Financial Exigency Procedures

Prologue: Facing Exigency

(Also see TBR policy at http://www.tbr.state.tn.us/policies/default.aspx?id=1492&terms=financial+exigency)

It is not easy for the administration and faculty of an institution of higher education to consider a time when lack of financial resources would require not only the cutting away of programs but the layoff of some of the faculty members which the university community has worked so diligently to recruit and has added to its ranks with great pride. A university is composed of people. Its lifeblood is the interaction of people (administrators, faculty, students, and support personnel) over a period of time. To plan for the removal of valued programs and bright, capable people for purely financial reasons is an odious task at best.

Nevertheless, the times require that a plan for facing financial exigency be available should it ever become necessary that such a state be declared at Tennessee Technological University, Cookeville, Tennessee. While it is hoped that the plan contained in the following pages will never have to be implemented, it is obvious that facing the traumatic decisions necessary in a time of financial exigency without a plan would be disastrous to all segments of the university community.

When following detailed guidelines and implementing procedures specified in a master plan, it is easy to lose sight of the spirit and intent behind the details, guidelines, and procedures. If the plan for financial exigency outlined in these pages should ever have to be implemented, it must be remembered that its spirit and intent are to maintain the dynamic quality of Tennessee Technological University, which is generated through the diversity and quality of its programs and faculty. The mission of the University is to maintain in all circumstances excellence in teaching, research, and service. While all parts of the institution work together to fulfill this mission, no part of it can be accomplished without capable faculty and the programs which they represent. The purpose of the plan presented here then is not to retain jobs in the face of financial exigency, but rather to preserve the energy, viability, and strength of the University. To this end, it is the intent of the plan to preserve as many of the programs and faculty of the University as possible in even the most dire financial circumstances. (It is recognized that there are other groups on the Tennessee Technological University campus (specifically non-faculty) whose existence both in number and quality are vital to accomplishment of the goals of the institution. The plan presented here does not specifically address their needs or circumstances in a declared state of financial exigency because these are governed by existing university policies and procedures dealing with reduction in force which are included in the Personnel and Payroll section of the Administrative Policies and Procedure manual.)

Those faced with the implementation of financial exigency decisions will be faced with certain moral obligations and responsibilities For example, the spirit and intent of affirmative action should ever be present in their minds as they wrestle with decisions of program terminations and faculty layoffs. They will also need to remember that such concepts as faculty retraining cannot be viable concepts unless the University maintains its capacity to provide retraining programs. It is imperative that offices and programs essential to this function not be terminated in retrenchment or exigency proceedings. Having articulated these thoughts and concerns m s, the following plan for alleviating circumstances of financial exigency is presented.

