Pago Pago, AMERICAN SAMOA — American Samoa Government’s “long-term obligation” increased by more than $34 million to just over $246 million at the end of fiscal year 2019, according to the independent audit of ASG’s financial statement for fiscal year 2019, conducted by Utah-based certified public accountant firm, Larson & Company PC.

In past years, lawmakers — during their annual review of the government’s proposed budget for the next fiscal year  — have always raised questions and concerns over the government’s long-term obligations and how it can be addressed with projected revenues.

With the pending FY 2021 budget plan yet to be transmitted to the Fono, this issue has again resurfaced as some lawmakers have already obtained or are waiting for financial reports from the government, including the FY 2019 financial audit report.

At the end of FY 2019, ASG had an increase of $34.4 million in long-term obligations, which represent a 16.2% increase from the prior year. Of the total $246.04 million in long term debit, the biggest contributors are the $120.9 million in general obligation bonds outstanding and $96 million in “net pension liability”, a decrease of $11.5 million compared to the prior year.

For the outstanding bonds the report shows Series 2015 A with $44.19 million Series 2015 B at $15.41 million; Series 2015 C with $11.72 million and the Series 2018 ASTC & Fono Bond at $49.61 million, according to the reports summary.

A summary of each of the bond series is included in the report, such as how revenues collected were to be used in areas of infrastructure improvements and acquisitions, as well as the government owned Territorial Bank of American Samoa.

For the $50 million bond Series 2018, $32 million was invested through ASTCA in the Hawaiki cable and the remaining for the new planned two-story Fono Building.

The auditors also note in the report that in December 2017, the ASG Employees Retirement Fund entered into a point-to-point indefeasible right of use (IRU) and leaseback agreement with ASTCA, whereby the Retirement Fund invested $17.3 million for a right of use of a point-to-point cable system. The cable system connects American Samoa to the main Hawaiki Cable System, providing an upgraded fiber optic cable infrastructure to the Territory.

It also says that the South Pacific Link, LLC, a limited liability corporation wholly owned by the Retirement Fund, was formed to administer the Fund’s investment in the Haiwaki Cable IRU.

In July 2019, an extinguishment agreement was executed by ASG, ASTCA, and ASGERF that terminated the IRU and leaseback agreement. Pursuant to the extinguishment agreement, the Fund received $18.7 million from ASTCA for the investment in the Haiwaiki IRU. The Retirement Fund pays investment fees either through direct payments to the investment manager or as a deduction from investment returns.

(See yesterday’s story about competition for both of these cable systems.)

NET PENSION LIABILITY

The auditors also explained that the “net pension liability” in the government-wide financial statements has been recognized in accordance with the most recent Retirement Fund actuarial measurement date.

On Sept. 30, 2019, ASG reported a net pension liability of more than $95.97 million (or nearly $96 million) for its proportionate share of the Retirement Fund’s net pension liability, according to the auditors, who explained that ASG’s proportion of the net pension liability was based on ASG’s share of contributions to the Retirement Fund for fiscal year 2018.

As of the measurement date of Sept. 30, 2019, the ASG’s proportional share of the net pension liability was 67.45%. ASG’s total reported net pension liability includes an allocated net pension liability of $2.04 million for the Airport Fund based on the Airport Fund’s share of ASG’s contributions for fiscal year 2018.

Samoa News will report in future editions on other areas of interest in the long-term obligations.