Inquiry comes as Puerto Rico moves ahead with new charter school solicitations for the 2027-2028 academic year.
The Financial Oversight and Management Board has launched a detailed inquiry into Puerto Rico’s Public Alliance School program after discovering a $13.1 million funding shortfall tied to charter school expenditures for fiscal year 2027, even though related contracts had already received government approval.
In an Oct. 14 letter to Orlando Rivera Berríos, director of the Office of Management and Budget (OMB), and Eliezer Ramos Parés, secretary of the Department of Education (PRDE), the board requested extensive information about the financial controls used to evaluate and approve Public Alliance School commitments and the process governing future expansion of the program.
The request comes as Puerto Rico continues to expand its charter school model, known locally as Escuelas Públicas Alianza (EPAs). According to PRDE’s 2026 Strategic Plan, the number of alliance schools grew to 21 during the 2025-2026 academic year, up from just three in 2020-2021. For the current school year, the department authorized five additional alliance schools, four of which have already begun operations. The program was created by law in 2018.
While these schools are managed by third parties, such as non-profit groups, they receive state funding based on their enrollment and are subject to the same PRDE evaluation and accountability standards as other public schools.
The Oversight Board said that between June and July 2026, PRDE submitted two proposed charter agreements and 18 amendments to existing agreements for review, representing 20 transactions worth a combined $43.7 million. During the board’s contract review process, PRDE disclosed an estimated funding shortfall of $13.09 million for charter school expenditures in fiscal year 2027 and said it was working with OMB to address the gap.
The disclosure raised red flags because the contracts had already been approved through OMB’s authorization process. Under existing procedures, agencies seeking contract approval must certify that sufficient funds are available and that no budget overruns are anticipated.
“As such, the 20 EPA Charter Agreement-related transactions had already undergone OMB’s fiscal review and authorization process before being submitted to the Oversight Board,” the board wrote. Nevertheless, PRDE later reported the multimillion-dollar shortfall during the board’s review.
The Oversight Board ultimately approved the transactions on Aug. 14, but imposed conditions requiring PRDE and OMB to identify the funding needed to cover final charter school costs for the 2026-2027 school year and submit a budget reprogramming request by Nov. 30.
The board said the issue extends beyond those contracts and points to a broader need for stronger fiscal oversight of recurring alliance school obligations.
The board also identified additional alliance school contracts registered with the Office of the Comptroller that had been approved by OMB and PRDE but were not submitted for Oversight Board review because they fell below the threshold established under the board’s contract review policy.
According to the letter, the existence of both reviewed and non-reviewed alliance school agreements highlights the need for consistent fiscal controls regardless of whether a contract requires prior Oversight Board approval.
The inquiry comes as PRDE continues pursuing further expansion of the program. The department currently has an active solicitation seeking applicants interested in establishing additional alliance schools for the 2027-2028 academic year.
The Oversight Board argued that opening new solicitations carries foreseeable long-term financial consequences because authorization of a new alliance school can create operating and funding commitments lasting multiple years.
“The fiscal impact of any proposed expansion, including the availability and sustainability of the funding necessary to support it, should therefore be evaluated before PRDE opens a solicitation or otherwise advances the authorization of additional EPA,” the board said.
The board indicated that OMB should become involved in evaluating the affordability and sustainability of expansion plans before new solicitations are launched and should strengthen its contract review process to ensure charter agreements are not approved without identified funding sources.
As part of its request, the Oversight Board directed OMB and PRDE to provide detailed information by Nov. 30 regarding every alliance school operating or authorized since fiscal year 2026, including enrollment, budgets, expenditures, funding sources, projected deficits and contract documentation. The agencies must also provide information about future expansion plans, explain how financial reviews are conducted before new schools are authorized, and submit an action plan to address the current funding shortfall and improve oversight going forward.
The inquiry signals heightened scrutiny of one of Puerto Rico’s fastest-growing education initiatives and raises questions about whether financial controls have kept pace with the rapid expansion of the charter school system. While the Oversight Board did not oppose the alliance school model itself, its letter underscores concerns that future growth should be supported by sustainable and verifiable funding before additional long-term commitments are made.
