Oversight Board Certifies Fiscal Plan for University of Puerto Rico
Points out ‘no tuition increase and no decrease in funding; support for scholarship funds’; outlines ‘reform to avoid pension insolvency’
SAN JUAN – The Financial Oversight and Management Board for Puerto Rico presented Tuesday the 2020 fiscal plan for the University of Puerto Rico (UPR) that it certified on June 12.
The board said in a press release that the fiscal plan is the roadmap for UPR’s transformation.
“Falling enrollment due to fewer high school graduates and a shrinking population in Puerto Rico; a pension system that is at serious risk of insolvency in about 10 years; and an aging infrastructure endanger UPR’s future as the jewel of the Puerto Rico education system. The COVID-19 pandemic is yet another challenge to UPR as it is looking to expand its distance learning capabilities for at least a portion of the student population, rethinking residences and challenged by how to provide the full student experience in this time of crisis,” the board said.
In recognition of these challenges, the board said it will provide a one-year delay from its previously required reduction of annual central government appropriations, as well as its tuition and fee increases.
“UPR will undoubtedly play an essential role in Puerto Rico’s recovery, teaching students best prepared to create a Puerto Rico of opportunity and prosperity. However, UPR needs to be prepared for the challenges ahead,” said the board’s executive director, Natalie Jaresko. “UPR has so far been slow to implement the changes necessary to secure a stable and bright future. COVID-19 has exacerbated these shortcomings.”
“That is why the coming fiscal year needs to be a year of change,” Jaresko added. “UPR needs to focus on increasing revenues, attracting more students, implementing its scholarship funds to help those students who need financial assistance, preserving its faculty, securing the pensions of its staff, and cutting administrative costs. Without change, UPR is simply not sustainable.”
The board listed the following UPR fiscal plan elements in its press release:
• Requires UPR to increase revenues by about $150 million per year by fiscal year 2025 and to generate savings of about $225 million per year over the same period. Without these measures, UPR’s operating deficit will approach $379 million by fiscal year 2022 and $390 million by fiscal year 2025.
• Outlines measures related to scholarship programs designed to ensure all students, regardless of their income level, have access to UPR’s undergraduate and graduate programs. UPR expects its internal scholarship fund to provide $9 million in financial aid during fiscal year 2021. In addition to this UPR scholarship fund, two independently managed scholarship funds for UPR students have been established by the Certified Fiscal Plan for the Commonwealth: for undergraduates with financial needs and for medical students who commit to serve in the rural areas of the island.
• Increases faculty by up to 3% between fiscal years 2021 and 2024 to maintain its level of academic excellence.
• Leaves all 11 UPR campuses open and funded but requires the consolidation of administrative functions, such as finance and accounting, and human resources.
“If UPR continues its current pension funding policy, the pension plan will be insolvent by 2031,” the board stressed. “Only by freezing the defined benefit plan, moving to a defined contribution plan, reducing accrued benefits, and implementing the 2020 UPR Fiscal Plan reforms would UPR be able to reduce pension contributions to a level that would achieve a balance.
“UPR must also invest the resources it already has available. To-date, only $4.8 million of the over $118 million in federal disaster relief funds that have been obligated to UPR have been disbursed. Further, UPR is again on track in fiscal year 2020 to spend less than half of its $46 million budgeted funds for capital improvements and equipment.”