  1. Introduction
    1.1 Averting Exigency
    The procedures of this document are to be implemented only as a last alternative to balance the budget of the University. Every effort shall be made to maintain the University's solvency by such means as (a) seeking new sources of income, (b) maintaining an optimum and enrollment of students, (c) developing ways to increase the flexibility of faculty to fulfill essential teaching and research opportunities (through provision of faculty retraining programs and other development activities), and (d) implementing retrenchment plans which do not directly influence the educational mission of the University.
    1.2 Retrenchment
    Retrenchment efforts shall be defined as all cost-cutting measures prior to and other than the abrogation of continuing faculty contracts. The President has the authority to effect a wide range of retrenchment actions without explicit authorization by the Board of Regents. The two principal exceptions are the discontinuation of an academic program and the layoff of tenured faculty members before the end of their appointment term as specified in the Universities tenure policies. Methods of retrenchment which would affect academic programs shall be considered through the normal channels of faculty consultation. Such alternatives might include (a) general salary freezes or reductions, (b) teaching overloads without additional pay, (c) elimination of released time, (d) reduction or elimination of faculty support services, (e) development or research leaves without pay, (f) voluntary retirement, etc.
    1.3 Communication
    The existence of adverse financial conditions and the need for retrenchment planning shall be communicated early to all faculty so that an atmosphere of cooperative and shared decision making may be established. The University Assembly shall be regularly involved in retrenchment efforts. Such involvement of faculty will establish credibility for any later declaration of a state of financial exigency.
  2. Authority
    In the event of financial exigency, the President as authorized by the Board of Regents may lay off a tenured faculty member or a probationary faculty member prior to the end of his or her term of appointment. Such layoffs may be made only in accord with the provisions of this plan and those of the Faculty Handbook. Faculty rights, as described in this document shall be guaranteed.
  3. Financial Exigency
    3.1 Definition
    Financial exigency shall be defined as an imminent financial crisis which threatens the survival of the institution as a whole, and which cannot be alleviated by means less drastic than the termination of an appointment with continuous tenure, or of a probationary or special appointment before the end of the specified term. (AAUP definition [See AAUP Red book, 1977 ed., p. 17] Neither the AAUP statement nor court decisions appear to interpret exigency as meaning bankruptcy or financial ruin. General agreement prevails that financial exigency should be declared as a last resort following a series of alternative actions designed to bring the institution's budget into balance.)
    3.2 Conditions
    Exigency should not be declared until all cost-cutting procedures (except those which would endanger the safety, health, and welfare of the university community) have been implemented to a point beyond which further reductions would seriously impair the central mission of the university.
  4. Layoff and Termination
    For the purposes of this document, "termination" refers to the elimination of a specific position or the discontinuation of a program. “Layoff” refers to the indefinite suspension of a faculty member's employment by Tennessee Technological University. A laid-off faculty member retains the rights specified in Section 12.
  5. Identification of a State of Financial Exigency
    5.1 Responsibility
    The primary responsibility for identification of a condition of financial exigency rests with the President. On the basis of information provided by the administrative staff and after consultation with appropriate committees of the University Assembly, the President shall recommend to the Board of Regents that they declare a state of financial exigency.
    5.2 Communication
    The President shall communicate to the faculty a summary of the reasons and evidence supporting the declaration of a state of financial exigency once that declaration has been made by the Board of Regents.
  6. Committee on Financial Exigency
    6.1 Creation
    Once the Board has declared a state of financial exigency, a committee shall be formed to make recommendations to the President concerning reductions in programs and personnel which will alleviate the financial emergency.
    6.2 Composition
    The Committee on Financial Exigency shall include the following persons:
    The Provost
    The Executive Assistant to the President for Planning and Administrative Services
    The President of the Faculty Senate
    The President of the Associated Student Body
    One Administrator appointment by the President
    One representative of the Alumni Association appointed by that organization's Executive Committee.
    Seven representatives elected from among the tenured faculty as follows: one from the Sciences and Mathematics Departments of the College of Arts & Sciences, one from the Humanities and Social Sciences Departments of the College of Arts & Sciences, one from each of the Professional Colleges (Agriculture & Human Ecology, Business Administration, Education, and Engineering), and one from the Independent Programs (Crafts, Military Science, and Nursing) and the Library.
    The Vice President for Business and Fiscal Affairs shall serve as an ex officio, non-voting member.
    6.3 Responsibilities
    The committee shall review documentation evaluating institutional priorities, administrative organization, academic priorities and programs in order to identify colleges, schools departments or program areas in which reductions will be made. (Such documentation will normally include departmental and college budget requests, formal program reviews, and any additional evaluative materials which may be available or reasonably collected. It is an on-going responsibility of the institution to engage in program evaluation in all areas and at all levels.) Primary responsibilities of the committee shall be to determine the magnitude of cuts which are needed and to assure that factors prescribed by applicable state or federal laws regarding fair employment practices are upheld. The recommendations for program reductions shall be communicated to the President who will then instruct the deans as to his decisions for program reduction.
    6.4 Individual Designations
    Deans and supervisors, in consultation with department heads and faculty, shall select the means for implementing recommended cuts in programs and/or personnel or otherwise respond to the President's instructions. Specific implementation plans with data indicating the appropriateness of such choices or other response shall be returned to the committee for review. The recommendations of specific individuals to be laid off shall normally follow seniority, as provided in Section 6.5, unless a clear and convincing case is made that program needs dictate other considerations. A faculty member with tenure will not be laid off in favor of a faculty member without tenure except in extraordinary circumstances. Other factors to be considered in layoff decisions include the effectiveness of those programs whose continuation is determined to be essential, the institution's continuing capability to meet its goals, undue effect on the institution's affirmative action plan, and the performance of individual faculty members.
    6.5 Seniority
    Seniority shall be first established by academic rank and then with academic rank according to total years of service in the institution.
    6.6 Implementation
    The financial Exigency Committee shall prepare a list of recommended reductions in programs and personnel along with all pertinent documentation. Every effort should be made to avoid a program discontinuance in the midst of an academic year. The Financial Exigency Committee shall forward its recommendations to the President.
    The President shall prepare recommendations for the Board of Regents. The President shall communicate program discontinuations to all faculty affected.
  7. Notification of Layoff
    Each faculty member selected for layoff shall receive prompt written notification from the President. This statement of notification shall be sent by registered mail and shall include:
    1. A statement of the basis on which the individual was selected for layoff (if on the basis of seniority, the criterion used and the data supporting the choice; if on another basis, the data and reasons supporting that choice);
    2. A statement of the date on which the layoff is to be effective (consistent with the provisions of Section 8); and
    3. A copy of the President's formal statement of financial exigency as defined in Section 52, a copy of the Financial Exigency Plan, and such other information as the President shall deem appropriate.
  8. Notification Period
    8.1 Non-tenured Faculty with More than Two Years of Service and Tenured Faculty
    Non-tenured faculty in their third year of service or beyond and tenured faculty shall be given notice of their intended release as soon as possible, with a normal minimum of time of twelve months between notification and layoff. If the magnitude of financial exigency dictates a shorter notification period, the President, in consultation with the University Assembly and the Financial Exigency Committee, may reduce the period to not less than six months. (See Section 12 regarding alternative employment, retraining, and reappointment rights.)
    8.2 Second Year Faculty
    Non-tenured faculty in their second year of service shall be notified at least six months in advance of the layoff date.
    8.3 First Year Faculty
    Non-tenured faculty in their first year of service shall be notified at least three months in advance of the layoff date.
    8.4 Faculty Prerogatives
    The faculty member can terminate his/her employment with the University, with a subsequent termination of salary, at any time prior to that specified in the notice of layoff.
  9. Appeals
    9.1 Appeals of Program Elimination
    Appeals of program discontinuation by individuals, program faculties, or departments shall follow the existing route of programmatic evaluation and review, ie., department head, dean, appropriate vice president, and the President. An appeal of program discontinuation shall be made to appropriate administrative personnel within three weeks after the date of notification.
    9.2 Appeals of Faculty Layoff
    The faculty member has the right to appeal a layoff decision. The appropriate route of appeal shall be to the individual's program director or department head, dean, and appropriate vice president. (0nce an appeal has reached the level of the vice president, that officer may refer it to the University Assembly or its designated subcommittee for consideration before rendering a personal decision. If this route is taken, the decision of the University Assembly or its subcommittee will then be subject to review by the vice president. Should the decision of the vice president conflict with the recommendation of the University Assembly or its subcommittee, the faculty member may then appeal directly to the President.) At each level an appeal must be initiated within two weeks of the notification of layoff or response from an appeal at the previous level. Decisions at each administrative level shall be communicated to the faculty member. If after review at the vice president's level, the individual wishes to carry his/her appeal further, he/she has a right to a hearing before the University Assembly or designated subcommittee thereof. (Individuals involved in recommendations for specific personnel terminations shall not take part in hearing appeals of such termination.) The University Assembly or its subcommittee shall conduct a hearing and forward a written report of its findings and recommendation to the faculty member and the president for final action. Board of Regent's regulations provide that any individual may appeal the President's decision to the Board.

