numbers, By the end the 2015 fiscal year, the operating deficits in the 2017 and 2018 borrowing to fund operations, its weak and financial types refer to the new government’s net deficit was up to $3.7 fiscal years, as well as to provide some financial reporting, and its significantly been put — the accounting rules dealing with pension billion. funding for the territory’s hospitals and underfunded pension liabilities, among administration, systems as GASB 67 and 68. To be clear: the new rules did not the V.I. Waste Management Authority. other factors. “GASB 67 and GASB 68, in its create new debt, but they did require The government decided in December Moody’s Investors Service also cites the governors simplest form, took the liabilities out that existing debt be stated more clear- to delay that transaction — which the “large unfunded pension liability” who didn’t pay of the notes to the financial statements ly on government financial records. amounted to more than $200 million as a factor in its downgrade. and onto the government’s balance “The standards had no impact on because of the high costs associated Fitch Ratings in an August report the money they sheet. So not only did it have an effect the amount actually owed to active and with this borrowing — until January, pointed to the territory’s tendency should have paid on the balance sheet, it also had an retired employees, but they did require and then called a halt to the January to shift spending needs to future effect on the government’s statement that governments measure and report attempt when not enough investors periods, and noted specifically how in. of revenues and expenditures,” said their obligations in a manner than were interested. To date it has not sold the territory consistently budgets — Phyllis Nehlsen, St. V.I. Finance Commissioner Valdamier substantially increased the amounts the bonds. funding for GERS at amounts that Croix, retired teacher Collens. included as balance sheet liabilities,” Although the Legislature also au- are far below actuarially required “Before, it was tucked away in Granof said. thorized an additional $100 million in levels, raising the pension system’s words in the back of the book,” Col- borrowing to pay down some of what liability and elevating future required lens said. “And now, which I agree, it Credit ratings plunge the government owes to GERS, the contributions. is front and center.” The GERS’ unfunded liability also V.I. Public Finance Authority, chaired Later in the report it cited the territo- “ The new rules’ impact on the Virgin impacted the government’s credit rat- by Gov. Kenneth Mapp, voted not to ry’s long-term liability burden, which We are going to Islands government’s financial state- ings and was a factor in the decisions borrow that portion. includes the GERS unfunded liability. suffer; ultimately ments was immediate. by the big three credit rating agencies So far, though, the government’s fi- It noted that if the pension system goes An initial Fiscal Year 2014 audit to cut the V.I. government’s bond rat- nancial situation and the government’s insolvent, the territory is still required some of us are of the V.I. government by BDO USA ings to junk status. inability to borrow have prompted the to pay the money it owes retirees. going to survive showed a $1.5 billion net deficit. “It definitely has an impact on the three major credit rating services to “Fitch views the depletion of Under the new accounting rules, the credit rating. When we’re looking at downgrade the territory’s bond ratings GERS’s pension assets as becoming and some of us auditors had to go back and restate the the liability burden, we look at the and its general credit rating on two an increasingly likely scenario over the won’t. government’s net deficit for 2014 as outstanding debt, plus the unfunded different occasions over the course of intermediate term,” the report states. almost $3.5 billion. pension liability,’ said Marcy Block, seven months. “All else being equal, asset depletion — Barbara Isaac, The adoption of the new rules “ac- a senior director for Fitch Ratings Those moves sent the territory’s would expose the USVI’s budget to St. Thomas, retired counted for $2.015 billion difference — Public Finance. “And since their bond ratings out of investment grade the additional burden of covering teacher between the negative net position for unfunded liability is so high, it really into speculative status, then further current retiree benefits from operating 2014 as was reported initially in the has a sizable impact on the rating.” into junk bond territory. resources.” 2014 annual report and that reported A lower credit rating typically In its downgrade of the PFA’s bonds Based on the 2015 fiscal year figures in the 2015 annual report,” Michael results in higher interest rates, meaning in December, S&P cited the govern- from GERS, Fitch estimated that ad- Granof, an accounting professor at the government’s costs of borrowing ment’s fiscal distress as evidenced by ditional burden at $145 million annually the University of Texas at Austin, said money by selling bonds goes up. its significant imbalance of govern- — “a figure likely to rise over time.” Thursday, March 9, 2017 The Virgin Islands Daily News 29 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN — $4,070,000,000.00 unfunded liability — Can GERS Be Saved? • Pros and Cons of other pension plans • Governor’s 5-Year Plan • Experts’ advice Inside Part 4 Can It Be Saved? | Page 30 Pensions Come in Many Forms | Page 30 What do the Experts Advise? | Page 31 Too Little, too Late to Help |Page 31 I would be interested in“ meeting with GERS Awaiting Court’s Help | Page 31 individuals who can tell us how we might get some money to keep the system alive and making whatever adjustments need to be made to it, like maybe looking at different plans or getting more people to pay into the system. — Abdul Ali, St. Croix, retired from the Labor Department 30 The Virgin Islands Daily News Thursday, March 9, 2017 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN Band-Aids can’t stop GERS’ bleeding he V.I. Government Employees Retirement System’s sold stateside. Although a V.I. there needs to be a willingness to “Although the global market Tproblems are the direct result of the V.I. government using law passed in 2011 requires the make changes.” crash and recession affected all money that legally belonged to GERS. government to make that transfer to There is no quick fix, no plans,” NASRA reported, “differing GERS every year, the government matter what changes are made, plan designs, budgets and legal From the very beginning, the V.I. government made promises did not do so until 2016. warned Elizabeth Kellar, a frameworks across the country that in the long run it could not keep. It doesn’t have all the No quick fix senior fellow at the Center for defied a single solution. Instead, money it is supposed to give GERS, and it has not found a way State and Local Government each state met its challenges with to get enough without cutting essential government services GERS board vice chairman Excellence. Correcting years of tailored changes specific to its A variety of potential solutions are available to help GERS Edgar Ross is optimistic. “This is underfunding “usually takes a unique circumstances.” my personal opinion,” he said. “If long time,” which is why the key Most government pension plans avoid insolvency, but unless GERS and the government choose we can get enough monies on a to keeping retirement system kept the essentials: and commit to the necessary solutions soon, GERS will be regular basis, on a monthly basis, healthy is “to pay the employer • Mandatory participation. insolvent in six years. to cover the demands of the retirees contribution every year and adjust • Cost-sharing between employer GERS and the Legislature have made changes, but they and the cost of the benefits, we can the employee contributions and/or and employees. merely slowed the decline. They did not solve the core problem: continue to limp along.” plan design as needed.” • Pooled and professionally V.I. Finance Commissioner Many different examples of managed assets. GERS does not have enough money. Valdamier Collens said he thinks effective changes and reforms are • Guaranteed pension amounts. These are among the recent and the V.I. Legislature raised it is possible to prevent GERS available now because, like GERS, • Lifetime pension payouts. changes: both employee and employer insolvency, but it will require, as he many other government pensions • Survivor and disability benefits. • First, GERS suspended its loan contribution rates. put it, “hard decisions and political were underfunded and have faced • Supplemental savings. program in order to keep more • Third, in 2016 the government will.” insolvency. “Reforms in most cases cash on hand. A new loan takes transferred $7 million to GERS Keith Brainard, research director NASRA reported in June 2016 preserved these important features