EXHIBIT D 

Case:17-03283-LTS Doc#:2707-4 Filed:03/12/18 Entered:03/12/18 20:59:11 Desc:

Exhibit D Page 1 of 93
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NEW FISCAL PLAN FOR PUERTO RICO

GOVERNMENT VISION | REBUILDING PUERTO RICO | PATH TO STRUCTURAL BALANCE | GOVERNMENT TRANSFORMA

Puerto Rico | January 24, 2018

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DISCLAIMER

The Puerto Rico Fiscal Agency and Financial Advisory Authority (“AAFAF”), the Government of Puerto Rico, its instrumentalities and agencies (the “Governmen

directors, employees, agents, attorneys, advisors, members, partners or affiliates (collectively, with AAFAF and the Government, the “Parties”) make no repre

any third party with respect to the information contained herein and all Parties expressly disclaim any such representations or warranties. The Government ha

and unaudited financials for 2015, 2016 and 2017 in addition to the inherent complexities resulting from a prolonged period of lack of financial transparency. 

made certain assumptions that may materially change once those financial statements are fully audited. 

The Parties do not owe or accept any duty or responsibility to any reader or recipient of this presentation, whether in contract or tort, and shall not be liable f

(including without limitation consequential damages or lost profits) or expense of whatsoever nature of such third party that may be caused by, or alleged to 

that is otherwise consequent upon the gaining of access to this document by such third party. The Parties do not undertake any duty to update the informatio

This document does not constitute an audit conducted in accordance with generally accepted auditing standards, an examination of internal controls or other 

accordance with standards established by the American Institute of Certified Public Accountants or any other organization. Accordingly, the Parties do not exp

assurance on the financial statements or any financial or other information or the internal controls of the Government and the information contained herein.

Any statements and assumptions contained in this document, whether forward-looking or historical, are not guarantees of future performance and involve ce

other assumptions made in this document. The economic and financial condition of the Government and its instrumentalities is affected by various legal, fina

governmental and political factors. These factors can be very complex, may vary from one fiscal year to the next and are frequently the result of actions taken 

but also by Financial Oversight and Management Board for Puerto Rico and other third party entities such as the government of the United States. Examples o

to,:

– Any future actions taken or not taken by the United States government related to Medicaid or the Affordable Care Act;

– The amount and timing of receipt of any distributions from the Federal Emergency Management Agency and private insurance companies to re

and Irma;

– The amount and timing of receipt of any amounts allocated to Puerto Rico and provided under the Community Disaster Loans Program;

– The amount and timing of receipt of any additional amounts appropriated by the United States government to address the funding gap describe

– The timeline for completion of the work being done by the Puerto Rico Electric Power Authority (“PREPA”) to repair PREPA’s electric system and 

developments or issues related to PREPA’s electric system and infrastructure on Puerto Rico’s economic growth;

– The impact of the measures described herein on outmigration; and

– The impact of the resolution of any pending litigation in the Title III cases 

Because of the uncertainty and unpredictability of these factors, their impact cannot be included in the assumptions contained in this document. Future even

from any estimates, projections, or statements contained herein. Nothing in this document should be considered as an express or implied commitment to do 

by AAFAF, the Government, or any government instrumentality in the Government or an admission of any fact or future event. Nothing in this document shall 

recommendation or advice to any person to participate, pursue or support a particular course of action or transaction, to purchase or sell any security, or to m

Because of the uncertainty and unpredictability of these factors, their impact cannot be included in the assumptions contained in this document. Future even

from any estimates, projections, or statements contained herein. Nothing in this document should be considered as an express or implied commitment to do 

by AAFAF and the Government as an admission of any fact or future event. Nothing in this document shall be considered a solicitation, recommendation or ad

support a particular course of action or transaction, to purchase or sell any security, or to make any investment decision.

By receiving this document, the recipient shall be deemed to have acknowledged and agreed to the terms of these limitations. This document may contain ca

or may contain terms that are discussed in other documents or that are commonly understood. You should make no assumptions about the meaning of capita

should refer questions to AAFAF (Fiscalplanforpuertorico@aafaf.pr.gov) should clarification be required.
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List of Acronyms

AAFAF Puerto Rico Fiscal Agency and Financial Advisory Authority 

(Spanish acronym)

ADEA Agricultural Enterprise Development Administration (Spanish acronym)

Administration Administration of Governor Ricardo Rosselló

ASEM Puerto Rico Medical Services Administration (Spanish acronym)

ASES Puerto Rico Health Insurance Administration (Spanish acronym)

BBB Request for supplemental federal assistance submitted on November 13, 2017 by 

the Government titled Build Back Better Puerto Rico 

CAGR Compound Annual Growth Rate

Cardiovascular Cardiovascular Center Corporation of Puerto Rico and the Caribbean

CDBG Community Development Bank Grant

CDL Community Disaster Loan from the CDL program 

Certified Fiscal Plan Fiscal Plan certified on March 13, 2017 by the FOMB

CFC Controlled Foreign Corporations

COFINA Puerto Rico Sales Tax Financing Corporation (Spanish acronym)

COSSEC Public Corporation for the Supervision and Deposit Insurance of Puerto Rico 

Cooperatives (Spanish acronym)

CRRO Central Recovery and Reconstruction Office

DDEC Puerto Rico Department of Economic Development Commerce (Spanish acronym)

DOH Department of Health

DOJ Puerto Rico Department of Justice

DOL Department of Labor

DOT Department of Transportation

DST Daylight Savings Time

EEI Electronic Export Information

EITC Earned Income Tax Credit

ERS Employee Retirement System

FEMA Federal Emergency Management Agency

FOMB Financial Oversight and Management Board of Puerto Rico

GAO U.S. Government Accountability Office

GDB Government Development Bank for Puerto Rico

GDP Gross Domestic Product 

GF General Fund

GFEWG Governor’s Fiscal and Economic Working Group

GILIT Global Intangible Low Income Tax

GNP Gross National Product

GOSR State of New York’s Office of Storm Recovery

Government Government of Puerto Rico

Governor Governor Ricardo Rosselló

Hacienda Puerto Rico Treasu

HHS U.S. Health and H

HUD U.S. Housing and U

Hurricanes Hurricane Irma and 

IMF International Mon

Island Puerto Rico

KPIs Key Performance I

LEA Local Education Ag

MCOs Managed Care Org

MFCU Medicaid Fraud Co

MMIS Medicaid Manage

OMB Office of Managem

P3 Public Private Part

P3 Authority Public Private Part

PA Public Assistance

Parties AAFAF and the Gov

PBA Public Building Ad

PMO Program Managem

PMPM Per Member Per M

PPPA Puerto Rico Port A

PRASA Puerto Rico Aqued

PREMA Puerto Rico Emerg

PRCCDA Puerto Rico Conve

PREPA Puerto Rico Electri

PRHFA Puerto Rico Housin

PRHTA Puerto Rico Highw

PRIDCO Puerto Rico Indust

PRITS Puerto Rico Inform

PROMESA Puerto Rico Oversi

Stability Act

PRTC Puerto Rico Touris

PSC Puerto Rico Public 

RFQ Request for Quote

SCO State Coordinating 

SIFC State Insurance Fu

UPR University of Puert

WIOA Workforce Innovat
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Table of Contents

I. GOVERNMENT VISION | PAGE 5

I. BACKGROUND AND CONTEXT | PAGE 6

II. A NEW VISION FOR PUERTO RICO | PAGE 10

II. REBUILDING PUERTO RICO | PAGE 13

I. BUILD BACK BETTER | PAGE 14

II. FUNDING SOURCES | PAGE 16

III. CRRO AND P3 UPDATE | PAGE 19

III. PATH TO STRUCTURAL BALANCE | PAGE 23

I. ECONOMIC OUTLOOK | PAGE 24

II. FINANCIAL PROJECTIONS | PAGE 29

III. DEBT SUSTAINABILITY | PAGE 38

IV. GOVERNMENT TRANSFORMATION | PAGE 44

I. NEW GOVERNMENT MODEL | PAGE 47

II. PROCUREMENT | PAGE 60

III. REDUCTION OF APPROPRIATIONS | PAGE 63

IV. HEALTHCARE REFORM | PAGE 65

V. TAX COMPLIANCE AND FEE ENHANCEMENTS | PAGE 69

VI. REGIONALIZATION OF SERVICES | PAGE 72

VII. GOVERNMENT PMO AND IMPLEMENTATION STRATEGY | PAGE 75

V. STRUCTURAL REFORMS | PAGE 78

I. INTEGRATED FINANCIAL MANAGEMENT | PAGE 88

TABLE OF CONTENTS
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GOVERNMENT VISION

TRANSFORMING PUERTO RICO THROUGH A NEW SOCIOECONOMIC MODEL

BACKGROUND AND CONTEXT | A NEW VISION FOR PUERTO RICO
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BACKGROUND AND CONTEXT
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Puerto Rico’s territorial status deprives its residents of the quality of life the

U.S. citizens

Puerto Rico becomes 

a U.S. Territory; 

“Unincorporated 

Territory” clause. 

1898

Spanish American War

Created a governance 

structure with a 

Governor, Legislative 

Assembly, and Judicial 

System.

1900

Foraker Act

Granted U.S. 

Citizenship to anyone 

born in Puerto Rico. 

1917

Jones-Shafroth Act

Gove

Rico 

to 1

PR Fe

Past decisions have led to the territorial status, highlighting the lack of basic rights the people of Puerto R

citizens:

No

Presidential Vote

No

Voting Representation 

in Congress

No

Parity in Medicaid

Fo

fo

The Congressional approval of the Tax Cuts and Jobs Act of 2017, as well as delays in restoring the ene

recovery initiatives, are the most recent evidence that Puerto Rico’s territorial status and lack of voting re

poses the greatest impediment to its sustainable economic development.

GOVERNMENT VISION | BACKGROUND AND CONTEXT
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The net effect of the territorial status is inequality, a driving factor in our decade-old fi

economic crisis

 Since 2006, Puerto Rico’s real GNP has shrunk by more than 14%.

 In the past decade more than 300,000 people left Puerto Rico. The impact of Hurricanes Irma and Maria acce

additional 600,000 people or 19% decline expected by FY22.

 Student population has declined by over 40% since 2000 with an additional 16% decline expected by FY22.1

 More than 45% of Puerto Rico residents live in poverty, which is the highest poverty rate of any U.S. state (M

at 21.9%). Puerto Rico’s 10.9% unemployment rate is almost three times the national level.2

 Concerns about quality of life, poor delivery of public services and high unemployment have led to a historic 

 Puerto Rico is treated unequally under key federal programs such as Medicaid as compared to states. For exa

has reported that Oregon, a relatively prosperous state with a population size similar to Puerto Rico, received 

Federal Government, whereas Puerto Rico received $19bn for the same year.3

 As discussed further, the impact of Hurricanes Irma and Maria requires that the New Fiscal Plan provides a ro

and long-term sustainability.

$41,754

$54,617

U.S. Median Mississippi

$20,078

-63%

Puerto Rico

Median Household Income4 ($mm’s)

Inequality created by the territorial status is one of the primary 

causes of the severe disparity in personal income that exists 

between residents of the U.S. mainland and Puerto Rico. 

Connecticut Puerto 

#29 #3

Puerto Rico ranks 30th in terms 

Puerto Rico is not a state it ha

in Cong

5 Reps. + 

2 Sen. 0 Rep

0 Se

3.6mm 3.3m

Ranking Population i

GOVERNMENT VISION | BACKGROUND AND CONTEXT

1 Department of Education, official public school registry

2 US DOL Bureau Labor of Statistics

3 GAO Report United States March 2014: Information on How Statehood Would Potentially Affect Selected Federal Programs and Revenue Source 4 United States Census Bureau, 2016
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2004 2000 2008 2012 2016

$39,000

$69,000

$26,000

$60,000

$71,000

+50%

+54%

+18% -3%

1.6

2.3

1.4

0.1

-1.5 -2.3

-4.2 -4.

2009 2003 2008 2004 20062005 2007 201

2001 2002 2000 2005 2003 2006 2007 2004 2008 

Public Debt Since 2000 ($mm’s, calendar years)1

Unchecked fiscal deficits between 2001 and 2008 led to a recurrent practice of 

deficit financing, resulting in a 131% growth in public debt during the period

Frequent policy changes and lack of econom

 $9,500

 $9,000

 $8,500

 $8,000

 $7,500

 $10,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

GF Revenue Projection

GF Revenue Actual

Overestimation of economic growth projections resulted in massive deficits that 

were covered with one-time measures and debt financing

Revenue Projections vs Actual Revenues Since 2005 ($mm’s) GDB Economic Ac

Puerto Rico Credit Rating FY00 – FY16: S&P R

An increase in expenditures and public debt le

Rico’s credit ratings, except for the per

A Negative 

Outlook AStable

ANegative 

Outlook

ANegative 

Outlook BBB

Negative 

Outlook

BBB

Credit 

Watch

BBBStable

BBBStable

GOVERNMENT VISION | BACKGROUND AND CONTEXT

Periods of fiscal irresponsibility and lack of economic planning and transpar

contributed to Puerto Rico’s financial crisis

1 Source: Government Development Bank of Puerto Rico

A Negative 

Outlook
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A NEW VISION FOR PUERTO RICO
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Our vision for the socioeconomic transformation is founded on a new Gove

drive fiscal and economic stability

Strategic Goals:

 To establish a new Government which facilitates and implements strategies that achieve sustainable econom

opportunities for job growth and personal advancement.

