Puerto Rico can avoid a costly default by upping taxes, cutting teacher jobs and closing schools, a group of hedge fund economists proposed in a report released on Monday, offering a controversial solution to the island's "unpayable" $72 billion debt crisis.
The report, commissioned by hedge funds holding several billion dollars of Puerto Rico's bonds, highlights the island's rising education expenditures against the backdrop of countless school closings and waves of poor families fleeing to mainland America.
According to government figures, education spending rose 39% to $4.8 billion over the last decade, while enrollment fell 25% to about 570,000. Puerto Rico still spends just $8,400 per student, compared to the U.S. national average of $10,667, according to the Guardian.
“The real expense per student has increased enormously without increasing the quality of education," Jose Fajgenbaum, director of Centennial Group Latin America and one of three former IMF economists who authored the report, told the Guardian.
The hedge fund-backed report arrives in response to the Krueger report, a government-commissioned study released June 29 that proposed a significant debt restructuring with which bondholders were unlikely to agree.