By Nick Brown
NEW YORK (Reuters) - Puerto Rico's governor proposed measures on Monday to reduce anticipated budget cuts at the University of Puerto Rico to $241 million by fiscal year 2021, from $450 million approved by the struggling U.S. territory's fiscal oversight board.
The measures, outlined by Governor Ricardo Rossello in a letter to the board, include transferring to the university some of the savings generated by upcoming cuts to healthcare spending; allowing the university to earn revenue by training public employees; and working with the island's Science and Technology Trust to monetize the university's patents, which UPR has historically struggled to do.
The school's fate is a sensitive issue locally, with student groups threatening strikes over the cuts. UPR's budget has already been slashed by $348 million over the last three fiscal years, according to Rossello's letter.
Its troubles are entangled with broad economic distress in the U.S. territory, where almost half the population lives in poverty and unemployment is more than twice the U.S. average. As the island buckles under $70 billion in debt, public healthcare and pension systems edge toward insolvency, and locals flock to the mainland United States.
The territory's finances are under the oversight of a federally appointed board, which some local critics condemn as an extension of its colonial legacy. The board's recommended austerity measures have drawn protests on the island.
The board has urged reduced government subsidies, staff cuts and tuition fee hikes at UPR, the 11-campus, 70,000-student university that has produced four of the island's ex-governors.
The full $450 million cut would be a "dramatic negative" that would be "difficult for the university to absorb," leaving it with a $157 million operating deficit, Moody's Investors Service said in a note on Monday.
Hiking tuition is hard "given the highly price-sensitive student population," Moody's said. It added that while it expects UPR to make its $32 million debt payment on June 1, subsequent payments could be missed because the university stopped transferring money into trusts for debt payments under Puerto Rico's 2016 emergency debt moratorium.
Some economists say the school has room to trim fat.
Arnaldo Cruz, co-founder of the San Juan-based think tank Center for Integrity and Public Policy, said UPR spends too much on non-faculty positions and that its 11 campuses are too many on an island of 3.5 million. "We think that does not make sense on such a small island with a population in decline," Cruz said.
(Reporting by Nick Brown; Editing by Frances Kerry and Dan Grebler)