To ensure cash flow over the next decade, the head office of the University of Puerto Rico (UPR) bets, not only on receiving new revenues from increases in the tuition of class credits and other financial impositions to students, but also to the renegotiation of its debt.
Several weeks ago, the Governing Board of the university system endorsed the Fiscal Plan: University of Puerto Rico with projections for a term of 10 years – with a reduction in government contribution of up to $ 519 million by 2025 - and submitted it to the Oversight Board for certification.
However, it is unclear in which stage the revision of the document is, because the organization that controls the Island public finances has not summoned a meeting to discuss it. The Central Administration staff of the UPR has neither received additional information requests or questioning about the plan submitted, as confirmed by Norberto González, chief financial officer of the UPR.
The Fiscal Plan approved by the Governing Board projects deficits in cash flow during most of the period that would go into effect if the UPR meets the annual payment of $ 48 million to bondholders. The university has a general debt of $ 411 million and another of $ 64 million, which corresponds to the Plaza Universitaria student residence, and, to date, it has complied with the payment of its obligations.
Alejandro Camporreale, representative of the Puerto Rico Fiscal Agency and Financial Advisory Authority (FAFAA) in the Governing Board, said that, following the signing of an indulgence agreement on June 30th, UPR is in conversations with its creditors under the Title VI of the PROMESA Law, seeking to renegotiate its obligations.
"About the debt, I have to be very sparing. An agreement was recently made to engage in good faith negotiations, and the Fiscal Plan, if it is to be certified, will establish financial assumptions for these negotiations to continue," Camporreale said in a telephone interview.
The official was cautious when talking about the possibility that voluntary negotiations will not give the desired results. When questioned whether Title III of PROMESA - which provides for a judicial process on the restructuring of debt - would be the next step for the UPR, he only said that the fate of an entity that fails to make the necessary adjustments to fulfill its obligations "we already know where it leads."
A blow to the pocket
The Fiscal Plan endorsed by the UPR includes an increase from $ 56 to $ 115 in the tuition per undergraduate credit starting next year. Graduate credit would increase from $ 140 to $ 270. During its discussion at the Governing Board on July 31, 2017, it was indicated that - to counteract the impact of this increase on students with lower incomes - a fund of scholarships would be created that would initially be provided with $ 50 million. Nevertheless, the Fiscal Plan projects a reduction in that fund from 2020, until it is reduced to only $ 10 million in 2025.
"As the deficit grows greater, then you have to get more money from tuition. If not, the deficit keeps on growing ... The position of the university is that this money will help students to have access to the university. But, at the same time, it acknowledges that, if it can not generate more income, it will not be able to subsidize students," said Camporreale.
The financial proposal leaves the door open to an additional 20% increase in tuition during the year 2022-2023, if the projections of income and savings are not met. This tentative increase would bring the annual tuition of undergraduate, which is currently $ 2,113, to $ 4,013.
Camporreale said that, at this time, it is not possible to predict how likely this new increase is to happen.
The blow to the students pocket does not stop there, because - if the institutional Fiscal Plan is certified - UPR would increase fees for laboratory, graduation, summer maintenance, application for admission, transcripts and certificates, identification cards and late tuition. It would also impose new fees for partial and total courses dropout and repetition of classes. According to the plan, the UPR would have an additional income from these concepts between $ 6 and $ 7 million per year.
The Central Administration did not want to disclose how much these impositions, which currently vary according to each campus, would increase, because, as stated by the press spokesman of the Presidential Office, Joseph Martinez, the breakdown "has not yet been approved."
According to projections, the UPR would also have to reduce tuition exemptions by 25% to get $ 4.55 million in savings. "In the financial statements for 2017-2018, savings should already be reflected," said Camporreale.
Some of the exemptions offered, benefit athletes, employees' children, research assistants, veterans, and members of institutional music groups.
"The campuses are being given the prerogative to determine which exemptions are most effective," said the FAFAA member.
El Nuevo Día arranged an interview with acting president of the UPR Governing Board, Walter Alomar, to hear about the criteria that will be used to reduce both 25% of the student tuition exemptions and 50% of the temporary employees payroll provided for in the Fiscal Plan, but he did not respond to the questions.
As it was informed, the plan visualizes the consolidation of the administrative operations of the 11 campuses in three centers or hubs. In this way, the administrative tasks of Bayamón and Carolina will merge with Río Piedras; Aguadilla, Utuado and Arecibo, with Mayagüez; and Humacao and Ponce, with Cayey. The Medical Sciences Campus would continue to operate independently.
This administrative restructuring would entail the transfer of 25% of the staff from thesmall campuses to the hubs. The strategy, according to the Plan, will include the relocation of the rest of the employees "through the UPR system to meet skills and location-based personnel needs" and "reduction of the workforce over time" because of the freezing of positions.
Although the Plan indicates that the consolidation "would not necessarily" result in closures, Camporreale said that closure of campuses is not an option. "We are not talking about closures, but of maximizing their use," he said.
Jose Torres, president of the Brotherhood of Non Academic Employees of the UPR, said that they will fight against "unilateral" employees transfers to different campuses.
"The university can not, unilaterally, move an employee to another place that is miles away," said the union leader. "They can not move them as if they were chess pieces," he added.
Torres warned that the closure of places will destroy the UPR retirement system. In fact, the Fiscal Plan indicates that the Governing Board approved an amortization plan for the system, considering a 3% annual growth of active personnel.
But Camporreale pointed out that the UPR should carry out a new actuarial study based on the savings measures included in the Plan. Then, rrecautionary measures could be taken.
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