cash out of the system in one large from the Internal Revenue for the National Association of that changes to public pension plan and modified some combination of lump, but loan repayments come Matching Fund, the fund that State Retirement Administrators, design and financing “have never required employee contributions, back into the system slowly and in holds the rum excise tax money put it this way: “If it’s known that been more numerous or significant benefit levels, or eligibility for small amounts. that comes to the territory when the plan costs are problematic, or than in the years following the retirement,” the NASRA report • Second, the GERS Board Virgin Islands produced rum is if the plan itself is unsustainable, Great Recession.” said. Can Big Changes Help GERS? Experts suggest GERS’ problems the V.I. government have enough employee rates in 2020 – or the V.I. • Change pension eligibility dates violate the law. might be solved by changes in what borrowing capacity to get that much Legislature could raise them sooner GERS has two important dates: 4. Get higher returns the retirement system does and how money to give GERS. In recent — but the rates already are 5 to 10 The year of employment when an it is funded. Some of those changes months the government could not percent higher than in many other employee becomes eligible for a from GERS’ investments would not work for GERS; some have even get enough investor interest to public pension plans. pension and is vested in GERS, “In theory, taking more investment been tried elsewhere and here, with yet issue bonds that Gov. Kenneth Mapp 3. Smaller pensions and the year an employee reaches risk could result in higher returns, but undetermined results, and some are on said were needed urgently to run the retirement age. Both dates differ it also leads to higher chances of ruin,” GERS’ wish list. territory through September 2018. Employees might see this as solving according to the employee’s status. according to the Mercer Report. Suggested changes include: For GERS right now, according to the problem on the backs of the Changing GERS’ vesting period is The short time remaining until the Mercer Report, short-term help workers, however there are different an unlikely choice because it already insolvency limits how much reward 1. A large cash infusion should be the first goal: “We suggest ways to cut future pension costs, for is 10 years, which is a long time the pension fund could get from riskier This option is GERS’ preferred that the initial focus needs to be on example: compared to other public pension investments. solution, but it is highly unlikely, short-term viability — getting enough • Reduce or eliminate cost of living plans. Meketa Investment Group, which given the government’s dire financial cash in the door to pay the benefits adjustments. Increasing the age for early manages the GERS portfolio, reported condition and inability to meet its that will be owed over that short-term The GERS board has authority over retirement keeps people working in September that GERS has an day-to-day operating expenses without period, and thus avoiding insolvency,” this, and in 2013 it suspended cost-of- longer and contributing money into annualized rate of return of 9 percent borrowing or adding taxes. the report advised. living adjustments except for disabled the system instead of taking money going back to 1981. According to a Rocky Joyner, a vice president 2. Bigger payroll pensioners. out in pension payments. The 31st National Association of Retirement at Segal Consulting who is GERS’ • Change the formula for calculating Legislature partially accomplished this Administrators report last month, actuary, told local policymakers contributions pension amounts. in 2015 by raising the retirement ages the median public pension fund in September that a one-time cash The Mercer report to the V.I. Pension formulas typically use a for Tier 2. annualized investment returns for the infusion of $1.4 billion to $1.7 billion government questions whether percentage of the employee’s average • Cut existing pension amounts 25-year period that ended in December by Sept. 30, 2016 would keep the employees would be willing to pay salary multiplied by a set number The GERS board in November was 7.8 percent and for the last 30 system afloat indefinitely. higher contribution rates if they don’t of years the employee worked. considered cutting pensions for current years, was 8.3 percent. The Mercer Report, which the expect to retire before the system goes For GERS, the Tier 1 employees’ retirees by 30 percent, but decided GERS returns have varied greatly V.I. Public Finance Authority insolvent. multiplier is 2.5 percent of salary, and against it. year-to-year, ranging from minus 1 commissioned to benchmark the On Jan. 1 of this year, each for Tier 2 employees, it is 1.75 percent. The move would have been percent to 11.2 percent in just the years funded status of GERS, also cited the employee’s required contribution rate Possible changes to the formula unprecedented. The Mercer Report from 2013 to 2015. advantage of a large cash infusion rose 1 percentage point, putting the would be reducing the multiplier and said, “Be it from a sense of fairness, A V.I. Inspector General’s audit after examining different methods of rates at 11 to 17 percent, depending increasing the number of years over concern about the employee relations report criticized the GERS board, pension funding. That report did not on the employee’s position and Tier 1 which the average salary is calculated. ramifications or lack of legality, to the saying it had not adequately protected suggest a specific amount. or Tier 2 status. The V.I. government’s The 31st Legislature changed the best of our knowledge no state has the system’s interests in its alternative The V.I. government does not have payroll contribution rate is 20.5 time period in the formula for Tier 2, done this.” investments and that the V.I. Code an extra $1.7 billion — which is more percent, which the government must raising it from the most recent five GERS vice president chairman needed to be changed to limit such than double its annual General Fund pay. years to all the years the employee Edgar Ross, a retired judge, said he budget — to give GERS, nor does The GERS board could raise worked. thinks cutting existing pensions would See CHANGES, page 31 Thursday, March 9, 2017 The Virgin Islands Daily News 31 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN Pensions come in many forms

basically starving that plan of contribu- Employers phase out old plans to get upper hand on costs tions that were expected, which would be used to pay down the unfunded The V.I. government has good liability,” Brainard said. reasons to offer good pensions to its The V.I. government is looking for employees. The pension benefit is a hook“ to keep good solutions, and it commissioned global “It is an important human resources pension consultant Mercer LLC to management tool to attract and retain employees, but “if you get rid of that hook, then the explore different options that other qualified workers who are needed to government becomes the training ground for the states have implemented and that the provide essential public services,” V.I. government and GERS might said Keith Brainard, research director private sector. consider, and then gave positives and for the National Association of State — Keith Brainard, research director negatives associated with each. Retirement Administrators. for the National Association of State Retirement Administrators The Mercer report included, at the The pension benefit is a hook to government’s request, an analysis of keep good employees, but “if you get what the state of Rhode Island did rid of that hook, then the government promises a specific pension amount depending on how the contributions to help turn its state pension system becomes the training ground for the that is determined by a formula based are structured. around. private sector,” he said. on such factors as, compensation Whatever it decides to do — make Mercer found that Rhode Island What GERS“ is For the V.I. government, the big history and length of time on the job changes in the existing plan or switch moved its current active members question is how to keep the hook rather than on investments. to a completely new plan — the gov- with less than 20 years of service continuously without going broke: GERS’ $4 billion The defined benefit plan, which can ernment will, by law, remain respon- into a new plan structure that com- saying is that unfunded liability has a doomsday take different forms, is common in sible for providing all of the existing bined defined benefit and defined clock ticking down to 2023, the year state and city government retirement benefits that its employees and retirees contribution. New employees go they need a lump the retirement system will become systems, and it works well — but only have earned under the current plan. directly into