NOBODY was very surprised when the Government of Guam Retirement Fund did not show up for Monday’s legislative hearing on Gov. Eddie Calvo’s omnibus spending cuts bill. The trustees of the Fund have a fiduciary responsibility to the Fund and its members and retirees that may conflict with the governor’s proposals.

The word “snubs” in our Tuesday headline on the story may have been a bit strong, however. The Fund didn’t mean any disrespect to Vice Speaker B.J. Cruz, who chaired the hearing. It’s just that the Fund may have to take the government of Guam to court if the proposals for an early retirement incentive program and extension of the unfunded liability amortization period are passed and signed into law.

“The Fund has determined that it will be in the best interest of its members and retirees that it not participate in overall government policy-making,” wrote Fund Executive Director Paula Blas in a letter to Cruz. “Rather, the Fund will analyze any proposal agreed to by both the legislative and executive branches and respond accordingly.”

Blas went on to explain that the Fund opposes the governor’s proposals. This, Cruz said, means the administration may be vulnerable to a lawsuit. Such an action would delay imposition of the cost savings perceived by the governor and his task force and embodied in Bill 507-31. Given the strong warnings, Gov. Calvo probably ought to take his Retirement Fund proposals back to the cost-cutting task force for more work.

We’ve commented here before on this business of fiduciary responsibility. Chairman Joe T. San Agustin and his fellow trustees have taken an oath to uphold and support the best interests of the Fund – whether they are appointed or elected, when an issue such as this comes along that fiduciary interest may well conflict with the fiduciary and/or political interests of the administration.

If the governor persists in making cost-cutting incursions into the Fund and its administration, the trustees may well have no choice but to file suit. Joseph A Guthrie, a lawyer and GovGuam retiree, has pointed out that in a 2003 court case, Judge Alberto Lamorena ORDERED the board of trustees to challenge in court the Organicity of any legislation enacted, which has the effect of increasing the Fund’s unfunded liability. The court order was made specifically applicable to legislation which “expands minimum eligibility requirements or reduces or delays funding of contributions.”

Judge Lamorena held that the board of trustee’s fiduciary duties require them to mount court challenges to legislation which threatens the actuarial soundness of the Fund. In light of the Court’s orders, Guthrie writes, the board of trustees has no business exploring which of the administration’ s legislative initiatives would be least deleterious to the actuarial soundness of the Fund. “Its obligation,” he continues, “is to resist all such initiatives.”

Gov. Calvo should leave the Retirement Fund alone, and look elsewhere to cut the GovGuam budget.