    A request for a hearing before the University Assembly must be made within three weeks after receiving notice of action taken by the appropriate vice president. The faculty member shall be given at least two weeks notice of the date of the hearing; such hearing shall be held not later than three weeks after the request except that this time limit may be extended by mutual consent of the parties or by order of the hearing committee.
    9.3 Grounds for Appeal of Faculty Layoff
    Appeal of layoff by a faculty member can be made only on the following basis:
    1. Established procedures were not followed: or
    2. Appropriate criteria were not applied, including but not necessarily limited to the following:
      (a) Selection for layoff constitutes a violation of the individual's academic freedom; or
      (b) Available data bearing materially on role or seniority of the faculty member in the institution were not considered; or
      (c) Unfounded or arbitrary assumptions of fact were made.
    9.4 University Rights
    In spite of any appeal of a decision concerning program discontinuation and/or layoff of a faculty member, the University has the right to continue actions leading to program discontinuations and/or layoff of faculty. (For program or personnel eliminations other than during a declared state of financial exigency, see the Faculty Handbook regarding notification periods.)
  10. Hearing Procedure
    Reviews conducted by the University Assembly or its subcommittee are non-judicial in nature and necessarily informal. Strict rules of procedure (e.g. confrontation, cross-examination, and formal rules of evidence) may not be required. However, an individual making a presentation to the committee may obtain the assistance of an adviser or legal counsel of his or her choice. If legal representation is desired, the faculty member must notify the chairperson of the committee at least one week before any hearing that may be scheduled so that the University may also schedule the presence of legal counsel. Postponements may be granted so that those who desire counsel may have counsel present. The University will be obliged to notify the individual in the same way.

    The committee will ensure that appropriate persons are notified of its review and given an opportunity to present to the committee evidence they deem appropriate. Any objection to the review procedures or composition of the reviewing committee must be made in writing to the committee chairperson. All objections will be reviewed by the committee and its decision will be final.

