In the throes of the worst economic crisis in its history, the Commonwealth of Puerto Rico declared bankruptcy on Wednesday and announced the closure of 184 public schools in a desperate cost-cutting move.
Following the collapse of talks with creditors to negotiate its way out of a crushing $70 billion debt to avoid lawsuits, Puerto Rico’s Financial Oversight and Management Board filed to place itself in U.S. bankruptcy court. A court order protecting the U.S. territory from creditors’ claims expired at midnight on Tuesday.
“We have sustained our position to negotiate in good faith, but before the current scenario, we choose to protect our people,” Puerto Rico Governor Ricardo Rossello tweeted Wednesday.
Facing $74 billion of bond debt and $48 billion of unfunded pension liabilities, experts say Puerto Rico would be required to set aside $3.5 billion a year in interest payments alone over the next decade to keep pace with any recovery plan.
In one of the first moves to reduce outlays, the Commonwealth announced its intent to close 184 schools at the end of the current term. The decision to move students is expected to affect 27,000 pupils.
Puerto Rico’s determination to close schools is not the first time it has been confronted with the agonizing decision to include schools in a retrenching of its budget; between 2010–’15, the Commonwealth shuttered 150 schools to cut costs.
Puerto Rico currently serves 365,000 students in 1,292 public schooling system.
[RT America] [Wall Street Journal] [Photo courtesy AP via Los Angeles Times]