Policies and Procedures Manual

Chapter 4: Business & Administration

04:21:00   Financial Exigency

(TBR Policy 5:02:06:00)

Introduction: TBR Policy 5:02:06:00 requires each institution to develop policies and operational practices to provide emergency procedures, including reduction in force, should it experience a condition of financial exigency. The following policy of Northeast State Community College on financial exigency is in compliance with the Board policy.

Definition of Financial Exigency: Financial exigency is the formal declaration by the Tennessee Board of Regents that Northeast State Community College faces an imminent financial crisis, that there is a current or projected absence of sufficient funds (appropriated or non-appropriated) for the campus as a whole to maintain current programs and activities at a level sufficient to fulfill its educational goals and priorities, and that the budget can only be balanced by extraordinary means which include the termination of existing and continuing academic and non-academic appointments.

Actions Required Prior to the Declaration of Financial Exigency: Financial exigency results from an imminent crisis characterizing the entire college; thus, the condition of financial exigency shall not be declared at a level below that of the entire college (i.e., it shall not be declared at the level of an academic or administrative unit). In light of the gravity of consequences resulting from a declaration of financial exigency, the process leading to an institutional recommendation to the Tennessee Board of Regents that financial exigency be declared shall be cautious, fair, well informed, and as responsive as possible to the interests of various segments of the institution.

  1. The responsibility for initiating the proposal for declaration of financial exigency resides with the president. Since recommending the declaration of financial exigency is an extreme measure, that responsibility requires the president to provide all appropriate assurances and documentation that is available and reasonable procedures to reduce the expenditure levels of the institution are exhausted and that no efforts have been spared to enhance revenues.
  2. Prior to proposing the declaration of financial exigency, the president shall share with all full-time employees of the College (faculty, administrative, professional non-faculty and clerical and support staff) all pertinent analysis and documentation that in his/her opinion, demonstrate an imminent fiscal crisis for the entire college that would warrant a declaration of financial exigency. That analysis and documentation will be shared promptly and with sufficient notice to all categories of full-time employees; and opportunities should be provided for discussions with and advice from the various employee categories (including the representative faculty body), answers to appropriate questions, and general deliberations befitting an educational institution.
  3. After discussion and review of any advice from various personnel constituencies, the president shall - if he/she remains convinced that conditions warrant a recommendation for declaration of financial exigency - present the recommendation with full documentation to the chancellor.
  4. If this review supports the conclusion that conditions warrant a declaration of financial exigency, the chancellor shall so recommend to the Tennessee Board of Regents. In addition to providing the Tennessee Board of Regents with a recommendation to declare financial exigency, the chancellor in consultation with the campus president shall also submit a statement of findings and conclusions which shall include at least the following:
    1. A description of the current fiscal condition of the institution, including the projected amount of deficit that would result from failure to declare financial exigency
    2. A projection of the fiscal condition that would result, in the opinion of the president and the chancellor, from general types of action anticipated to be taken subsequent to a declaration of financial exigency
    3. An analysis of the reason for the current imminent fiscal crisis characterizing the entire institution, specifying with appropriate documentation those identifiable factors contributing to the crisis
    4. A statement of assurance, with supporting evidence, that available and reasonable procedures to reduce expenditure levels of the institution are exhausted, that further retrenchment within existing policies is not compatible with the objective of assuring maximum protection for the academic programs of the institution and the educational needs of students, and that efforts to enhance revenues have been carried out in a responsible manner
