By The Star Staff
The Financial Oversight and Management Board is conditioning financial assistance to needy undergraduate and graduate students at the University of Puerto Rico (UPR) on the educational institution’s compliance with tuition increases, an oversight board letter shows.
UPR President Luis A. Ferrao Delgado had requested a waiver of the requirements set forth in Section 16 of the budget enforcement language for the Certified Fiscal Year 2024 UPR Budget. Section 16 outlines that if UPR does not fully adjust tuition to keep pace with critical investment and provide sufficient resources to help stem longstanding challenges, UPR may only disburse $10 million of scholarship funds appropriated under the “Commonwealth Scholarship Fund” budget line item to eligible undergraduate students with demonstrated financial need. Only if UPR fully complies with the tuition adjustment defined in the UPR Fiscal Plan, the $10 million in scholarship funds may also be available for allocation to eligible graduate students with demonstrated financial need.
As such, the $10 million in scholarship funds are intended to offset the impact of tuition adjustments set by the UPR Fiscal Plan.
In an Aug. 30 letter, the oversight board informed Ferrao that it had granted a partial waiver of the request for $2.2 million to eligible graduate students with demonstrated financial need.
“The allocation is proportional to the level of compliance with the tuition schedule established by the UPR Fiscal Plan, given that undergraduate tuition adjustments have progressed more than those for graduate students,” the oversight board said in the letter. “Accordingly, the remaining $300,000 will be reserved for eligible undergraduate students with demonstrated financial need, resulting in $7,800,000 for undergraduates and $2,200,000 for graduates.”
For fiscal year (FY) 2024, UPR determined not to increase tuition credit costs and instead commissioned a price elasticity study to examine the effect of tuition increases on enrollment.
The study concluded that there is a negative and significant relationship between tuition increases and student enrollment. The UPR submitted the results of the elasticity study to the oversight board in support of the request, along with additional requested information on April 26, 2024, and May 10, 2024.
“The Oversight Board analyzed the data submitted by UPR to understand the variables and the determination process by replicating the econometric estimations presented in the Elasticity Study, using data from 11 campuses (in comparison, the Elasticity Study included data from four campuses),” the board said. “The evaluation conducted by the Oversight Board suggests that demand is less elastic than estimated in the Elasticity Study when the same methodology is applied to more campuses.”
“This indicates that tuition increases will have less of an effect on enrollment than estimated in the Elasticity Study,” the board wrote.
“Moreover, the primary objective of the UPR Fiscal Plan is to improve UPR’s financial position while preserving and, wherever possible, enhancing its ability to deliver quality higher education,” the oversight board added. “Given UPR’s challenges, the UPR Fiscal Plan includes measures to diversify revenue sources, including tuition increases. The UPR Fiscal Plan also emphasizes the need to limit the impact of tuition increases on students with demonstrated financial need by increasing needs-based scholarship expenditures to maintain affordability and access to UPR.”
The UPR Fiscal Plan established a schedule for adjusting graduate tuition to increase the cost per credit for graduate programs to be more in line with island and mainland benchmarks, and then index to average public tuition increases or 3.1% starting in FY2020.
“However, during FY2019, UPR implemented only a partial increase to graduate tuition adjustments and then continued to index graduate tuition costs until FY2023 without addressing this shortfall,” the oversight board noted.
“Consequently, this has led to persistent shortfalls in meeting the UPR Fiscal Plan revenue targets, as the planned adjustments since FY2019 have not been fully enacted,” the board said. “Although the partial increases until FY2023 allowed the University to increase tuition revenues, UPR reported revenue shortfalls of approximately $9.5 million, $10.4 million, and $9 million for Fiscal Years 2022, 2023, and 2024, respectively.”
With the above-mentioned considerations, the oversight board approved a partial waiver to Section 16 of the budget, allowing $2.2 million to be allocated to eligible graduate students with demonstrated financial need. The remaining $300,000, the board said, should be allocated to eligible undergraduate students with demonstrated financial need. The board also approved extending the $2.5 million until June 30, 2025.
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