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Puerto Rico to Close 179 Schools Because of Crushing Debt

AP Photo/Danica Coto

As the school year winds down in Puerto Rico, a lot of schools are shutting their doors for good, permanently sending away school children, teachers, and support staff.

That’s because Puerto Rico is reeling from a decade-long debt crisis and the public school system is once again on the chopping block.

Over the past several years, hundreds of schools have been shuttered to save money.

But never has the assault on the school system been so deep — 178 schools will soon be gone. Students will be sent to new schools and as many as 5,000 teachers will see their school contracts expire.

It’s a grim chapter in the island’s dark saga of debt, which began during the global financial crisis when economies around the world were crippled by the irresponsible and sometimes fraudulent activity of the financial sector.  

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Since then, the government has been functioning on a shoestring budget, forced by creditors to save money wherever and whenever possible, including through rationing electricity and water.

This imposed austerity caused an exodus of the island’s middle and upper classes, who seek better opportunities and more stability on mainland US. This in turn deepens Puerto Rico’s debt crisis by depriving it of both tax sources and economic activity.

The US territory has a 45% poverty rate, twice the unemployment as the rest of the country, and its healthcare system is under severe strain.

That’s one reason for the major school restructuring — the population is being hollowed out. So not only does it save money, but the closures help to rebalance the ratio of teachers to students, according to the government.

But that doesn’t make the closures any easier for the students, parents, and teachers involved.

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“No to the closing of schools,” Shakira Cabrera, a concerned resident, wrote on Facebook, according to The Los Angeles Times. “If they want to save money, then reduce the salary for themselves and stop playing with the children’s education.”

Because the island is a commonwealth, rather than a state, the federal US government hasn’t offered much assistance.

Now Puerto Rico is awaiting a hearing in US bankruptcy court on May 17, an unprecedented bid to be rescued under Title III, a debt-restructuring system, and given a clean economic slate. Previously, Detroit’s 2013 bankruptcy filing of $18 billion was the largest municipal bankruptcy in US history.

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Once again, its peculiar status as a commonwealth is a major liability, as there are no statutes for dealing with a commonwealth bankruptcy. It’s unknown how the presiding federal court judge Laura Taylor Swain will approach the case, but she has extensive experience with major financial litigations.

Whatever the outcome, Puerto Rico is out of options. It was recently sued by its creditors — including bondholders, hedge funds, banks, and more — for larger payments that it simply cannot afford.

As it awaits its fate — a court battle that could drag on for years — the government will continue to downsize and slash budgets.

And the people of Puerto Rico will continue to either move off the island or face a diminishing quality of life.