CONTEXT: In 2016 Congress created PROMESA (Puerto Rico Oversight, Management, and Economic Stability Act) and appointed a seven-member commission (known in Puerto Rico as La Junta) to administer a resolution to Puerto Rico’s $73 billion debt. In response to the leveling of draconian austerity measures on the people of Puerto Rico by the seven-member junta, the Puerto Rican Association of University Professors (Asociación Puertorriqueña de Profesores Universitarios – APPU, by its Spanish initials) submitted a letter on May 11, 2019 to elaborate on the current situation in Puerto Rico to the House of Representatives’ Natural Resources and Territorial Affairs Committee.
In the letter, penned by Angel Rodriguez, President of APPU, the association identified several egregious policies enacted by the PROMESA board. These include: 1) A labor reform that includes imposing minimum wages ($7/hr) for a significant number of workers, reduction of vacation and sick days leave to 7 days per year, law changes that will allow dismissing workers without prior notice, eliminating health care contributions to employees among others. 2) Reducing by 50% the budget of the only public university on the Island, the University of Puerto Rico (UPR) that amounts to a $400 million loss by 2022, placing the University in danger of losing its accreditation. 3) Decreasing retirement pensions by 10% to 25%, leaving a significant number of retired elderly well below the poverty level. 4) Increasing the cost of expressway tolls. 5) Raising the cost of basic utilities such as water, sewage and electricity, which is already among the highest in the USA, with the goal of privatizing these public agencies in the near future. 6) The Fiscal Board has threatened to close the UPR Retirement Trust and to reduce pensions, a situation of great concern to faculty and other employees, who see their financial security threatened in retirement after having paid the contributions that the employer required from them to guarantee a defined benefit pension for life, a benefit for which employees paid a substantial part of their salaries.
The Puerto Rican Professors Association proposed the following actions which are delineated in the letter addressed to Hon. Raul Grijalva, Chair of the House committee.
1. Require a forensic audit of the debt contracted by the Government of Puerto Rico
2. Prosecute those responsible for the debt that incurred on illegal or illegitimate actions
3. Establish in the PROMESA Law a Conflict of Interest Policy that prevents any debt participant from advising or deciding on it. This policy must include which agency will enforce compliance with it.
4. Protect public education as an essential service to the Puerto Rican population
5. Include the University of Puerto Rico as an essential service to the Puerto Rican Population. Particularly we ask Congress to protect UPR, classifying it as an essential service to the people of Puerto Rico as to warrant public financing that will allow UPR to continue its mission. Specifically to amend section 201(b)(1)(B) to read: “ensure the funding of essential public services; this includes public funds allocated to the University of Puerto Rico by means of the formula established in Law number 2 of 1966 or a minimum of 800 million dollars annually until termination of the Oversight Board pursuant to section 209 of this Act, so that with the aforesaid funds the institution is able to fulfill its major role as an essential public service and is also able to comply effectively with its obligations and accreditation requirements”
6. Protect the pension rights of public employees, by ensuring the corresponding budget allocation.
7. Ensure mechanisms that develop the economy in Puerto Rico, create jobs, avoid the financial exploitation of the young and middle aged workers, and prevent their emigration.
8. Restrict spending and have the Government of the US, or US Congress, which created the Oversight Board, cover the expenses of any oversight body.
9. The immediate dismissal of all members of the current Oversight Board, and the consultants appointed or hired by the Fiscal Board. Their negligent actions have worsened the socioeconomic condition in our country. It is urgent that PROMESA be repealed by the U.S. Congress that passed it. Leaving the PROMESA and its Board members in place would mean the disappearance of what is left of the economic infrastructure of the Island, its education, and its basic services, some of which are included in the Constitution of the Commonwealth of Puerto Rico.
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HON. RAUL GRIJALVA – CHAIR
NATURAL RESOURCES AND TERRITORIAL AFFAIRS COMMITTEE
HOUSE OF REPRESENTATIVES
UNITED STATES CONGRESS
CC: OTHER MEMBERS OF THE COMMITTEE
DEAR MR. GRIJALVA:
The University of Puerto Rico.
