Fiscal board tells Congress members it is unaware of any formal gov’t plan to mitigate loss in federal funding

Rep. Nydia Velázquez (D-N.Y.) (Victor J. Blue/The New York Times)

By THE STAR STAFF

The Financial Oversight and Management Board for Puerto Rico has addressed concerns raised by six members of Congress regarding the continuity of essential services provided by non-governmental organizations (NGOs) in light of recent federal funding reductions.

In a detailed response to a Dec. 11 letter from U.S. Reps. Nydia Velázquez (D-N.Y.), Alexandria Ocasio-Cortez (D-N.Y.), and others, the oversight board outlined its limited statutory role under the Puerto Rico Oversight, Management and Economic Stability Act, commonly known as PROMESA, emphasizing that its oversight responsibilities primarily involve fiscal planning and budget certification rather than direct program administration.

The oversight board confirmed that Puerto Rico’s Office of Management and Budget (OMB) shared a draft analysis last Dec. 12 assessing the potential fiscal year (FY) 2026 budgetary impact of federal fund reductions. However, the study does not evaluate separate impacts on municipalities or the nonprofit sector.

“The methodology is not focused on assessing the separate impacts of funding shortfalls on the civic sector or municipalities,” the board stated.

When asked about contingency plans, the oversight board said in its Jan. 7 response to the federal legislators’ letter that it is unaware of any formal action plan by the commonwealth to safeguard essential services amid funding cuts. Instead, the board said, it is collaborating with the government on the FY 2027 budget process, aiming to strengthen fiscal tools and institutionalize permanent budget reforms.

Over the past six months, the oversight board has approved several funding transfers to maintain critical services in healthcare, emergency management and education. Those include $8.58 million for juvenile residential facilities, $950,000 for Asociación de Puertorriqueños en Marcha (APM), and $1 million for Caribbean Preparedness and Response Inc., which is working to establish Puerto Rico’s first nonprofit internet service provider. Requests from the Department of Justice related to Victims of Crime Act funds and a $14.83 million transfer for the Vimenti Workforce Hub remain under review.

Regarding alternative funding sources for NGOs, the board noted that Puerto Rico’s Emergency Reserve is strictly limited to disaster response and that no other mechanisms currently exist to replace lost federal funds. While certified budgets have historically included allocations for NGOs, the board warned that fiscal risks identified in the 2024 Fiscal Plan -- such as replenishing the Emergency Reserve and establishing a Rainy-Day Fund -- remain unresolved.

To date, $130 million has been restored to the Emergency Reserve, leaving $79.5 million pending. Plans to maintain funding for the University of Puerto Rico and municipalities, address operational risks, and create a Rainy-Day Reserve are expected to be integrated into the FY 2027 budget framework, the oversight board said.