the new plan. sum of money in insolvent – unable to pay the promised if the sponsor puts the required amount The government also will still have This is how the combination works pensions in the promised amounts. of money into it. to pay down GERS’ current unfunded for Rhode Island: The employee keeps the system to Something must be done. But what? “It’s like a car. It only works if you liability. The cost of doing that would any retirement credits already earned make it work, but The V.I. Government could create put gasoline in it,” said Brainard. have to be included in the cost of in the old defined benefits plan. Those a new tier within the existing GERS Defined contribution plan switching to a new plan. credits will not change. But going somehow they’re plan for new employees, with lower “They still owe those benefits that forward, the amount of benefit that an not getting what benefits or higher contribution rates, This plan, which has several have been promised,” Brainard said. employee would earn under the old or both. variations, requires the employer, the “And switching to a different type of plan is reduced and replaced to some they’re asking for Another possibility could be chang- employee or both to make regular plan… has nothing to do with solving degree by a contribution into the newer from the ing the type of retirement plan the contributions, which then are invested. the problem of the defined benefit plan. government uses. Plans exist in various In this type of plan, the contribution plan.” The Mercer report noted that it did governor and the forms, and each has advantages and amount is a pre-set amount, but future Any move that would close the not try to verify 2023 as GERS’ insol- Legislature. disadvantages for the employer and the pension amounts depend on the invest- existing GERS plan to new entrants vency date, but it estimated that the employee. ment earnings. and require the new employees go into date may be optimistic — insolvency — Helen Hart, Defined benefit plan Hybrid plan a defined contribution plan instead not could happen sooner — if GERS’ St. Thomas, retired only would not help GERS’ current assets such as the amounts receivable teacher and president A “defined benefit plan” is the cur- This combines elements of defined plan, it would speed up insolvency. from member loans and from real of Government rent GERS plan. The employer — in benefit plans and defined contribution “When you close off the pension estate and limited partnerships cannot Retirees United for GERS’ case the V.I. government — plans. Hybrid plans have variations, all plan to newly hired workers, you’re be liquidated at their current value. Fairness

CHANGES as GERS, had administrative costs of survival. than $1 million a year for GERS. CONTINUED FROM PAGE 30 $4.5 million, according to the Mercer Board vice chairman Edgar Ross Senators also passed a bill requiring investments. Report. thinks that could be a partial answer to all proceeds from the sale or renting of A bill was“ passed Just before the audit, the 31st The Minnesota State Retirement GERS’ problems. “A funding source houses the government acquired from Legislature did the exact opposite. System, which covers more than has to be given to the system — a Limetree Bay be contributed directly to give the GERS The senators expanded the alternative 100,000 employees in five plans, had dedicated funding source that would to GERS. The houses, formerly $100 million, investment program and even added to about $10 million in administrative help us meet the ongoing annual owned by HOVENSA, were deeded the list of risky alternative investments costs in 2015, according to the report. expenses and increase our investment over to the government as part of the which the in which GERS could invest. 6. Create a new assets,” he said. operating agreement with Limetree governor say he The senators also made changes The 31st Legislature made a step Bay when that company purchased the allowing GERS to invest in more employee tier in that direction, but the anticipated old refinery site ain’t giving them. junk bonds and make more foreign A third tier for employees hired revenue is small in the face of GERS’ Mapp vetoed the bill, saying he I think he’s investments. after a certain date could have different needs. The senators earmarked funds wanted to use the money to make 5. Reduce GERS’ expenses contribution and benefit accrual rates, the government receives from the up for GERS contributions that wrong. but that would not reduce GERS’ resolution of the Lonesome Dove government agencies did not pay for — Eurman Fahie, GERS’ annual administrative obligations to current Tier 1 and Tier 2 petroleum company receivership. The individual retirees who can’t receive St. Croix, retired expenses from 2010 to 2015 have retirees and active employees. funds are to be divided between the their pensions until the government from Department of ranged from $13.5 million to $19.5 7. Find a dedicated Senior Citizens Center Fund, which pays overdue amounts. million, which is high compared to gets the first $500,000 each year The governor also said that half Housing, Parks and other pension plans of similar size and funding source and the government to get the rest of the money from the housing rents Recreation even in comparison to some much If the government would set aside a to make up for its unpaid employer has to go toward maintenance of the larger plans. permanent and steady revenue stream contributions to GERS or to abate and properties. He did not clarify why The Government of Guam’s pension exclusively for GERS, the retirement assist GERS in reducing its unfunded cost of maintenance would require system, which is about the same size system would have a better chance of liability. The amount could mean less half the revenue from the rents. 32 The Virgin Islands Daily News Thursday, March 9, 2017 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN GERS What do the experts advise?

A new report on GERS says that Verlautz wrote. increasing contributions and cutting retiree benefits would go deeper, at awaiting the options to avoid insolvency — He gives the government these benefits, in different combinations, 50 percent or more, as benefits would which is expected sometime in Fiscal three options for avoiding GERS would have on staving off insolvency. be based solely on how much came Year 2023 — are very limited, but insolvency in 2023: Cutting benefits? in in contributions each month. court’s simple: put more money into the • Making significant additional The formula for survival system or stop paying so much out. contributions, either as a one-time The GERS board decided in The report, commissioned by the cash infusion or as substantially November that cutting benefits for The Mercer report also explores V.I. Public Finance Authority and au- increased annual contributions current retirees and beneficiaries was potential solutions – things that have help thored by James Verlautz, a principal • Cutting benefits of current ben- not an option. been tried in other retirement systems at Mercer LLC, confirms what GERS efit recipients Board member Edgar Ross said — that could help GERS reach long- Seeks enforcement officials and its actuary have been • Transferring “the obligation for in an interview that the board had term stability. The report cautions, saying for a long time. the benefit to another party such as considered the cuts because the actu- though, that actions must first be of government “Anything other than significantly the USVI government.” ary, Joyner, had presented them as a taken to avoid short-term insolvency. increasing cash contributions into the It was not clear what the consultant potential way to help avoid pending The report provides a formula as a contributions plan to essentially cover the benefit meant by the last option, because the insolvency. simple way of describing the costs of payments or cutting the plan’s exist- government is already obligated to Ross, a retired judge, said that it is a retirement plan: GERS went to the U.S. District ing obligation for retiree payments is pay the benefit. his position that such cuts would not Employer contributions equal Court in October to try to get unlikely to have a significant effect In explaining that option, Collens be legal – not for the board to imple- benefits paid plus administrative a federal court order forcing on avoiding insolvency,” Verlautz said it was “having some other ment and not even if enacted by the expenses minus investment earnings the V.I. government to make its wrote. governmental entity take on the Legislature. He pointed to a recent minus employee contributions. The required contributions to GERS. Finance Commissioner Valdamier responsibility of keeping the pension decision by the 3rd U.S. Circuit V.I. government has been falling Judge Curtis Gomez has not Collens said the PFA contracted with system going” – but he pointed out Court of Appeals. far short of the mark for employer