If Maryland closed or merged a state college, would it lose federal Land Grant Act funding, and what would happen to tenured faculty?

Plain-English summary

The Director of the Maryland General Assembly's Department of Fiscal Services asked the Attorney General whether closing or consolidating public colleges facing fiscal and enrollment pressure could cost Maryland its federal funding under the Morrill-Nelson land grant act, and whether the legislature could designate a different institution to receive that funding if it closed or merged a current land grant college. The opinion concluded that closure or consolidation would have no effect on the State's Morrill-Nelson funding as long as the General Assembly designated another institution as a land grant college, because federal case law established that land grant funds belong to the state itself, not to any particular college, and Maryland's own legislative history showed the General Assembly had always retained the power to redesignate the recipient. The opinion went on to flag a separate, harder problem: whatever the General Assembly decided about land grant funding, it would still need to address what happened to tenured faculty and staff at a closed or merged institution, since tenure could be abrogated only for just cause or genuine financial exigency, not simply erased by a legislative reorganization.

Currency note

This opinion was issued in 1982. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The opinion analyzed the Morrill-Nelson Act, related federal land grant funding programs, and Maryland tenure law and case law as they stood in 1982. Federal land grant and agricultural research funding programs, Maryland's higher education governance structure, and the case law defining tenure and financial exigency have all had decades to change since 1982. Anyone researching current rules about federal funding consequences of closing a Maryland public college, or current faculty tenure protections, should verify the current statutes and case law rather than relying on this opinion's 1982 analysis.

Common questions

If Maryland closed a public college that received Morrill-Nelson land grant funds, would the state lose that federal money?
No, according to this opinion, as long as the General Assembly designated another institution as the land grant recipient. The opinion explained that federal case law, including State of Wyoming ex rel. Wyoming Agricultural College v. Irvine, established that Morrill-Nelson funds are granted to the state itself, not to any specific college, so the state legislature retains the power to choose or change which institution receives the money.

Did Maryland have a track record of actually redesignating its land grant institutions?
Yes. The opinion traced Maryland's land grant history from the 1856 creation of the Maryland Agricultural College through its 1920 merger into the University of Maryland and the later incorporation of what became the University of Maryland Eastern Shore, and noted the General Assembly had expressly reserved, as early as 1865, the right to make "any other disposition" of the land grant funds at any time.

Could closing a school still cost Maryland any federal money?
The opinion flagged one narrower risk: a special supplemental funding program under the Food and Agricultural Act of 1977, tied specifically to 1890 land grant institutions (predominantly Black institutions with agricultural research programs) like the University of Maryland Eastern Shore. If the U.S. Secretary of Agriculture treated those funds as going to the institution itself rather than the state, outright closure of that institution, as opposed to a merger that kept its agricultural programs and facilities running, could jeopardize that special funding.

Separately, could the state simply lay off tenured professors if it closed or merged a college?
Not without more. The opinion explained that tenured faculty and staff could be terminated only for "just cause," including substantiated financial exigency, defined as an imminent crisis threatening the institution's survival that cannot be solved by less drastic means, and that even in a legislative merger, courts (citing Russell v. Board of Trustees, involving a similar Arkansas college merger) expected some general notice and a reasonable opportunity for affected faculty to be heard, even if not the full individualized process used in ordinary for-cause dismissals.

Background and statutory framework

The Morrill-Nelson Act, tracing back to the original 1862 Morrill Act, granted each state public land or land scrip to fund at least one college teaching agriculture and the mechanical arts, and later amendments in 1890, 1935, 1952, 1960, 1966, and 1972 expanded federal appropriations while preserving the basic grant structure. Maryland accepted the 1862 Act's terms in 1864 and designated the Maryland Agricultural College as recipient in 1865, expressly reserving the General Assembly's right to make "any other disposition" of the funds later. Over the following decades, the state's land grant institution went through several transformations, including a 1935 transfer of the Princess Anne Academy (predecessor of the University of Maryland Eastern Shore) from Morgan College to the state, and the 1920 merger of the Maryland State College of Agriculture into the University of Maryland, leaving College Park and Eastern Shore as Maryland's land grant institutions at the time of the opinion.