The Puerto Rican Association of University Professors (Asociación Puertorriqueña de Profesores Universitarios – APPU, by its Spanish initials) welcomes the opportunity to submit this letter to elaborate on the current situation in Puerto Rico. We ask that your committee urgently pursue a more just balance between budget cuts and the basic needs of Puerto Rico’s American citizens. The urgency of that discussion should not exclude the fundamental issues underlying the debt and the Financial Oversight Board, which are the visible symptoms of a colonial history.
APPU
The Puerto Rican Association of University Professors (APPU) an academic union since 1960, represents faculty at the eleven campuses of the University of Puerto Rico’s System, as well as retired professors. Our mission is to protect the rights and interest of active and retired faculty, promote improvement of working and retirement conditions, uphold UPR’s autonomy and cooperate in the improvement of public higher education.
That mission makes us vigilant of our environment and the events that influence higher education and culture, within and beyond our island’s shores. For decades we have called attention to Puerto Rico’s stagnating economy and its impact on our educational system and ourselves as educators, well before PROMESA but, regrettably, to no avail.
The Public Debt
Puerto Rico’s public debt is currently our most critical economic problem; a monumentally complex phenomenon that affects the nation as well as all its people. PROMESA has, frankly,
been very counterproductive: every day we fall deeper into economic—and in many cases emotional and spiritual—depression, as our public goods are privatized, our properties are devalued, our social and economic needs deferred, now that the Commonwealth status’s veneer of autonomy and self-government has been stripped from our collective self image. The magnitude of the problem calls for sensible solutions that truly correspond to our reality.
It should be noted, in connection to Puerto Rico’s debt, that the United States holds all sovereign powers over Puerto Rico: currency, treaties, interstate commerce, private and public law, public lands, maritime and air transportation, communications, mail, banks, jobs, the environment, military and bankruptcy. For decades our economic development model has focused on conferring privileges to US capital by offering tax exemptions, providing public utilities and keeping salaries lower than in the continental USA.
Puerto Rico took loans and issued triple-tax-exempt bonds, under the Jones Act. As our economy stagnated in the wake of the expiration of Section 936 of the US Internal Revenue Code, our government—as you know—turned to privatizing or cutting public services and raising taxes. This has prompted the mass migration of our people, and the aging of the island’s population, as our wealth is increasingly transferred, to “vulture” bond-holders and the host of attorneys and consultants on whom our government increasingly relies to define its policy.
The view in Congress, emphasized and reiterated by the White House, is that the debt has been caused by bad administration, absence of transparency, delays in submitting audited finances and corruption by Puerto Ricans. This leads to the impression that the debt has been caused by Puerto Ricans, and justified the establishment, under PROMESA, of the Financial Oversight and Management Board.
It is neither fair nor sensible to leave the burden of this debt on the people of Puerto Rico, whose only fault has been to continue to elect politicians who place others’ interests before our own. Congress has created much of the current situation from Puerto Rico’s mysterious exclusion from Title IX bankruptcy protection, through the elimination of Section 936 which was the mainstay of Puerto Rico’s economy in the last quarter of the 20th century, and the bipartisan “working group” on economic development, that was created along with PROMESA, and quietly failed to produce an economic development plan that might lead out from our present crisis. We call upon Congress to assume the fiduciary responsibility that comes with the sovereignty it never relinquished over our island, and not continue to let us collectively twist in the wind, perhaps to “encourage” other jurisdictions to avoid default at all costs.
It is absolutely unfair to have the working people of Puerto Rico, who continue to live on the Island, to pay for the debacle others—bankers, brokers, attorneys, consultants and the politicians they have advised in San Juan and Washington—have caused. The Fiscal Oversight Board and the government of Puerto Rico have agreed to pay a huge portion of our debt through higher taxes and charges for basic services, benefiting outside interests and depriving our island of its capacity to generate wealth for the next two generations. An article on June 18, 2018 in Forbes points to the fact that “oversight can’t occur effectively if its aim is secrecy rather than disclosure”.