made a ruling yet. Mercer to provide the government that no other governmental entity has That decision found that even contributions for years. GERS filed the new motion in with certain information and the extra cash floating around to give to though the Legislature in 2011 The report says that the five ele- a 1981 federal case against the options that might be available for GERS either. enacted 8 percent paycuts for govern- ments in the formula “are the levers V.I. government that was settled GERS, based on similarly situated “I can’t think of another govern- ment employees for two years, the an employer uses in designing and with a consent decree in 1984. jurisdictions stateside. mental entity that has enough excess government still had to live up to its administering a retirement plan.” In the decree, the government The Mercer report contains some revenues right now to be able to collective bargaining agreements, The equation does not balance for agreed to pay the total amount information that is similar to infor- assist the GERS,” he said. which did not allow for the paycuts. GERS, but the report notes that one due in its employer and employee mation the retirement system has Collens said he breaks down that Ross said in light of that decision, or more of the levers could poten- contributions within 30 days of already released – although the report option to mean “that the central he did not believe making cuts to tially be moved to get the retirement each payroll period. It was modi- also provides potential solutions, as government in its planning of its retiree benefits would be legal. system back into balance. fied in 1994 to ensure accurate, well as a comparison of the funded executive budgets would have to take “Most of our retirees were mem- The Mercer report goes on to timely payments into appropri- status of GERS with select plans in on more of a ... make more appro- bers of unions. The unions, while explore different options that might ate bank accounts controlled other states. priations on an annual basis to the these members were employees, help GERS on the pathway to long- by GERS, according to court The report, which at times points GERS to keep it going.” bargained with the government for term stability. Those possibilities, documents. out the obvious, notes that GERS The options of making additional certain benefits. The mere fact that among others, are outlined in this In the current action, GERS has two funding issues and that contributions or cutting benefits were the employment relation terminated Daily News report. contends that the government has each will require its own solution. explored extensively in presentations does not mean that the benefits Collens said the V.I. Public Finance failed to abide by the terms of Those issues: preventing short-term GERS made public in September, agreed upon while they were active Authority paid Mercer $32,286 for the consent decree for years, and insolvency and ensuring long-term presentations by the system’s actuary members terminate,” Ross said. “The its evaluation of GERS. The PFA GERS asks the judge to find the stability. and investment advisers. government has to honor the collec- selected Mercer after contacting four government in contempt of court. A projected insolvency date of During the September presen- tive bargaining agreement.” companies about actuarial services An issue is whether that 2023 for the retirement system is “a tation, Rocky Joyner of Segal The GERS board had considered a and subsequent competitive negotia- 33-year-old consent decree ap- very short time frame in actuarial Consulting, which provides actuarial 30 percent cut. tion. The other companies were AON plied only to the government’s terms and the potential remedies are services to GERS, explored the po- Officials anticipate that if the plan Risk, PricewaterhouseCoopers and payroll contributions for each limited and conceptually simple,” tential impact that different levels of is allowed to go insolvent, the cuts to Towers Perrin, he said. employee or whether it also included the amount that an actu- ary determines the government needs to pay in addition to its payroll contributions. Too little, too late to help be $15 million News to the EDA for answers about Five-Year Financial Plan expects money for GERS, No matter whether it is $45 million how the expectation of 25 new compa- but details are vague and the amount falls far short or $15 million, it would not be enough nies — 5 per year for 5 years — was to help GERS break even in 2020, reached, and about how the govern- The V.I. government seems deaf to generating $5 million to the govern- and it would not have been enough in ment had concluded that each of those the ticking of the doomsday clock and ment’s revenue, for a total of $25 2015. Nor would it make a significant new businesses — which likely would has publicly described only one new, million. Then, in 2020, the government inroad in the pension plan’s unfunded be receiving significant tax breaks — upcoming strategy for dedicating ad- will start sending 60 percent of the liability. Expecting that much ad- would add $5 million a year to the V.I. ditional revenue to GERS. money to GERS. ditional revenue from that many new government’s revenue. A Five-Year Financial Plan put The wording of the plan does not EDC companies could be equally An EDA spokeswoman said that together in late 2016 by the governor’s make clear whether the money to unrealistic. Daily News requests to interview EDA financial team says that starting in GERS would be 60 percent of the The Five-Year plan cites 17 applica- acting CEO Wayne Biggs were for- 2018, the V.I. Economic Development cumulative amount of three years of tions “currently in the pipeline,” but warded “to USVIEDA management Authority will approve five new ap- new revenues, which would be $45 provides no specifics. for review.” plications for Economic Development million, or 60 percent of the new V.I. Finance Commissioner No further response has been Commission benefits every year, each revenue from one year, which would Valdamier Collens referred The Daily forthcoming. Thursday, March 9, 2017 The Virgin Islands Daily News 33 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN GERS’ Timeline of Trouble

he V.I. Government Employees Retirement System stands on without appropriate funding, and increasing contribution rates. the September 2005 GERS reform T the edge of a fiscal cliff, the result of countless decisions and add a new tier for new employees He urges the Legislature to give legislation includes a section actions — or inactions — by government and GERS leaders over August 2003 — GERS submits draft the board statutory authority that would increase pensions for legislation to Government House to raise contribution rates. retired senators to as much as the course of decades — especially in the last 15 years. to reduce pension pay for future Sept. 22, 2005 — Senate 100 percent of their Senate pay. Many of the events described in this timeline might appear employees. Nothing is done. committees debate extensive May 25, 2006 — Senate Rules minor, in and of themselves, but viewed together they show the GERS reform bill and add Committee approves Todmann complex, interwoven path that has brought the territory to the point — 2004 — many amendments, including as GERS administrator. it is at today. June 21, 2004 — GERS officials, Sen. Usie Richards’ provision July 12, 2006 — GERS testifying before a Senate authorizing GERS board to make estimates its unfunded liability committee, propose increasing risky viatical investments. has topped $1 billion. — 1959 — — 2002 — contributions from employees Sept. 26, 2005 — Legislature November 2006 — GERS board June 24, 1959 — The 3rd May 23, 2002 — GERS struggles and the government. unanimously passes considers how to develop Legislature of the Virgin Islands to collect on loans Senate July 15, 2004 — GERS administrator GERS Reform bill. 120 acres it bought in July enacts the Government Employees requires it to offer employees up Laurence Bryan tells senators Oct. 17, 2005 — Act 6793 to spend in estates Hoffman and Retirement System with Act 479. to $50,000. It has no procedures that the GERS’ unfunded liability $60 million in unanticipated Nullyberg on St. Thomas. to foreclose on delinquent is nearly $1 billion, urges them revenues and 16.3 million in debt Nov. 25, 2006 — Gov. Turnbull — 1980s — mortgages or repossess vehicles to increase contribution rates reserves and give $6.3 million to calls the 26th Legislature into Oct. 25, 1983 — Act 4877, the or force mortgage holders and pass a law giving the GERS GERS, passed by 26th Legislature special session Nov. 28 to Omnibus Authorization Act, to insure their properties. board power to increase rates. is signed by Gov. Charles Turnbull. consider floating $600 million in No. 1 of the nine “unfunded July 30, 2002 — GERS informs Nov. 5, 2004 — GERS board Nov. 2, 2005 — Act 6794, the GERS pension obligation bonds to