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PROMESA Oversight Board Advises Strategies for COVID-19 Funds

Puerto Rico’s Financial Oversight and Management Board (FOMB) has sent a letter to Governor Wanda Velazquez Garced to propose strategies for using coronavirus relief funds. Puerto Rico has been allocated $2.2 billion from a $150 billion fund dedicated to state, territorial and tribal governments under the Coronavirus Aid, Relief, and. Economic Security (CARES) Act.

“This funding, if used appropriately,” advised the FOMB, “can provide much needed support for the Commonwealth and its residents and businesses to mitigate, contain, and minimize the effect of COVID-19 on the lives of the people
of Puerto Rico.”

Reopening the economy

Puerto Rico, already struggling with cash flow and coping with higher levels of poverty than any State, is dealing with the consequences of closing businesses and reducing people’s participation in the economy.

The Board expressed concern that cash grants wouldn’t keep businesses afloat without technical assistance. “We do believe cash grant programs can provide immediate relief to small businesses,” the letter said. “However, we encourage the Government to supplement cash assistance with technical support. In addition to cash, many of these business owners will need to rethink their operations and will require training and coaching to navigate this new reality.”

“Without technical assistance,” the letter continues, “they would be more likely to close after they receive disbursement.”

The letter also acknowledges that some residents of Puerto Rico will face long-term unemployment, even after local businesses reopen. “More than a safety net, these workers will require job training and placement services,” they said. “Therefore, we encourage the Commonwealth to invest some of these funds to strengthen the workforce development infrastructure and programming of the government.

Healthcare Improvements

The government already expressed an intention to buy personal protective equipment (PPE), ventilators, and virus detection tests. The Board asked the governor to invest in better inventory and logisitics management as well, to make sure that the supplies are distributed and used appropriately.

“One of the recommendations made by RAND Corporation after Hurricane Maria was establishing regional Disaster Healthcare Centers (DHC) in Puerto Rico,” they wrote. “A DHC serves as an umbrella for a group of hospitals, clinics, and provider agencies in their geographic area and is responsible for developing plans, relationships, and procedures to enhance hospital surge capacity for responding to an emergency event.

“We recommend that the Department of Health identify approximately five healthcare facilities in Puerto Rico as HDCs. These HDC’s would be in charge of coordinating and managing the distribution of ventilators, PPE’s, COVID-19 tests, and other support equipment within their geographic area.”

The Board also advised investment in telemedicine — doctor visits by video. Because of HIPAA privacy regulations, telehealth or telemedicine requires specialized technology. The governor had previously relaxed these requirements to allow telemedicine support during the pandemic.

Distance learning

“Although PRDE has announced a set of initiatives, we have concerns that they are not part of a larger coordinated effort to address student needs during the crisis. Thus, it might be practical to use some of these funds to enhance the system’s distance learning capacity, which can be useful beyond emergencies such as this (and in preparing for a possible reemergence of COVID-19 this fall/winter), as well as to think about how to recuperate lost learning,” the Board suggested. “An increased level of tech fluency could be sustained post-crisis to assist student learning in normal times.”

The Board also recommended summer school programs across the territory, both to help students catch up and to provide employment for teachers — plus some stimulation for the economy.

Reimbursement and Reporting

On the FOMB website, the Board suggests that some of the federal funds could be used to reimburse Puerto Rico’s emergency fund. In their letter, they stated this: “The Oversight Board believes a portion of the $500 million incremental funds certified on March 28, 2020 as part of the $787 million Emergency Measures Support Package may be reimbursable expenses under the $2.2 billion program.”

The letter concluded with requirements for reporting. Both planning of expenditures and actual use of funds must be tracked and reported to the Board on a biweekly basis. The Board also recommended making all expenditures of the federal funds visible to Puerto Rico residents on a public website.

Signers of the letter included Executive Director Natalie A. Jaresko as well as each member of the PROMESA Oversight Board: Andrew G. Biggs, José B. Carrión III, Carlos M. García, Arthur J. González, José R. González, Ana J. Matosantos, and David A. Skeel, Jr.

Read the full letter.

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