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As one result of a reduced budget, Betancourt-Serrano says, when professors retire, the school cannot always afford to hire a replacement, leading to a reliance on adjuncts and part timers who cost the university less. In his department, most professors now have 35 students per class, up from 25 in years past. That also means the university pension fund will slowly be drained dry.
Professors such as Betancourt-Serrano say that it would be shortsighted to continue to cut spending on education. He is familiar with the hedge fund’s proposal to cut funding overall and is skeptical of its motivations. “Asking the advice of hedge-fund consultants or brokers regarding the well-being of a social institution is tantamount to asking for Colonel Sanders’ advice regarding the well-being of chickens,” he says.
The trouble with UPR is that its financial viability hinges on the economic prospects of the island as a whole. The university is unique compared to public universities stateside in that 68 percent of its revenue comes from the state. Most public universities in the United States derive a much lower percentage of their revenue from states and have instead upped tuitions.
Standard & Poor’s downgraded UPR’s credit rating at the end of June, stating, “a default, distressed exchange, or redemption of Puerto Rico’s debt appears to be inevitable within the next six months.” Bianca Gaytan-Burrell, director of U.S. Public Finance Ratings at Standard & Poor’s, says that all universities, public and private, can expect challenging times ahead. More recently, the agency also downgraded Puerto Rico’s private University of the Sacred Heart.
Gaytan-Burrell says that UPR and private institutions are heavily reliant on Pell grant and Title V funding, meaning that the institutions are by and large tuition driven in terms of their sources of revenue. Over the past two years, universities saw their enrollments decline, but that decline sharpened in the fall of 2014.
“We believe that that really was accelerated due to pressure from the economy from the commonwealth,” Gaytan-Burrell says. “This is not just endemic to Sacred Heart, but we’re seeing it all around the island.”
For now, Pell grants provide a stable revenue source for Puerto Rico’s public and private universities, but their Pell dependence could result in problems down the line. Any changes to how Pell grants are awarded would therefore have a disproportionate effect on Puerto Rico’s universities.
Being Pell dependent also means that the universities have to keep an eye on their cohort default rates. If the cohort default rate exceeded 25 to 35 percent for two consecutive years, they would be open to sanctions from the U.S. federal government, including the loss of all federal funding. “They’re all working on getting the cohort default rate down, but if they don’t, they could lose Pell Grant and federal funding,” Gaytan-Burrell points out. Such an eventuality spells disaster for the universities.
The situation in Puerto Rico is clearly far from resolved. While Puerto Rico’s government appears to be gearing up to shake up the funding levels, there is a long history of student protest on the island. Last spring, students showed that they would not accept dictates from above easily. Rosa, for his part, says that he and other students are preparing to make their voices heard.
This article appears courtesy of Diverse: Issues in Higher Education.