Puerto Rico works to keep basic services running through debt restructuring process

by | May 23, 2017 | Headlines, Puerto Rico | Comments

On May 3, Puerto Rico declared a special type of debt restructuring in a move to keep the multitude of lawsuits filed against it by its creditors at bay. In the meantime, Puerto Rico is struggling to keep its basic services running during the debt restructuring process. In its court filings submitted at the beginning of May, Puerto Rico declared that it is “unable to provide its citizens effective services”

Education

In order to save money on power and water bills, 178 schools are being closed in the largest mass school closing in the history of the territory. Universities are also suffering, as the government is scheduled to cut $149 million dollars from the budget of the University of Puerto Rico on July 1. The university has been on strike since March 1, and has recently voted to continue their strike despite an order by a judge to cease and desist. While the strike is supported by many students and staff, others feel that the strike has the potential for harm. Over half of the faculty members rely on research grants to pay them a salary for the summer. They cannot be eligible for their grant money until the school declares an official start to the summer term. With the strike looming on indefinitely, some professors are beginning to worry that they won’t be able to access their funds. Similarly, for students pursuing internships or research positions for the summer, they may not be eligible for those positions until their transcripts say that they have completed the semester. Title IV funds are also being withheld from 5 campuses that are participating in the strike, jeopardizing funding for important programs such as Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), and federal work study.

Essential Services

Other services have historically been provided for free by municipality governments, paid for by tax dollars. However, as more austerity measures go into effect, and as tax dollars will be moved towards paying off the debt, some local governments may be unable to fund basic services like trash collection and healthcare services. The island also struggles to find the money to pay the salaries of its police officers. Power companies on the island are also raising rates and rationing power, hurting customers who have already faced previous large hikes to their rates.  Other’s fear that the ability to file complaints about child abuse and other such Public Services will go uninvestigated due to a lack of funds.

Puerto Rico is also struggling to provide adequate water services to its customers. The National Research Defense Council released an independent study this week claiming that nearly all tap water in Puerto Rico violates the health and safety standards set by the federal government. The company, run by the government, has also failed to complete the required number of health and safety checks, and, that it failed the ones it had completed. Puerto Rico’s Aqueduct and Sewer Authority is already struggling under its large debt. It holds $5 billion of Puerto Rico’s debt.  With further budget cuts to come to essential services as part of austerity measures, it seems unlikely that the Aqueduct and Sewer Authority will be able to effectively curb the problem in the face of more cuts, and President Trumps moves to cancel certain environmental protections.

Pensions

The islands are also looking towards the grim reality that their pension system will run out of money as soon as July. This will impact thousands of citizens who rely on their pensions as the household income or to pay for their healthcare. The pensioners have already witnessed cuts to their pensions, and it’s been proposed that they will be cut another 10%. Potentially 400,000 Puerto Ricans will lose health care because they won’t be able to afford it as their pensions and salaries are cut.

photo credit: Puerto Rico (San Juan) by Ricardo’s Photography