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Resident commissioner, Puerto Rico gov discuss alternatives to halted $1.5B in federal Education funds

By on October 10, 2019

Resident Commissioner Jenniffer González (Courtesy)

Government faces various hurdles before receiving federal allocations

SAN JUAN — Resident Commissioner Jenniffer González and Gov. Wanda Vázquez Garced met this week to discuss how to resume the flow of federal funds for the island’s Department of Education, the disbursement of which was halted because the Puerto Rican government failed to assign a spending monitor.

González said the governor put forth a discovery process to identify the most critical areas for the island’s Education Department and talks are being held with representatives of the U.S. Department of Education to gain access to at least a portion of the funds with priority to cover special education.

“The governor suggested to me, and I believe it is a good alternative, that instead of putting in place a federal monitor, that Puerto Rico is classified as a ‘high risk’ [jurisdiction], which was one of the actions discussed before the governor came into power. What that does is that when the government spends, it asks for reimbursement with the invoice. That is less harmful than [freezing] the funds completely,” González said.

She also said that “the other alternative that the governor proposes, which I think is very correct, too, is that because the most urgent are the special education funds and they were able to identify some items that could reach half of the funds needed, but an amount is still missing, that the Department of Education then [releases] a percentage.”

At the beginning of this summer, the U.S. Education Department decided that the funds sent to the island would have to be administered by an outside fiduciary agent, a measure used when federal agencies have concerns regarding the handling of its allocations. Because the Puerto Rico government never finalized a contract with a company approved to monitor the $1.5 billion in federal funds for Education, its disbursement was halted.

The requirement of a fiduciary, or financial monitor, is not considered  receivership, which is lower than the island education system’s current classification.

In addition to the internal strategies to unfreeze the funds, González said U.S. Education reps will be visiting the island next week to reassess the matter.

Health and housing, too

Besides the public education funding issue, Puerto Rico is also about to see a reduction in Medicaid funds on Nov. 20, when the temporary 100 percent Federal Medicaid Assistance Percentage for the island’s Vital healthcare program expires. If the continuing resolution is not passed, the matching rate would drop back to 55 percent, resulting in the government of Puerto Rico having to seek funds to cover 45 percent of Vital’s expenses.

In early September, Puerto Rico was about to run out of healthcare funds, but Congress included them in its continuing resolution to fund the federal government. That resolution covers until Nov. 20. The commissioner, as well as representatives of the island’s public and private sectors are advocating the approval of the Territories Healthcare Improvement Act, which would give the island $3 billion annually for four years.

The measure’s bill is in the House Energy and Commerce Committee, and González said she will be meeting with Sen. Charles “Chuck” Grassley, who chairs the Finance Committee and has sent several letters to the U.S. Department of Health and Human Services, questioning the allocation of funds to the island and focusing on government transparency.

On Aug. 2, the U.S. Department of Housing and Urban Development (HUD) announced its plan to appoint a federal financial monitor to oversee the disbursement of disaster recovery dollars to Puerto Rico.

“Given the Puerto Rico government’s alleged corruption, fiscal irregularities and mismanagement, we will appoint a Federal Financial Monitor to oversee the disbursement of all HUD disaster recovery funds,” said Secretary Ben Carson. “The Federal Financial Monitor’s guidance, coupled with our new, improved financial controls, will ensure recovery funds get to the people who need them most and protect taxpayers who are footing the bill.”

HUD said the monitor would have “extensive legal, accounting, construction management and audit oversight experience and be tasked with ensuring the efficient, effective, and accountable use” of federal funds.

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