 To develop an educated, healthy, productive and vibrant society, observant of law, order and integrity.

 To establish effective, efficient, and responsible government policies and practices that remain sensitive to the 

vulnerable residents. 

 To incorporate practices and operations based on scientific- and performance-based models into Government

matter; and where resident participation, collaboration, and trust in government are the main focus of its vali

1. Develop and protect human capital.

2. Correct structural issues, bolster economic growth efforts, and utilize areas of 

opportunity.

3. Improve Puerto Rico’s competitiveness through less regulation, energy reform 

and other various structural reforms.

4. Position Puerto Rico as a global investment destination.

5. Upgrade policies of public private partnership investment in energy, water, 

waste management, and other infrastructure projects.

6. Increase labor force flexibility and create high quality jobs.

7. Develop a safe, educated, healthy and sustainable society.

8. Achieve equality for all residents of Puerto Rico consistent with other U.S. 

states.

9. Eliminate inequality at the local level.

10. Use and maximize science and technology as a driver for transformation.

The devastation caused by Hurricanes Irma and Maria creates an opportunity to redesign major components of 

infrastructure, invest in the quality and resiliency of public and private buildings, and restructure and modernize 

services to residents.

Pro

an

Effective and 

Transparent 

Government

 Technology an

Development and Prote

 E

Sta

Main Objectives:

GOVERNMENT VISION | A NEW VISION FOR PUERTO RICO

Source: Plan Para Puerto Rico, Government Program and a Model for the Socioeconomic Transformation of our Island.
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The New Fiscal Plan integrates the devastation caused by the Hurricanes as 

recent facts and assumptions underlying Disaster Relief Assistance and priv

claims proceeds

The FOMB approved the Certified Fiscal Plan covering a 10-year period on March 13, 2017. Thereafter, the Gove

task of implementing the proposed initiatives to achieve structural balance by FY20. In the aftermath of the Hur

Government to revise the Certified Fiscal Plan. The New Fiscal Plan is built upon the pillars of fiscal and structura

objective of revitalizing the economy and critical infrastructure.

1Build Back Better Puerto Rico, Request for Federal Assistance for Disaster Recovery November 13, 2017.

Devastated Puerto 

Rico

 Air Worldwide, a global leader in catastrophic risk modeling, estimates that the infr

damages correspond to a storm that happens once every 250 to 1,000 years.

 In addition to the 11 years of recession and significant economic decline, the Hurric

infrastructure and economy of Puerto Rico. 

Altered 

Macroeconomic 

Outlook

 The Hurricanes had a significant negative impact on the economy; however, Disaste

coming years will help rebuild the infrastructure destroyed by the storms and provi

renewal.

 Population is expected to decline by 10% over the next two years with the downwa

moderate level, over the following years.

Transformative 

Moment in History

 Build Back Betterrepresents a bold and innovative vision on how the Government w

infrastructure, housing, and economy in a way that makes Puerto Rico stronger, be

 Puerto Rico established the CRRO to manage the reporting and use of recovery fun

following proven past disaster recovery structures.

A Critical Path 

Forward

 Fiscal reforms, such as implementing the New Government Model and improving ta

achieve cost efficiencies and enhance revenues. A comprehensive package of struct

welfare, and tax reform, will be implemented to stimulate sustainable economic gro

opportunities.

External Help is 

Critical 

 Obtaining financial support from the Federal Government is vital to rebuilding Puer

providing core services while the Government implements its transformational stra

GOVERNMENT VISION | EXECUTIVE SUMMARY
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REBUILDING PUERTO RICO

A COMPREHENSIVE DISASTER AND INFRASTRUCTURE RECOVERY STRATEGY

BUILD BACK BETTER | FUNDING SOURCES | CRRO & P3 UPDATE
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BUILD BACK BETTER
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Notwithstanding the precautionary measures taken prior to the Hurricanes

infrastructure was significantly damaged by Hurricanes Irma and Maria

On September 6, 2017 and September 20, 2017, Hurricanes Irma and Maria devastated Puerto Rico. The Hurric

economic and infrastructure related damages disrupting the daily lives of 3.4mm residents, including housing, i

safety, health and social services, and municipal operations. The response to the catastrophe by the U.S. and Fe

one of the largest and most complex disaster recovery efforts in U.S. history.3

1 Translates to 68% of PREPA’s customer-base 2 FEMA and Status.pr

3 Build Back Better Puerto Rico, Request for Federal Assistance for Disaster Recovery, Acknowledgement Section, November 13, 2017

Initial repair efforts are focused on temporary fixes and still require significant permanent investments that will 

needed to withstand future natural disasters.

Cell Service

Potable Water

Electricity Restored 

Based on Generation

ATMs

Gas Stations

1 Day After 

5% 

44%

0%

114 

40% 

30 Days 

61% 

69%

21%

1,047 

78% 

45 Days 

92% 

83%

41%

1,160 

84% 

Days Elapsed Since Hurricane Maria2

REBUILDING PUERTO RICO | BUILD BACK BETTER
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FUNDING SOURCES
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On November 13, 2017, the Government submitted a formal request for su

Federal assistance, titled Build Back Better Puerto Rico

The BBB plan is a roadmap for rebuilding a more resilient Puerto Rico that details the funds requested for disaste

was prepared with the joint support of the State of New York GOSR, 100 Resilient Cities, Ford Foundation, Open S

and other state and Federal agency experts.1

Mission Critical Goals

Restore damaged housing stock

Provide residents with core services

Rebuild and strengthen the Island’s critical infrastructure 

 Spur economic revitalizatio

Better prepare Puerto Rico for futur

Ensure transparency and stronger f

REBUILDING PUERTO RICO | FUNDING SOURCES

1 Build Back Better Puerto Rico, Request for Federal Assistance for Disaster Recovery, Acknowledgement Section, November 13, 2017

Uses

 Housing: $31.1bn for damaged and destroyed buildings, structu

 Power Grid & Utility Resiliency: $17.8bn to repair the damaged 

Island.

 Healthcare: $14.9bn to repair, strengthen, and make more resil

bolster state emergency stockpiles, and to augment existing Me

 Cost-share (part of all other): Estimated 10% FEMA cost-share to 

Federal funding (to the extent the cost-share is not eliminated e

Sources

 Additional Federal funding is obtained from special disaster relie

additional funds to Federal agencies earmarked for disaster relie

 

Housing 33%

Power & Grid 

Resiliency 19%

Health & 

Healthcare

16%

Education and 

Schools 9%

All Other 23%

$94.4bn Request by Category

Commitment to Transparency and Financial Controls

 The CRRO was created to ensure transparency and accountability of disaster recovery funding and for the 
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Although Puerto Rico anticipates significantly more Federal Disaster Relief A

$35.3bn is included in the New Fiscal Plan

 Puerto Rico has requested $94.4bn in Federal Disaster Relief Assistance.

 However, as required by FOMB guidelines, the New Fiscal Plan assumes 

only $35.3bn under FEMA’s Public Assistance Program as per current 

law.1

 In addition, $21.9bn from private insurance companies is included.2

1 PR Government estimates reviewed by third party subject matter experts.

2 Property Claims Services Estimate, dated October 2017.

3 Includes $938mm of FEMA Individual Assistance. 

4 Based on outlays of Hurricane Community Development Fund during Hurricane Katrina recovery.

$35.3bn FEMA Public Assistance Funding

The $35.3bn estimate is based on FEMA Public Assistance program 

guidelines with a damage assessment by category. 

Proposed funding uses:

 51% – Repairing, modernizing, and strengthening Puerto Rico’s 

water and power infrastructure.

 24% – Reconstructing critical publicly mixed buildings and fixing of 

equipment.

 25% – Rebuilding and strengthening emergency response 

capabilities, water control facilities and other.

$35.3bn 

FEMA Public 

Assistance 

Program1

$2

Pr

Insura

FEM

+

Disaster Related Fund

 The Government’s cost-share is estimated at 10% or $1.4bn, with $1.3bn to be spent during the five years cov

excluding the amounts related to PREPA and PRASA which are addressed in their respective fiscal plans.

 Puerto Rico is requesting a cost-share adjustment for FEMA’s programs under the Stafford Act to 100% Federa

not eliminated entirely, the Government has requested authorization to use CDBG-DR funds to cover the cost

requirements. Historically, either FEMA or Congress have authorized a 100% Federal cost-share for catastroph

Andrew and Katrina.

 Congress has approved $4.9bn of liquidity funds for Puerto Rico and the U.S. Virgin Islands in the form of a CD

negotiation since October 2017. This loan is not additive to the economy.

 Property Claims Services, a subsidiary of Verisk Analytics, estimates $21bn of private insurance funds, with 75

 

Buildings & 

Equipment 24%

Emergency 

Response 9%

Water Control 

Facilities 8%

All Othe

$35.3bn of FEMA Disaster 

REBUILDING PUERTO RICO | FUNDING SOURCES
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CRRO AND P3 UPDATE
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The CRRO was created following global best practices used in many jurisdictions including without limitation New 

and New Zealand to ensure accountability and coordination of the disaster recovery efforts expected by residen

taxpayers. It will ensure that the Government can implement reconstruction efforts with efficiency, effectivenes

capitalizing on opportunities to build back in a way that makes Puerto Rico better, stronger, and more resilient.

Governor of PR

Multi-Stakeholder Recovery 

Advisory Commission

P3 Authority

Central Recovery and 

Reconstruction Office 

(CRRO) Director

Federal Agencies

Strategy Legal Communications, Sector 

Engagements & 

Community Outreach

Transparency, 

Data 

Management 

& Reporting

Grants 

Management 

& Oversight

AAFAF’s Recovery 

Procurement Group

Independence Compliance, 

Ethics & Audits

SCO

PREMA

OMB

The Purpose and Responsibilities of the CRRO – Transparency, Efficiency and Controls

 CRRO was established to promote transparency and efficiency in the disaster recovery process and will:

 Monitor contracting for compliance and effectiveness purposes.

 Implement and enforce checks and balances for procurement and approval of contracts and payments.

 Deploy a proven grant-management software and provide external visibility via frequent status updates 

 Coordinate and channel all efforts and activities of the Government related to recovery efforts.

 Process, finance, and execute works and infrastructure projects related to recovery efforts.

 Managing funds and the recovery process in this fashion will be critical to Puerto Rico’s long term reconstruc

 Third party assistance within the reconstruction process will be optimized by engaging consultants with 

HUD, and other grant programs and a national accounting firm to develop financial controls, policies and 

Key Milestones

 December 6, 2017: P3 Authority Board formalized the creation of the CRRO as a division within the P3 Autho

 Charter Resolutions and proposed organizational structure of the CRRO were approved by the P3 Authori

 Contract support structure and related proposals for implementation of policies and procedures were ap

REBUILDING PUERTO RICO | CRRO AND P3 UPDATE

The Central Recovery and Reconstruction Office will assist in providing over

controls during the rebuilding process
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Puerto Rico’s proven P3 framework will adapt to the current economic and 

circumstances to achieve a real incremental effect on long-term growth

 As proven in different jurisdictions around the world, centralizing implementation of P3 project delivery with

technical, financial, and legal expertise has been beneficial to the delivery and intensifying of P3 projects. Pu

track record in P3s having executed landmark projects such as Toll Roads PR-22 / PR-5 and LMM Internation

 P3 pipeline has been revised to reflect a five-year Fiscal Plan time horizon, leveraging Federal funding and w

P3 Authority is focusing on developing critical infrastructure projects across the Island, modernizing public se

stronger and more resilient infrastructure in close collaboration and partnership with the private sector.

 Recently enacted laws provide for the private sector to submit unsolicited proposals which are private bids f

projects. This process will enable collaboration and partnership with the private sector to accelerate develop

infrastructure and optimization of government operations. Since January 2017, 20 unsolicited proposals, enc

infrastructure sectors, have been received.

 Puerto Rico Revitalization Authority

 CAPEX and infrastructure development will be streamlined by leveraging the capabilities and resour

PRIFA, certain other instrumentalities, and Title V of PROMESA into a new Puerto Rico Revitalization 

GOVERNM

P3 IMPACT AREAS:

ENERGY

PUBLIC SAFETY PORTS & AIRPORTS

SOCIAL IN

MASS TRANSPORTATION

REBUILDING PUERTO RICO | CRRO AND P3 UPDATE
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A path forward with current P3 pipeline

Finalize D&C and begin procurement

 Finalize the D&C and launch RFQ. Q1 

2018.

 Focus on populating the data room 

with as much useful information as 

possible. 

 Initiate financing application with 

Federal Grant Programs. 

