Spotlight on Puerto Rico – UPR in turmoil as Interim President, Board members resign

By Jennice Fuentes /Fuentes Strategies

The University of Puerto Rico—already struggling through student protests of mandated Federal Oversight Board (FOB) budget cuts— made headlines again with the resignation of the University’s Interim President, Nivia A. Fernández. Fernández had refused to comply with a court order to reopen the gates at the UPR Río Piedras Campus, for fear of inciting a confrontation with students. Three members of the Governing Board of the UPR resigned immediately prior to Fernández resignation.

Courts have since exempted now-former Interim President Fernández from complying with the court-ordered reopening of the Río Piedras campus gates, but the University is still subject to a $1,000 fine for each day that it remains closed. UPR has thus far accumulated $11,000 in fines for not reopening the campus.

Meanwhile, Governor Ricardo Rosselló immediately announced the appointment of two new members to the Governing Board: former Corrections Department Secretary Zoraida Buxo, and Law Professor Walter Alomar Jiménez. As the Governor announced these appointments, he also stated that “Intending to achieve the opening of the University, without the university community demonstrating the will to return to its academic and administrative work, would provoke violent situations in front of the gates that should be avoided.”

Trump Budget cuts spare Puerto Rico’s food stamps and Medicaid, cuts other programs

The Trump Administration’s FY 2018 Budget Proposal appears to have spared Puerto Rico in two of its largest federal programs. The Administration proposes roughly level-funding for both the Nutritional Assistance Program (NAP, which is the Commonwealth equivalent of SNAP) and Medicaid. While NAP would receive $20 million less, Puerto Rico’s recent population loss means that the cut should have less of an impact on the Island.

Regarding Medicaid, though the breakdown of the funding remains unclear, the Administration seems to be keeping current funding levels, which means that it adds about $600 million in Obamacare funding that was set to expire later this year. Last month, in a deal to stave off a federal shutdown, Congress provided an additional $295 million for Puerto Rico’s Medicaid program. The $600 million would, in theory, help to avoid the “Medicaid cliff” until about September 2018. Total Medicaid funding for Puerto Rico under Trump’s budget is $1.63 billion.

On the flip side, the budget proposes eliminating $53.7 million in Community Development Block Grants (CDBG) and $50 million for HIV patients. In addition to the CDBG cuts, programs under Housing and Urban Development (HUD) would see cuts of up to $204.7 million. The State Children’s Health Program (S-CHIP) would also receive $54 million less than current funding levels. Lastly, the rum cover-over reimbursement is reduced by $23 million in FY18, for a total funding level of $369 million.

Governor formally requests Title III for HTA, Retirement Systems

Governor Ricardo Rosselló has formally requested that the FOB file Title III bankruptcy for the Highways and Transportation Authority (HTA) and the Retirement Systems of Puerto Rico. One of the main victims of any significant HTA debt reduction would be the government itself.

Close to two-thirds of HTA’s debts are owed to government entities, such as PREPA ($46 million) and the Retirement Systems Administration ($14.5 million). HTA’s total non-insured debt, which includes government contractors as well as the above-mentioned government entities, is $93.3 million, according to the documents presented in court. In his request for Title III, the Governor said that attempts to reach voluntary agreements with HTA creditors did not bear fruit and that this action was necessary to prevent endless and costly litigation.

Regarding the restructuring of the Retirement Systems (ASR in Spanish), the Rosselló Administration reached an agreement with Pension Obligation Bonds (POB) creditors, who have continued to receive payment. Aside from this agreement, ASR still owes almost $3.5 billion in additional debt. Current participants of the retirement systems, including active and retired employees, total 257,190 individuals. It remains unclear whether the government will seek to restructure the judiciary’s retirement system.

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