Oversight board certifies its own fiscal plan for UPR after rejecting gov’t proposal

The Financial Oversight and Management Board has certified its own Revised 2021 Fiscal Plan for the University of Puerto Rico after determining that the government’s fiscal plan failed to meet the requirements of PROMESA.

By THE STAR STAFF

The Financial Oversight and Management Board for Puerto Rico has certified its own Revised 2021 Fiscal Plan for the University of Puerto Rico (UPR) after determining that the government’s fiscal plan failed to meet the requirements of the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA).

The certified plan outlines a comprehensive set of corrective reforms to stabilize UPR’s finances, including tuition increases. Without corrective measures, UPR would face operating deficits approaching $420 million by fiscal year (FY) 2026, an inability to pay $600 million in bonded debt, continued pension underfunding, and erosion of academic quality and research capacity.

In a letter dated June 5, the oversight board informed Gov. Jenniffer González Colón and legislative leaders that the government’s proposal “did not satisfy PROMESA’s requirements,” prompting the board to “exercise its authority to develop and certify a compliant plan.”

A central component of the plan is a series of revenue‑enhancing measures designed to reduce UPR’s reliance on commonwealth appropriations, which historically covered nearly 70% of its operating budget. The plan calls for continued adjustments to undergraduate and graduate tuition, reductions in tuition exemptions, and expansion of non‑tuition revenues. These include higher fees, increased alumni donations, greater pursuit of federal research grants, and new service agreements with government agencies.

Despite tuition increases, the plan includes measures to protect low‑income students, including expanded institutional scholarships and continued alignment of tuition levels with Pell Grant eligibility.

The oversight board also urges UPR to strengthen its capacity to generate revenue from intellectual property, patents and auxiliary services such as continuing education and campus facilities.

To address persistent operational inefficiencies across UPR’s 11‑campus system, the plan mandates a broad administrative transformation that includes consolidating duplicative functions, centralizing procurement and enforcing stronger financial controls. Workforce changes are also required by the plan: reductions in non‑faculty positions through attrition, elimination of hundreds of trust and senior administrative roles, and targeted reinvestment in faculty to protect academic quality.

Benefit adjustments -- such as reduced employer health contributions and elimination of the Christmas bonus -- are included to bring personnel costs in line with fiscal capacity.

The oversight board highlights UPR’s deeply underfunded pension system as a critical risk, noting that the retirement plan is 57% unfunded with some $1.8 billion in unfunded liabilities. The plan presents two reform paths, both of which require closing the defined‑benefit plan. The board signals that the option involving reductions to certain accrued benefits is the only one that fully stabilizes the system without imposing unsustainable annual contributions.

The certified plan also imposes strict governance and reporting obligations. UPR must provide regular updates on cash flow, enrollment, procurement savings, and pension contributions, and must strengthen internal controls across all campuses and component units.