pay mandates,” passed by the 15th Legislature that a combination of fires Bryan, giving no reason, Reform Act of 2005, is reluctantly down GERS’ unfunded liability. Legislature, becomes law. additional contributions totaling and names GERS chief signed into law by Turnbull, who Nov. 28, 2006 — At the special Feb. 21, 1984 — Act 4896, 6.6 percent of compensation financial officer Willis Todmann says its negatives barely outweigh session, the Senate sends providing early retirement for is necessary for GERS to break as acting administrator. positives. The law creates Tier 2 the four bills — including the Education Department as even. Unfunded liability is December 2004 — Consultants of government employees who will one for pension obligation personnel, passed by the 15th $518.1 million. Government make an independent operational make higher contributions for lower bonds — to the Committee of Legislature, becomes law as is $23.3 million in arrears. analysis of GERS and find that benefits; creates GERS alternative the Whole for further vetting. unfunded mandate No. 2. Sept. 17, 2002 — GERS the system is rife with inefficiency. investment program; allows GERS Dec. 1, 2006 — In Committee of Administrator Laurence Bryan Problems include lengthy loan board to increase contribution the Whole, AARP Virgin Islands — 1990s — Jr. warns Senate Committee processing, loan payments not rates up to 3 percentage points members testify about problems Aug. 16, 1994 — Act 6007, about the “pending calamity been posted since January 2004, over five years. The bill also with Turnbull’s proposed changes the Early Retirement Incentive of a collapse” and pleads no formal process in place to track requires the government to fully to the 2005 Retirement System Training and Promotion Act increase in contribution levels. delinquent accounts on a monthly fund any special early retirement Reform Act, citing the proposed of 1994, passed by 20th Dec. 6, 2002 — GERS Board of basis, and delinquencies not programs before the programs increase in senators’ benefits Legislature, becomes law as Trustees continues $10,000 reviewed since December 2003. start and does not allow any and provisions that would undo unfunded mandate No. 3. cap, the maximum level at Bryan calls the report flawed and increases in benefits unless some reforms put in place in Dec. 5, 1995 — Act 2088 extending which the system can insure a smoke screen to divert blame. a specific funding source has 2005. Senators also discuss Act 6007, passed by the 21st the loans for all members. Dec. 20, 2004 — Groundbreaking been identified and provision Turnbull’s $600 million pension Legislature, becomes law as Dec. 23, 2002 — 24th Legislature on the new $5.4 million new made for the funding of all future obligation bond proposal. unfunded mandate No. 4. in its final hour raises senators’ GERS headquarters in Orange benefits on a sound actuarial Dec. 12, 2006 — In a brief salary from $65,000 to Grove, St. Croix, which officials basis in the annual budget. legislative session, senators — 2000 — $85,000, governor’s salary say will enhance customer Dec. 15, 2005 — Government vote to send into committee Oct. 19, 2000 — Act 6361 providing from $80,000 to $135,000, service and operations. owes GERS $25 million in several bills — including Turnbull’s early retirement options and and lieutenant governor’s salary delinquent contributions. GERS reform proposal and the reducing expenditures, passed by from $75,000 to $115,000. — 2005 — December 2005 — Turnbull asks the authorization for $600 million in 23rd Legislature, becomes law Feb. 1, 2005 — GERS board Senate for a raise to $135,000 a pension obligation bonds — so as unfunded mandate No. 5. — 2003 — member Marvin Pickering says year and a raise for the lieutenant the incoming 27th Legislature Jan. 10, 2003 — Gov. Charles at board meeting: “We are governor to $120,000 a year. can consider the measures. — 2001 — Turnbull bows to public pressure liquidating our assets, and Dec. 27, 2006 — Turnbull calls Early 2001 — Act. 6391 increasing and vetoes the raises bill after the clock is ticking” as result — 2006 — the 26th Legislature into special retirement benefits for Territorial two weeks of public outrage of the widening gap between Jan. 11, 2006 — In Committee session the next day to consider Court judges, passed by 23rd and protest demonstrations retirement payouts and employer of the Whole meeting, Senate a 48-page bill that includes the Legislature, becomes law as at his inauguration. and worker contributions. President Lorraine Berry directs $600 million in pension obligation unfunded mandate No. 6. March 18, 2003 — Advocates for March 16, 2005 — GERS GERS officials and the governor’s bonds and several changes June 18, 2001 — Act 6415 funding the Preservation of the Retirement acting administrator Todmann financial team to develop a Turnbull had proposed for GERS. pay increases for retirees and System present petitions bearing tells Senate the GERS feasible plan for reducing It also includes raising salaries eligible employees is passed by 6,000 signatures to Senate board needs authority to GERS unfunded liability by April for the governor, lieutenant the 24th Legislature, becomes President David Jones calling for raise contribution rates. 15. GERs officials have made governors and senators, as well law as unfunded mandate No. 7. the repeal of unfunded mandates May 19, 2005 — GERS board three recommendations: float as the lucrative new retirement June 19, 2001 — Act 6427 placing passed by the 24th Legislature. approves a $4.28 million $600 million in bonds; double package for senators. employees on steps, passed by Aug. 20, 2003 — GERS construction bid from Best employer contributions, and Dec. 28, 2006 —26th Legislature the 24th Legislature, becomes administrator Laurence Bryan Construction Inc. to build its tap into HOVENSA’s corporate passes Turnbull’s bill on a 7-6 law as unfunded mandate No. 8. tells a Senate committee that the St. Croix headquarters. Earlier income tax payments. vote with two senators absent. Sept. 24, 2001 — Act 6429 retirement fund is deteriorating groundbreaking preceded Jan. 16, 2006 — Senate sends Dec. 29, 2006 — Turnbull expanding eligible members of the and the government needs to acceptance of the bid. proposed GERS legislation back to signs the bill into law. early retirement program, passed make regular payments toward Aug. 3, 2005 —Todmann testifies Government House for redrafting. by the 24th Legislature, becomes a $731 million unfunded liability, that the system cannot survive Turnbull’s proposed 42-page bill law as unfunded mandate No. 9. stop awarding enhanced benefits another 10 years without addressing problems he saw in See TIMELINE, page 34 34 The Virgin Islands Daily News Thursday, March 9, 2017 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN

TIMELINE hire an internal auditor. St. Croix was supposed to be slated to get a $395 bonus $4 million annually for the next CONTINUED FROM PAGE 33 June 2007 — Jaredian Design Group finished by the end of 2006, but from V.I. Lottery funds. 10 years to pay the government’s — 2007 — advises GERS that it has cause to construction still is not complete. Oct. 1, 2009 — GERS marks its contribution on retroactive annuity Jan. 1, 2007 — Turnbull leaves terminate a $5.4 million contract J. Benton Construction has been 50th anniversary with open payments to government retirees. office; John deJongh Jr. with Best Construction, which tapped to take over the project. houses and benefit fairs. Sept. 22, 2010 — Senators approve takes office as governor. was hired to build the system’s Jan. 29, 2008 — Former GERS Oct. 19, 2009 — At a Senate a measure to let GERS put up Jan. 4, 2007 — Widespread anger new headquarters on St. Croix. administrator Todmann is arrested, town hall meeting, government to 10 percent of its portfolio into over the passage of Act 6905 In a letter, Jaredian said Best accused of stealing from GERS employees voice fear and anger alternative investments, which leads to petition drives to recall Construction failed to meet its through a forgery scheme that over the plan to implement carry higher than usual risks but the senators who supported the contractual requirements by not allowed him to collect two salaries. provisions of the 2005 GERS offer the potential for larger profits measure who are not leaving office supplying enough properly skilled March 19, 2008 — The full Senate reform act on Jan. 1, 2010. than some other investments. at the end of the Senate’s term. workers or paying subcontractors approves a bill to increase Oct. 28, 2009 — In response to Nov. 25, 2010 — DeJongh Jan. 8, 2007 — 27th Legislature as specified. The building had employer contributions to GERS widespread public outcry, the approves a bill appropriating takes office as the recall efforts been scheduled for completion from 14.5 percent to 17.5 percent Legislature passes an amendment $2.4 million for contributions gain momentum: A petition drive in at the end of 