Debt can be deemed “odious” if it meets the following requirements: it is the product of neglect or abandonment of a territory without rights; the debtor has not had control of the decisions that led to large segments of the population being deprived of civil and human rights; decisions to issue debt were made behind closed doors, aware of the debtor’s insolvency; and a penalty is imposed on the victim. This term describes the financial crisis in which Puerto Rico is immersed.
PROMESA
The situation of a $73 billion default, unprecedented in the municipal bond market, stirred a financial scandal of global proportions and led a Republican-dominated Congress to pass PROMESA, creating an Oversight Board to impose fiscal responsibility and restore access to capital markets.
PROMESA drew immediate concern since its enactment, as it overruled the fiscal autonomy granted by the 1952 commonwealth Constitution, establishing an appointed body to rule over an elected government. It also did away with the ideological foundation of Puerto Rico’s relation with the United States, exposing that relationship as naked colonialism.
Since it was established, the FOMB has adopted policies and practices that clearly favor the short-term interests of bond holders far more than the island’s short- or long-term economic development, to say nothing of the health and well-being of Puerto Ricans. The FOMB has micro-managed Puerto Rico’s budget, with callous disregard for public opinion, expressed opposition by a wide range of groups, and massive protests. It has refused to audit the debt, which should naturally have been among its first steps. It has refused to take measures against the tax privileges of corporations based on the Island, revise billionaires’ tax exemptions, nor made so much as a statement against truly wasteful practices of Puerto Rico’s government, such as the absurd number of political appointees who control every decision of any consequence at each and every government agency and public corporation, and virtually paralyze the government for months before and after each election. The FOMB
has encouraged the government of Puerto Rico to spend millions of dollars on consultants and contracts, as the Board itself has done from the outset, ignoring blatant conflicts of interest as several of those consultants, along with individual FOMB members, are closely linked to the entities that created and benefited from the current fiscal crisis.
Instead, the FOMB, together with the Puerto Rican Government, have targeted the public education system with draconian budget cuts, seeking to privatize it through charter schools, and have slashed support for the University of Puerto Rico, doubling tuition costs and fees and strangling its teaching and research functions. Their policies have “achieved” the closing of 283 public schools, forcing parents to travel long distances to take their children to school and placing some students at grave risk where there is rivalry between neighborhoods. No criteria were presented to determine what schools were to be closed and, perhaps, sold or given to “non-profit” organizations. Some of the schools closed and sold for a dollar ($1.00) were in better structural condition than the ones which remained open.
The FOMB has promoted a neoliberal wish list of policies that roll back decades of social and economic progress by working Puerto Ricans:
A labor reform that includes reducing minimum wages ($7/$5.08/hr) to a territory with the lowest minimum wage of any state1, reducing vacation and sick day leave to 7 days a year, allowing workers to be dismissed without prior notice, etc.
Slashing by 50% government support for UPR, the island’s only public university, over a five-year period ending in 2022.
Decreasing retirement pensions by 10% to 25%, leaving a significant number of retired elderly well below the poverty level and sparing only pensions lower than $1,000/month.
Increasing tolls on expressways.
Elevating the cost of basic utilities such as water, sewage and electricity, which is already among the highest of the USA, with the stated goal of privatizing them in the near future.
The Cost of the FOMB
PROMESA established that the expenses of the Fiscal Board would be paid by the Government of Puerto Rico.
The PROMESA Board had an initial budget of $30 million, but has been increasing since then. For 2018, the FOMB budget was $70 million, and for 2019 it would be $75 million. Total Title III fees reached $131 million in 2018, $335 million in 2019, and would be $248 million in 2020.
This Board pays $650,000 plus expenses to its Executive Director, Ms. Natalie Jaresko; this is higher than the salary paid to the President of the United States, or the President of any other nation in the world, as funds are cut from Puerto Ricans’ education and health care. Given the financial situation in the Island, how can this be justified?