    5. A transmittal of any advice, alternatives, or information in writing by any institutional personnel constituencies (including the representative faculty body).
  5. Actions Required Subsequent to the Declaration of Financial Exigency. Should the Tennessee Board of Regents formally declare a state of financial exigency at Northeast State Community College, the president shall in a reasonable time and with appropriate documentation initiate a proposed plan to allocate necessary funding reductions among the primary budgetary sub-units (e.g., Instruction, Public Service, Academic Support, Student Services, Institutional Support, Plant Operations, etc.) within the institution. The following procedures shall be followed
    1. The president shall convene the institution's Financial Exigency Committee which shall be composed of members of the Executive Council, the dean of each academic division, the president of the faculty senate and a representative of the clerical and support staff.
    2. The president's proposed plan for allocating necessary funding reductions to primary budgetary sub-units shall be reviewed by the Financial Exigency Committee. The committee shall review the amounts of proposed reductions, evaluate proposed reductions in the light of institutional priorities, and consider administrative organization and academic priorities. It shall also consider the magnitude of proposed reductions in each primary budgetary sub-unit in the light of factors prescribed by applicable state or federal laws regarding fair employment practices.
      The committee shall submit in writing within 30 days to the president its response to the president's plan, which shall include either an endorsement or a recommendation of alternatives.
      The president shall consider any alternatives recommended by the committee and within 30 days shall indicate to the committee a final decision relative to the internal allocation of necessary funding reductions. This final plan will be communicated broadly to all personnel constituencies including the representative faculty senate.
    3. Heads of primary budgetary sub-units, with broad and clearly defined faculty and staff consultation, shall recommend to the president plans for effecting their designated budget reductions. Those recommendations from heads of primary budgetary sub-units shall include proposed reductions in programs or personnel, shall achieve the designated reductions, and shall respond to any inquiries the president or the Financial Exigency Committee may direct.
    4. As a primary component of his/her review of plans submitted by heads of primary budgetary sub-units, the president shall - prior to accepting them - submit the plans for review by the Financial Exigency Committee. The committee must consider the following general principles in considering plans submitted by heads of primary budgetary sub-units
      1. Retrenchment other than reduction-in-force should reflect as its major priority maximum protection of the academic programs of the institution and the educational needs of students
      2. When an academic or administrative unit undergoes reduction-in-force, the principal consideration in determining which persons to retain and which to terminate should be the maintenance of viable academic or support programs within that unit
      3. Personnel of affected academic or administrative units should have clearly defined advisory involvement relative to determining specific persons and minimal personnel needs or areas of specialization essential to a unit's visibility.
      4. To avoid the possibility of compromising the quality of highly productive programs within the institution and to recognize the best interests of continued academic excellence, reduction-in-force cannot normally be accomplished on a strictly across-the-board basis.
      5. Affirmative action plans should be carefully considered in all personnel decisions.
      6. Unless an exception is made to maintain a viable academic or support program (see section (d.2) above) or for reasons of affirmative action (see section (d.5) above), decisions as to the order of personnel terminations in academic or administrative units should be made in light of the following factors listed in rank order:
        (1) Program needs and program enrollment
        (2) Tenure status
        (3) Rank
        (4) Seniority within rank
        (5) Length of local service
        (6) Length of total service
        (7) Performance evaluations

