FINANCIAL OVERSIGHT AND MANAGEMENT BOARD

FOR PUERTO RICO

Members
Andrew G. Biggs
Carlos M. García
Arthur J. González
José R. González
Ana J. Matosantos
David A. Skeel, Jr.
José B. Carrión III
Chair Natalie A. Jaresko
Executive Director

BY ELECTRONIC MAIL

October 1, 2019

Eligio Hernández Pérez

Secretary
Department of Education

Dear Secretary Hernández,

This letter is in response to the budget increase request from the Department of Education stating
the need to use prior year general fund underspending of $81M in fiscal year 2020 in order to fund
the Special Education Program. FOMB is fully supportive of finding a solution to restore the
funding at the Special Education Program and reiterates that the Department of Education’s budget
reduction as compared to FY19 was never intended to come from the Special Education Program.
The reduction in the Special Education Program was not foreseen by the Certified Budget for the
Department and that action was taken by either or both of the Department of Education and the
Office of Management and Budget (OMB).

From the information we have been provided, it is important to begin with a look back at FY19
General Fund spending, which was under budget by approximately $25 million. FY19 budget was
$1.467 billion and reported spending was $1.442 billion. The FY20 certified budget is $1.347
billion, which is a reduction of $120 million and a reduction from actual FY19 spending of $95
million. The reduction in spending per the Certified Fiscal Plan and the Certified Budget was
intended to focus on capturing savings primarily from the closure of schools in previous years ($69
million in reduced administrative staff, and $13.8 million in utility and other administrative costs
no longer to be incurred) and procurement savings via increased efficiency ($37 million).

The allocations of the available funds made by OMB and the Department of Education allocated
increases in spending in the FY20 budget as compared to the latest available actual FY19 spending
to Community School Program ($8.2 million), Administration Program ($14.5 million), Auxiliary
Services and Technical Assistance Program ($9.7 million), School Security Program ($8.0
million), Technology Institute Program, and the Adult Program. That said, the allocations made
by OMB and Department of Education decreased spending in the FY20 budget as compared to
actual FY19 spending in the Special Education Program ($75.7 million), Food Services Program

PO Box 192018 San Juan, PR 00919-2018; www.oversightboard.pr.gov; comments@oversightboard.pr.gov

($12.2 million), Vocational and Technical Education Program ($8.3 million), School Maintenance
Program ($4.1 million), Printing Services, and Institute of Administrating Training and Counseling
to Schools. It is hard to understand how administrative-related programs (Administrative Program
and Auxiliary Services and Technical Assistance Program), for example, have increased in cost,
given the previous school closures which should have reduced overhead and overall administrative
costs per the Certified Fiscal Plan and Certified Budget.

As discussed in our meeting held at the Department of Education on Wednesday, September 25,
2019, we have agreed to review the request for a budget reallocation and budget increase if the
agency, with the help of OMB, identifies an appropriate source of funds. Unfortunately, the request
that was sent to the Oversight Board included an unacceptable use of previous year General Funds.
We have been following up with the Department of Education but have not yet received a revised
request.

Please be aware the Oversight Board is taking this matter very seriously. We hope to work together
on this matter and make sure the Department of Education, specifically the Special Education
Program, has the necessary budget to operate and to serve the special education student population.
The Oversight Board looks forward to working urgently with you to accomplish the requirements
and goals of PROMESA for the benefit of the people of Puerto Rico.

Sincerely,

Natalie A. Jaresko

PO Box 192018 San Juan, PR 00919-2018; www.oversightboard.pr.gov; comments@oversightboard.pr.gov