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Puerto Rico’s financial oversight board told the bankrupt island’s governor on Monday to revise his proposed fiscal turnaround plan to add more detail on labor and other reforms, and to create room in the budget for a $1.3 billion emergency fund, Reuters reported. In a letter to Governor Ricardo Rosselló, the federally appointed, seven-member panel set a Feb. 12 deadline for the new draft, which will chart Puerto Rico’s plan to regain economic stability. Rosselló’s draft turnaround plan, submitted on Jan. 24, projected a $3.4 billion budget gap that would bar the island from repaying a penny of its debt until 2022. While the plan included subsidy cuts to cities and towns and the streamlining of public agencies, the board, which must approve the plan, demanded more details in yesterday’s eight-page letter. The board wants an emergency reserve of $650 million in the next five years and $1.3 billion within 10 years, “based on best practices for states and territories regularly impacted by storms,” it said. Read more. 

In related news, Puerto Rico’s governor said that his administration will unveil a broad education reform bill on Tuesday aimed at incorporating school vouchers and charter schools into the bankrupt U.S. territory’s education system, Reuters reported. Speaking in a televised address on Monday, Governor Ricardo Rosselló also said that every public school teacher in Puerto Rico would receive a $1,500 annual salary increase beginning next school year. It was unclear whether the pay bump would require legislation. The governor’s remarks came 10 days after the island’s education secretary, Julia Keleher, said she planned to decentralize Puerto Rico’s education department and introduce “autonomous schools.” Public school reform is a touchy issue in the U.S. territory, where teachers make an average of about $27,000 a year. Its public school system, organized as a single, island-wide district, is among the weakest in the United States and long plagued by bloated administrative spending. In some age groups, less than 10 percent of students meet federal testing standards. Read more. 

Dozens of entrepreneurs, made newly wealthy by blockchain and cryptocurrencies, are heading en masse to Puerto Rico this winter, the New York Times reported. They are selling their homes and cars in California and establishing residency on the Caribbean island in hopes of avoiding what they see as onerous state and federal taxes on their growing fortunes, some of which now reach into the billions of dollars. They want to build a crypto utopia, a new city where the money is virtual and the contracts are all public, to show the rest of the world what a crypto future could look like. Blockchain, a digital ledger that forms the basis of virtual currencies, has the potential to reinvent society — and the "Puertopians" want to prove it. For more than a year, the entrepreneurs had been searching for the best location. After Hurricane Maria decimated Puerto Rico’s infrastructure in September and the price of cryptocurrencies began to soar, they saw an opportunity and felt a sense of urgency.

Puerto Rico’s bankrupt power utility, PREPA, is close to replacing former Executive Director Ricardo Ramos, a member of the utility’s board said yesterday during a panel discussion on the U.S. territory’s storm-ravaged energy sector, Reuters reported. PREPA’s governing board is vetting several potential hires referred by a consultant tapped to help the utility find its new leader, board member Nisha Desai said, calling the decision critical to PREPA’s recovery from September’s Hurricane Maria. Ramos resigned as executive director of the Puerto Rico Electric Power Authority in mid-November amid federal and state investigations into contracts awarded to restore power, after Maria decimated Puerto Rico’s electric grid, cutting power to all 3.4 million U.S. citizens. Nearly 30 percent of customers still lacked power as of Wednesday, more than four months after the storm, according to a report from the U.S. Department of Energy.

Governor Ricardo Rossello said yesterday that assets of the Puerto Rico Electric Power Authority (PREPA), the largest U.S. public power provider, could reap as much as $4 billion, Bloomberg News reported. The governor is seeking to place the bankrupt utility into private hands. He’s heard from some “people” that such a move could garner $2 billion to $4 billion, although those figures aren’t an asking price or an official valuation, Rossello said yesterday. The governor announced this month his plan to privatize PREPA after Hurricane Maria slammed into the island in September and destroyed its power grid. About 500,000 customers are still without electricity and the system is generating at 81 percent of its capacity, as of Tuesday. Rossello announced yesterday that a working group that will collaborate with Puerto Rico’s federal oversight board on PREPA’s privatization.

A U.S. federal judge yesterday dismissed a lawsuit by some of Puerto Rico’s bondholders, who had argued that the U.S. territory broke the law by defaulting on constitutionally-guaranteed debt despite having the money to make payments, Reuters reported. Judge Laura Taylor Swain, who is overseeing Puerto Rico’s bankruptcy, did not address the merits of the bondholders’ claims, concluding that she lacked jurisdiction over some of them, and that others were not fit to be ruled on. The dismissal is a setback to owners of roughly $18 billion in general obligation (GO) bonds guaranteed by Puerto Rico’s constitution and taxing power. A win would have helped establish the top priority of GO debt relative to other credits in Puerto Rico, a central question as warring creditor classes litigate competing claims to the island’s limited funding streams. Puerto Rico has $120 billion in combined bond and pension debt, and its finances are under the oversight of a federally-appointed board. GO bondholders have accused the oversight board and the Puerto Rican government of unlawfully steering revenues away from them.

Puerto Rico’s government unveiled a fiscal plan yesterday under which the commonwealth would only be able to support $2.5 billion to $14 billion of debt in the long term, a fraction of its current level, the Washington Post reported. The plan suggests that holders of its bonds might receive as little as a nickel on the dollar. Under the Puerto Rican government’s fiscal plan, the territory would pay nothing in debt service over the next five years. The plan assumes that the federal government will provide $35.3 billion in federal disaster assistance linked to Hurricane Maria, which devastated the island. That figure is one third of what Puerto Rican Gov. Ricardo Rosselló recently requested, but still more than Congress is likely to provide. The fiscal plan is subject to approval by the oversight board that Congress established when it passed the Puerto Rico Oversight, Management, and Economic Stability Act. And it would require the approval of U.S. District Judge Laura Taylor Swain, who is overseeing the bankruptcy of the commonwealth, which sought court protection to restructure its more than $70 billion in debts. Read more.

Faced with worker shortages, employers are trying to lure Puerto Rico residents to the mainland with the promise of jobs for many on the island devastated by Hurricane Maria, the Wall Street Journal reported. The Department of Corrections in South Carolina began billboard advertisements in Puerto Rico to hire correctional officers, noting “Relocation Assistance Available.” The department has more than 650 such openings. Director Bryan Stirling is hoping to lure candidates with the promise of decent pay — $35,000 a year, plus overtime — and benefits. Bayada Home Health Care, which struggles to fill in-home care positions in 22 states, also set its sights on the island, which has a bounty of health care workers and an economy reeling from recession. With the U.S. unemployment rate at a 17-year low of 4.1 percent, employers are straining to hire everyone from carpenters to engineers. But in Puerto Rico, where the unemployment rate is 10.8 percent, many businesses remain closed due to lack of electricity or have trimmed workforces because of depleted demand. Read more. (Subscription required.)