Special education programs like therapies, evaluations, transportation, and reimbursements to families are important government obligations. Many families depend on those services, and many such services are owed to students who are entitled to them under federal law. The timely delivery of those services is both a legal requirement and a priority shared by the Puerto Rico Government and the Financial Oversight and Management Board.
However, the Oversight Board is concerned about how these services have been funded. Long-term planning and budgetary controls within the Puerto Rico Department of Education (PRDE) are needed. Proper attribution of funds among schools with a falling number of children is needed. And more efficient fiscal management within PRDE is needed. However, solutions are under way to fund education programs sustainably.
Over a period of several years, recurring costs within the special education program have increasingly been met through such non-recurring resources. A substantial share of these recurring service costs, including the externally contracted services provided through the provisional remedy program, was supported by federal pandemic-relief funds that expired in the current fiscal year of 2026. While those funds have lapsed, the underlying obligations have not. The result is a recurring commitment now pressing against the Government’s day-to-day operating budget, the general fund, without a corresponding recurring revenue source.
This has been compounded by deficiencies in PRDE’s budget planning, management, and fiscal controls. In recent years, spending on special education services has consistently exceeded the amounts budgeted, with the resulting overruns addressed after the fact through requests for additional funding in the middle of the fiscal year (defined in budgetary terms as reprogramming).
The issue is not one of insufficient appropriation; it is that PRDE has not been managing available resources appropriately. Several of the recent requests for such reprogramming arise directly from this pattern, for example the request to fund special education transportation.
These pressures also reflect a deeper structural issue – a demographic issue. PRDE’s cost base has been built for a substantially larger student body than the one it now serves. Puerto Rico’s school-age population continues to decline. PRDE’s enrollment fell by approximately 37% since fiscal year 2017, while its general fund appropriation rose by roughly 18% over the same period. The incoming kindergarten cohort is now approximately a third smaller than the cohort graduating each year, indicating that this decline will continue for the foreseeable future. Within special education, the number of students declined by approximately 18% since fiscal year 2010, while the cost per student served rose by approximately 102% between fiscal years 2010 and 2026.
The path toward addressing this condition is already defined. The Government’s Fiscal Plan for Puerto Rico certified by the Oversight Board directs PRDE to adopt student-based budgeting, an allocation method that funds each school according to the number and needs of the students it serves, rather than according to historical staffing levels or structures.
Under this model, resources follow students, and higher-need students, including students in special education, carry materially higher weighted funding tied to their specific classroom, therapy, transportation, and related-service needs. The formula underlying this methodology has been developed and modeled for the fiscal year 2027 budget. To date, however, PRDE has applied it only in part in preparing its budget submission, and the regulation that would allow the formula to operate in full has not yet been submitted.
Fully implemented, student-based budgeting would make the cost of serving each student transparent, align PRDE’s budget with the student population it serves, and avoids funding recurring obligations, including special education, through year-end reprograming.
Beyond how these services are budgeted, their reliable delivery depends on consistent monitoring, standardization, and documentation across schools. Where those functions are weak, the consequences are fiscal as well as operational: service-delivery gaps contribute both to reliance on costlier external service arrangements and to administrative and judicial proceedings under applicable legal mandates. Strengthening PRDE’s capacity to monitor and document the delivery of student services therefore advances the same objective as the measures above, ensuring that obligations owed to students are met reliably and at a sustainable cost.
PRDE’s responsibilities to students with disabilities extend beyond special education. Section 504 of the U.S. Rehabilitation Act of 1973, a federal civil-rights mandate, requires that students with a disability receive the accommodation they need to access their education on an equal basis. At present, PRDE does not have adequate capacity to identify and deliver these accommodations consistently across schools. That gap carries both programmatic and fiscal consequences: students entitled to those accommodations may not reliably receive them, and PRDE is left exposed, under a federal civil rights mandate, to the kind of compliance findings and legal proceedings, and the costs they carry described above. Strengthening that capacity, the organizational structure to monitor and standardize service delivery, together with the system changes needed to identify these students and document the support they receive, would reduce that exposure while ensuring PRDE meets the full range of its obligations to students with disabilities reliably and on a sustainable footing.
Sound budgeting and reliable service delivery also depend on how PRDE’s fiscal-management functions are organized. The Civil Service Reform (CSR), extended to PRDE in 2023 and completed in December 2024, was undertaken to address the obsolete organizational structures, roles, compensation, and recruitment practices affecting PRDE’s fiscal operations. The reorganization covered over 500 employees across 14 areas. It created 114 new classifications and, on that basis, reclassified 374 employees to align their roles with their actual responsibilities and PRDE’s operational needs, while identifying approximately 295 positions to be recruited to complete the redesigned structure.
Learning and development was a central pillar of the reform: between March and December 2024, in-scope employees completed more than 15,137 hours of training across 684 active courses, averaging roughly 27 hours per employee, with 552 active users on the learning platform, as part of a continuous-learning effort intended to build the skills the new structure requires and to support both PRDE’s operational objectives and employees’ professional growth. Another central element of the redesign was the consolidation of PRDE’s administrative functions into three new functional areas: fiscal operations, program operations, and technology operations, with fiscal operations integrating the finance, budget, accounting and procurement to strengthen fiscal management and compliance. To date, approximately 200 of the positions identified have been recruited. However, the fiscal functions continue to operate as separate streams rather than as the integrated fiscal operations area the redesign contemplated.
To meet the immediate needs of special education students without furthering the practices that produced this situation, the Oversight Board requires PRDE to:
- Submit the student-based budgeting regulation, consistent with the Fiscal Plan for Puerto Rico, together with an implementation plan providing for the full application of the methodology in the fiscal year 2028 budget, so that recurring program costs are funded through a transparent, student-based methodology going forward.
- Submit a plan to strengthen the delivery of Section 504 accommodations, including the organizational and system changes needed to ensure that students entitled to such accommodation are properly identified, served, and documented across schools..
- Complete the implementation of the Civil Service Reform, prioritizing the recruitment of the three directors for the consolidated fiscal, program, and technology operations areas, respectively, and submit a recruitment plan with milestone dates for the remaining positions.
- The Government must ensure that the budget for the next fiscal year includes sufficient recurring funding to meet all special education and provisional remedy program liabilities to be incurred in the fiscal year. This information is essential prior to the certification of the fiscal year 2027 Commonwealth budget currently under review by the Legislative Assembly. .
These requirements will help ensure that the resources supporting special education services rest on a stable and recurring footing. And the requirements support the broader work underway to strengthen PRDE’s fiscal sustainability and transparency, including the development of organizational and workforce-planning mechanisms and a long-term financial plan.