UPR budget cuts
The FOMB’s fiscal plans have consistently called for draconian cuts to the University of Puerto Rico, disregarding UPR’s irreplaceable role in the island’s long-term development, and the short-term survival of many local economies. The fiscal plans call for over $400 million in budget cuts over 5 years, from $833 million to $410 million: a reduction of 51%, with the worst cuts occurring in 2017-18 and 2019-2020.
To partially offset these cutbacks, an enormous increase in tuition and other costs of study was imposed, but this caused our students to reduce the number of courses they take each semester, extending time-to-degree and adversely affecting UPR’s retention and graduation rates, an important measure of academic excellence. The tuition hikes—combined with the elimination of tuition waivers as part of graduate financial aid packages—were particularly onerous for graduate students, and applications for graduate programs have dropped precipitously in the past year, threatening the survival of many key academic programs.
As another cost-cutting measure, faculty and non-teaching staff positions have been frozen for a decade now, preventing new hires that are needed to give continuity to teaching and research, and forcing an entire generation of intellectuals to choose between the humiliation of precarious, hyper-exploitative working conditions as adjunct professors, or leaving their homeland in search of better working conditions.
The Fiscal Board has threatened to close the UPR Retirement Trust and to reduce pensions, despite the Trust Fund’s relative fiscal health. This is a situation of great concern to faculty and other employees, who see our hopes for a dignified retirement threatened, after decades of paying required contributions that the University now is unwilling to match.
As working conditions at UPR have worsened, retirements have skyrocketed: we lost 1409 employees in 2019. Nothing is more crucial to a university than its human resources, and the hiring freezes imperils important research and severely undermines long-term scientific development, to the severe detriment of UPR’s, and Puerto Rico’s, future.
On a recent visit to Puerto Rico, Joseph Stiglitz, a Nobel Laureate in Economics stated: “The Board seems to only think of reaping money out of people and that is morally wrong. The priority should be to audit the debt, growth, then you pay the debt. The actual plan is a disaster; anything would be better than this. The proposals will only deepen the crisis and it will end up being a lost decade. I have seen austerity measures before and they do not work; this is more draconian than Greece. The cutbacks proposed by the government have no explanation or justification. Restructuring of debt is a necessary prerequisite for any growth strategy. Puerto Rico needs more than a moratorium; it needs policies for macroeconomic growth. The economy of the 21st century should be based on learning. If you diminish it, you threaten growth and there is no growth without educated people”.
University of Puerto Rico
The University of Puerto Rico (UPR) is an institution of great pride for Puerto Ricans. It was established in 1903, and is the first and oldest center of higher learning on the Island. It has been, and remains, our foremost means of social mobility, and the curator of crucial parts of our cultural heritage in its museums, libraries and collections.
Between 2013 and 2016, the annual allotment that UPR received from the Commonwealth government was $833.9 million, a significant reduction from the 9.67% of the Commonwealth budget to which the University is entitled by law.
In the last five years UPR has granted 478 doctoral degrees, 50% of them in science and technology. Ninety percent of research published in peer-reviewed journals by Puerto Rican authors are produced by UPR professors and students. It is the highest ranked among the 37 centers of higher learning that operate in the Island, and ranks 589 out of 11,000 globally and 18th among Latin American Universities (having slipped substantially since austerity measures were imposed in 2009).
UPR is responsible for 84% of all research and development in the Island. During the last three years UPR competed and obtained grants, mostly from federal agencies, totaling more than $240 million dollars. The National Institutes of Health awarded $41.5 million in grants; the National Science Foundation $12.2 million.
There are currently 290 ongoing health-related research projects, in which 20 postdoctoral fellows, 120 graduate students and 150 undergraduate students actively participate. Support for these projects by federal and local agencies exceeded $45 million dollars since 2014. There were 26 patents listed in 2016. Many of these studies are in the biomedical and clinical fields, trials, chemistry, biology, nanomaterials, engineering, physics, computer simulations, ecology, economics, and community service and development.
