- Introductory Statement
- These procedures are prescriptive for circumstances of a Financial
Crisis at the University, from its recognition by the President through its
declaration and eventual termination by the Board of Control.
- In approving these procedures, the President and Board of Control
relinquish none of their constitutional or statutory authority.
- These procedures are intended for contingencies in which the University
is confronted with a financial shortfall due to circumstances largely out of
the control of the University, such as an unexpected and sharp decline in
enrollments, or an unexpected failure of budgeted support from the State.
- These procedures are intended for situations requiring decisive action
within a period of about one to six weeks. Contingencies that permit action
over a more extended period are covered in the Procedures for Periods of
Financial Stress (q.v.).
- A period of time is required to implement these procedures and for
expenditures to be reduced. To enable the University to meet its financial
obligations during this period, it is incumbent on the University to plan
for periods of financial distress. Financial contingency plans must be
prepared for this eventuality.
- Titles of University administrators may change with time. Hence, where
particular administrative titles are used in these procedures, "or
equivalent" is always implicit.
- At a time of financial crisis, any departures from these procedures
should be made in good faith and must be reported by the President to the
Board of Control and the University Senate.
- Committee Membership
Three committees are involved
initially in the declaration and management of a financial crisis. The
function of these committees is described below in Sections C and D.
- Financial Emergency Committee (FEC): An advisory committee consisting of
the Officers of the University Senate (President, Vice President, and
Secretary), and those members of the Senate Finance Committee who have been
appointed to that committee by the Senate. Chaired by the President of the
Senate.
- Executive Budget Council (EBC): An advisory committee consisting of
administrative officers holding these titles: the Provost and Senior Vice
President for Academic and Student Affairs, the Vice President for
Administration, the Vice President for Governmental Relations, the Senior
Vice President for Advancement and Marketing, the Vice President for
Research, and the Director of Planning and Budgeting. Chaired by the Provost
and Senior Vice President for Academic and Student Affairs.
- Reconfiguration Committee (RC): A working advisory group consisting of
the Executive Budget Council (above), the Officers of the University Senate,
two members of the Senate Finance Committee designated by the Senate, the
President of Staff Council, and the Deans of the Colleges and Schools. A
representative from Human Resources shall serve without vote. Chaired by the
Provost and Senior Vice President for Academic and Student
Affairs.
- Declaration of a Financial Crisis
- The decision to initiate a state of Financial Crisis rests with the
President. The procedures below will be followed when the President
determines that a financial emergency exists which may justify declaration
of a Financial Crisis. The emergency will be an extraordinary one
threatening the University as a whole so that usual procedures of planning,
management, budgeting and cost-reduction are not adequate to meet necessary
budget reductions within the time available.
- Procedures for Declaration of a Financial Crisis
- The President will call the Financial Emergency Committee into
session. The President will inform the Committee of the nature and
severity of the Financial Crisis and will present a timetable for sending
the President's recommendation to the Board of Control.
- The Financial Emergency Committee may confer, and comment or respond
immediately to the President. The Committee should provide a written
response to the President and the Board of Control indicating the
Committee's view of the financial crisis. The response may include
supporting documentation, and may include recommending an independent
audit of the financial status of the University.
- The Senate President will call a meeting of the University Senate. At
that meeting, the President and other administrative officers, and the
Financial Emergency Committee, will inform the Senate of the nature of the
financial emergency. The Senate will make its recommendation on the
financial emergency expeditiously in a proposal communicated by the Senate
President to the President and the Board of Control.
- A state of Financial Crisis will exist upon declaration of the Board
of Control.
- Procedures for a Financial Crisis
The procedures below
will be followed when the Board of Control has declared the existence of a
Financial Crisis.
- Immediately after the declaration of a Financial Crisis, the Executive
Budget Council and two non-voting liaisons from the Financial Emergency
Committee will provide the vice presidents, vice provosts, deans, and
directors with guidelines, including deadlines, for preparing plans for
reductions of budgets. These guidelines will also be furnished to the
Financial Emergency Committee.
Guidelines may include incentives for
cutting costs, such as arranging for some portion of the budget given up by
a unit to be returned to that area as discretionary funds.
- Vice Presidents, vice provosts, deans, and directors will generate plans
for budget reductions.
These individuals will actively and
systematically seek input from appropriate faculty, staff and students; the
existence of this input will be documented when the plans are submitted.