 Shortlist to three teams only (this is to 

ensure undivided attention and strong 

competitive tension from bidders). 

 Build flexibility during the RFQ process 

to allow proponents to submit and 

come up with innovative ideas about 

project scope, financing, construction 

innovations, and maximization of 

revenues. 

 Encourage innovation and award 

points for alternative concepts. 

 Provide transparency and comfort to 

bidders. 

Run a flexible RFQ process Build a p

 Assist the 

understan

bidders a

risks. 

 Build a pr

between 

 The collab

will lead t

developm

challenge

Given Puerto Rico’s fiscal and economic conditions, it is expected for projects to carry certain risk premiums and 

However, the market recognizes well-structured projects, critical and transformative projects and has the ability 

solutions to improve the financial profile of projects. 

Despite challenges and adjustments, there is a path forward for P3 projects in Puerto Rico:

Student Life

 Draft RFQ1 Released 10/16/2017

 D&C2 Study to be published by 

January 2018

Maritime Transportation

 Draft RFQ Released 10/16/2017

 D&C Study to be released by 1Q 

2018

Parking 

 Draft RF

 D&C Stu

2018

1 3 2

1Request for Quote is the title for the standard bidding process in which businesses invite suppliers to bid on goods and services. 2Desirability and Continuation (“D&C)” Study performed to see how attractive externalization of public agencies/functions is to the private market.

REBUILDING PUERTO RICO | CRRO AND P3 UPDATE
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PATH TO STRUCTURAL BALANCE

ECONOMIC OUTLOOK | FINANCIAL PROJECTIONS | DEBT SUSTAINABILITY

ECONOMIC AND FINANCIAL CONSIDERATIONS FOR THE FUTURE 
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ECONOMIC OUTLOOK
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Baseline Ec

Economic 

Fundamentals

Base

H

Reven

Expen

Struct

New Eco

Macroeconomic Model Post Hurricanes Irma and Maria

 The Government has developed an economic outlook model with 50 years of historic economic data from Pu

growth, inflation rates, and population growth rates, which in turn are used as the main drivers for financial p

 The model also incorporates U.S. GDP growth, net transfers from the Federal Government, historical 

economy, and world oil prices.

 The methodology used is consistent with that used in IMF macroeconomic projections in the context 

programs.

 In addition, there are four additional key drivers in the economic model that 

have a significant impact to the projections:

1. Hurricane Impact

 The level of hurricane destruction is the variable that is greatly 

influencing economic projections.

2. Disaster Relief Assistance 

 Disaster relief assistance funding (Federal funding and private 

insurance claims proceeds) helps rebuild the Island’s 

infrastructure and businesses and leads to a positive impact on 

economic projections.

3. Revenue and Expense Measures

 Revenue measures improve the tax collection efficiency of the 

Government. 

 Both revenue and expense measures have a negative impact to 

GDP.

4. Structural Reforms

 Improve the business environment and play a complementary 

role in stimulating investment and job creation, the impact of 

the structural reforms is positive.

PATH TO STRUCTURAL BALANCE | ECONOMIC OUTLOOK
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Hurricanes Irma and Maria have significantly altered the economic landscap

Certified Fiscal Plan Dated March 13, 2017

FY18 FY19 FY20 FY21 FY22

New Fiscal Plan

1

CATEGORY

3

4

BASELINE 

REAL GNP 

GROWTH (%)

RECOVERY SPENDING 

($bn’s)

PR 

POPULATION 

GROWTH (%)

2 INFLATION (%)

PATH TO STRUCTURAL BALANCE | ECONOMIC OUTLOOK

2018 2019 2020 2021 2022 FY18 FY19 FY20 FY21 FY22

-3.9 -3.4 -1.4 -1.5 -1.0

1.2 1.0 1.0 1.1 1.3

-0.2 -0.2 -0.2 -0.2 -0.2

-11.2

7.6

2.4 1.8 1.5

2.1 1.6 1.5 1.4 1.4

11.6 10.4 9.9

7.6 6.1

-7.7

-2.0 -3.6 -3.2 -2.9
DRAFT 

TO MA

Negative impact of Hurricanes on economic outlook is mitigated by Federal 

positive impact of Structural Reforms

 Nominal GNP is estimated to fall sharply in FY18 due to the impact caused by Hurricanes Irma and Maria. Dis

rebuilding efforts drive higher nominal growth in subsequent years.

 The key driver to the financial projection is revenue growth, which is estimated for FY18 using the elasticity o

observed during the U.S. Great Recession and is consistent with general fund collections through November.

 Revenues are not anticipated to recover to pre-Hurricanes levels through the projection period: revenues are 

lower than pre-storm levels by FY22, in nominal terms.

PATH TO STRUCTURAL BALANCE | ECONOMIC OUTLOOK

FY18 FY19 FY20 FY21 FY22

NOMINAL 

GNP GROWTH 

(%)

REVENUE GROWTH

(%)

INFLATION

(%)

POPULATION 

GROWTH

(%)

-9.3

9.3

4.0 3.2 3.0

-18.3

9.3 4.0 3.2 3.0

2.1

1.6 1.5 1.4 1.4

-7.7

-2.0 -3.6 -3.2 -2.9
DRAFT 

TO MA

Population Decline

 Population is estimated jointly with GNP. The estimation is anchored on historical data since 1965.

 GNP contraction causes population decline, as people leave the Island due to poor economic conditions. 

 People leave the Island because there are no jobs – jobs do not disappear because people leave.

 The main drivers of long-run population growth are:

 Past GNP growth: When the economy is doing better, people are less likely to leave the Island.

 Past population growth reflects the high persistence of demographic trends.

 The growth of net Federal transfers to Puerto Rico, in real terms: higher transfers from the Federal G

resources for households in Puerto Rico.

 The effects of Maria and Irma are included in the estimation: as expected, the results indicate that ne

increases following a storm.

 Relief spending is incorporated into the model representing increased resources for residents of Pue

 However, these long-run growth factors do not completely capture short-term demographic factors impactin

extraordinary hurricane.

 The New Fiscal Plan adopts demographic projections calculated by Lyman Stone, an expert in demography. T

presented in the First FOMB listening session held on November 16, 2017.1

 A 19.4% cumulative decline in population is expected over five years.

PATH TO STRUCTURAL BALANCE | ECONOMIC OUTLOOK

FY18 FY19 FY20 FY21 FY22 POPULATION 

DECLINE IN 

PUERTO RICO

(%) -3.2% -2.0%

-7.7%

-3.6% -2.9%

1Cresting the Wave: Puerto Rico’s Once and Future Population Decline
DRAFT 

TO MA

FINANCIAL PROJECTIONS
DRAFT 

TO MA

Certified Fiscal Plan

Key Presentation Differences in New Fiscal Plan from Certified Fiscal Plan

201

7

202

2

202

3

202

1

202

0

201

9

201

8

Category

HTA

UPR

Independently 

Forecasted NonEnterprise 

Component Units

Special Revenue 

Funds / 

Enterprise Funds

 Revenues and expenses consolidated into 

Commonwealth plan.

 Capex funded through Commonwealth.

 Implicit deficit impacted cash available for debt 

service.

201

7

202

2

202

3

202

1

202

0

201

9

201

8

Title III Expenses

Reconciliation 

Adjustment

Disaster Relief

New 

 Clawbackable reven

Commonwealth.

 Revenues and expen

 HTA developing inde

 Estimated deficit, inc

expenditures, funde

 Revenues and expenses presented on a gross basis.

 Capex funded through Commonwealth.

 Budgetary appropriation included in GF budget.

 Only budgetary appr

 UPR developing inde

 Presented on a net surplus / (deficit) basis.  Consolidated into Ce

expenses (gross basi

 Typically presented 

separately for comp

 Presented on a net deficit basis.  Consolidated into Ce

expenses (gross basi

 Included in Certified Fiscal Plan to account for 

potential under budgeting.

 Excluded based on a

versus FY14 CAFR.

 N/A.  FEMA funding and F

on a gross basis; cos

 Excluded in fiscal plan Certified Fiscal Plan.  Included in the New 

Pension and 

Paygo

 Pension costs presented in Paygo line item, as a 

portion of direct payroll and through special 

appropriations.

 Pension expense pre

Portion of Paygo Exp

COFINA  Included in “Other SUT,” not general fund.  Included in general f

PATH TO STRUCTURAL BALANCE | FINANCIAL PROJECTIONS
DRAFT 

TO MA

Government Entities and Relation to the New Fiscal Plan

Central

Government

ASEM

GDB1

CCPRC

PRTC

ASES

PRITA

Ports

PBA

ADEA

HTA1

DDEC

AAFAF

UPR1

HFA

SIFC

PRCCDA

Major

Entities Included

in the New Fiscal Plan

1. Central Government Entities

2. Major Component Units

3. Other Component Units and 

agencies

Major

Entities Excluded

from the New Fiscal Plan

Puerto Rico Electric Power 

Authority (PREPA)

The Children’s Trust Fund

P

C

INCLUDED EXCLUDED

1. TSA 2. Major C

Individually Reported – Comprises appr

of Fiscal Plan Cash Flow

Agencies: 

Department of 

Education, 

Department of 

Health, Police, etc.

1 GDB , HTA, and UPR have separate and apart fiscal plans from the Central Government.

PATH TO STRUCTURAL BALANCE | FINANCIAL PROJECTIONS
DRAFT 

TO MA

Hurricanes Irma and Maria temporarily set back Puerto Rico’s fiscal progres

AN UPDATED FINANCIAL PROJECTION IS REQUIRED TO ACCOUNT FOR PUERTO RIC

 Hurricane Maria’s landfall worsened an already fragile infrastructure and econ

 Over the five year period, the Government went from a $3.7bn cash flow surp

Certified Fiscal Plan to a deficit of $3.4bn driven by the hurricane’s impact on t

revenues and need for recovery spending.

 A contributing factor to the situation is general lack of access to traditional cap

rebuilding efforts.

IMPACTS ON REVENUE FROM HURRICANES IRMA AND MARIA DRIVE DEFICITS

 Depressed GNP increases outmigration. Baseline government revenues are ma

and start stabilizing in FY20 – FY22.

 FY18 is the most impacted as the hurricanes immediately disrupt the economy 

disaster relief assistance spend and recovery in revenue lags.

 Prior to implementation of measures, the funding gap for the five year period i

THE GOVERNMENT IS COMMITTED TO CONTINUE IMPLEMENTING TRANSFORMA

 Gross expense and revenue enhancement measures reduce the pre-measures 

 Net measures of $4.3bn help mitigate the gap, offset by proposed tax reform, 

deficit of $3.4bn.

PUERTO RICO WILL NEED A LIQUIDITY FACILITY THROUGH FY21 TO BRIDGE THE G

IRMA AND MARIA

 In addition to disaster relief assistance, Puerto Rico requires external liquidity s

fiscal measures are fully implemented.

 The availability of this funding source is a critical risk to the success of this Fisca

viability of Puerto Rico.

PATH TO STRUCTURAL BALANCE | FINANCIAL PROJECTIONS

FINANCIAL 

PROJECTIONS

1

TEMPORARY 

REVENUE DECLINE

2

FISCAL

MEASURES

3

LIQUIDITY 

SUPPORT

After all Government transformation initiatives and structural reforms are implemented, Puerto Rico will have a 

4

through FY22. As a result, a liquidity facility will be needed to bridge the gap to structural balance. 
DRAFT 

TO MA

REVENUE 

PRE-MEASURES

EXPENSE 

PRE-MEASURES

COMPONENT UNITS1

INCREMENTAL FISCAL 

MEASURES

CASH FLOWS POSTCOST SHARE AND 

TITLE III EXPENSES

OPERATIONAL CASH 

FLOW (PRE-COST 

SHARE AND TITLE III 

EXPENSES)

By FY22 the accumulated deficit is $3.4bn, requiring a liquidity facility to maintain the ability to provide public se

Puerto Rico.

11,726 12,229 12,391 12,387 

FY18 FY19 FY20 FY21 

-12,225 -13,135 -13,293 -13,553 

44

-44 -137 -244 

-37 -66

826 1,557 

-492 -1,016

-214

147 

-938 -1,601

-766 -144

PATH TO STRUCTURAL BALANCE | FINANCIAL PROJECTIONS

1 Component units are legally separate from the Government, but are discretely presented as component units in the Government’s financial stateme

Cash Flows Post Measures, Excluding Debt Service

($mm’s)
DRAFT 

TO MA

Key General Fund Revenue Drivers

 Taxes collected from 

expected to decline 

FY17 to FY18 as a re

Then grow annually 

CAGR of 4.5% throug

INDIVIDUAL + 

CORPORATE INCOME 

TAXES

SALES & USE TAX 

ACT 154 TAX

 In FY18, total SUT is 

10.0% from FY17.

 From FY19 – FY22, g

increase with the no

capture rate of 67.9%

to 0% of the B-to-B S

prepared foods.