UPR offers important services to the Puerto Rican population, through its clinical practice and community outreach programs. These programs include highly specialized medical services for all citizens, and primary and secondary health care, legal services and empowerment projects, for underserved populations; tsunami and earthquake monitoring and alertness program through UPR’s Seismic Network, among many others.
The severe budget cuts imposed by the FOMB and the Governor of Puerto Rico clearly place Puerto Rico’s most important socio-economic development project at risk. In particular, they have led the Middle States Commission on Higher Education (MSCHE) to require all 11 campuses to “Show Cause” for not withdrawing their accreditation: emphatically NOT because of any academic shortcoming in UPR, but because the budget cuts inevitably raise very serious concerns as to the institution’s ability to continue the work for which MSCHE accredited it, and the UPR administration, despite statements that the cuts are “manageable”, has been unable to allay those concerns. This is clearly among the most terrible consequences of these ideologically-driven budgetary cuts.
Loss of UPR’s MSCHE accreditation would mean that our students would lose access to Pell grants, and our faculty would lose access to research funding. This would mean the destruction of Puerto Rico’s public university, the dismantling of our economy’s largest and best professional-training pipeline, and our principal vehicle of upward social mobility: it would be devastating for the entire country. It would likely entail closing down several of the eleven UPR campuses and the loss of many faculty and other personnel, by retirement or dismissal. It also imperils unique academic programs, which are crucial for the island’s social and economic development, indeed its survival in the 21st-century economy.
The FOMB justified the cutbacks, with the accompanying tuition and fee increases, by comparing UPR’s costs with those of “selected” Universities in the continental United States.
Nevertheless, economists Alameda and González, 2017 (3), state that the median family income in Puerto Rico was $19,606, less than half of that of the poorest state, Mississippi, which was $52,672. Though the cost of study at UPR is approximately $14,850/yr, one of the lowest in the USA, this represents almost 78% of Puerto Rico’s median family income.
Imposing a nearly 300% tuition increase at UPR will create a huge barrier to accessing higher education for the large majority of Puerto Rico’s population that is economically disadvantaged, and will likely cause a drop in UPRs student population; as forecast by the dramatic drop in applications to graduate programs this past year. Evidently, offsetting budget cuts with tuition increases is counterproductive in many ways.
Perhaps no other group has been as terribly impacted by FOMB-imposed budget cuts than UPR’s growing number of adjunct professors. These faculty members, many of whom hold doctorates, earn $1,800 per class, per semester, before taxes. If the adjunct professor teaches a full load of 12 credits, the salary amounts to $14,400/year, much less than the average income in PR. In addition, these professors receive no health or retirement benefits, nor do they receive pay during the three summer months. They have no job security, and must accept any and all courses they are offered, many times at distant campuses. These “road scholars” can hardly be expected to contribute to university life from which they can be excluded on a department chair’s whim, nor to give adequate attention to their students or their research projects when they must rush to their next class, miles away.
These trends—increasing tuition and fees, lowering faculty salaries and benefits, freezing recruitment of faculty and administrative personnel, and eliminating academic programs—dramatically reduces access to quality public education and will limit the population’s ability to contribute to the island’s economic development.
We ask Congress to protect UPR, classifying it as an essential service to the people of Puerto Rico as to warrant public financing that will allow UPR to continue its mission.
Essential Services
We are mindful of the Essential Service Act 2013 that renders as essential the need for public security or obstruction to normal life. The interpretation of that concept includes a strict observance of life essentials, such as water supply, food reserves, hospitals, communications, firemen and policemen, prisons and clean up services headed by an executive power. We are well aware of how precious these essential services are, having lived through Hurricanes Irma and María and their aftermath since September 2017.
Allocating the burden of the debt to the UPR, the only public institution that can provide the knowledge and human resources essential for Puerto Rico’s financial recovery is unreasonable and contrary to PROMESA’s stated purpose to “Provide a method for a covered territory to achieve fiscal responsibility and access to the capital markets”.
Massive cuts to education is not the solution to a decades long economic recession that has lasted more than a decade, in an economy in which growth depends on scientific and social nnovation towards economic sustainability. The University of Puerto Rico is crucial for that goal, and should be considered an investment instead of an expense.
