Oversight Board Issues Budget Targets for Fiscal Year 2021

Oversight Board Issues Budget Targets for Fiscal Year 2021
Sets the schedule for a collaborative budget process with the Government and Legislature

(San Juan, PR – November 6, 2019) – The Financial Oversight and Management Board for
Puerto Rico today provided the Commonwealth of Puerto Rico the budget targets to be used
to develop the upcoming fiscal year (FY) 2021 budget. In a letter to the Governor, Wanda
Vázquez Garced, and the Legislature, the Oversight Board established the General Fund
FY2021 revenues for the purpose of budgeting at $9.6 billion and the Other Funds revenues
at $3.4 billion. The letter also sets the schedule for the process of developing, submitting,
approving, and certifying the FY2021 budget for the Commonwealth of Puerto Rico and its
instrumentalities.

In addition to complying with the revenue forecast, the Government’s January 31, 2020
proposed budget submission shall follow certain agency payroll and operating expenditure
targets. The targets include a second set of salary increases for police, the third iteration of
funds to establish a Commonwealth-managed scholarship fund for students at the University
of Puerto Rico, and a capital expenditures budget of $350 million. Moreover, it includes
setting the health insurance employer contribution of up to $125 per employee, per month.
Public corporations with employees with pre-existing conditions are exempted from such
limit.

“Sound budget practices and fiscal responsibility will allow for prioritizing spending where
it is most needed at the time,” said Oversight Board Executive Director Natalie A. Jaresko.
“The requests for thorough information and specificity will provide all parties greater insight
into the budget, as well as transparency, and should guarantee an even more efficient
approval process moving forward.”

In order to continue providing more transparency into the budget and use of taxpayer
dollars, the Government’s January 31, 2020 proposed budget submission should continue to
substantiate and justify professional services contracts across agencies, such as specifying
whether they are mandated by Federal consent decrees or they provide direct services to
residents.

The General Fund targets also include a one-time appropriation of $276 million to replenish
the budget reserves used in previous years. The budget targets for Administración de
Seguros de Salud de Puerto Rico (“ASES” by its Spanish acronym) are based on the certified
Fiscal Plan, which represents the current status of federal funding contemplated for Puerto
Rico’s Medicaid program. As such, the ASES budget for FY 2021 is subject to material change
if additional federal funds are approved.

Furthermore, the Oversight Board stated that the certified budget for FY 2021 will include
projected expenses related to the confirmation of the Title III Joint Plan of Adjustment.
The revenue forecast provided today to the Government of Puerto Rico represents the
revenues proposed to be used for budgeting purposes. The Commonwealth Fiscal Plan
outlines the full revenue forecast for FY2021.