 Act 154 revenues in 

15.3% in FY18 with a 

 The impact of the Ta

negative impact of H

chain, accelerates th

related revenues. Th

to FY17 is approxima

2,987 3,226 3,356 3,464 3,568

581

240 129 109 104

PATH TO STRUCTURAL BALANCE | FINANCIAL PROJECTIONS

2,292 2,506 2,606 2,690 2,771

478

213 100 84 81

1,761 1,684 1,552 1,303 1,036 -725

77 -132 -248 -267

DESCRIPTION FY18 FY19 FY20 FY21 FY22

The following General Fund Revenue drivers comprise 60% of total revenue, excluding Federal transfers and re

over the five year projection period.

($mm’s)
DRAFT 

TO MA

Key Expense Drivers 

 Through FY22, basel

expected to increase 

 Department of Educ

approximately 40% a

payroll, respectively

PAYROLL

DIRECT OPERATING 

EXPENSES1

APPROPRIATION TO 

GOVERNMENT 

ENTITIES

 Through FY22, basel

are expected to incr

CAGR of 1.1%.

 Department of Educ

comprise approxima

operational expense

 Formula-based appr

entities are assumed 

projection period. N

are assumed to grow 

 There’s some variab

appropriations, decl

$30mm in FY22.

PATH TO STRUCTURAL BALANCE | FINANCIAL PROJECTIONS

MEDICAID FUNDING

 Federal Medicaid fu

expected to run out 

resulting in $350mm 

cover the loss of Fed

 For FY19 - FY22, the 

cliff is equal to the a

be Federal funding r

insurance premiums 

federal funds from b

$294mm.

-2,843 -2,843 -2,886 -2,926 -2,968 -126

0 -43 -41 -42

-887 -887 -900 -913 -926 -39

0 -13 -13 -13

-2,764 -2,804 -2,814 -2,754 -2,745

20

39 -10 60 9

-350

-1,424 -1,538 -1,660 -1,789

-1,439

1,074 -114 -122 -130

DESCRIPTION FY18 FY19 FY20 FY21 FY22

1 Service payments, professional fees, medicine costs and other expenses that are directly attributable to a 

department. 

($mm’s)
DRAFT 

TO MA

Measures are comprehensive and balanced to avoid further economic dete

will yield net savings of $2.0bn by FY22

NEW GOVERNMENT 

MODEL

PROCUREMENT REFORM

REDUCTION OF 

APPROPRIATIONS

NEW HEALTHCARE 

REFORM

REVENUE MEASURES

PAYMENT 

FOR PAST SERVICES

TOTAL

PATH TO STRUCTURAL BALANCE | FINANCIAL PROJECTIONS

FY18 FY19 FY20 

(1) 296 736 

- 12 33 

- 161 302 

49 199 500 

65 210 265 

113 879 1,836 

- (100) (100) 

- (219) (212) 

(150) (625) (732) 

(150) (945) (1,043) 

(37) (66) 792 

SUBTOTAL

EITC

TAX REFORM

SUBTOTAL

FISCAL MEASURES IMPACT NET OF IMPLEMENTATION CO
DRAFT 

TO MA

Revenues

ACT 154 $1,761 $1,684 $1,552 $

SUT (excl. FAM & CINE) 2,180 2,383 2,478 

Other General Fund Revenue 4,806 5,137 5,305 

Total General Fund Revenues 8,747 9,203 9,335 

Additional SUT (FAM & CINE) 112 123 127 

Other Non-General Fund Revenue 2,867 2,903 2,928 

Total Revenue Excl. Federal Transfers and CU's $11,726 $12,229 $12,391 $1

Expenses

General Fund 8,989 9,087 9,108 

Other Expenses 2,886 2,624 2,647 

Medicaid “Cliff” 350 1,424 1,538 

Total Expenses Excl. Federal Transfers and CU's $12,225 $13,135 $13,293 $1

Central Government Surplus / (Deficit) ($499) ($907) ($902) ($1

Component Units Revenue 4,825 4,949 5,073 

Component Units Expense 4,781 4,992 5,210 

Component Units Surplus / (Deficit) $44 ($44) ($137) ($

Operating Surplus / (Deficit) - Pre Measures ($455) ($950) ($1,040) ($1

Measures Net of Structural Reforms (37) (66) 826 

Operating Surplus / (Deficit) ($492) ($1,016) ($214) 

FEMA Cost-share 327 352 317 

Title III Costs 119 233 236 

Surplus / (Deficit) ($938) ($1,601) ($766) ($

 

Cash Flows Post-Measures, Excluding Debt Service1

PATH TO STRUCTURAL BALANCE | FINANCIAL PROJECTIONS

($mm’s)

FY18 FY19 FY20 F

1 Excluding Federal Transfers

NOTE: In addition to federal disaster relief assistance, the Government will continue investing in the upkeep and maintenance of its infrastructure. Fo

Government will invest approximately $400mm a year in the following categories: (i) $275mm in the Central Government and its CUs; (ii) $85mm in P
DRAFT 

TO MA

DEBT SUSTAINABILITY
DRAFT 

TO MA

Debt Sustainability Overview

The debt sustainability analysis is intended to provide an informative guideline for the long-term financial cap

and to minimize future default risk. Returning to the capital markets will require managing Puerto Rico’s debt 

municipal best practices, including benchmarking its borrowing capacity with the metrics rating agencies utiliz

creditworthiness of U.S. states and territories. 

The objective of the Debt Sustainability Analysis is to provide forward-looking and transparent analy

borrowing capacity to regain and maintain capital market access in compliance with PROMESA requi

This analysis is intended to be “creditor agnostic” and does not take any position on the allocation of 

repayments to any particular constituency.

Borrowing capacity is analyzed using benchmark average U.S. state debt metrics to imply a range of 

capacity.

1

2

3

PATH TO STRUCTURAL BALANCE | DEBT SUSTAINABILITY

Actual Comparables

Benchmark against peers considering the 

appropriateness of the comparison group and 

using multiple metrics to get a full picture of 

where Puerto Rico stands.

Comprehensive debt analysis

Consider the majority of debt outstanding from 

both the primary Government and major 

component units, and discuss the impact of 

other long-term obligations on debt 

affordability.

Projects obligations

Forecasts debt obliga

repay beyond the cu

considering various i

scenarios and lookin

future debt levels.

Produced regularly

Require regular com

which contains a clea

debt capacity.

The Government will adopt the following elements generally regarded as key components of a debt afforda

1 2

4 3
DRAFT 

TO MA

Puerto Rico 30-year economic forecast

Revenues ($MM) Nominal Disposable Personal In

Change in Population (YoY Growth %) Change in Nominal GDP (YoY Gr

The analysis utilizes a 30-year macroeconomic model consistent with the five year fiscal plan. 

PATH TO STRUCTURAL BALANCE | DEBT SUSTAINABILITY

CAGR: 2.0% 

Average : (1.4%)

 Revenues ($mm’s)  Nominal Disposable Person

–

$80,000

$60,000

$40,000

$20,000

$140,000

$120,000

$100,000

FY18FY20FY22FY24FY26FY28FY30

–

$5,000

$25,000

$20,000

$15,000

$10,000

FY18FY20FY22FY24FY26FY28FY30FY32FY34FY36FY38FY40FY42FY44FY46FY48

(10.0%)

(2.0%)

(4.0%)

(6.0%)

(8.0%)

–

FY18FY20FY22FY24FY26FY28FY30FY32FY34FY36FY38FY40FY42FY44FY46FY48

(10.0%)

(5.0%)

–

5.0%

10.0%

FY18FY20FY22FY24FY26FY28FY30
DRAFT 

TO MA

PATH TO STRUCTURAL BALANCE | DEBT SUSTAINABILITY

State Benchmarking

• In considering debt burden, Moody’s focuses on net tax-supported debt (or “NTSD”), defined as debt paya

other general resources, net of obligations that are self-supporting from pledged sources other than state 

(such as utility or local Government revenues).

The following two pages use NTSD metrics to calculate potential debt capacity for Puerto Rico:

I. Debt Service / Revenue 

II. Debt per Capita

III. Debt / State Personal Income

IV. Debt / GDP

Generally included in NTSD 1

 General obligation debt paid from statewide taxes 

and fees.

 Appropriation backed bonds.

 Lease revenue bonds.

 Special tax bonds secured by statewide taxes and 

fees.

 Highway bonds, secured by gas taxes and DMV fees.

 GARVEE bonds.

 Lottery bonds.

 Moral obligation debt paid from statewide taxes 

and fees.

 Capital leases.

 P3's with state concession obligations.

 Pension obligation bonds.

Generally excluded in NTS

 Self-supporting GO deb

of being paid from sou

general revenues.

 Moral obligation debt w

being paid from source

general revenues.

 Tobacco securitization 

 Unemployment insuran

 Debt guaranteed, but n

 Special assessment bon

1Moody’s Investors Services’ U.S. State Government Debt Analysis, May 2017.

The Debt Sustainability Analysis utilizes metrics from the May 2017 Moody’s Investors Services’ U.S. State Govern
DRAFT 

TO MA

$238 $1,473

$3,708

$16,662

–

$8,000

$4,000

$20,000

$16,000

$12,000

Lowest 10

States Average

U.S. Average Highest 10

States Average

Puerto Rico

I. Debt Service to Revenues III. Debt to State Personal Incom

II. Debt Per Capita IV. Debt to GDP

Source: Moody’s Investors Services, U.S. State Government Report (May 3, 2017).

Note: (1) Puerto Rico benchmark metrics per Moody’s. Debt service as % of revenue based on 2015 Own-Source Government Revenues. Personal Income r

(1)

(1)

PATH TO STRUCTURAL BALANCE | DEBT SUSTAINABILITY

U.S. state debt metrics provide a benchmark for potential debt capacity

 Utilizing any of the following rating agency metrics to measure debt burden, Puerto Rico significantly exce

highest states, clearly indicating an unsustainable debt portfolio and insufficient capacity to meet debt ser

maintaining adequate funding for services.

0.9%

4.4%

8.8%

28.1% 

5.0%

0.0%

30.0%

25.0%

20.0%

15.0%

10.0%

Lowest 10

States Average

U.S. Average Highest 10

States Average

Puerto Rico

0.5% 3.0% 

–

80.0%

60.0%

40.0%

20.0%

120.0%

100.0%

Lowest 10

States Average

U.S. Aver

0.5% 2.6% 

–

60.0%

50.0%

40.0%

30.0%

20.0%

10.0%

Lowest 10

States Average

U.S. Avera
DRAFT 

TO MA

Illustrative Implied Debt Capacity Range (Based on Average U.S. State Metri

Implied Debt Capacity Range Based on U.S. State averages ($mm’s) 

 Analysis uses 30-year macro economic forecast to determine a range of debt capacity based on (i) the debt m

state and (ii) the debt metrics of the 10 highest U.S. states.

 Debt capacity ranges shown below are based off of the four methodologies previously described: (i) Debt to 

(iii) Debt to State Personal Income and (iv) Debt to GDP.

 Implied debt capacity and expected growth in debt capacity must be sufficient to cover both restructured de

PATH TO STRUCTURAL BALANCE | DEBT SUSTAINABILITY

–

$5,000

$20,000

$15,000

$10,000
DRAFT 

TO MA

GOVERNMENT TRANSFORMATION

NEW GOVERNMENT MODEL | PROCUREMENT | REDUCTION OF APPROPRIATIONS | HEALTHCARE REFORM | TAX C

ENHANCEMENTS | REGIONALIZATION OF SERVICES | GOVERNMENT PMO AND IMPLEMENTATION STRATEGY

DELIVERING HIGHER QUALITY SERVICES THROUGH AN ENHANCED GOVERNMENT MODEL
DRAFT 

TO MA

Government Transformation and better revenue management is expected t

savings of $3.0bn by FY22

NEW 

GOVERNMENT 

MODEL

PROCUREMENT 

REFORM2

REDUCTION OF 

APPROPRIATIONS

NEW 

HEALTHCARE 

REFORM

TAX 

COMPLIANCE 

AND FEES 

ENHANCEMENT

FISCAL MEASU

FY18 FY19 Objective New Government Initiatives

▪ New Government Model is the blueprint 

for the optimization of government 

agencies and services while improving 

quality of services offered.

▪ Build a centralized, transparent, and efficient 

procurement function that ensures best value 

for money by acting as a single customer, rather 

than separate entities, when buying goods and 

services.

▪ Reduce appropriation levels for UPR and 

Municipalities, while revamping Incentives 

Code, will stimulate the necessary 

adjustments and lower dependency from 

the Central Government.

▪ By streamlining policy and 

institutionalizing controls, healthcare 

expenses will be reduced and benefits 

optimized.

▪ Enforcement of tax compliance measures 

is the main Government lever to 

increasing revenues while not raising 

taxes.