The Governor of Puerto Rico, Dr. Ricardo Rosselló, and the Fiscal Board have been negligent in failing to protect UPR as the only public university in Puerto Rico. Actually, both the Government and the UPR fiscal plans violate Puerto Rico’s Law (Number 2 of 1966) that establishes a formula which allocates public funds to UPR. This Law was created to keep party politics separate from the University’s academic-administrative decision-making.
The FOMB and the Fiscal Agency and Financial Advisory Authority (FAFAA) are abusing their powers and using budget cuts to administer the University. The UPR Fiscal Plan, prepared by the government and the FOMB, requires a reorganization of the UPR, which adversely affects resource allocation and employee working conditions. The Governor, his operational agency (AAFAF) and the FOMB are jeopardizing UPR’s accreditation, creating the conditions to destroy the UPR, with the loss of multiple essential services UPR provides, including health and security.
These measures against UPR, and many more included in the FOMB’s Fiscal are increasing migration of Puerto Ricans to the continental United States, as those who remain are left to drown in poverty. A humanitarian crisis is on the way, as well as the deepening of the socioeconomic crisis if we do not act now.
What APPU proposes
The Puerto Rican Association of University Professors (APPU) asks for the derogation of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), or to significantly amend it to attend the following issues:
1. Require a forensic audit of the debt contracted by the Government of Puerto Rico.
2. Prosecute those responsible for the debt that incurred on illegal or illegitimate actions.
3. Establish in the PROMESA Law a Conflict of Interest Policy that prevents any debt participant from advising or deciding on it. This policy must include which agency will enforce compliance with it.
4. Protect public education as an essential service to the Puerto Rican population.
5. Include the University of Puerto Rico as an essential service to the Puerto Rican Population. Particularly we ask Congress to protect UPR, classifying it as an essential service to the people of Puerto Rico as to warrant public financing that will allow UPR to continue its mission. Specifically to amend section 201(b)(1)(B) to read: “ensure the funding of essential public services; this includes public funds allocated to the University of Puerto Rico by means of the formula established in Law number 2 of 1966 or a minimum of 800 million dollars annually until termination of the Oversight Board pursuant to section 209 of this Act, so that with the aforesaid funds the institution is able to fulfill its major role as an essential public service and is also able to comply effectively with its obligations and accreditation requirements”
6. Protect the pension rights of public employees, by ensuring the corresponding budget allocation.
7. Ensure mechanisms that develop the economy in Puerto Rico, create jobs, avoid the financial exploitation of the young and middle aged workers, and prevent their emigration.
8. Restrict spending and have the Government of the US, or US Congress, which created the Oversight Board, cover the expenses of any oversight body.
We also request the immediate dismissal of all members of the current Oversight Board, and the consultants appointed or hired by the Fiscal Board. Their negligent actions have worsened the socioeconomic condition in our country. Their conflict of interest in requiring Puerto Ricans to pay an unaudited debt jeopardizes essential services to the detriment of Puerto Rican citizens.
It is urgent that PROMESA be cancelled by the U.S. Congress that appointed it. Leaving the PROMESA and its Board members in place would mean the disappearance of the economic infrastructure of the Island, its education, and its basic services, some of which are included in the Constitution of the Commonwealth of Puerto Rico.
Puerto Rico has one of the most severe social and economic disparities of the USA. As Puerto Rican and citizens of the United States, we ask that Congress take immediate action for the cancellation of PROMESA and protection of the University of Puerto Rico as our only public University on the Island, by designating it an essential service and restituting its budget.
Cordially,
Ángel Rodríguez
President
APPU
P.O. Box 22511
San Juan, PR 00931-2511
appu.nacional@gmail.com
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This document is copyrighted by APPU and is posted on Latinopia.com with their permission. Photo of University of Puerto Rico in the public domain. Photo of University facade and Promesa image courtesy of José Umpierre. All other images copyrighted by Barrio Dog Productions.