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  • Writer's pictureThe San Juan Daily Star

University of Puerto Rico at a crossroads


By José M. Saldaña


The headline on the cover of the Monday, December 5 San Juan Star about the University of Puerto Rico states: “$365 Million Owed and Holding: With Little Done to Restructure Debt, UPR Extends Standstill Agreement for 18th Time”. A page 3 article by The STAR STAFF expands on the cover headline by stating that “the UPR has extended for the 18th time the standstill agreement with creditors on certain revenue bonds through May 31, 2023, proof that it has done little to restructure its debt.”


The article states that “On June 29, 2017 the bond trustee and UPR at the direction of the Fiscal Agency and Financial Advisory Authority entered into a letter of agreement providing that the university will transfer certain amounts in respect of pledged revenues to its bond trustee, U.S. Bank Trust National Association, on the condition that the trustee will not institute, commence or continue certain legal proceedings against the UPR to get payments.


“According to its 2021 fiscal plan, UPR has taken few steps to increase revenues and cut expenditures and may face pre debt service operating deficits growing to $455 million in fiscal 2026,” the article continues.


It was agreed by the U.S. Bank Trust National Association on behalf of both institutions to amend the period on UPR system refunding bonds, Series P and O, to May 31, 2023. In consideration of the extension of the compliance period, UPR will make some $21.38 million divided into six monetary transfers totaling $3.5 million to each trustee to hold or to make payment or distribution as required under the trust agreement. Failure by the UPR would result in termination of the compliance period. The first payment for $3.58 million of the $21.38 million must be made on or before Dec. 23 and the last one on May 18, 2023.


Several weeks ago, Treasury Secretary Francisco Parés Alicea offered the government’s recipe for avoiding the collapse of the UPR by pointing out that, according to the 2020 financial statement, the UPR has a deficit of $2.4 billion and that Parés understands that discipline and renegotiation are key for the UPR. For our part, we must add that this deficit is now closer to $5 billion. Given this situation and the statements of Secretary Parés … total silence on the part of the presidents of the UPR governing board and the university.


On countless occasions I have pointed out that in the face of the present economic deficit situation -- for all intents and purposes a bankruptcy -- the UPR has to restructure itself physically, administratively and academically. I have pointed out that the institutional budget and employment structure have to be adjusted to compensate for the present reduction in students and income. The administration has to reduce expenses and save. … But to do this is feared like the devil fears the cross.


It has long been known that there are a huge number of academic programs that are repetitive, that have lost their relevance and have no demand from students, but these are not eliminated or integrated. There are also campuses at distances of 15 and 20 minutes from each other, with administrative and academic duplication, but they are not integrated academically or administratively. One like the Utuado Campus is not justified. This campus with an annual budget of $13 million, with a capacity for close to 3,000 students has an enrollment of about 300 students at a prohibitive cost of about $46,000 per year per student, with a graduation rate of 19% -- that is, 81% do not graduate in the required time -- but even so that campus continues to exist without being viable.


Faced with this situation, the UPR has to become smaller, more relevant and of higher quality. But that does not seem to be the position of the current president, Luis Ferrao Delgado, who when he was a candidate for the presidency indicated that they could not count on him to reduce or integrate campuses.


To face the current circumstances of the institution, the most important characteristics that in my opinion should hold both the president of the UPR and the members of the governing board are: possess and master managerial and administrative skills, be good fundraisers, have a thorough knowledge of the current fiscal and ideological university problems and, above all, have a strong character. Possess great courage and the necessary toughness to make the unpopular decisions that will have to be made without losing your nerve and without fearing criticism and consequences.


I believe that the characteristics listed above are in serious shortage in the current administration to deal with the current circumstances in which the institution finds itself. But in addition to the above, it is necessary to ask whether the current governing board -- based on its composition and displayed capacity of its members -- is the appropriate entity to establish and supervise the execution of a brave, disciplined and effective institutional policy to face and succeed in what is clearly an institutional bankruptcy. They have long been responsible for establishing a clear institutional policy to solve this systemic problem in order to implement a strategic plan, and they have not done anything to that effect. Is it possible that the governing board hopes or wishes that this problem will solve itself?


Given the inefficiency, incapacity and timidity at all levels of top institutional management and the obvious institutional deterioration, the solution to the UPR’s problem seems to be one of two options: Leave it as it is (what is now happening) until it collapses on its own, or take concrete action that at this time I think should be for the Financial Oversight and Management Board to appoint a trustee to replace both the current governing board and the presidency and take control of the institution to do what needs to be done and that the current administrators have not shown to have the ability, determination or courage to carry out.


We’ll see!



José M. Saldaña, DMD, MPH, is a former president of the University of Puerto Rico.

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