University of Puerto Rico Officials, Students Reach Deal to End Strike

University of Puerto Rico officials and students reached an agreement this week that will end a two-month strike that shut down campuses and will allow the university to complete the school semester.

UPR’s student assembly Monday approved ending the strike after the university said it would not impose a special fee of $1,100 to $1,300 in 2010 for each student on top of tuition costs, according to Ivan Rios, a spokesman for the university. The fee was intended to help raise revenue for the institution.

In addition, UPR will not raise tuition rates at this time or limit tuition waivers for certain students who also receive federal Pell Grants, according to local reports.

UPR has 11 campuses throughout the island. Classes could resume next week at many of the campuses, Rios said.

It is not clear if the university may ask students again in 2011 to pay special fees or increased tuition. UPR officials are working on a fiscal 2011 budget that already has a $166 million deficit, according to Gabriel Rivera, the university’s director of finance.

Students currently pay $45 to $51 per credit hour, or $720 to $816 for a 16-credit-hour semester.

Rivera yesterday was unable to discuss the fiscal 2011 budget and how the university will balance that spending plan in light of its agreements with students. Fiscal 2011 begins July 1. In addition, UPR is planning on borrowing from the Government Development Bank for Puerto Rico, the commonwealth’s fiscal agent, before issuing its next bond deal sometime in 2011.

The university has $569 million of outstanding bonds and $71 million of outstanding notes, as of Dec. 31, according to GDB documents. Moody’s Investors Service and Standard & Poor’s rate the school Baa1 and BBB-minus, ­respectively.

The school also makes lease payments to the Puerto Rico Industrial, Tourist, Education, Medical and Environmental Control Facilities Financing Authority — known by its Spanish acronym AFICA — on $78 million of outstanding debt sold in 2000 for the University Plaza Project.

While the strike halted the university’s operations and prolonged the semester, the disruption should not affect bondholders as the system relies mainly on commonwealth appropriations rather than tuition revenue to pay debt service.

The university will pay $54 million in fiscal 2011 in debt service, including the AFICA bonds. Those obligations are manageable as UPR is set to receive $691 million next year from the commonwealth’s general fund.

UPR each year receives an appropriation from Puerto Rico equal to 9.6% of the commonwealth’s average annual revenue from internal sources for each of the two prior fiscal years. As Puerto Rico’s revenues have declined during the past few years, so have UPR’s allocation from the general fund.

UPR currently serves 65,669 students. It is Puerto Rico’s sole public university and its largest higher education institution.

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