Vice presidents, vice provosts, deans, and directors must review
their plans with Human Resources (or equivalent successor division) to
ensure that they are consistent with University policy where individual
employees are affected.
The proposed plans are expected to consider
the possible unequal treatment of units. Vice provosts, deans, and directors
may expect that areas will not be treated equally.
The proposed
plans will be submitted to the Office of the Provost and Senior Vice
President for Academic and Student Affairs. Only those plans meeting the
guidelines (D.1. above) will be forwarded to the Reconfiguration Committee.
Plans not meeting the guidelines will be returned for revision.
- The Reconfiguration Committee will review the proposed plans and prepare
recommendations for the President following these guidelines:
- verify the adequacy and accuracy of documented employee input into the
proposed plans (see D.2. above);
- seek feasible alternatives to any plans that would result in
elimination of faculty and staff positions;
- determine that all plans are consistent with existing policies of the
University;
- identify, create (if necessary), and evaluate plans avoiding the
termination of faculty and staff, including such measures as temporary
furlough, reduced time appointments, severance pay for resignation, and
incentives for early retirement, to meet the crisis in the short term and
to allow orderly planning over longer periods.
- The Reconfiguration Committee will submit its recommendations to the
President.
The recommendations may include plans submitted to the
committee, unchanged or modified. Recommendations may also be original with
the committee.
- In the event the President determines that resolving the Financial
Crisis requires program reconfiguration involving the removal of faculty and
staff, the President will ask the Reconfiguration Committee for
recommendations for reconfiguration.
Such recommendations for
reconfiguration will be developed following these principles:
- Consistent with the role and mission of the University,
recommendations will protect academic programs and educational needs of
students.
- The recommendations will protect the University's commitment to the
principle of tenure. Thus, elimination or reconfiguration of a program or
department is the only procedure by which tenured faculty may be removed
because of a financial emergency.
- The recommendations will protect the University's commitment to equal
opportunity.
- The recommendations will provide that the budget for salaries and
wages of the Administration's first, second, and third echelons as a unit
will be reduced equitably with reductions in budgeted salaries and wages
across the University.
- Recommendations for Reconfiguration of Programs or Administrative Units
- Definition: Programs are defined as departments, degree programs,
majors or options within departments, interdepartmental degree programs,
and units.
- Definition: Reconfiguration may involve one or a combination of the
following, any of which result in a loss of position: absorption of one or
more programs unto another program; merger or consolidation of two or more
programs to form a new program; separation of a program into two or more
programs; elimination. Reconfiguration also applies to administrative
units.
- Criteria for Consideration of Proposals for Reconfiguration
- 1)
- The Reconfiguration Committee will base its consideration of the
proposed program reconfiguration on criteria of quality, centrality,
need, and cost. A list of more specific considerations is provided
below.
- 2)
- Not all criteria will have equal weight nor should proposals be
evaluated on some algebraic formula based on the criteria. The listing
is to be considered as a reminder of factors to be included in review of
proposals for reconfiguration.
- 3)
- Criteria may have different implications in different contexts. For
example, "accreditation status" of a program might count against a
proposal for merger if the resulting unit could not be accredited;
however, it might favor a proposal for elimination of a unit on the
verge of losing accreditation.
- Specific Criteria for Use in Evaluating Proposals for
Reconfiguration
- 1)
- Quality
- a)
- Productivity of a program as indicated by applicants for
admission, credit hours generated, degree recipients, scholarly
publications, and service internal or external to the
University.
- b)
- Quality of products compared with similar programs at the
University and elsewhere.
- c)
- National or international reputation of a program.
- d)
- Status of accreditation
- e)
- Conformation of the proposed reconfiguration with national
patterns of organization, to enable recruitment, retention, and
recognition of students, faculty, and staff.
- 2)
- Centrality to University mission
- a)
- Necessity of a program or its products because of external
mandate, including University charter, legislative pressure, laws, and
governmental regulation.
- b)
- Effects of reconfiguration on other programs at the
University.
- c)
- Extent of internal support available for the program.
- d)
- Whether a program is of a class that should be present in every
university, or at least in every technological
university.
- 3)
- Need - Present and Projected
Demand for the program,
including measures such as market demand for graduates, demand by
applicants, and demand by other programs at the University.