The opinion found strong support, both in the Morrill-Nelson Act's own text and in case law, for the conclusion that land grant funds belong to the state rather than to any particular institution. It relied heavily on State of Wyoming ex rel. Wyoming Agricultural College v. Irvine, in which the U.S. Supreme Court held the land grant "is clearly to the state, and not to any institution established by that state," and on State v. Bryan, a Florida decision upholding a legislative consolidation of that state's agricultural college system on similar reasoning, as well as a more recent parallel, Russell v. Board of Trustees, in which an Arkansas merger of a predominantly Black agricultural college into the University of Arkansas system did not disrupt land grant funding. The opinion also traced Maryland's own legislative history of appropriating, withdrawing, and reallocating funds to its agricultural college, including Maryland Agricultural College v. Keating, upholding the General Assembly's reserved right to reduce the college's endowment appropriation, as further evidence the legislature had long-standing, court-recognized authority to redesignate its land grant recipient.

The opinion did flag one narrower complication: a special supplemental research and facilities funding program under the Food and Agricultural Act of 1977, targeted at 1890 land grant institutions like the University of Maryland Eastern Shore, which might be treated as a grant to the institution itself rather than to the state, meaning an outright closure (as opposed to a merger preserving the school's agricultural programs) could jeopardize that particular funding stream even though the core Morrill-Nelson money would not be at risk.

Turning to personnel, the opinion explained that Maryland higher education employees acquire tenure through contract (the University of Maryland system), through state statute or agency regulation (other state colleges and universities, certain University of Maryland associate staff, and non-probationary classified personnel), or, in principle though not recognized as actually existing in Maryland, through long, continuous service creating "de facto" tenure. Tenured employees could be dismissed only for "just cause," which traditionally covered performance-based grounds like incompetence or misconduct, but which courts had also read to include financial exigency, an imminent crisis threatening the institution's survival that could not be solved by less drastic measures, even when the applicable rules did not expressly list it. The opinion noted that courts evaluating individual financial-exigency terminations generally required an institution to use reasonable selection standards and make reasonable efforts to find affected employees alternative employment, though not necessarily the complete procedural protections used in ordinary for-cause dismissals. Drawing on Russell v. Board of Trustees, involving the Arkansas merger discussed above, the opinion suggested that a comparable Maryland merger or closure enactment could similarly satisfy tenured employees' due process interests through general notice, faculty participation on a merger planning committee, open faculty meetings, and circulation of the merger plan, rather than personalized, individual hearings for every affected employee, and pointed to Maryland's own 1973 merger of the University of Baltimore into the state college system, as well as two outside publications on college mergers, as useful references for the General Assembly's planning.

Citations

Statutes:

• Morrill-Nelson Act, 7 U.S.C. §301 et seq.
• 7 U.S.C. §304
• 7 U.S.C. §§302 and 303
• 7 U.S.C. §305
• 7 U.S.C. §329
• Food and Agricultural Act of 1977, Pub. L. 95-113, §§1444 and 1445, 91 Stat. 1007, 1009 (7 U.S.C. §§3222 and 3223)
• Bankhead-Jones Farm Tenant Act of 1933, 7 U.S.C. §1000 et seq.
• Chapter 97, Laws of Maryland 1856
• Chapter 90, Laws of Maryland 1864
• Chapter 178, Laws of Maryland 1865
• Chapter 53, Laws of Maryland 1866
• Chapter 548, Laws of Maryland 1935
• Chapter 372, Laws of Maryland 1916
• Chapter 480, Laws of Maryland 1920
• Chapter 694, Laws of Maryland 1973
• Article 21 of the Maryland Code
• COMAR Title 21
• 1971 Arkansas Act 1138 (1971)

Cases:

