The Puerto Rico Oversight Board voted to raise tuition for the University of Puerto Rico and tolls for the Highways and Transportation Authority in the process of approving fiscal plans for the entities along with five other Puerto Rico organizations.
There was more debate and discussion on the UPR plan than on the others. UPR has $590 million in bonds outstanding.
Board UPR Director María López said the board’s fiscal plan would not affect the quality of education. The plan’s cuts would be made to back-office operations. The board’s plan would increase non-tuition sources of revenue and make some “modest fee increases.”
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The plan mandates pension reform for the university, cutting pension benefits. The university’s pension plan currently has 56% of its liabilities funded. There will be some savings through staff attrition, she said.
The approved fiscal plan says the cost of undergraduate tuition and fees for 28 credits will rise by 31.6% from School Year 2019-2020 to School Year 2025-2026. Graduate tuition will increase at different levels depending on the program but in general it will go up more markedly.
Puerto Rico Gov. Pedro Pierluisi attended Thursday’s meeting representing Puerto Rico’s government and he said he opposed the UPR fiscal plan. He said the government has historically respected UPR’s autonomy, something the plan would not do. The board has already cut central government funding by 40%. He said he was concerned by additional tuition increases.
Medina said, “We need to balance the speed of change with the needs of the university and their ability to implement such changes.” He said the university had problems with some accreditations this past year.
Peterson said UPR was an engine of economic growth on the island.
Biggs said the board has been trying to reform UPR for four years and the university had shown very little cooperation with the board’s efforts. He said if the board did not force the reforms, they would not take place.
In the board’s plan it is cutting $94 million of support, Mayda Velasco, vice president of the UPR Governing Board, told the Oversight Board. The university needs this money to continue its reforms and to get federal funds.
In response, Oversight Board Executive Director Natalie Jaresko said the federal government, in response to the COVID-19’s fiscal impact, was awarding $400 million in American Rescue Plan funds to the university. This money can help both students and university this coming fiscal year. She said the university has $200 million in its bank accounts and of this sum $165 million is unrestricted cash.
The board voted 5 to 2 in favor of the UPR plan, with Peterson and Medina in opposition.
Regarding the Highways and Transportation Authority fiscal plan, Board Infrastructure Director Alejandro Figueroa Ramirez said its three prongs were implementing critical fiscal measures, doing a better job delivering its capital program, and implementing transportation sector reforms.
On the first, he said the authority would introduce several revenue measures such as increased toll fares and toll fines and would introduce labor and governance reforms at the authority.
The plan specifies that there will be toll revenue increases of 8.3% each year fiscal 2022 to fiscal 2024. Starting in fiscal 2025 increases would be the consumer price index percent plus 1.5 percentage points per year.
The HTA has $6.6 billion in debt outstanding, of which about $4.2 billion is bonds.
Figueroa Ramirez said the second prong would involve continuing to try to spend as much as possible of the available capital funds for capital projects. In past years much of the allocated money hasn’t been spent.
For the third prong the director said the authority will aid the approved transportation sector reform in the next two years.
The board unanimously voted for the HTA fiscal plan.
On Puerto Rico Electric Power Authority, Figueroa Ramirez said after the June 1 handover of the transmission and distribution system to LUMA Energy the authority is seeking to pick a private operator for its generation system in the second half of this calendar year. The plan also seeks to advance the procurement of renewable energy capacity.
Also on Thursday the board approved fiscal plans for Puerto Rico Aqueduct and Sewer Authority, Puerto Rico Industrial Development Company, Puerto Rico Sales Tax Finance Authority (COFINA), and Public Corporation for the Supervision and Security of Puerto Rico Cooperatives (COSSEC). It voted unanimously for all plans except for the one for PRIDCO, which Antonio Medina abstained on.
The approved fiscal plans are in the Oversight Board’s certified fiscal plan section of its website.