    A verbatim record of the hearing, which might be a sound recording, will be maintained and made available to any person with legitimate interest in the proceeding.
  11. Layoff Status
    11.1 Conditions
    A faculty member whose position has been selected for layoff shall, at the end of the appropriate notice period, be placed on layoff status, unless the layoff notice has been rescinded prior to that time.
    11.2 Definition of Layoff Status
    The faculty member whose notice period has expired is placed on layoff status which shall be defined as follows:
    1. For probationary faculty, layoff status shall continue for one year.
    2. For tenured faculty, layoff status shall continue until one of the following occurs.
      (a) Reappointment is made to the position from which laid off. Failure to accept such reappointment offered in a letter sent by registered mail would terminate the faculty member's association with Tennessee Technological University;
      (b) An alternative, continuing position at Tennessee Technological University is accepted. Failure to accept an alternative appointment would not terminate the faculty member's layoff status;
      (c) There is failure by the affected faculty member to notify the President not later than July 1 of each year while on layoff status as to his/her location, employment status, and desire to remain on layoff status. Failure to provide such notification by registered letter shall terminate the faculty member's layoff status.
    3. The period officially designated as layoff status for tenured faculty shall be three years. At the end of that time, a faculty member not reinstated shall have no further obligation to the University nor the University to him/her. However, the University may attempt to re-employ the faculty member after the three-year period has elapsed as resources and position openings become available.
  12. Rights of Tenured Faculty Members on Layoff
    12.1 Alternative Employment
    The University shall endeavor to make faculty members who are laid off aware of openings within the University system, and the University's placement service shall make its resources available to affected faculty members.
    12.2 Retraining
    The University recognizes its responsibility toward tenured faculty, and, in a period of retrenchment of impending financial exigency, should develop reeducation programs and make its services available to begin the retraining process for faculty before exigency procedures become necessary.
    The University shall provide support and limited financial assistance, where possible and mutually beneficial, to enable faculty to readapt within the department or within another department of the institution.
    Examples of appropriate University support include:
    1. Provide remission of tuition and fees for course work taken at Tennessee Technological University by a faculty member as part of a retraining effort;
    2. Provision of available resources to assist a faculty member in the preparation of grant applications or identification of other sources of external funding which will assist in his/her retraining;
    3. A faculty member's reasonable use of University facilities in his/her retraining;
    4. A period of apprenticeship in another department or agency of the campus, at full or partial salary, shall be considered in the retraining of a faculty member,
    5. Assistance to the faculty member in his/her attempts to develop new skills useful to the University under the auspices of external local agencies.
    12.3 Reappointment Rights
    In all cases of layoff because of financial exigency, no person may be employed at the University within three years to perform reasonably comparable duties to those of the faculty member laid off unless the released faculty member has been offered reinstatement and a reasonable time in which to accept or decline it. The three-year period shall be computed from the effective date of layoff as specified in the original notice.
    12.4 Rights During Layoff
    A faculty member on layoff status has the following minimal rights:
    1. Such participation in any fringe benefit programs which may be allowed by state regulation governing rights of laid off state employees;
    2. Such continued use of campus facilities as is allowed by policies and procedures established by the department and institution; and
    3. Such participation in departmental and institutional activities as is allowed by guidelines established by the department and institution. However, participation shall not include participation in judgments (e.g. teaching assignments, curriculum revision) which themselves might affect the faculty member's layoff status.
  13. Continuation or Termination of Exigency
    13.1 One-Year Limitation
    No later than one year from the date of the declaration of a state of financial exigency, the President, after consultation with the University Assembly and appropriate members of the administration, shall request that the Board of Regents declare either the continued existence of exigency conditions or the termination of the state of financial exigency.
    13.2 Continuation of Policies and Procedures
    Should a state of financial exigency continue, the policies and procedures established in this document shall continue in effect.
    13.3 Termination of Exigency
    At the termination of a declared state of financial exigency, all policies, procedures, and bodies created in this document for the sole purpose of making and implementing exigency decisions shall cease to exist.

After Exigency: an Epilogue

Declaration that a state of financial exigency exists would come only in extraordinary circumstances. For that declaration to be made, two factors would have to be present:

  1. The administration and faculty would not have been able, in conditions of increasing financial stringency to reallocate and redirect resources to handle the demands of the academic program, and
  2. The chief external causes for the exigency would have been relatively sudden, unexpected, severe.

It follows that the first concern of administration and faculty following a declaration of exigency and an exercise of exigency decisions would be a review and evaluation of the patterns of management and decisions that had led to the exigency, along with a more determined effort to anticipate external causes and conditions. In examining the dire situation occasioned by the declaration of a state of financial exigency, at least two questions would need to be addressed:

  1. Are the stated mission, role and scope of Tennessee Technological University consistent with the resources likely to be available in the future? and
  2. Do institutions and persons responsible for decisions about state appropriations want implicitly or explicitly to change in fundamental ways Tennessee Technological University's mission, role and scope?

Finally, the University should be concerned with maintaining the morale and confidence of the faculty by continuing to support good programs of faculty development and evaluation and for further retraining and redirection of competencies as needed. Recruitment and development policies should be reviewed with the experience of exigency decisions in mind.

[Approved by the University Assembly Spring, 1982]

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