• State of Wyoming ex rel. Wyoming Agricultural College v. Irvine, 206 U.S. 278 (1907)
• State v. Bryan, 39 So. 929 (Fla. 1905)
• Trustees of University v. Winston, 5 Stew. & P. (Ala.) 23
• Trustees of Dartmouth College v. Woodward, 4 Wheat 518, 4 L. Ed. 629
• Russell v. Board of Trustees, 502 F. Supp. 916 (D.C. Ark. 1980), aff'd, 657 F.2d 1008 (8th Cir. 1981)
• Maryland Agricultural College v. Keating, 58 Md. 580 (1882)
• Jackson v. Walsh, 75 Md. 304 (1892)
• Johnson v. Board of Regents of University of Wisconsin System, 377 F. Supp. 227, 235, 239 (D. Wis. 1974)
• Perry v. Sindermann, 408 U.S. 593, 602 (1972)
• Bignall v. North Idaho College, 538 F.2d 243, 246 (9th Cir. 1976)
• Johnson v. Fraley, 470 F.2d 179, 181 (4th Cir. 1972)
• Board of Regents of State Colleges v. Roth, 408 U.S. 564, 577 (1972)
• Ring v. Schlesinger, 502 F.2d 479 (D.C. Cir. 1974)
• Parker v. Board of Educ. of Prince George's County, 348 F.2d 464 (4th Cir. 1965)
• Krotkoff v. Goucher College, 585 F.2d 675, 680 (4th Cir. 1978)
• Chung v. Park, 514 F.2d 382, 387 (3rd Cir. 1975)
• Graney v. Board of Regents of University of Wisconsin System, 286 N.W.2d 138, 149 (Wis. 1979)
• Geier v. Blanton, 427 F.Supp. 644 (D.C. Tenn. 1977), aff'd 597 F.2d 1056 (6th Cir. 1979), cert. denied, 444 U.S. 886 (1979)

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1982/Volume67_1982.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.

EDUCATION

Colleges and Universities—"Land Grant" Funds Personnel and Tenure—Effect of Closure or Consolidation of Public Institutions

January 13, 1982

William S. Ratchford, II
Director
Department of Fiscal Services
Maryland General Assembly

You have requested our opinion concerning the legal ramifications of closing or consolidating public institutions of higher education in response to fiscal and enrollment constraints. Specifically, you ask whether closure or consolidation of certain institutions "could jeopardize federal funding such as that provided under the 1890 Land Grant (Morrill-Nelson) Act". As a corollary, you also ask whether the General Assembly, if it decides to close or consolidate a college currently receiving Morrill-Nelson funds, may designate another institution as a land grant college so as to entitle that institution to receive these federal funds.

For the reasons related below, it is our opinion that the closure or consolidation of a land grant institution would have no impact on the funding that the State receives under the Morrill-Nelson Act, so long as the General Assembly designates another institution as a land grant college in accordance with the terms of the federal statute. We also offer below some observations and advice on paramount personnel considerations that will warrant the General Assembly's attention if it decides to close or consolidate any State institution of higher education.

I
History of the Morrill-Nelson Act

The federal statute authorizing financial aid for the so-called "land grant" colleges in the several states and U.S. possessions is commonly known as the "Morrill-Nelson Act", codified at 7 U.S.C. §301 et seq. The stated purpose of the Morrill-Nelson Act has been, since its genesis in 1862, to support:

"at least one college [in each State] where the leading object shall be, without excluding other scientific and classical studies and including military tactics, to teach such branches of learning as are related to agriculture and the mechanical arts, in such manner as the legislatures of the States may respectively prescribe, in order to promote liberal and practical education of the industrial classes in the several pursuits and professions in life." 7 U.S.C. §304.

The original congressional enactment in 1862 (then characterized as the "Morrill Act") granted to each state 30,000 acres of public land "for each Senator and Representative in Congress to which the States are respectively entitled by the apportionment under the census of 1860", thus the colloquial reference to "land grant" institutions. The original grant apportioned the dedicated public land and conveyed shares of land scrip to the states, which in turn sold the scrip and invested the proceeds to create a perpetual fund that served as the source of financial support for the "land grant" colleges. 7 U.S.C. §§302 and 303. Additionally, the 1862 statute stipulated a series of conditions dealing with management and use of the fund.1

1 The principal conditions, contained in §305, are as follows: if any part of the fund or its interest is "diminished or lost", it is to be replaced by the state so that the capital of the fund remains "forever undiminished"; the annual interest is to be applied "without diminution" to the maintenance of the agricultural college, except that a sum, not exceeding 10% of the amount received by the state, may be expended to purchase land for experimental farms, whenever authorized by the legislature of the state; no portion of the fund may be used "directly or indirectly, under any pretense whatever", to purchase, preserve, erect, or repair any building; each state that accepts a grant must establish at least one agricultural college or the grant to the state "shall cease"; an annual report on the progress of the college shall be made to the federal agency administering the grant.