2006 but is only of an employee’s compensation. that pushes back implementation to GERS for unused sick leave St. Thomas-St. John targets Sen. 30 to 35 percent finished. April 13, 2008 — DeJongh of the GERS Reform Act of 2005 credited toward retirement for Louis Hill; on St. Croix the protest Sept. 20, 2007 — The GERS board signs the bill to increase for another year, to Jan. 1, 2011. members who retire in 2010. movement targets Senators Juan directs legal counsel Cathy Smith employer contributions. Nov. 12, 2009 — DeJongh Figueroa-Serville, Norman Jn to issue eviction notices to the May 15, 2008 — GERS board signs the measure delaying — 2011 — Baptiste and Ronald Russell, who V.I. Justice Department and V.I. selects seven companies to implementation of GERS reform. Jan. 1, 2011 — Tier 2 GERS voted for Act 6905, as well as Division of Personnel because they manage alternative investments The legislation also appropriates members — those hired Oct. 1, Sen. Neville James, who missed are past due on more than $1 in real estate, private equity $3 million to pay both employer 2005, and after — start making the Dec. 28 special session. million in rent for their spaces in and hedge funds. and employee contributions increased contributions as Jan. 16, 2007 — The four St. Croix the GERS Building on St. Thomas. June 23, 2008 — DeJongh on outstanding accrued leave required by the 2005 reform law. senators subject to recall petitions Oct. 10, 2007 — DeJongh announces Diageo plans to build time that employees want to Jan. 25, 2011 — GERS board take a grievance to the Federal urges senators to increase a facility on St. Croix to produce use as credit toward retirement votes to move forward with Communications Commission the employer’s set-rate Captain Morgan rum. He says part so that employees planning plans to develop land it owns about radio personality Roger contribution to GERS from 14.5 of the rum excise tax revenues to retire in 2010 can do so. in estates Hoffman and Morgan, whose talk show “Free percent to 17.5 percent that will come to the territory December 2009 — GERS makes Nullyberg on St. Thomas. Speech” has been a forum for Oct. 18, 2007 — V.I. Personnel when the new facility’s rum is major loans to two prominent Feb. 16, 2011 — GERS announces callers’ outrage over Act 6905. Director Kenneth Hermon Jr. asks sold in the U.S. will help combat Virgin Islands businesses: $15 $5 million purchase of 170 The senators claim that Morgan the GERS board for a three-year the GERS’ unfunded liability. million to Carambola Beach acres on St. Croix’s East is using the issue of a senatorial timetable to pay off his agency’s Oct. 10, 2008 — Recession- Resort and Spa and $3.3 End as an investment. recall “to destabilize the legislative past-due rent and to waive about driven decline in the value million to Seaborne Airlines. July 5, 2011 — DeJongh signs branch of government.” $150,000 in late fees. Personnel of GERS’ investments is the V.I. Economic Stability Act of Jan. 22, 2007 — DeJongh in his first owes GERS more than $647,000 estimated at $330 million. — 2010 — 2011, which cuts government State of the Territory Address says in back rent and utility bills. Dec. 15, 2008 — DeJongh’s February 2010 — The U.S. Interior employees’ salaries by 8 percent he disagrees with the plan to use GERS says it received just two financial team meets with GERS Department Inspector General’s for two years and includes a pension obligation bonds to cover rent payments from Personnel board over its decision to enforce Office, spurred by GERS’ growing retirement incentive program. The the GERS unfunded liability and in 2005 and none in 2006. The the law requiring members to pay unfunded liability, proceeds move decreases the amount of will not support issuing more debt. board does not make a decision. GERS for unused leave time if with an audit investigation money coming to GERS. DeJongh Feb. 9, 2007 — More than 100 Oct. 18, 2007 — GERS board they want it to count toward their of the retirement system. also line-item vetoes a $7 million emergency first responders take to unanimously selects Austin Nibbs, retirement. DeJongh asks GERS March 12, 2010 — GERS appropriation from the Internal the streets on St. Croix to protest executive assistant commissioner to delay implementing the policy. attorney Cathy Smith says a Revenue Matching Fund to GERS. Act 6905, specifically a provision at the V.I. Finance Department, Dec. 16, 2008 — GERS board bill the Senate approved that July 7, 2011 — Senators override that increased the number of years to replace Todmann as GERS votes to wait another year purportedly came from GERS deJongh’s veto of the $7 million emergency services employees administrator; his selection also before requiring government differed significantly from draft appropriation to GERS in FY must work to get full annuities. requires Senate confirmation. employees to pay into the legislation she submitted. The 2013, meaning it is now law. March 5, 2007 — The petition drive Oct. 25, 2007 — GERS board system for unused leave they bill as passed allows government July 8, 2011 — The GERS board to recall four St. Croix senators approves an $8 million loan to credit toward retirement. Several employees who owe back approves a 1.5 percent cost of over Act 6905 fails because the help St. Croix-based GeoNet semi-autonomous agencies pension payments — but are not living increase for government petitions were short of the 8,691 Ethanol fill its inventory. have not paid their additional told by GERS they owe them in retirees. GERS officials also signatures required; a similar Dec. 20, 2007 — GERS board contributions to the system since time to make payments before say that the Economic Stability recall effort in St. Thomas-St. receives a report saying the the employer contribution rate was they retire — to start collecting Act will harm the system with John had fizzled in January. Justice Department owes raised by 3 percentage points. retirement checks anyway. new provisions that could Week of March 21, 2007 — back rent of $1.2 million and March 17, 2010 — After five years add another $26.3 million to GERS board places system Personnel owes $446,000. The — 2009 — and a cost of $11 million, the new GERS’ unfunded liability. administrator Todmann on board does not take action. January 2009 — GeoNet Ethanol GERS office building in Orange July 29, 2011 — GERS officials say leave, and board members finishes paying back its $8 Grove on St. Croix enters the WAPA owes more than $5 million are tight-lipped about why. — 2008 — million loan from GERS, plus final stages of construction. The in contributions to the system. March 22, 2007 — Senators Jan. 23, 2008 — Pivoting from his $660,000 in interest. original project plan had a $5.4 Aug. 12, 2011 — GERS officials repeal a provision of Act 6905 earlier objection to the $600 June 2009 — GERS’ investment million budget with completion testify before a Senate committee that added five years to the million pension obligation bonds portfolio values begin rebounding scheduled for the end of 2006. about needed reforms of time newer emergency service issue, deJongh says he expects following hard decline in 2008. June 11, 2010 — With an eye the retirement system. employees have to work to to them by June. He says he July 1, 2009 — Government toward securing a guaranteed Aug. 23, 2011 — GERS officials tell receive full retirement benefits. changed his mind because of officials learn that GERS has revenue stream, GERS considers the Senate Finance Committee March 24, 2007 — Todmann, plans to increase the government not yet implemented the building supermarkets that that Carambola has defaulted on under fire from the GERS board, contribution rate from 14.5 second tier pension program would be open to everyone but its $15 million loan from 2009. resigns as administrator and chief percent to 17.5 percent. for new employees — one of offer discounts to members. Aug. 30, 2011 — The Economic financial officer effective April 24. Jan 29, 2008 — GERS board the key provisions of the GERS July 2010 — GERS moves into its Stability Act’s retirement incentive April 19, 2007 —GERS board unanimously agrees to reforms passed in 2005. new St. Croix headquarters. program is reported to have approves more than $200,000 terminate its contract with Best July 31, 2009 — More than Sept. 20, 2010 — Senators approve for a forensic audit and to Construction. The new office on 5,700 government retirees are a bill appropriating See TIMELINE, page 35 Thursday, March 9, 2017 The Virgin Islands Daily News 35 GERS at Risk Who’s to Blame? By Daily News Senior/Investigative Reporter JOY BLACKBURN