GOVERNMENT TRANSFORMATION

1 All measures reflect gross savings. Estimated total net costs to implement are $132mm over the five year period. 2 .Third party consultants are currently conducting a thorough analysis of all applicable expense categories. Estimated savings will be updated and are antici

334

1

12

0

161

0

49 199

65

210 

TOTAL 115 916 
DRAFT 

TO MA

Levers to drive Government Transformation

Attrition

Voluntary Transition 

Program

Single Employe

Program

Uniform Benefits

The Government aims to achieve savings through reducing expenses by tran

Government operates and increasing revenues while avoiding the impositio

focusing on compliance initiatives

P3’s/Externalization

Real Estate 

Optimization

Modernization 

Government P

Procurement

Enablers to achieve Government Transformation

Shared Services

Current 

State

Executive 

Branch = 115 

Entities

GOVERNMENT TRANSFORMATION
DRAFT 

TO MA

NEW GOVERNMENT MODEL
DRAFT 

TO MA

Recently approved New Government of Puerto Rico Act is an additional veh

enable streamlined legislative approval of the Government’s transformation

Government Model

Evaluation Pro

Act 122 of 2017 – New Government of Puerto Rico Act

Evaluation & Reorganizatio

 The Governor is to evaluate 

of either programs or entiti

 That evaluation is to be pre

Plan to the Legislative Assem

1

Timeline for Legislative Proc

 Upon filing, the Legislative 

either approve or reject th

 If approved, the Legislative 

Concurrent Resolution to t

 If an agreement is not reac

extension is provided.

2

Extension in Legislative Pro

 After the 15 day extension

pass a resolution expressin

of the Reorganization Plan

 If neither chamber express

Concurrent Resolution by t

extension, the Reorganizat

3

 The main issue with the existing executive branch government 

model is decentralization and excessive agencies.

• The existence of 115 entities causes inefficiencies and 

ineffective government.

• Too many departments perform similar or identical 

processes.

• Central oversight is limited.

 As part of the overall Government transformation, Puerto Rico 

plans to address the inefficiencies within the Executive Branch 

through a careful analysis of service offerings that will allow for 

externalizations and consolidations of agencies.

 Specifically, the Government plans to reduce the Executive 

Branch from 115 entities to a maximum of 35.

Amendment to Acts

 Bill to amend organic acts 

 Effectiveness of approved 

temporary until the partic

4

On January 9, 2018, the 

Government announced the 

first five Reorganization Plans

GOVERNMENT TRANSFORMATION | NEW GOVERNMENT MODEL
DRAFT 

TO MA

New Government Model: Summary of Impact

DEPARTMENT OF 

EDUCATION

DEPARTMENT OF 

CORRECTIONS

DEPARTMENT OF 

HEALTH

▪ By undertaking a comprehensive restructuring 

initiative, the Department of Education aims to 

achieve both academic and financial benefits.

TOTAL

▪ Provide the necessary optimization of resources 

while enhancing the quality of rehabilitation to 

the targeted population.

▪ Implement rightsizing recommendations in 

order to provide core services in an efficient and 

fiscally responsible manner.

TRANSFORMATION 

OF ALL OTHER 

AGENCIES

▪ Redesign Government by reducing non-core 

expenses, externalizing services, and centralizing 

services to eliminate duplication.

Rationale Impacted Agencies

125

0

45 

1

51 

0

112

0

333

1

FISCAL MEASU

FY18 FY19 

GOVERNMENT TRANSFORMATION | NEW GOVERNMENT MODEL

1 All measures reflect gross savings. Estimated total net costs to implement are $132mm over the five year period. 

PAYROLL AND 

OPERATING 

EXPENSES FREEZE

▪ In compliance with Act 3 of 2017, a freeze on 

payroll and operational cost increases for fiscal 

years FY18 to FY22 aims to support the overall 

expense reduction efforts.

0 0
DRAFT 

TO MA

Reducing total expense base while improving educational outcomes

SUMMARY OF DEPARTMENT OF EDUCATION TRANSFORMATION PLAN

 Over the past decade, the department has experienced enrollment declines, shifts towards 

private schools and Federal and state revenue declines. 

 An increase in outmigration following Hurricanes Irma and Maria is expected to further impact 

the downward trend in student enrollment.

 Student population is expected to decline by 10% for the upcoming FY18 – FY19 

academic school year.

 Transforming the system from the current Unitary System and shifting towards a Local Education 

Agency (LEA) structure.

 Initiatives are projected to save 11% on today’s spend driven by reducing the size of the system, 

making better use of resources and increasing autonomy of regional leaders.

 Implementation will continue for the upcoming FY18 – FY19 academic school year with full 

transformation by FY22.

 To fully capture academic benefits, a level of re-investment in instructional materials, 

professional development, technology and facility upgrades is being analyzed and may partially 

offset identified savings over the five year period.

DEPARTMENT OF EDUCATION SPEND, $2.5bn per year

$303.4

ANNUAL S

BY FY22

*- Enrolled stud

($mm’s)

2,584 2,584 2,472 2,368 2,318 2,281

FY22 FY21 FY19 FY18 Adj. Budget FY20 FY18

0.0 -112.2 -216.0 -265.9 -303.4

CURRENT 

DI

35 

1,112 

S

346k* 

GOVERNMENT TRANSFORMATION | NEW GOVERNMENT MODEL
DRAFT 

TO MA

Annualized savings of $303mm will be achieved by the transformation of th

system

INITIATIVE RATIONALE 

IMPROVE STUDENT 

TEACHER RATIO

RIGHT-SIZING 

FACILITIES 

OPTIMIZATION

REGIONAL & 

CENTER LEVEL 

STRUCTURE

 Improving the student teacher ratio from an average of 

11:1 to 14:1 by FY22 will align Puerto Rico school system 

with comparable stateside benchmarks.

 Implementing the regional Local Education Agency model 

will decrease district level headcount requirements.

 Realigning Center Level personnel with the new regional 

LEA structure allows for consolidating functions and 

departments.

 Continuing to optimize the school footprint for the FY18-

FY19 academic year will yield both personnel and nonpersonnel savings across the system.

 Building of new facilities will be analyzed to ensure optimal 

footprint.

83.9 19

5.8 2

22.6 9

DEPARTMENT OF EDUCATION TRANSFORMATION LEVERS

FY19 FY

($mm’s)

112.3 30

GOVERNMENT TRANSFORMATION 

TOTAL

| NEW GOVERNMENT MODEL
DRAFT 

TO MA

Transformation of the Department of Correction’s operations will optimize 

resources and improve the quality of service to the targeted population

 Corrections and rehabilitation services in Puerto Rico are segmented into two separate 

budget entities:

1. Department of Corrections and Rehabilitation, which administers all services provided 

to the adult and juvenile corrections population including services provided at 

correctional facilities, and services provided to the population at community 

programs.

2. Correctional Health (“Salud Correccional”), which provides health services to the 

adult imprisoned population.

DEPARTMENT OF CORRECTION AND REHABILITATION SPEND, $438mm per year

 Transformation plan aims to reduce service costs through:

1. The optimization and consolidation of correctional facilities

2. Externalization of imprisonment services

3. Efficient procurement processes

4. Addition of state-of-the-art technology

5. Reduction of central administration and support offices

$13

ANN

BY FY

308 329 359 393 437 438

-130.2 -78.6

FY20 FY22

-109.4

FY21

-1.0 -45.4

FY19 FY18 FY18 Adj. Budget

($mm’s)

SUMMARY OF DEPARTMENT OF CORRECTIONS TRANSFORMATION PLAN

CURRENT S

ADULT 

$95.8 

JUVENIL

$691.4 

COMMUN

$7.0 

# OF CO

2 

GOVERNMENT TRANSFORMATION | NEW GOVERNMENT MODEL
DRAFT 

TO MA

To achieve operational efficiencies and savings, the new operating model w

significant footprint reduction supported by improved technology

INITIATIVE RATIONALE 

OUT OF STATE 

PROGRAM 

CONSOLIDATION OF 

FACILITIES

IMPROVED 

TECHNOLOGY 

CENTRAL 

ADMINISTRATION & 

SERVICE OFFICE 

CENTRAL 

PROCUREMENT 

 Reduce per diem cost through externalization of services to 

approximately 3,200 inmates (30% of imprisoned 

population). 

17.2 4

 Reduce service cost by consolidating existing juvenile 

facilities through the construction of a modern and costefficient social treatment facility.

 Reduce in per diem cost by consolidation of regional 

contact offices, reduction of transportation costs, and 

modern document management technology.

 Reduce office space and equipment expenditures and 

increase efficiency of human resources management 

through improved technology.

 Savings achieved through implementation of new 

procurement operating model, modern strategic sourcing 

practices, and enabling the use of technology through the 

entire procurement life-cycle.

0.0 1

4.9 6

0.4 

11.1 2

11.8 3

PERSONNEL 

OPTIMIZATION

 Normal attrition, voluntary transition program, and uniform 

medical benefits impact will benefit the Department of 

Correction’s transformation.

DEPARTMENT OF CORRECTIONS TRANSFORMATION LEVERS

FY19 FY

45.4 13

TOTAL

GOVERNMENT TRANSFORMATION 

($mm’s)

| NEW GOVERNMENT MODEL
DRAFT 

TO MA

Maintain high quality of public health services while achieving efficiencies i

for the Health Department

SUMMARY OF DEPARTMENT OF HEALTH TRANSFORMATION PLAN

 The Department of Health (“DOH”) is highly fragmented, consisting of three public corporations, 64 federally 

public hospitals, seven sub-secretaries, six regional offices, eight program offices with decentralized human r

administration and finance functions. As a result, there's a need for organizational controls, an implementatio

a centralization of functions in order to provide public health services to citizens in an efficient and fiscally re

DEPARTMENT OF HEALTH SPEND, $1.3bn per year

$85

ANNU

BY FY

1,329 1,329 1,278 1,263 1,252 1,243

FY18 Adj. Budget FY21 FY18 FY19 FY22 FY20

0.0 -51.4 -66.3 -76.9 -85.9

($mm’s)

CURREN

REGIO

ASEM & 

6

 Medicaid has 85 offices across 78 municipalities that can be consolidated and established in 

strategic locations. Online services will be encouraged to improve eligibility data management and 

track trends. 

 ASEM is a public corporation created to serve as a central procurement office for Government 

hospitals to create economies of scale for medical supplies, devices and services. Over time, rates, 

salaries and services have increased above industry averages, causing a disproportionate decentralization of procurement processes across the hospitals it serves. ASEM also has an ER, ORs 

and a level three trauma center. Demand for services is high, but they still have a need for 

Government subsidy due to higher operating costs than private sector.

 Centralization of Chief Business Office and management of ASEM and the DOH Government 

hospitals will provide structure, efficiency and effectiveness while increasing revenue and 

eliminating duplicative efforts that cause redundancies and inappropriate staffing.

 Having a strong leadership and organizational structure, controls, an efficient workforce and the 

necessary technology are the baseline for the effective implementation of healthcare reforms and 

the new healthcare model.

GOVERNMENT TRANSFORMATION | NEW GOVERNMENT MODEL
DRAFT 

TO MA

INITIATIVE RATIONALE 

PERSONNEL 

OPTIMIZATION & 

CENTRALIZATION

REGIONAL OFFICES

RESTRUCTURING

ASEM/RCM

47.9 7

▪ Implement right-sizing and centralization of functions 

recommendations in order to provide public health services 

to citizens in an efficient and fiscally responsible manner.

▪ Reduction and centralization of Medicaid offices and regional 

hospital office structure to eliminate duplication of effort and 

redundancies and implement an appropriate staffing model.

▪ Right-sizing initiatives focused on revenue optimization, 

organizational design, consolidation of Chief Business Office 

and management of ASEM and DOH public hospitals.

0.5 0

3.0 1

Centralization and consolidation initiatives are expected to yield a savings o

FY22

FY19 FY

DEPARTMENT OF HEALTH TRANSFORMATION LEVERS

($mm’s)

51.4 8

TOTAL

▪ Normal attrition, voluntary transition program, and uniform 

medical benefits impact will benefit the Department of 

Health’s transformation.

GOVERNMENT TRANSFORMATION | NEW GOVERNMENT MODEL
DRAFT 

TO MA

Transformation of all other agencies by consolidation or externalization of f

services

SUMMARY OF 105 AGENCIES TRANSFORMATION PLAN

 A portion of the Executive Branch includes 105 agencies which provide services at a cost of 

$11.3bn annually. 

 In order to achieve an agile, and efficient Government, the Government is performing reviews of 

agency programs and services to determine the optimal right sizing actions. 

ALL OTHER AGENCIES SPEND, $11.3bn per year

 A careful analysis of service offerings and Government programs will allow for externalizations 

and consolidations of agency functions or programs to achieve cost savings and improve the 

quality of services offered. 

 The Government has enacted various laws (i.e. Act 122 of 2017) to assist in the implementation 

of the New Government Model. Personnel related savings would be facilitated by the Single 

Employer Program, Voluntary Transition Program, and Uniform Medical Benefits initiatives. 

 Individual implementation plans will be prepared and actively monitored during the 

implementation phase to ensure cost savings targets are met.

