The Teachers Mutiny

T’was the week before Christmas and…

“…we had a coup d’état,” in the words of Jaime.

Who should know, being a lawyer and an astute observer. So what happened? Well, the governor of the island called a special session of the legislature to pass a “reform” of the teachers’ retirement system, which currently has almost 40,000 pensioners. This follows a move in April to reform the government workers retirement system, which caused protests across the island.

It’s not the chickens but rather the eagles come home to roost; since 1952, governments have had two or three essential strategies to reduce unemployment. The first was legitimate—manufacturing, especially pharmaceuticals. That Valium you mother chugged down to tide her through your terrible twos? Thanks, Puerto Rico!

The other modes were a little less kosher….

“He shipped ‘em all off to New York!” sputtered Mr. Fernández, when someone suggested that Luis Muñoz Marín—a close relative of the devil, in the eyes of Mr. Fernández—had reduced unemployment.

The other solution? Put everybody on the government payroll, give them one task to do, and pay them substantially less than the private sector. So you had an enormous government; if memory serves... well wait. Here’s a graphic:

So everybody knew for years that we were heading for disaster. And thus the last governor passed legislation that slashed 30,000 government jobs. Last April, the present governor took the machete to the government retirement system and raised taxes. And now, it’s the teachers’ turn.

There are two reasons for this. First, the system is broke; here’s what the president of the Senate, Eduardo Bhatia, had to say:

To have a retirement system you have to square the end of the month and it is broken. For every dollar you have to give a person who retires today there are 17 cents in the piggy bank. The question is where the other 83 cents go, and that is the decision we have to make as a country. Are there additional 83 cents in the General Fund? No, not there,’ said the Senate leader.

Put it another way—the norm is to have a plan 80% funded, we are only at 17%.

The other factor at play? A little company called Moody’s, which has our credit rating one notch above junk, and is watching Puerto Rico closely.

Well, “watching” may be generous. Moody’s, in fact, has Puerto Rico quite securely by part of a gentleman’s most prized anatomical possessions. And Cate Long, writing for Reuters states it openly: she wrote, “Moody’s identified this reform as one of the factors that will compose its review of Puerto Rico.”

So what happened? The governor sent legislation to one of the two teachers’ unions on the island, and they erupted. And as you can see in the video below, they not only protested but broke the doors to the Senate and charged in. So soon, the entire island was glued to their televisions, watching as hundreds of chanting teachers gathered in the capitol.

Damage? $55,000. One part of which may have been a senator’s chair, on which, according to The New Day, a child was permitted or possibly urged to urinate. Oh, and a security official got bitten, though the attacker didn’t draw blood.

And what did the Senate do? Well, they got the hell out of Dodge City, which in this case meant retreating into an adjacent room, the Hall for Illustrious Ladies. They continued the debate until seven PM, when they adjourned.

To make a sorry situation worse, the teachers do not receive Social Security, and so their pension is the only thing they have.

The reaction from the guv? He came out and called it “reproachable,” which seems a bit mild, given the damage done and the precedent it sets.

You can argue—the teachers should have seen it coming; it was clear that the system was unsustainable. It’s also true that we have a very expensive government, and that our legislators make a killing, both when they’re in office and when they come back as “advisers.” Nor does it help that—according to Mr. Fernández—the Department of Education has the highest proportion of non-docent versus docent personnel in the country.

The saddest thing? According to an analysis by Joanisabel González in the print edition of El Nuevo Día, “Lo increíble es que Puerto Rico entrará en esta nueva parte del ciclo sin garantías de que escapará a la degradación crediticia”.

Simple translation! Even if we do this—and the House has in the last hour just passed the legislation—it may not be enough.