TIMELINE over the property in May. Airlines, a day after announcing Feb. 12, 2015 — At a press that GERS needs an immediate CONTINUED FROM PAGE 34 Aug. 9, 2012 — DeJongh approves plans to move its headquarters conference, Gov. Kenneth cash infusion of $1.4 billion to drawn applications from about a bill providing a $6 million to Puerto Rico, informs GERS Mapp says he will name new $1.7 billion to avert insolvency 370 government employees. appropriation to GERS. that the airline has paid off members to the GERS board in 2023. GERS’ most recent Oct. 1, 2011 — The report on Sept. 20, 2012 — A St. Croix its $4 million in outstanding after outlining faults he found actuarial report shows an Interior Department Inspector government retiree presents loans from the system. in GERS investments. unfunded liability of $4.07 billion. General’s examination of GERS a petition to senators during a March 19, 2015 — Nibbs Sept. 22, 2016 — Senators vote reveals the system at critical risk GERS hearing, asking for a variety — 2014 — announces that following a to approve borrowing $247 of failure because of a $1.4 billion of measures including a sin tax Jan. 23, 2014 — GERS insists that government payment of $1 million, million, with $100 million going unfunded liability. Interior requests on liquor and cigarettes with Seaborne Airlines still owes the GERS begins paying annuities for to GERS, to help pay down oversight by its Office of Insular proceeds to go to GERS, a repeal system nearly $187,000, although some of the hundreds of retirees GERS’ unfunded liability. Affairs to ensure the territory is of sections of Act 6905 that Seaborne says the company who had been waiting months October 2016 — A group of acting on recommended changes. increased salaries and retirement paid its full debt to GERS. or years for their pensions to public service retirees protests September 2011 — The GERS benefits for senators and the Feb. 6, 2014 — Retiree advocacy start because their employer the long delays in getting board passes a resolution saving directed to GERS, and that group Government Retirees contributions were missing. their pensions started. seeking to “amicably resolve” new and renewal tax exemptions United for Fairness sends a Aug. 19, 2015 — GERS board October 2016 — GERS asks a the pending criminal charges under the Economic Development letter to GERS board members suspends all loans to members federal judge to enforce court against former administrator Authority be decreased and the to demand reinstatement of to preserve the system’s liquidity mandate issued in the 1980s Willis Todmann, who has been difference allocated to GERS. cost of living increases. and passes a resolution urging that required the V.I. government charged with stealing from GERS. Sept. 22, 2012 — GERS board March 18, 2014 — DeJongh signs the government to issue the $600 to pay what is required by law Oct. 18, 2011 — A Superior Court loans Seaborne another $1.5 legislation passed earlier this million in pension obligation bonds into the retirement system. jury finds Todmann guilty. million and decreases the month to allow GERS to return authorized by Act 6905 and for Oct. 25, 2016 — Mapp says Oct. 26, 2011 — A Senate interest rate on an existing loan the 8 percent contributions the Legislature to approve pending he will veto the $247 million committee endorses a plan to Seaborne to 6.23 percent. withheld on 2010 retroactive pension reform legislation. borrowing bill. He also calls GERS recommended that November 2012 — GERS has town payment checks issued to some Sept. 23, 2015 — The Senate for Nibbs to be fired. would clarify language and hall meetings on reforms proposed retirees, plus 9 percent interest. approves modest GERS reforms Nov. 3, 2016 — In a special ambiguities in existing law, to help stave off insolvency. April 12, 2014 — GERS board including raising retirement ages session the 31st Legislature increase contribution rates for votes to put the Carambola Beach and some benefits modifications. again authorizes $247 million judges and senators and allows — 2013 — Resort and Spa up for sale. Oct. 8, 2015 — Mapp vetoes in government borrowing, contract and per diem employees May 16, 2013 — DeJongh’s GERS May 13, 2014 — The Senate the GERS legislation, which including the $100 million for who work exclusively for the taks force makes a report and Committee of the Whole meets had been stalled for years, GERS, correcting the wording government at least 40 hours a recommendations including to begin discussing major GERS claiming the bill contains mistakes in the earlier bill. week to be included in GERS. setting a minimum age for reform. DeJongh submitted a bill drafting errors and provisions Nov. 7, 2016 — Based on the Nov. 14, 2011 — GERS closes on a retirement, withholding cost of in March that incorporates the that were not considered or Nov. 3 authorization, the PFA $13 million loan to the government living adjustments, increasing task force suggestions, although voted on by the Senate. votes to issue $147 million in at a 4.91 percent interest rate contribution rates, reducing Tier 1 no bill is before the Senate yet. Oct. 19, 2015 — The Senate bonds — leaving out the $100 to enable the government to pay benefits by 10 percent, increasing Other meetings are planned. approves a revised bill that million earmarked for GERS. retirement incentives that are part contributions for senators and Aug. 24, 2014 — GERS’ updated raises the retirement age for Nov. 22, 2016 — GERS board votes of the Economic Stability Act. sitting judges and using rum actuarial report shows an government employees to down a proposed 30 percent Dec. 14, 2011 — The GERS board revenues to back an increase unfunded liability of $1.84 billion. 65 and modifies a number of cut to all pension benefits for agrees to a request to refinance in employer contributions. Sept. 10, 2014 — Nibbs discusses benefits for Tier 2 employees. current retirees, because it would the loan to the Carambola at a 6.3 June 28, 2013 — Senators the pressing need for pension Oct. 26, 2015 — Mapp signs violate the U.S. Constitution. percent interest rate rather than pass legislation to ensure reform with the Senate Finance the GERS bill into law. Dec. 20, 2016 — The 31st the original 10.5 percent rate. that the 8 percent pay cuts Committee, urging senators to Legislature approves a bill that for government employees take action on GERS reform — 2016 — provides for the proceeds from the — 2012 — mandated by the Economic legislation that has been March 14, 2016 — A scathing V.I. rental of property acquired in the Jan. 10, 2012 — Statements to Stability Act are restored in July. pending before the Senate Inspector General’s audit finds that Limetree Bay Terminals agreement the GERS board say deJongh’s Sept. 26, 2013 — The GERS board for years. Similar legislation GERS’ alternative investments are to go toward decreasing dismissal of government workers votes to increase employer was considered in the 29th risky, unmonitored and illegal. GERS unfunded liability. to offset a budget gap could contribution rates by 3 percentage Legislature but never made it April 25, 2016 — Mapp approves “cripple” GERS. About 350 points and to raise employee out of the Rules Committee. a bill that earmarks a portion — 2017 — full-time government positions contribution rates by 1 percentage Nov. 20, 2014 — GERS board votes of the government’s revenue Jan. 1, 2017 — Government had been terminated during point each year for the next three to hike contribution rates beginning from Lonesome Dove petroleum employees’ GERS contribution January, and the governor had years, starting Oct. 1, 2013. Jan. 1, 2015. The employer rate company for GERS. rates go up 1 percentage dismissed more than 100 part- Oct. 17, 2013 — Nibbs tells is set to go up 3 percentage May 27, 2016 — Mapp asks Senate point, as scheduled. time, temporary and per diem senators that GERS has not points, from 17.5 percent to 20.5 to “refrain from diverting funds Jan. 20, 2017 — Mapp vetoes contract workers in December. received the $7 million in rum percent, and stay at that level from the General Fund to GERS.” the bill directing proceeds May 2012 — GERS takes ownership tax revenues it was supposed for five years. Tier 1 employees May 31, 2016 — Mapp from renting the Limetree Bay of Carambola Beach Resort to get under a provision in the will see their contribution rates signs legislation mandating properties directly to GERS, after its owners default on a Economic Stability Act. In 2001 increase by 1 percentage that GERS offer loans to saying he wants to use those $15 million loan from GERS. deJongh had line-item vetoed point a year for three years. active GERS members in proceeds to pay missing June 19, 2012 — DeJongh signs the provision, but the Senate Dec. 31, 2014 — Willis Todmann, amounts up to $10,000. government contributions to GERS an executive order creating a voted to override the veto. former GERS administrator, June 16, 2016 — Despite the new for employees who are retiring task force to look at GERS’ Nov. 18, 2013 — GERS reveals is pardoned by deJongh after loan program mandate, the GERS but have missing government long-term financial condition. that employee and employer serving three years in prison board votes not to reinstate the contributions, and that some July 26, 2012 — Todmann is contribution did not go up effect for stealing from GERS. program. Members say it would of the money needs to go for sentenced to five years in jail. Oct. 1, 2013. GERS board go against their fiduciary duty. property maintenance. He asks Aug. 31, 2012 — Nibbs tells member Edgar Ross says that — 2015 — August 2016 — GERS sues Luis senators to revisit the measure. senators that Carambola Beach a day after the Sept. 26 vote to Jan. 21, 2015 — GERS board Hospital for $7 million, claiming Jan. 30, 2017 — In his State of Resort ultimately defaulted on increase the rates, the board met votes to increase contribution the hospital failed to pay employer the Territory Address, Mapp says its $15 million loan from GERS, with deJongh and then reversed rates for Tier 2 employees by 1 and employee contributions. he will submit comprehensive ultimately only paying back its decision behind closed doors. percentage point each year for Sept. 20, 2016 — Rocky Joyner, GERS reform legislation to the $2.1 million; GERS had taken Dec. 19, 2013 — Seaborne three years, starting in February. GERS’ actuary, tells policymakers 32nd Legislature by March 31. 