Trust Funds R Us

Recently our wonderful FSM PIO (Public Information Office) published a story on the state of FSM’s compact trust fund.

Good news

For the most part, the article was very positive.  The article gave encouraging figures like:

As of November 30th 2018, the total value of the Trust Fund was $642,183,870. By comparison, the total value of the Trust Fund was $564,970,738 the year prior. Since it began in 2005 the Trust Fund has seen a performance return of 5.7%. Fiscal Year (FY) 2018 (i.e. October 2017 through September 2018) saw growth of 6.77% for the Trust Fund as a whole.

What was even better was the current projection.  I know, it’s just a projection, but it sounded great:

Current projections are that the Trust Fund will reach slightly over one billion dollars ($1,000,000,000) by 2023. At that point, the Trust Fund must focus on a distribution policy that sustains its growth while also ensuring the continued delivery of government services.

That is an astounding number.  Some people think this is not enough.  But, how much do we need to give us a boost? Are we going to say fuck it and just rely on grants to sustain us forever? I think we all know the hard answer to that question.

Other funds

Also, we have another source of funds, the Trust Fund for the Federated States of Micronesia is another investment created by FSM Congress back in 1999.

The FSM Trust Fund was created by Congress in 1999. The Fund’s investment adviser is Wilshire Associates Inc. The custodian of the Fund is the Bank of New York.

This trust fund was audited back in 2015  and had some issues, including no board of trustees.  The last update I can find on the fund, was from the FSM PIO back in 2017:

On February 01, 2017, the FSM Secretary of the Department of Finance & Administration, the Honorable Sihna Lawrence, announced that the FSM Trust Fund ended calendar year 2016 with a total balance of $94.12 million, including the state accounts established by Public Law 18-107.

How does the one billion dollars projection sound now? Maybe better to know there is a cushion of $94.12 million dollars, which was back in 2017.  I am curious to know, what will the numbers be this year.  Unlike the compact trust fund that has a website and is updated regularly, the FSM trust fund doesn’t have that, yet?

You may recall though, President Christian recently signed public law 20-47 to “further promote transparency and accountability of the FSM Trust Fund.”

The Law

The law states “While the Board of the FSM Trust Fund…has not been duly constituted…all powers of the Board shall be vested in and exercisable by the President of the FSM; Provided, however, that he shall cause the Administrator of the Fund to report on a regular basis to Congress of the progress of the FSM Trust Fund. The Administrator shall report…to Congress on a quarterly basis but at least 10 days before each regular session….The Administrator shall be deemed a fiduciary and shall be held to the standard of a fiduciary….”

So, no board of trustees still and now we are expecting an update every three months.  We will be looking for it.  And don’t forget to read that 2015 audit report if you’re curious about the history leading up to the recently signed public law 20-47.

Till then, see you on the next blog or podcast.