$5

ANN

BY F

11,315 11,315 11,190 10,957 10,848 10,761

FY18 Budget FY18 FY19 FY21 FY22 FY20

0.0 -124.7 -358.2 467.1 -554.0

($mm’s)

CURRE

4

1 Includes 

GOVERNMENT TRANSFORMATION | NEW GOVERNMENT MODEL
DRAFT 

TO MA

Savings from personnel measures and improved delivery of Government se

expected to yield gross savings of $554mm by FY22

INITIATIVE RATIONALE 

PERSONNEL 

OPTIMIZATION

UNIFORM 

HEALTHCARE 

INSURANCE

 Drive higher attrition rates via Single Employer Program 

and Voluntary Transition Program available to employees 

when centralizing/externalizing services.

62.2 26

 Align healthcare insurance benefits to promote uniformity 

and payroll consistency across agencies. 

58.9 5

ALL OTHER AGENCIES TRANSFORMATION LEVERS 

FY19 FY

EXTERNALIZATION

CONSOLIDATION

 Transfer services from the Government to outside entities 

(including not-for-profits) that have proven experience in 

order to reduce expenses, mobilize resources to areas of 

need and improve quality of services.

0.0 4

 Focus on achieving economies of scale through the 

elimination of duplicate and unnecessary services and 

maximizing shared service structures to reduce overhead 

costs and improve internal service levels.

3.7 2

($mm’s)

124.7 55

GOVERNMENT TRANSFORMATION 

TOTAL

| NEW GOVERNMENT MODEL
DRAFT 

TO MA

By digitizing processes that will enable organizational changes, the Governm

delivery of services and achieve operational savings

 The foundation for the Government’s socioeconomic development model is based on science, technology a

the creation of the Puerto Rico Innovation and Technology Service (PRITS).

 PRITS’s mission is to enable the transformation of Puerto Rico through innovation, technology, and a collab

challenges that will result in new knowledge and real impact.

Digital Transformation Objectives

Innovation

Plan

Technology 

Infrastructure

Dashboard

Proactive

Institute

Provide real-

measure per

recognizing d

Improve stra

making with 

predictive m

Present a comprehensive strategic and tactical 

innovation plan for Puerto Rico that addresses shortterm initiatives and outlines a long-term vision.

Design and build a resilient, cutting-edge technical 

infrastructure as a basic building block to support Puerto 

Rico's innovation agenda and technology development.

2018 

Q1 Q2 Q3 Q4

Digital DMV 

(CESCO)

Single Citizen 

Identity

Integrated, real time 

fine payments

Car license renewal 

notifications

License 

renewals

Car permits 

renewals

Single Sign-on

Digital Signatures

Demographic Registry

Timeline of Digital Transformation Initiatives

GOVERNMENT TRANSFORMATION | NEW GOVERNMENT MODEL
DRAFT 

TO MA

 Lack of occupancy planning strategies, deferred maintenance, and fragmented ownership have resulted in a 

owned real estate portfolio spread among a large number of public entities. 

 To date, with very few exceptions, the Government lacks a clear understanding of the number, type, location

the real estate assets it owns.

 Strategy follows a five-step process:

Real Estate optimization and modernization strategy

Inventory Assessment Legal Rehabilitation

Perform cost 

improvements 

where necessary 

and justified.

Perform necessary 

surveys, title 

searches, reviews on 

property registry 

issues, property 

demarcation and 

cure title 

deficiencies.

Perform 

assessments to 

understand legal 

status, conditions 

need/cost of 

improvements and 

best optimal use.

Create real estate 

owned (REO) 

inventory by entity 

prioritizing the 

identification of 

vacant and unused 

properties.

Structural Implementa

GOVERNMENT TRANSFORMATION 

Steps and Progress:

| NEW GOVERNMENT MODEL
DRAFT 

TO MA

PROCUREMENT
DRAFT 

TO MA

Government Procurement Reform will create a centralized operating model 

technology, transparency and efficiency that translates to substantial cost s

 Procurement reform aims to transform Puerto Rico’s inefficient and ineffective decentralized procurement sy

 The objective is to build a centralized, transparent, and efficient procurement function that ensures the Gove

customer, rather than separate entities, when purchasing goods and services.

PROCUREMENT SAVINGS, $43mm by FY22

$42

ANNU

IN FY

 The three main components of reform are: 1) new operating model, 2) spend management and 3) strategic 

technology. 

 The new centralized operating model will make the procurement function more efficient and effective by lev

power of the Central Government and improving policies to ensure greater compliance with Government-wi

 Spending levels will be adjusted by implementing modern strategic sourcing and category management pract

analytics capabilities that provide visibility to sourcing spend. A spend analysis is currently being performed 

targets. 

 Investing in innovative technological capabilities will enable procurement processes across the entire procure

facilitate the execution of a centralized procurement organization.

GOVERNMENT TRANSFORMATION | PROCUREMENT

43 43 33

12

0

FY21 FY22 FY19 FY20 FY18

($mm’s)

SUMMARY OF PROCUREMENT REFORM INITIATIVES

Current procurement related savings reflects a review of only 40% of Puerto Rico’s addressable spend. Third 

currently conducting a thorough analysis of all applicable expense categories. Estimated savings will be updat

be higher than current estimates. 
DRAFT 

TO MA

Procurement Function 

Review Spend Analysis

Prioritize 

Execution

Identify Savings

Leverage 

Experience with 

GPR

Define 

Operating 

Model

Quick Hits Sourcing 

Drive Near

Identify low 

complexity 

categories

-

Term

Savings

Operating Model 

Development Data Collection and Analysis Strategic Sourcing Exec

Define Category 

Spend

Define Leading 

Practices

SDeliver Early 

Results

Assessment & Design Sourcing Executio

1.a 1.b 2 

10 Weeks 10-18 Weeks E

Dec 2017-Feb 2018 Feb 2018-Jun 2018 J

The execution approach will help the Government build the organizational c

needed to reform while realizing short and long-term savings

Support Data Gathering Develop/Deploy PeopleSoft Solutio

4

4

GOVERNMENT TRANSFORMATION | PROCUREMENT
DRAFT 

TO MA

REDUCTION OF APPROPRIATIONS
DRAFT 

TO MA

Reduction of Government Appropriations

REDUCTION OF UPR 

APPROPRIATIONS

REDUCTION OF 

MUNICIPAL 

APPROPRIATIONS

Appropriation

631 590 504 433 410

-41.3 -127.3 -198.3 -221.3

220

165

110

55

0

-54.7 -109.7 -164.7 -219.7

$2

ANN

BY F

$2

ANN

BY F

Initiative

FY18 FY19 FY20 FY21 FY22

 The transformation of the UPR is focused on obtaining new revenue sources, modernizing, and optimizing its c

campuses, and revamping its academic programs, all of which will result in a reduction on Central Government 

the University into a more competitive and modern higher education system. 

 The reduction in direct payments to municipalities could be offset by a modernized tax regime that will focus o

improved property tax collections, cost savings, and regionalization of services that will provide cost efficiencie

GOVERNMENT TRANSFORMATION | REDUCTION OF APPROPRIATIONS

($mm’s)

FY18 FY19 FY20 FY21 FY22

REVAMPING OF 

INCENTIVES CODE

263

198 198 198 198

-65.0 -65.0 -65.0 -65.0

 A detailed analysis of the cost-benefit of the economic incentives offered by the Government to diverse indust

yielded savings of $35mm per year (already incorporated in the New Fiscal Plan baseline). As part of the New In

additional $65mm in savings will be generated by eliminating incentives that have a negative ROI. 

$6

ANN

BY F

FY18 FY19 FY20 FY21 FY22
DRAFT 

TO MA

HEALTHCARE REFORM
DRAFT 

TO MA

Establish a comprehensive healthcare model to drive efficiency and quality 

 The Puerto Rico Health Insurance Administration’s (ASES, for its acronym in Spanish) is a public 

corporation whose core function is to manage the healthcare services for the Medicaid (federal and 

Commonwealth) and CHIP-eligible populations in Puerto Rico under the health plan MI Salud.

 ASES faces many challenges, such as: chronic underfunding, low capitated rates and payments for 

providers, high outmigration impacting provider-patient ratios, rapidly changing demographics, 

increased prevalence of chronic diseases, and an increasing demand for specialty drugs. 

 The new healthcare model will provide adequate and accessible healthcare in the face of federal 

funding disparity. It will incorporate actuarial data with updated demographics, expense control 

measures, and data management to reduce pressure on the system. 

 Fraud, waste, and abuse programs are mostly delegated to MCOs, limiting information sharing and 

hindering trend development capabilities to identify cases. A Medicaid Fraud Control Unit (MFCU) will 

be established by the local DoJ in conjunction with the US Health and Human Services Office of 

Inspector General to investigate and prosecute providers and patients that misuse Medicaid funds.

 The Medicaid Management Information System (MMIS) implementation will be key for data mining, 

identifying population health trends, and modifying benefits packages aligned with identified 

beneficiary needs.

HEALTHCARE SPEND, $2.8bn per year

$79

ANNU

BY FY

GOVERNMENT TRANSFORMATION | HEALTHCARE REFORM

2,801 2,752 2,602 2,301 2,051 2,006

FY18 FY22 FY19 FY18 Adj. Budget FY20 FY21

-49.0 -199.0 -500.0 -750.0 -795.0

SUMMARY OF HEALTH REFORM MEASURES

CURRENT 

ME

91% 

9 

REIM

78% 

GENER

90% 

($mm’s)

* Aggregate ta

** Based on an 

Medicare fee s
DRAFT 

TO MA

Expand current 

regional 

structure to a 

Single Region

GOVERNMENT TRANSFORMATION | HEALTHCARE REFORM

Optimize, standardize, and modernize the current healthcare system in Pue

Implemen

Medica

Managem

Informat

System 

(MMIS

Promote 

competition among 

MCOs for market 

share offerings

Allow Patient Choice 

by letting members 

choose their MCO 

based on quality, 

network, and 

benefits offered

Establish limits to 

benefits according to 

the actual needs of 

the beneficiaries and 

in alignment with 

market trends

Improved negotiations with stakeholders: 

 Negotiate pharmacy costs based on new formularies, mandatory generics dispensing and population need

 Establish Preferred Provider Specialty Hospitals with capitated payment agreements.

Optimization of programs:

 Establish programs with focused on care coordination for beneficiaries with chronic conditions.

 Implement incentives for preventive care, healthy habits, and to promote higher quality of services.

 Establish centers of excellence for special conditions with a limited beneficiary volume, but at a high treatm

efficiencies and lower costs, such as pharmacy benefits (i.e., Department of Health HIV Program).

Establish a robust infrastructure and monitoring to support information exchange:

 Establish a population health and integrated health program.

 Implement patient accountability and responsibility measures.

 Establish a referral system across health systems.

 Implement value-based payments and unformed fee schedules.

Develop and implement an education program for providers, payors, and beneficiaries.

Key Pillars:

Other Key Initiatives:
DRAFT 

TO MA

Fiscal measures from improving efficiencies, adjusting benefits, and develo

healthcare model are expected to save $795mm by FY22

INITIATIVE RATIONALE 

PAY FOR VALUE

 Establish uniform fee schedules, standardize 

reimbursement rates for providers and a high Medical Loss 

Ratio (MLR).

91.0

REDUCE DRUG 

COSTS

 Reduce drug spending by enforcing mandatory dispensing 

of generic drugs, updating the preferred formulary and 

establishing shared-savings initiatives.

41.0

MODIFY BENEFITS 

PACKAGE

 Evaluate services that could be capped from the current 

benefit package without adversely affecting access for MI 

Salud beneficiaries.

45.0

NEW HEALTHCARE 

MODEL

 Develop a new healthcare model in which the Government 

pays for basic, less costly benefits and the patient pays for 

premium services selected resulting in cost reductions 

attributed to greater competition along with the capped 

PMPM amount.

0.0 7

GOVERNMENT TRANSFORMATION | HEALTHCARE REFORM

FY19 FY

IMPROVE 

PAYMENT 

INTEGRITY

 Establish partnerships to increase scrutiny of premium 

payments for beneficiaries that have left the system or have 

another primary health insurance. Establish MFCU to reduce 

waste, fraud and abuse. Implement MMIS for claim data 

mining and population health trending.

22.0

199.0 7

HEALTHCARE REFORM TRANSFORMATION LEVERS 

TOTAL

($mm’s)

2
DRAFT 

TO MA

TAX COMPLIANCE AND FEE ENHANCEM
DRAFT 

TO MA

TAX COMPLIANCE AND FEES ENHANCEMENT SAVINGS, $415mm by FY22

SUMMARY OF TAX COMPLIANCE AND FEES ENHANCEMENT

$41

ANNU

BY FY

 For years, the tax system has been impacted by high rates of non-compliance. Hacienda’s tax collection cent

technology and analytical tools and data that hinder its ability to detect tax evaders.

 The Government has identified revenue enhancement reforms to increase tax revenues by broadening the t

compliance with existing tax laws, and optimize specific tax rates and fees.

 Transforming the collection of taxes and improving technology will enhance compliance of 

existing tax laws for all businesses and individuals in Puerto Rico.

 It is important to note that the revenue enhancement measures projections are subject to 

material changes that may be required as a result of the Tax Cuts and Jobs Act of 2017 and its 

impact on Puerto Rico.

