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Puerto Rico fiscal board says Education administration lacking

By on November 13, 2019

Fiscal board Executive Director Natalie Jaresko (Screen capture of

Stresses ‘need for financial management’ during public hearing

SAN JUAN — The federally established Financial Oversight and Management Board for Puerto Rico heard Wednesday morning from the island’s top Education Department officials about the status of the department and the implementation of the fiscal reforms included in the fiscal plan certified by the board for the commonwealth.

The hearing was attended by Education Secretary Eligio Hernández and staff, as well as private sector educators and education experts. For their part, the board members—some of whom participated over the phone—questioned the Education Department panel’s priorities and methods for implementing fiscal reform, with member José González and Executive Director Natalie Jaresko being the most vocal in terms of disagreeing with the statements of department administrators. 

Education Secretary Eligio Hernández (Screen capture of

“The takeaway from this is that you have the single largest agency from a spending perspective. It’s $4 billion and you don’t have separate, focused financial function in the department to manage it. You would never imagine a company, a private company that earns $4 billion of revenues not having a finance department to figure out why it took more than two years to shut off the electricity in a school,” Jaresko questioned, referring to an aspect of waste at the department that could have been easily dealt with after a school closure.

The board director also remarked several times that the budget cuts implemented by the Education Department are not in tune with what was established in the certified fiscal plan and budget.

“When the savings are not coming from administration, you are forcing yourself to cut from teachers and students,” Jaresko told Education Secretary Eligio Hernández.

According to the department’s presentation, there have been 438 school “consolidations,” saving $47 million, but Jaresko questioned why the closure of 34 percent of the schools did not result in a proportional administrative spending reduction. When Hernández replied that some personnel, such as special needs assistants, are classified as administrative, Jaresko snapped back, citing department charts that show a less than 20 percent reduction in janitors and cafeteria workers.

Jaresko reminded the panel that the fiscal plan expects a payroll of $192 million that includes $92 million for teachers and areas of direct service to the students. In a press conference after the hearing, she stressed that the Education Department has to work toward different budget allocations for it to be consistent with the fiscal plan.

“Not being consistent creates problems that don’t have to exist, like the one we discussed today with special education,” Jaresko said referencing the budget cuts that the department implemented in the special education area despite the board not having requested the cuts.

Fiscal board Chairman José Carrión went as far as to question who came up with the special education cuts, to which the reply was the Permits & Endorsements Management Office.

“We found that, all of a sudden, the department, or OGP, determined that the main cut would come from special education. They decided to take that issue into account and not take into account the budget reductions of for example more administrative [areas.] That cut it is not in line with what the financial statement should reflect,” Carrión told the media after the hearing.

In the school closure portion of the discussion, González focused on the 22 schools that were not part of the school closure plan but remain shuttered because they sustained extensive damage from Hurricane María. When the board member pointed out that María was more than two years ago, the Education secretary admitted that the department does not have the money to fix those schools. Hernández added that Education is working with the Central Office for Recovery, Reconstruction and Resiliency, or COR3, as well as the Federal Emergency Management Agency (FEMA) to process those schools’ needs.

However, González took bigger issue with how the department was working and presenting its budget. Specifically, he complained that all obligations are being included in its budget charts, for example, which results in surpluses on paper that are not real, such as unreflected millions of dollars in utility costs. González also pointed out a problem in the department not using generally accepted accounting principles, such as the Governmental Accounting Standards Board (GASB), a source of best practices.

“It is important to reflect the real condition by the end of the fiscal year. That is what tells me precisely if I assigned sufficient funds or not for the department’s operations,” González said.

“Education reform is vital for the people of Puerto Rico and long-term economic sustainability,” Carrión said in a press release. “Our children will see first-hand the transformation of a system centered around our children’s educational needs. Our children are our future. That is why we need to see education as the foundation of our society and the cornerstone of our economy.”

Jaresko added that the department needs to set high aspirations to improve gaps in academic achievement. 

“We cannot restore growth and opportunity without improving the education system in Puerto Rico. The Certified Fiscal Plan assumes the education reform will generate 0.17% of economic growth by the fiscal year 2049. The changes to the school system will revamp and modernize the school’s curriculum to ensure that children obtain the necessary skill set to integrate into Puerto Rico’s economy and ensure its future development,” she said 

The board acknowledged that the government is taking steps to ensure quality education for Puerto Rican children. “However, much work remains to be done,” Jaresko said. “The children of Puerto Rico deserve an efficient and reliable education system in order to enjoy a dynamic and prosperous economy.”

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