        The Financial Exigency Committee shall submit in writing to the president its response to the plans for recommended reductions submitted by heads of primary budgetary sub-units. That response shall include either an endorsement or a recommendation of alternatives.
      7. After appropriate review of response by the Financial Exigency Committee, the president shall indicate his/her acceptance, rejection, or amendments to reduction plans submitted by heads of primary budgetary sub-units. The president shall communicate his/her composite plan for reducing expenditures to the entire campus community
      8. The president shall submit for approval by the chancellor his/her composite plan for effecting budgetary reductions as required by the fiscal condition of the institution. That transmittal must include the written response by the Financial Exigency Committee to both (1) the president's plan for allocating necessary funding reductions to primary budgetary sub-units and (2) plans for the primary budgetary sub-units for effecting their designated budget reductions. If the chancellor approves the plan for implementation, he/she shall submit it as information - together with any analysis he/she may deem appropriate - at the next meeting of the Tennessee Board of Regents.
         
  6. Procedures for Termination of Personnel Under Conditions of Financial Exigency: Following declaration by the Tennessee Board of Regents that a condition of financial exigency exists at Northeast State Community College, the president - having complied with those actions required subsequent to the declaration of financial exigency - is authorized to carry out those actions, including reduction-in-force, which are included in the plan approved by the chancellor. Reduction-in-force under the policy may include any personnel classification, including tenured faculty members or probationary faculty members prior to the end of their terms of appointment.
    1. The procedures for termination described in Section V of this policy are in force only during a period in which the Tennessee Board of Regents has declared that Northeast State Community College is in a condition of financial exigency
    2. An individual selected for termination shall receive prompt written notification from the president. That notification shall include the following:
      1. A statement of the basis on which the individual was selected for termination
      2. An indication of the data or reasons supporting the choice if it is not a clearly defined factor such as rank or tenure status
      3. A statement of the date on which the termination is to become effective
      4. A copy of the declaration of financial exigency adopted by the Tennessee Board of Regents, and
      5. Such other information as the president may deem appropriate.
    3. An individual who receives notice of termination, as described in section (6.b) above, may appeal the decision under the conditions indicated in this section.

      A Faculty Hearing Committee composed of four faculty members, the Chief Financial Officer (ex-officio), vice president for Academic Affairs (ex-officio), and the director of Human Resources (ex-officio), shall be appointed in the following manner. The aggrieved faculty member will be permitted to choose the four faculty members from a list of eight senior faculty members submitted to the president who are not being considered for termination. The president or his/her designee will preside over the hearing.

      A Staff Hearing Committee composed of four staff members, the Chief Financial Officer (ex-officio) and the director of Human Resources (ex-officio), shall be appointed in the following manner. The aggrieved staff member will be permitted to choose the four staff members from a list of eight senior staff members submitted by the president who are not being considered for termination. The president or his/her designee will preside over the hearing.

      The Faculty Hearing Committee and the Staff Hearing Committee shall ensure prompt hearings that are thorough and fair but need not be official in nature. Other faculty and staff members may be requested to attend committee hearings to furnish data and answer questions as required. Strict rules of procedure (i.e., confrontation, cross-examination, and formal rules of evidence) need not be required.

      The following conditions constitute grounds for appeal by an individual of notice of termination:
      1. That established institutional procedures or provisions of TBR Board Policy 5:02:06:00 were not followed.
      2. That appropriate criteria were not applied, including but not limited to the allegation that his or her selection constituted a violation of the individual's academic freedom or that unfounded or arbitrary assumptions of fact were made.

        The Hearing Committee shall not review the decision concerning the declaration of financial exigency or the president's plan for the amount of reduction to be assumed by each primary budgetary sub-unit.

        A recommendation will be made to the president by the Faculty or Staff Hearing Committee that he/she uphold or reverse the action of termination, and the president will inform the appropriate Hearing Committee and the individual of his/her final decision.

        The final decision of the president may be appealed to the chancellor and, after he/she has made a decision, to the Tennessee Board of Regents.
         
  7. Continuing Rights of Persons Terminated Under Conditions of Financial Exigency. No vacancy caused by termination under conditions of financial exigency shall be filled for a period of three years from the time of notice of termination without first offering the position to the person terminated (academic or non-academic), provided that the person terminated keeps the institution informed of his or her current mailing address. If the person previously terminated is offered the position and accepts, he or she will be returned in the same rank and tenure status.
     
  8. Termination of Declaration of Financial Exigency. If the financial health of the institution improves sufficiently, the president shall initiate a proposal for the termination of a declared state of financial exigency. The policies and procedures established by this policy shall continue in effect during the period of a state of financial exigency. At the termination of a declared state, that action by the Tennessee Board of Regents shall cause all policies, procedures, and bodies created in this policy for the sole purpose of making and implementing exigency decisions to cease to exist.
     
  9. Definitions: The following are general definitions of words and terms used in this policy which are not defined above. These words and terms are subject to further qualification and definition in the previous sections of this policy.
    1. Reduction-in-force: the termination of employment of faculty or staff resulting from a budgetary crisis reflected in a declared state of financial exigency.
    2. Academic or administrative unit: an academic department or other similar account-level unit.
    3. Representative faculty body: the major faculty organization devoted to governance.
    4. Primary budgetary sub-unit: a major budgetary area of an institution (e.g., Academic Affairs, Student Affairs, and Fiscal Affairs) usually headed by an administrator reporting directly to the president.


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Divisional Review Responsibilities Checklist: Finance

Revision History: November 2005, November 2011, March 2013