Financial Exigency in Universities

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Financial Exigency in Universities
Southern University

Financial Exigency in Universities

Financial Exigency is a state of financial crisis, commonly a judicially accepted condition permitting an educational institution to terminate programs and eliminate staff positions, including those of tenured faculty. Every college and university experiences some form of financial hardship at one time or another. The financial problems plaguing local and state governments in recent years have been suggicient by themselves to create serious problems for institutions across the country. At the very least, an institution’s financial difficulties can lead to the reallocation of resources; at the worst, they can threaten the institution's existence. Faculty travel budgets and money for new faculty appointments are often early casualties. In the more serious cases, faculty and staff appointments are terminated, and academic programs and departments are reduced or eliminated. Some institutions ultimately close their doors. Because a college or university's financial problems and an administration's response to them can significantly affect faculty rights, faculty appointments, and the substance of academic programs, faculty have a keen interest in learning about these problems as soon as they start to emerge. Unfortunately, an institution's financial difficulties can catch members of the faculty by surprise, too late for them to participate meaningfully in decisions about how the institution should respond to these problems. An institution's declaration that it is in dire financial straits, like a declaration of war, often comes too late to avert disaster, if it comes at all. Over the years, the American Association of University Professors has developed standards and procedures to enable colleges and universities to protect academic freedom and to ensure academic due process when they have to contend with serious financial problems. (Praire, 2010) In addition, the AAUP, under the auspices of its Committee A on Academic Freedom and Tenure, has investigated and reported on numerous instances in which the termination of appointments of faculty members on stated grounds of financial exigency has been deeply flawed, both procedurally and substantively. A college or university budget is all of the following: a mechanism for setting institutional priorities; a plan of action for the institution; a summary of commitments made by those who have participated in the budgeting process; a mechanism for communicating to all members of the campus community the institution's objectives and the means to meet those objectives; and the outcome of negotiations over what activities should be funded and at what levels. The allocation of financial resources among competing demands is plainly a complex and crucial task for any college or university. The AAUP has long held that the governing board, the president, and the faculty should participate in financial decisions according to their particular expertise and responsibilities. The governing board is expected to husband the endowment and obtain capital and operating funds; the president is expected to maintain existing institutional resources and create new ones; the faculty is expected to establish faculty salary policies, and, in its primary responsibility for the educational function of the institution, to participate also in broader budgetary matters primarily as they impinge on that function. The faculty's role in budgetary decisions should therefore be well established before a financial storm engulfs the institution. Such a role is, in any case, consistent with, and helps advance, the principle of shared authority in institutions of higher education. In addition, the faculties are also more likely to support budgetary decisions when they have participated meaningfully in reaching those decisions, including decisions that may prevent bad financial problems from becoming worse. Moreover, an...
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