36 The Virgin Islands Daily News Thursday, March 9, 2017 GERS at Risk Who’s to Blame By Daily News Senior/Investigative Reporter JOY BLACKBURN How The Daily News Did This Report aily News reporter Joy Blackburn began research for this systems • National Conference of State • Mary Moorhead, St. Croix, GERS D report in October 2016. Although long aware of challenges • Written testimony to V.I. Legislatures retiree GERS faces, The Daily News and Blackburn both found the Legislature hearings • Government Finance Officers • Phyllis Nehlsen, St. Croix, GERS • Video of V.I. Legislature hearings Association retiree newest numbers striking: Only six years to • Audio files of government and • The National Institute on • Austin Nibbs, GERS administrator insolvency, and GERS’ urgent need for an GERS press conferences Retirement Security • Lloyd O’Bryan, St. Croix, GERS infusion of $1.7 billion — more than double the • V.I. Code • Pew Charitable Trusts retiree territory’s annual General Fund budget — to get • Daily News archives • St. Croix Government Retirees • Pat Oliver, librarian at St. Croix the retirement system back on track. Governmental locations Inc. Educational Complex and active • S&P Global GERS member At stake in GERS’ impending insolvency are • V.I. Bureau of Economic Research People interviewed • Joyce Rohlsen, St. Croix, GERS the livelihood and well-being of thousands of V.I. • V.I. Finance Department retiree government retirees, the future financial security • V.I. Government Employees • Abdul Ali, St. Croix, GERS retiree • Edgar Ross, former Superior of thousands of active government employees Retirement System • Craig Barshinger, former Virgin Court judge, GERS retiree, and and the economic stability of the entire Virgin Joy Blackburn • V.I. Legislature Islands senator-at-large, retired GERS board vice chairman • V.I. Office of Inspector General • Lisa Bhola, St. Croix business • Edward Siedle, president of Islands economy. • V.I. Office of Management and owner, Trends Benchmark Financial Services How did we get to this point? Is there still time to avoid Budget • Marcy Block, senior director at • Troy deChabert-Schuster, state disaster? What has worked in other places to turn troubled • V.I. Public Finance Authority Fitch Ratings – Public Finance director of AARP Virgin Islands pension systems around? • V.I. Superior Court • Keith Brainard, research director • Patricia Tranberg Stevens, St. The Daily News put top priority on uncovering the truth, the • V.I. Supreme Court for the National Association of Croix retiree, GERS member • V.I. Government House State Retirement Administrators • Bernice Turnbull, former V.I. causes and the effects on this fast-approaching calamity and on • U.S. Census Bureau • Peyton Bryant, St. Croix business finance commissioner any possible solutions. • U.S. Bureau of Economic Analysis owner, Small Wonders • Charles Turnbull, former V.I. This report was prepared not only to inform but also to • U.S. Department of Interior Office • Kinila Callendar, GERS governor generate public discourse and government action to turn the tide of Inspector General spokeswoman • Ian Williams Jr., St. Thomas, — before it’s too late. • U.S. Department of Labor • Valdamier Collens, V.I. Finance GERS retiree • U.S. District Court Commissioner and Public • Steven van Beverhoudt, V.I. • U.S. Bankruptcy Court Finance Authority executive Inspector General Documents used • Letters • Government Accountability Office director • Numerous V.I. government (all are public information) • GERS newsletters Non-governmental locations • Eurman Fahie, St. Croix, GERS employees who did not want to • Government House news releases retiree be named • Actuarial evaluations • GERS news releases Documents also are in the • Patricia Goins, attorney and • Numerous V.I. government retirees • Audited financial reports • Government agencies’ news files of professional associations, partner at Hawkins Delafield & who did not want to be named • Bills and Acts of the V.I. releases community organizations, Wood, the V.I. government’s bond • Business owners territory-wide. Legislature • V.I. government five-year plan, nonprofits and ratings services: counsel. Interviewed in writing • Briefings various drafts • AARP • Helen Hart, St. Thomas, president • Budgets • Professional associations’ position • American Academy of Actuaries of GERS Reitrees United for • John deJongh Jr., former V.I. • Census data papers and resolutions • Brookings Institution Fairness governor. • Court documents • Presentations by GERS • Center for Retirement Research at • Verne Hodge, retired Superior • Cathy Smith, GERS legal counsel • Credit ratings and analyses actuary Rocky Joyner of Segal Boston College Court judge Declined to be interviewed • Dictionaries Consulting • Center for State and Local • Barbara Isaac, St. Thomas, GERS • Economic data • Presentations in 2015 and 2016 by Government Excellence retiree • Wayne Biggs Jr., acting chief • Financial statements GERS adviser Meketa Investment • The Council of State Governments • Rocky Joyner, vice president and executive officer of the Virgin • U.S. Interior Department Inspector Group • Fitch Ratings actuary at Segal Consulting, the Islands Economic Development General audit reports • National Association of State • Governmental Accounting company that provides actuarial Authority, did not respond to • V.I. Inspector General audit Retirement Administrators briefs Standards Board services to GERS requests for interviews reports and analyses • Moody’s Investor’s Service • Elizabeth Kellar, senior fellow at • GERS Board of Trustees • Internet sites • Reports on public pension systems • National Association of State the Center for State and Local Chairman Dr. Wilbur Callender • Memos • Data analysis on public pension Retirement Administrators Government Excellence referred all questions to Nibbs. Tell Us Your Solutions Tell Us Your Troubles

The threat of GERS insolvency threatens the that history so we can avoid past mistakes? Every V.I. government retiree seems to your story. livelihoods of thousands of Virgin Islands people • What should be the most important priorities have at least one story to share about the • If you are one of the retirees who man- and the economic well-being of everyone in the for V.I. government and GERS? challenges of dealing with GERS. aged to get your GERS problems fixed, oth- territory. • What are we willing to sacrifice or change in Missing records, unpaid government ers would like to know how you did it. All of us have an interest in averting a finan- order to save GERS — and what are we not? contributions and computer problems have • If you are planning to retire soon and are cial crisis. We welcome your thoughts. frustrated and infuriated many GERS partici- worried that GERS’ record-keeping will be a What are your ideas for ways the people of the Every idea is worth hearing — and who pants, and have even left some retirees still problem for you, tell us about it. Virgin Islands and officials could get a handle on knows, yours may be one that leads to positive waiting for their pension check. The power of one can be the power of this problem? changes. Has any of that happened to you? many. You deserve to be heard! This Daily News Special Report highlighted Send your questions and suggestions to • If you are retired having difficulty col- Please send us your story at letters@dai- the people, the decisions, and the circumstances [email protected], [email protected], lecting your benefits, getting the amount lynews.vi, [email protected], or call that got us to this point. Now we ask you: or call Joy Blackburn at 340-714-9145. corrected — or getting a straight answer Joy Blackburn at 340-714-9145. • What lessons from should we learn from We request that you include your name. about what’s wrong — we hope you’ll share We request that you include your name.