 As part of the local corporate tax reform, the Government will need to consider the following:

 Account for the corporate tax rate and GILTI rules of the Tax Cuts and Jobs Act of 2017.

 Provide certainty to Controlled Foreign Corporations operating in Puerto Rico.

 Promote economic development and growth.

65

210 298 366 415

FY20 FY18 FY19 FY22 FY21

GOVERNMENT TRANSFORMATION | TAX COMPLIANCE AND FEE ENHANCEMENTS

Total savings from FY18 baseline by year

($mm’s)

Increased tax compliance and collections reduce leakage through advanced 

TAX 

FEE E

ADDT
DRAFT 

TO MA

Improving collections and reevaluating fees will broaden the tax base to he

revenues by $415mm through FY22

INITIATIVE RATIONALE

TAX COMPLIANCE

ADJUST TAXES AND 

FEES

Increase tax compliance and collections by:

 Transitioning to an integrated tax 

administration software (“Unified Internal 

Revenue System”) 

 Working smatter on tax debt collection through 

advance analytics and providing more flexible 

payment plan rules

 Promoting voluntary compliance program

 Establish an electronic record for certain SUT 

Credits and point of sale monitoring

 Increase collection of SUT on internet sales

Maintain fees including licenses, traffic fines, and 

other charges for services to maintain market 

trends.

GOVERNMENT TRANSFORMATION | TAX COMPLIANCE AND FEE ENHANCEMENTS

TAX COMPLIANCE AND FEES ENHANCEMENT

SUB-INTITIATIVE

Fiscal terminal 

Internet Sales Tax 

Correspondent audits 

Installment Agreements 

Large taxpayer cases 

Call Center 

Credit bureaus 

Electronic Filing of Tax Liens 

Transition to GenTax 

Subtotal 

Tobacco products excise 

Gaming tax 

Licenses and other fees 

Medical marijuana 

Subtotal 

($mm’s)

TOTAL
DRAFT 

TO MA

REGIONALIZATION OF SERVICES
DRAFT 

TO MA

 The Government is proposing a strategy that will allow municipalities to achieve efficiencies to establish the p

autonomy.

 The strategy focuses on transitioning towards a “county structure” where counties take a prominent role in t

services currently performed by the Central Government or at the municipal level. 

 A guiding principle is that all counties have to be fiscally independent and self-sufficient, without the need fo

the Central Government. 

 There is an overlap between the services offered by the Central Government and most municipalities. Implem

approach at the county level will provide better management and utilization of services by reducing redunda

Regionalization of services will help municipalities achieve economies of sca

alleviate negative impact in revenues due to reduction of subsidies and the 

Roadmap to County System Transformation

Set County Structure Identify Revenue 

Sources

Establish Governance 

Structure

1 2 3

Identify composition of 

counties and shared 

services approach

Create a structure 

where municipalities 

and counties are 

fiscally independent

Design model for 

autonomous counties

GOVERNMENT TRANSFORMATION | REGIONALIZATION OF SERVICES
DRAFT 

TO MA

The shared services approach will generate efficiencies by consolidation of 

Composition

 Municipal distribution is based on two main criteria: total population and urban-rural areas.

 In order to have a balanced distribution between these two factors, four possible county-like structures hav

Shared Services Approach

 There are five services that are crucial to have in each county:

 These services are mainly rendered by the Central Government but there is overlap with some municipalities

 One of the main challenges of any Government is striking a balance between offering high quality services a

approach has the potential to mitigate cost by decentralizing many of the services provided by the Central G

their quality.

 Other administrative functions (i.e. HR, Finance, etc.) will be evaluated to be included in shared services mod

 Counties could be funded by modifying the property tax system that currently appraises property taxes at 

an updated property appraisal system.

 Re-appraise property values at current market rates by phasing in re-appraisals of property over a pe

 Register previously unregistered properties to capture property taxes from non-compliant properties

 Identify and re-categorize properties that are misclassified (e.g. commercial properties incorrectly cla

GOVERNMENT TRANSFORMATION | REGIONALIZATION OF SERVICES

Public Safety Family Services Education Hou
DRAFT 

TO MA

GOVERNMENT PMO AND 

IMPLEMENTATION STRATEGY
DRAFT 

TO MA

Developing a centrally run PMO is an important step toward ensuring the implementation and tracking of t

transformation and right sizing measures that will achieve savings targets under the New Fiscal Plan.

Introduction to implementation

Historically, the Government has suffered from inconsistent execution, due in part to not having a defined, cent

structure. It has historically operated in silos, suffered staffing and coordination challenges, and has been limited 

report and keep track of expenses. In order to mitigate implementation risk, an enhanced and centralized PMO s

Accountability Efficiency Reliability

 The Agency PMOs are generally led by designated Agency Heads and report directly 

 Agency PMOs undertake the required work to implement initiatives. 

 The daily activities of PMOs are managed and undertaken by staff knowledgeable in 

matter areas, and assigned members meet regularly with PMO leadership to report 

necessary decision-making.

 Agency PMOs will be responsible for assembling a taskforce to:

 Complete validation and definition of full scope of projects and priorities.

 Finalize reporting tools and tracking responsibilities.

 Perform ongoing weekly tracking and reporting.

 The GFEWG is the central PMO with defined reporting to the Governor of all econo

measures.

 The GFEWG, comprised of senior leadership, oversees Agency PMOs and reports di

 The GFEWG has already been established and is in operations. 

Governor’s Fiscal 

and Economic 

Working Group 

(GFEWG)

Agency Program 

Management 

Offices (PMOs)

GOVERNMENT TRANSFORMATION | GOVERNMENT PMO AND IMPLEMENTATION STRATEGY

Individual Agency PMOs will be established with direct reporting to the GFEWG. Each Agency Head will be r

and implementing a PMO structure that best fits their respective agency. Through this PMO structure, the G

to effectively manage and implement the Plan.
DRAFT 

TO MA

 The GFEWG will have oversight over the implementation of all fiscal and economic measures. Members repre

and economic leaders with statutory authority under their enabling acts to implement fiscal reforms. The GFE

authority within their respective agencies, but the GFEWG is chaired and led by the Governor’s Representativ

amongst parties, the Governor’s Representative is responsible for deciding the course of action or escalating 

appropriate.

 The GFEWG will coordinate with stakeholders such as the Governor’s Office personnel and other Governmen

implement fiscal and economic policy as appropriate. 

 GFEWG Charter Members:

 Governor’s Representative (Chair)

 Executive Director of AAFAF

 Hacienda Secretary

 Economic Development Secretary

 Labor Secretary

 Executive Director of OMB

 P3 Authority Executive Director

 Governor’s Infrastructure Advisor

 No new legislation is required for enabling the GFEWG.

Project Management Office of all Government projects

GOVERNOR 

Governor’s Fiscal and 

Economic Working 

Group (GFEWG)

PMOs PMOs 

Accountability Efficiency Reliability

Mission Statement: To recommend and manage the implementation of the Fiscal and Economic Policy of the 

certified fiscal plans, the recovery plans, and public policy established by the Executive & Legislative branche

GOVERNMENT TRANSFORMATION | GOVERNMENT PMO AND IMPLEMENTATION STRATEGY
DRAFT 

TO MA

STRUCTURAL REFORMS

STRUCTURAL REFORMS | INTEGRATED FINANCIAL MANAGEMENT

A FOCUS ON PUERTO RICO’S STRENGTHS AND CORE COMPETENCIES
DRAFT 

TO MA

Structural reforms drive economic growth, but the impact is felt over the lo

The current crisis creates momentum to implementing a comprehensive structural reforms package to attra

investment and achieve strong, sustainable and balanced economic growth.

Supply

Energy 

Reform

New Government

Model

MODERNIZATION, COMPETITIVENESS

& GROWTH

Demand Destination 

Marketing Organization

Partnering with 

the Federal Government

Private 

Labor Reform

Permitting 

Process Reform

Infrastructure 

Reform

Public Private 

Partnerships

Critical 

Projects

Enterprise 

Puerto Rico

Incentives

Code

Regulatory 

Reform

Digital Service 

Reform

Welfare 

Reform Workforce 

Reform

Transparency & 

Statistics Reform 

STRUCTURAL REFORMS
DRAFT 

TO MA

Gove

Ease of Doing Business

Regulatory Reform

Utility Reform

New Gov

Digital Se

Energy Reform

 Reduce unnecessary regulatory burdens 

to reduce the drag of government on the 

private sector.

 Consolidate all public service & utility 

regulatory agencies into one.

 Deregulation of land freights to help 

reduce the price of consumer goods and 

improve carriers/shippers service.

 Deregulation of occupational licensing to 

reduce unnecessary hurdles for 

individuals entering the labor market. 

 Modify the condominium law to 

accelerate decision-making.

 Establis

agile go

growth 

 Consoli

of econ

Govern

 Leverage and facilitate expedited private 

sector investments in a modern, costefficient, and environmentally compliant 

energy infrastructure; reform PREPA 

operations and services to clients; and 

allow for greater competition in energy 

generation.

 Maximiz

streamlin

 Moderni

leveragin

a public -

Tax Reform and Incentives Code

 Tax Reform will provide the necessary 

modifications to help counteract the Tax 

Cuts and Jobs Act. 

 The new Incentives Code will rationalize 

all economic development incentives, 

exemptions, subsidies, grants, and 

credits, based on the ROI to Puerto Rico.

 The Code will conform to the Tax Cuts 

and Jobs Act to protect and enhance 

Puerto Rico’s competitiveness. 

 The Code will establish a new digital and 

transparent process for the application, 

award, and compliance of all incentives. 

The new structural reforms package seeks to complement and extend the st

that have already been implemented to drive private sector investment and 

 Focus the Workforce Innovation and 

Opportunities Act (WIOA) incentives to 

develop high-priority sectors and 

capabilities.

 Implement a Local EITC program to drive 

integration into the formal economy.

 Update the welfare structure to protect 

vulnerable segments while promoting 

self-sustainability.

Welfare Reform

Workforce Reform

Transpar

 Approv

Admini

docume

Human Capital

F

Executive 

 Provide 

in Feder

implem

PROME

Force R

STRUCTURAL REFORMS
DRAFT 

TO MA

STRUCTURAL REFORMS

The Tax Cut and Jobs Act and the impact of the Hurricanes accelerate the ne

comprehensive tax reform that will spur economic development, lower cost 

and make Puerto Rico more competitive

-100

-273 -284 

-50

-188 -196 

INITIATIVE RATIONALE FY18

-79 -165 

0

FY19 FY20 

INDIVIDUAL 

INCOME TAX

 A reduction in individual income 

tax rates will result in a maximum 

tax rate lower than 30%.

REGULAR 

CORPORATE 

INCOME TAX

SALES & USE TAX 

(“IVU”) B-TO-B

 A reduction in corporate income 

tax rates will result in a maximum 

tax rate lower than 30%.

 A reduction in Sales & Use Tax Bto-B from 4.0%, to 2.0% in FY19 

and 0% in FY20.

REDUCE TAX RATE 

TO PREPARED 

FOODS -85 -87 

0

TOTAL TAX 

REFORM -150

-625 -732 

 A reduction in prepared food tax 

from 10.5%, to 6.0% in FY19.
DRAFT 

TO MA

The new Incentives Code seeks to revamp the way in which all economic inc

reviewed, approved and managed

The Incentives Code will be more a coherent and consistent law that covers all of the promoted activities, see

investment, and establishes new processes and controls. 

Export Manufacturing “Visitors 

Economy”

Creative 

Industries

Finance, 

Investments & 

Insurance

Infrastructure 

Subsections & Categories

Incentives Code

The Incentive Code seeks to encourage activities that 

produce a positive ROI for Puerto Rico

• Reform based on economic/financial guiding principles

• Change in public policy - redirected towards activities. 

that encourage competitiveness, export & investment. 

• New agile paradigm that provides support for the 

continuous improvement of the development strategy.

• Ability to identify emerging risks and opportunities.

Strengthen compliance and control of incentives

• Simplify the annual reporting process for beneficiaries 

while at the same time strengthening its audit.

• Clear, rational and objective penalty process with welldefined triggers.

• Participation of the private sector (CPAs, tax 

professionals, lawyers, etc.) to facilitate the compliance 

verification process.

100% fiscal transpar

for all the economic 

• Publish on a recurr

incentives offered 

• Reporting informat

to constantly impro

that incentives are 

impact for Puerto R

Establish an easy an

incentives

• Single designated o

process.

• Standardized incen

• Clear and easy com

(integrated single d

1 2

4 3

STRUCTURAL REFORMS
DRAFT 

TO MA

Ease of Doing Business Reforms

THE INCENTIVES CODE WILL HELP ATTRACT NEW COMPANIES TO PUERTO RICO

 Over 50 incentives laws are being consolidated with a fiscal cost of over $450mm in cash and equiv

 Incentives for activities high in exports and private capital investment, including the visitor econom

 The Incentives Code will require a uniform, digital, and transparent process for the application, aw

economic incentives and will continuously adapt to the ever-changing competitive environment.

