Oversight Board approves furloughs against government’s wishes
Yet again, the Financial Oversight and Management Board and the government of Puerto Rico are butting heads, this time over the Oversight Board’s decision to impose furloughs. This will be the first time in the history of Puerto Rico that furloughs will be implemented. Furloughs are when employees are given mandatory time off from work, without pay. While furloughs are often considered to be a beneficial alternative to layoffs, Puerto Ricans aren’t celebrating.
On Friday, August 4, the Oversight Board announced their decision to implement furloughs. The furloughs will affect government employees in all departments except for Police, starting from September 1. They will be for up to two days each month. While the numbers do not seem drastic, that will be 24 days a year that some employees will not be paid, money that is desperately needed by many families. The Board chose this particular plan over other more drastic plans for furloughs including a four day furlough and furloughs for teachers. The Oversight Board claims that the furloughs are necessary to reach the $218 million dollar savings goal that the government is responsible for achieving, and hasn’t. The furloughs can be eliminated ahead of schedule if the savings goal is met before the end of the 2018 fiscal year.
The Puerto Rican government has vocally rejected the furloughs. Governor Ricardo Rosselló claims that he will not impose them. Rosselló has said that he can choose not to implement the furloughs because under PROMESA, the law that creates the Oversight Board, it can only make “recommendations”, and that it does not have enforcement power. Speaking against the furloughs he is quoted as saying, “[a]ctivating our economy and stimulating the creation of more and better jobs in Puerto Rico must be a common objective, both for the government and for the Financial Oversight and Management Board…The furlough proposed by the Board would provoke the opposite, increasing the crisis and hitting our People unnecessarily, which is why we will not allow it.”
Board Member, Jose Carrion, responded by stating that if the furloughs are not implemented promptly, that it could lead to deeper furloughs in the future in order to achieve the same level of savings. Carrion also stated that the furloughs are not seen by the board as just a “recommendation”.
Other news from the ninth public meeting of the Oversight Board concern the pension scheme. In an effort to relieve pressure from the overburdened pensions system, the Board announced that it will make a 10% cut to the system. This is not without controversy, as a bill discussing the pension system is currently being debated in the legislature to protect the pension system from any cuts. The Board also decided that all new government hires will be enrolled in Social Security. Previously, teachers and police officers were not enrolled in the system and were reliant on the pension system. Enrolling new hires in Social Security may help relieve some pressure from the crumbling system.