Deep Cuts in Puerto Rico

Alaska isn't the only place facing deep cuts to public funding. The University of Puerto Rico's annual appropriation has fallen by $333 million over three years.

July 11, 2019
 
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U of Puerto Rico

The move by Alaska governor Mike Dunleavy to slash $130 million in state support for the University of Alaska in a line-item veto -- an amount equivalent to 41 percent of the university’s state appropriation -- sent shock waves through the world of public higher education, and for good reason. Even against a backdrop of state disinvestment from public higher education nationally, the magnitude, manner and speed of the threatened cuts to Alaska’s budget were highly unusual, and university leaders warned they will have to take drastic cost-cutting measures if the Legislature does not act to override the governor’s veto.

But not as well-known is the fact that elsewhere in the U.S., another public university system is facing cuts of a similar magnitude, and on a similar, albeit somewhat longer, time frame. The appropriation for the University of Puerto Rico's operating expenses was slashed by $86 million this year, to about $501 million, following on a $44 million cut the year before that and a $203 million cut the year before that.

A fiscal plan for the university certified by the island’s Financial Oversight and Management Board in June calls for the appropriation to continue to fall over the next several years, so that by fiscal year 2022 it will be under $400 million, 56 percent lower than the $879 million baseline figure at which the Puerto Rican government historically funded the university's operations.

Professors say the cuts being imposed by the government and the financial oversight board -- which was established by Congress to oversee the U.S. territory's finances as it confronts a $123 billion debt crisis -- are straining faculty and staff resources and imperiling access for students.

The president of UPR, Jorge Haddock, disagrees, and argues that the cuts have not affected academic quality or access to the institution. The university's accreditor, the Middle States Commission on Higher Education, in June reaffirmed accreditation for all 11 of UPR's campuses after having placed them on show-cause directives requiring them to provide evidence of compliance with various standards, including those relating to adequacy of financial resources and financial monitoring and reporting.

Appropriation Cuts and Tuition Hikes

Professors say the deep cuts to UPR's government appropriations and hikes in tuition will jeopardize the primary engine for social mobility and economic growth for the island, which -- in addition to facing a financial crisis -- is still recovering from the extensive damage wrought by Hurricane Maria in 2017.

"They're destroying the source of professionals, the source that is going to sustain the local economy, but they’re not interested in building the economy of the island. They're trying to privatize everything on the island," said Charles R. Venator-Santiago, an associate professor of political science at the University of Connecticut and executive director and president-elect of the Puerto Rican Studies Association.

In November the association's leadership issued an open letter expressing "alarm at the draconian budget cuts being imposed on the University of Puerto Rico by the Fiscal Oversight Management Board (FOMB) with the acquiescence of government and university authorities." The letter argued that the cuts to Commonwealth support "will endanger the future of the island’s premier institution of higher education."

“It’s becoming harder and harder to maintain the level of excellence that we need at the university,” said Angel Rodriguez, the president of the Puerto Rican Association of University Professors. Rodriguez estimates that the university has lost about 40 percent of its professors from attrition over the past decade. In that same time frame, enrollment has decreased by about 9,000 students, from about 64,000 to 55,000, as the island's population has fallen.

While there have not been program closures or terminations, faculty say they are feeling the effects of faculty and staff lost through attrition who are not replaced.

“The objective is to shrink the public university and to make it less competitive,” said Isar Godreau, a researcher at the UPR Cayey campus's Institute of Interdisciplinary Research and an anthropologist. “As faculty retire, there are no replacements, so departments keep getting smaller and smaller. Nonfaculty are also not being replaced, so the administrative processes in an already bureaucratic system have come to a status of inefficiency. It feels like they are just letting the system deteriorate on its own.”

“I can’t say I’ve seen a decrease in the quality yet, but I do see the exhaustion in my colleagues,” Godreau added. “We’re trying to keep it up in spite of everything that’s been happening.”

Meanwhile, the undergraduate tuition rate has more than doubled from $57 per credit in 2017-18 to $124 this coming academic year, and is slated to increase to $157 by fiscal year 2023. That may seem low -- and indeed by mainland U.S. standards, it is -- but professors say it must be contextualized against the median household income in Puerto Rico, which at $19,775 is about a third of the $57,652 median income across the U.S. The island’s 44.4 percent poverty level is more than three times the national average of 12.3 percent.

Natalie Jaresko, executive director of the financial oversight board, said the tuition increases were developed with the objective that the maximum annual tuition would be about $1,000 less than the maximum Pell Grant award, which sits at a little more than $6,000. The fiscal plan also calls for an expansion of need-based scholarship funds.

Jaresko said that Puerto Rico can't afford to subsidize the university at the level it historically has. In the past the Puerto Rican government contributed about 70 percent of the university's budget.

"The Commonwealth is unable at this time to make the same contribution," she said. "Given that the Commonwealth is in bankruptcy, everyone is sharing in this pain. It’s a time of right-sizing."