DEREGULATION OF ON-ISLAND FREIGHTS

 The benefits of deregulation can help reduce price of consumer goods, improve carriers/shippers se

holding and maintaining inventory and drive business competition.

THE REGULATORY REFORM WILL SIMPLIFY THE PROCESS OF BUSINESS FORMATION

 Consolidate all public service & utility regulatory agencies including the Telecommunications Regu

Commission, and the Public Service Commission into one.

 Adoption of a sharing economy friendly policy in Puerto Rico.

MODIFY CONDOMINIUM LAW TO ACCELERATE DECISION MAKING

 Current statute discourages decision making and investment in real property. Currently, in order to 

it requires unanimous approval by all title owners in the condominium.

 Promote development of rental residents investment to increase population density.

OCCUPATIONAL LICENSING REFORM

 Excessive licensing can impose costs and place unnecessary hurdles for individuals entering the labo

Conducting a review and reform of occupational licensing requirements will provide PR with a more 

market and promote entrepreneurship. 

STRUCTURAL REFORMS

THE TAX REFORM WILL PROVIDE THE NECESSARY MODIFICATIONS TO COUNTERACT THE FEDERAL T

 The Tax Reform will conform to the Tax Cuts and Jobs Act to protect and enhance Puerto Rico’s co

 The new code will lower corporate marginal tax rates and broaden the tax base by closing loophol

code to achieve gains in collections, compliance and operational efficiency.

 The reform will provide a revenue-neutral transition from the Act 154 excise tax.
DRAFT 

TO MA

The Transformation Plan is Intended to Provide a Roadmap for a Transformed Energy Sector f

Provides Puerto Rico with a 21st century energy sector that serves as an engine of economic gro

environment.

Builds energy infrastructure that recognizes the need for a transformed and resilient system, w

projected decrease in demand.

Achieves low-cost and reliable energy.

Provides sustainable structural and financial models for energy on the Island.

Leverages available federal funding for disaster recovery.

Increases generation from renewable energy.

Provides platform for the implementation of innovative technology to drive efficiencies and im

through operational excellence.

Provides, as applicable, professional and independent governance.

Relies on a robust and transparent regulatory framework to regulate private and monopoly com

sector, promote private investment, and implement and manage efficient rate designs and effe

STRUCTURAL REFORMS

Energy Reform
DRAFT 

TO MA

STRUCTURAL REFORMS

Human Capital Reforms

WELFARE REFORM WILL PROVIDE INCENTIVES TO ENCOURAGE LABOR PARTICIPATION

 The EITC program will drive economic integration.

 Parameters will be calibrated to the Puerto Rican condition (demographic factors, labor conditions, 

resources).

 The Local EITC could be modified to be complement any future Federal EITC expand in Puerto Rico (

the District of Columbia).

 Digitalization of benefit application and eligibility reviews, consolidation of processing centers, and p

reduce costs associated across all agencies with welfare benefit programs.

WORKFORCE REFORM WILL PRODUCE MORE JOBS FOR KEY INDUSTRIES THAT ARE POISED FOR GR

 Update the Workforce Innovation and Opportunity Act (WIOA) State Plan to focus the programs and 

sectors and capabilities such as aerospace, software development, and creative services, among oth

 Integrate the WIOA program with the broader promotional efforts of the Department of Economic 

Partnering with the Federal Government

PARTNERING WITH THE FEDERAL GOVERNMENT FOR EQUAL TREATMENT FOR PUERTO RICO

 Provide equal treatment to Puerto Rico in Federal funding and programs and implement the recomm

Congressional Bi-Partisan Task Force Report – Puerto Rico has been unequally treated for tax purpose

 Census Bureau - eliminate the EEI filing requirement for shipments to/from Puerto Rico and the main

 Federal Contracting Center - channel a greater percentage of the Federal procurement budget to com

services from Puerto Rico.

 US Digital Service - detail top Federal employees to the PRITS to collaborate on joint projects.

 Federal funding parity - Disaster Recovery, EITC, Child Tax Credit, Supplemental SS, Medicare & Medi

 Employment Based (EB) visas - stimulate the Immigrant Investor (EB5) program and carve out an Exc

program quota for new jobs created in Puerto Rico.

 Trade and transportation regulations - incentivize the creation of an Air Cargo Hub and an In-transit 
DRAFT 

TO MA

STRUCTURAL REFORMS

Government Transformation Reforms

THE NEW GOVERNMENT MODEL THROUGH THE MODERNIZATION AND SIMPLIFICATION OF PUBLI

 Modernize agency operations and services to residents and simplify programs, services and process

modernize their operations to improve efficiency and service delivery while maximizing the positive 

 The Puerto Rico Information Technology Service (PRITS) was created in January 2017.

 The Chief Innovation Officer will be in charge of implementing new efficient technologies while the 

will ensure the efficient transmission of information across digital venues. 

 The Reform will institutionalize the PRITS and empower it with the authority and resources to be s

THE DIGITAL SERVICES REFORM WILL MAXIMIZE THE USE OF TECHNOLOGY TO STREAMLINE ALL C

THE TRANSPARENCY REFORM WILL INSTILL GREATER INVESTOR CONFIDENCE

 Consolidate and externalize the production of economic statistics to the Federal Government, consist

recommendations of the PROMESA Congressional Bi-Partisan Task Force.

REIMAGINING PROPERTY REGISTRATION 

 Modernize property and title registration by leveraging the use of technology to provide streamlin

through a pubic private partnership.
DRAFT 

TO MA

STRUCTURAL REFORMS

Destination Marketing Organization (DMO) - Timeline

 Incorporation of Invest Puerto Rico with the Puerto Rico State Department. 

 Designation of the members of the Board.

 Approval by the Board of Invest Puerto Rico Corporate By-Laws.

 Creation of the following Committees of the Board: (i) Executive Committee; 

(ii) Audit Committee; and (iii) Ethics Committee.

 Election of certain officers of Invest Puerto Rico.

 Finalize organizational structure of Invest Puerto Rico

 Approval by the Board of the Collaboration Agreeme

 Approval by the Board of the Fiscal Sponsorship Agre

Achievements:

2/2017 

Appointment of 

Board of Directors

Selection of 

Executive Search 

Firm 

First Official Meeting 

of Board of Directors

Bill Approval

Hurricanes 

Irma & Maria

Selection of 

Executive 

Director

Initial funding 

transfer to IPR

3/2017 

Board of Directors 

Established

Design 

Marketing P

Contract Executive 

Search Firm 

First Official 

Meeting of 

Board of 

Directors

Bill Approval

Hurricanes 

Irma & Maria

"Onboarding" 

CEO

Initial funding 

transfer to DMO

 Incorporation of DMO with the Puerto Rico State Department. 

 Designation of the members of the Board.

 Approval by the Board of DMO Corporate By-Laws.

 Contract executive search firm.

 Contract Project Manager to established DMO. 

 Operating Funds Transfer from CTPR to DMO.

Achievements:

Con

DDE

Exe

Contract 

CTPR/DMO

Executed

C

Staffing DMO 

Sales, marketing 

and promotion 

personnel

Invest PR (IPR) - Timeline
DRAFT 

TO MA

INTEGRATED FINANCIAL MANAGEMEN
DRAFT 

TO MA

Integrated financial management function proposed mission and critical ob

CRITICAL OBJECTIVES

CONTROLS &

ACCOUNTABILITY

RISK

MANAGEMENT

FISCAL

RESPONSIBILITY

COMPLIANCE & 

TRANSPARENCY

 Standardize and implement accounting processes.

 Establish and enforce disbursement priorities.

 Steer the island-wide implementation of financial and accounting systems.

 Produce the required reports and help monitor fiscal plan implementation, right-sizing

 Conduct litigation risk assessment.

 Perform receipts seasonality management.

 Enact measures implementation forecasting and impact analysis.

 Manage centralized insurance procurement and policy management.

 Enforce and manage a consolidated treasury for the Government.

 Protect and enhance collections and revenue streams.

 Estimate revenues and exercise budget oversight.

 Establish effective expense controls and oversee the implementation of the procureme

 Reinforce timeline to release pending audited financial statements.

 Establish a new process to assure timely release of audited financials for FY18 onwards

 Drive the comprehensive upgrade and standardization of accounting and IT systems ac

 Produce and publish comprehensive fiscal plan implementation results and establish 

financial reporting in coordination with AAFAF and the FOMB.

Puerto Rico’s integrated financial management function will protect fiscal responsibility, promote long-term 

STRUCTURAL REFORMS | INTEGRATED FINANCIAL MANAGEMENT

and ensure responsible resource allocation in accordance to the Fiscal Plan and the annual budget.
DRAFT 

TO MA

Implementing an integrated financial management function is a key compo

transparency 

GOVERNOR

OFFICE OF THE

CHIEF FINANCIAL OFFICER (based 

at Hacienda)

Fiscal Agent & Debt Management Grants 

FISCAL AGENCY AND FINANCIAL 

ADVISORY AUTHORITY

CENTRAL 

RECONSTR

Accounting & Financial Reporting

Current Situation – Puerto Rico’s financial management functions are currently dispersed across various special

fragmented at the agency level.

Proposed Solution – Consolidate most central financial management functions and agency financial operations 

uniformity and accountability. 

P3 A

Project Formu

Ma

Budget & Financial Planning Fiscal Plan Implementation, 

Compliance and Oversight

P3 

Financial Controls &

Centralized Treasury Interfac

Financial IT Systems

Insurance & Risk Management Capital Expe

Fiscal Plan Reporting

*To be named PR Revitalization Authority once reorganization plan is implemented.

Liaison with FOMB

STRUCTURAL REFORMS | INTEGRATED FINANCIAL MANAGEMENT
DRAFT 

TO MA

The implementation of these immediate work streams will require greater c

and drive the integration of resources into Government

CAFR & REPORTING TO FOMB B

CENTRALIZED TREASURY & 

LIQUIDITY MANAGEMENT

FINANCIAL IT SYSTEMS 

INTEGRATION

 Establish a clear timeline to 

the publishing of the FY2015, 

FY2016, and FY2017 CAFRs 

and manage it to completion 

as soon as possible

 Implement a new process for 

the publishing of the FY18 

and subsequent CAFRs 

within the established 

regulatory timeframes

 Support the ongoing 

reporting to the FOMB and 

improve the process and 

quality of the data provided

 Drive the strategic public 

disclosure of financial 

information to rehabilitate 

PR as a viable capital 

markets participant

 Upgrade, rationalize, and 

integrate the central 

government’s financial IT 

systems

 Establish and enforce 

consistent accounting 

policies and procedures 

across all entities in an effort 

to implement modifiedaccrual basis

 Leverage new forecasting, esettlement, and analytics 

capabilities to support all 

OCFO functions

 

 

 

 Consolidate visibility and 

control of all Government 

bank accounts, including CU 

accounts at private banks

 Rationalize bank account 

portfolio and optimize cash 

pooling and treasury 

operations 

 Implement uniform accounts 

payable and disbursement 

prioritization policies, 

processes and reports

 Implement uniform time & 

attendance processes and 

payroll controls & reporting

STRUCTURAL REFORMS | INTEGRATED FINANCIAL MANAGEMENT
DRAFT 

TO MA

June 2016 Draft FS 

Financial Reporting Status Status Completion 

% Target Date 

1 Calculation of Lottery Revenues 75% Dec-17 

2 Fund Balance (Equity) Presentation & Compliance Assessments 50% Jan-18 

3 Calculation of Payroll & Related Expenses 25% Jan-18 

4 Valuation of Capital Assets & Leases 50% Jan-18 

5 Calculation of Pension and Retirement Liabilities 25% Jan-18 

6 Calculation of Expenses and Payables 25% Feb-18 

7 Journal Entries Creation & Finalization 50% Feb-18 

8 Bank Reconciliations and Timing of Cash Movement Assessment 25% Feb-18 

9 Calculation of Revenues and Accounts Receivable 25% Feb-18 

10 Debt and Obligation Balance & Compliance Assessments 50% Feb-18 

11 Review of Component Entities as Reporting Units 50% Feb-18 

12 Budget to Actual Comparison 25% Feb-18 

13 Finalization of Draft Financial Statements & Footnotes 0% Feb-18 

Audited Financials Timeline Update

 

 

An entirely new process will be implemented for the FY18 audited financial statements. This process 

will commence before the end of the current fiscal year and will leverage monthly closings and other 

interim steps and information requests. 

Financial Reporting Update

 The pre-audited financials are currently being finalized for FY16 and FY17. 

 Key deliverables are: 1) Bank Reconciliations, 2) Financial Statement Analyses, and 3) Draft Financial Statem

 Target Dates of final packages are:

 FY16 – February 2018

 FY17 – April 2018

Audited Financial Statements Timeline

 Two separate teams from KPMG will work on the FY16 and FY17 audits concurrently. 

 A two month turnaround from KPMG is planned once they receive the final draft financials. 

 Based on the progress of the FY16 and FY17 financials, the audited financial statements are on track to be f

2018.

STRUCTURAL REFORMS | INTEGRATED FINANCIAL MANAGEMENT