- 4)
- Cost
- a)
- Cost of operating the program and the size of the program relative
to its contribution to the University's mission, compared with
equivalent programs in peer institutions.
- b)
- Ratio of effective production to University fiscal input to the
program.
- c)
- Comparison of cost of the program to the revenue generated by the
program, including tuition, grants, contracts, gifts, endowments,
etc.
- d)
- The University's investment in a program's facilities that can not
be redirected easily.
- e)
- Possible economies available with a merger of programs that are
similar in goals, orientation, clientele, etc.
- f)
- Possibility of shifting fiscal support of a program, for example
to external grants or contracts, or from endowment earnings.
- g)
- Effect of the proposed reconfiguration on the University's image
and support by the public.
- The recommendations from the Reconfiguration Committee will be presented
to the University Senate concurrently with their presentation to the
President.
- Hiring of new faculty or staff during a Financial Crisis will be limited
to extraordinary circumstances (for example, replacing a recently deceased
employee) where an existing program would be otherwise seriously
affected.
- In the event the President approves reconfiguration of a program, the
dean or director of the program will implement the reconfiguration plan and
will notify in writing each faculty and staff member of the program
immediately. Students in the program will be given public notice. The
President of the University Senate will similarly notify and inform the
Senate.
- These following procedures will apply when approved program
reconfiguration involves the loss of faculty or staff positions:
- Prompt and explicit notice to affected personnel.
- The mechanisms in place for separation or laying-off of personnel will
be followed. Such mechanisms include, for example, established university
procedures or collective bargaining agreements.
- For faculty and/or other non-union employees who are removed, special
provision will be made including, but not limited to the
following:
- 1)
- Every effort will be made to provide suitable placement elsewhere in
the University.
- 2)
- Preferential rehiring of removed persons to fill any vacancy for
which they are qualified within the University, for a period of at least
three years after their removal.
- a)
- Faculty who were tenured and who are rehired as faculty will be
rehired with tenure.
- b)
- Persons who are rehired will not lose credit for previous years of
service, and will have the same fringe benefits as current
employees.
- 3)
- Any faculty member removed during a Financial Crisis may be
appointed as an adjunct faculty member, and will be entitled to
continuation of at least these prerogatives: access to library, parking,
computing, cultural, and recreational facilities afforded non-removed
faculty; status as graduate faculty; use of granting and contract
offices. Regular full- and part-time non-union staff who are removed
will be afforded similar prerogatives.
- 4)
- Faculty and staff who are removed are eligible to receive health
insurance at rates available to them under COBRA.
- 5)
- Eligibility for employee education programs and tuition reduction
incentive programs will continue for at least three years after
removal.
- Removal of tenured faculty must be approved by the Board of
Control.
- A tenured faculty member who is removed during a financial crisis has a
right to a hearing before the University Academic Tenure Committee (or its
designated alternate).
- A written request for a hearing must be filed within 30 days from the
date of initial notice of removal. A copy of the request must be filed at
the same time with the Provost.
- The request for a hearing must include either or both of the
following:
- 1)
- A citation of the specific Financial Crisis procedure(s) which the
member thinks have been violated;
- 2)
- A summary of information that the member thinks is either new, or
was not considered by the Reconfiguration Committee in its
deliberations.
- The recommendations of the Academic Tenure Committee (or its
designated alternate) shall be made to the President through the Provost
within 90 days of receipt of the written appeal. The report shall indicate
whether or not the Financial Crisis procedures have been violated, or
whether in the Committee's opinion the information supplied during the
hearing should alter the recommendations of the Reconfiguration
Committee.
- Termination of a Financial Crisis
- The President and the Reconfiguration Committee will monitor closely the
financial situation of the University during the Financial Crisis. The
President of the University Senate will report the situation regularly to
the Senate.
- If the President determines that the conditions of Financial Crisis no
longer exist, a recommendation for termination will be submitted to the
Board of Control.
- A state of Financial Crisis will cease to exist upon declaration of the
Board of Control.
Adopted by Senate: January 16, 2002
Approved by President: February 7, 2002
Subject to confirmation that the tenure sections of the new promotion and
tenure procedures currently being written by Senate are consistent with the
tenure sections of Proposal 15-02.
Amended with Proposal 11-04
Became Senate Procedures 901.1.1
Copyright © 2001 Michigan Tech
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01Dec01
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