At the same time, Jaresko said, “UPR isn’t taking advantage of all of the opportunities it has to diversify its revenues. When you look at diversifying your revenues by increasing tuition, when you subsidize tuition, the greatest subsidy goes to the most wealthy. The idea here would be to use the resources in a way where, yes, you subsidize but you subsidize those who are in need, not those who are not in need.”

"There are other pieces," she added. "I don’t know another university that doesn’t ask its alumni for contributions. UPR has extraordinary alumni who when I meet with them either on the island or off the island they proactively comment that they have never been asked -- not to mentor students, not to take interns, not to offer financial help. UPR has been lulled into a sense of financial security in a way with this level of subsidies that hasn’t forced them to develop these other tools that are really valuable."

The fiscal plan for the university certified by the oversight board in June also discusses UPR's pension system, which according to plan is funded only at a 43-percent level. It recommends that UPR can either increase its spending on pensions and make what the board determined is "the full actuarially required" contribution of about $160 million per year -- a step that will require it to find savings in other places, likely by further increasing tuition, reducing faculty or closing some of its 11 campuses -- or that it freeze or cut retirement benefits.

The fiscal year 2020 budget certified by the financial oversight board called for the university to make $160 million in contributions to the pension plan, $80 million more than the university budgeted based on earlier projections and more than double what it paid last year. UPR said it cannot make the additional $80 million payment, which UPR President Haddock said came as an "out-of-the-blue" demand from the fiscal board.

The rightful role of the seven-member financial oversight board is a highly contested subject in Puerto Rico. Asked who has the final say on UPR's finances -- the university's governing board or the financial oversight board -- Haddock said the answer depends on whom you ask but that according to Puerto Rican law he is supposed to enact the budget set by the governing board. Jaresko said that in refusing to adhere to the budget certified by the financial oversight board the university is not complying with Promesa, the 2016 federal law that established the financial oversight mechanism for agencies on the island.

"We don’t have the money on top of the $86 million cuts -- now they want us to add another $80 million contribution. It's almost like they want to hurt us," Haddock said.

“I don’t know where they think we can get this money, because it would have to come from further cuts.”

"Essential Service"

Haddock said that the university has responsibly managed the cuts without suffering any damage to its academic programs.

"It has not caused any damage on the academic quality or the academic programs," he said. "We have not cut one single program because of the budget cuts, and we have continued to increase the quality based on the rankings, and based on the feedback from Middle States in the accreditation process."

Haddock said the university is seeing increased revenues from federal grants and from other sources. "We’re looking at all this new income and then the savings are in nonacademic areas that do not affect our academic deliveries directly," he said. "We have savings on power, electricity, we have savings on paper -- we’re moving towards paperless. We also have attrition in nonacademic personnel. There alone the reduction [in this year's budget] was $40 million." At the same time, he said, the budget calls for increasing faculty by 3 percent per year.

"It's obvious," he said, "that there was room for savings."

Haddock said that after the projected cuts to appropriations are phased in, the university still stands to derive about 40 percent of its budget from central government appropriations (or, to be more precise per the fiscal plan, 38 percent).

"As a president, of course I would love to have more money from everywhere from every source," Haddock said. "But I think that we’re still one of the best-funded state universities in the U.S. Forty percent -- that doesn’t exist in many universities any longer."

Though Haddock argues that the cuts have been managed so as to not damage academics, others assert that the cuts have contributed to reductions to the full-time faculty workforce. In May testimony to a congressional committee, Ana Cristina Gómez Pérez, a professor of law at UPR’s Rio Piedras campus and a coordinator of the budget committee for the University Board, an advisory board consisting of campus administrators, faculty and students, said the university has frozen hiring for tenure-track positions in favor of hiring part-time adjunct lecturers. She said that as of Dec. 31, 746 full-time professor positions were frozen. (The UPR president's office was unable to verify the figure or provide requested data on faculty attrition and changes in full-time versus part-time faculty prior to deadline.)

Speaking on behalf of the University Board (which is a separate entity than the UPR governing board), Gómez Pérez called on Congress to amend Promesa to classify UPR as an “essential service” and to guarantee funding of at least $800 million a year.

“Within the context of this crisis and the aftermath of the hurricanes, the University of Puerto Rico is the only institution that can provide the island with the platform for recovery and restructuring,” Gómez Pérez said in her written testimony. “Currently, the University of Puerto Rico has a diverse array of research and projects aimed to recovery in the areas of health, education, safety and renewable energy, among others. It is also the first and only public institution of higher education in the island and custodian of its cultural heritage. Moreover, it has the best graduation rates compared to other higher education institutions of the island. We believe that the FOMB is misguided in its conception and designing of the fiscal austerity measures of the University of Puerto Rico.”

"We have an austerity-on-steroids problem, but we also have the problem of not being fairly represented at the governmental or institutional level," said Godreau. "We have a representative in Congress that has no vote. Puerto Rican people cannot vote in the election for president. Seven unelected members of the fiscal control board are imposing these measures, these policies, and they have power over the governor, over the Legislature, finances. Who tells these seven members that they can't impose these measures?"

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