Subsequent amendments, to the Morrill Act in 1890, 1935, 1952, 1960, 1966, and 1972, while preserving the basic grant features and conditions, expanded the coverage to encompass ancillary "instruction in the English language and the various branches of mathematical, physical, natural and economic science", and augmented federal financial support by authorizing additional annual appropriations to the several states.2 Currently, the statute authorizes an annual allocation of $8,100,000, to be divided equally among the several states, as well as an additional amount of $4,360,000, to be divided proportionately in relation to the respective states' populations. 7 U.S.C. §329.3

2 August 30, 1890, c. 841, §1, 26 Stat. 417; June 29, 1935, c. 338, §22, 49 Stat. 439; June 12, 1952, c. 419, §§1-4, 66 Stat. 135; July 14, 1960, Pub. L. 86-658, 74 Stat. 525; Nov. 7, 1966, Pub. L. 89-791, Title I, §108(a), as added June 20, 1968, Pub. L. 90-354, §1, 82 Stat. 241; June 23, 1972, Pub. L. 92-318, Title V, §506(d), 86 Stat. 350.

3 During the budget cutting process that preoccupied Congress this past Spring, the House proposed to eliminate the entire land grant program while the Senate proposed a reduction of $1.8 million (or $32,000 per state). The Morrill-Nelson funding survived intact, however, following amendments to the budget reconciliation bill in committee sessions. See "The Green Sheet", June 29, 1981, published by The National Association of State Universities and Land Grant Colleges ("NASULGC").

We recently learned from a NASULGC representative, however, that funding under another federal agricultural program, which also substantially benefited State land grant institutions, ceased as of October 1, 1981. Specifically, at the Reagan Administration's behest, Congress did not appropriate any money in federal fiscal year 1982 for distribution to the states under "The Bankhead-Jones Farm Tenant Act of 1933", 7 U.S.C. §1000 et seq. [c.517, 50 Stat. 522]. Under that Act, approximately $11.5 million annually had been appropriated to the various states; the State of Maryland's share of $215,000 was, like the land grant funds, distributed to the University of Maryland's College Park campus ($189,000) and Eastern Shore campus ($26,000).

II
History of Maryland Land Grant Institutions

In 1856, the State of Maryland established and endowed an agricultural college. See Chapter 97, Laws of Maryland 1856. Under this enactment, creating the "Maryland Agricultural College", the General Assembly provided for incorporation, sale of stock, election of trustees vested with managerial powers, and an annual appropriation of $6,000. The General Assembly also expressly reserved the right to revoke the incorporation or, as it later did, to withdraw any endowment appropriations.4

4 Section 11 of Chapter 97, Laws of Maryland 1856, states:

"[T]he General Assembly of Maryland hereby expressly reserves the right at any future session to withdraw any part or all of said endowment of $6,000 hereinbefore appropriated, or to repeal, vacate, and make void all and every part of the incorporation aforesaid, and all rights, privileges, and immunities hereinbefore mentioned and the endowment and donation of the $6,000 to be paid out of the Treasury, as hereinbefore provided for, shall cease to be paid."

See also note 8 below.

In 1864, the General Assembly declared its acceptance of the provisions of the Morrill Act of 1862. See Chapter 90, Laws of Maryland 1864. In its next Session, the General Assembly devoted the investment proceeds from the sale of land scrip to the Maryland Agricultural College, with the explicit condition that "nothing herein contained shall be construed to prohibit or preclude the General Assembly, at any time hereafter, from making any other disposition of said funds, not inconsistent with the Act of Congress making said donation". See Chapter 178, Laws of Maryland 1865.5

5 In 1866, the General Assembly supplied a lump sum of $45,000 to the Maryland Agricultural College in order to stave off insolvency. See Chapter 53, Laws of Maryland 1866. This "bail-out" appropriation was subject to two key conditions. First, the college was required to make the State of Maryland an equal joint owner of all college property. Second, the 1866 Act provided that 10% of the Morrill Act land grant funds be reserved to reimburse the State for part of the $45,000 appropriation.

Following an amendment to the Morrill-Nelson Act in 1890 (26 Stat. 417), which stipulated that the money was to be used for education "without distinction of race or color", the trustees of the Maryland Agricultural College granted approximately one-fifth of its Morrill-Nelson funds to Morgan College of Baltimore, to be spent for its Normal and Industrial Branch at Princess Anne on the Eastern Shore. Report of the Maryland Agricultural College (1890). In 1935, the State of Maryland acquired from Morgan College full title to the Princess Anne Academy and made the Academy a part of the University of Maryland system. See Chapter 548, Laws of Maryland 1935. In 1948, the State changed the name of the Academy to Maryland State Academy.

In 1916, the Maryland Agricultural College became the "Maryland State College of Agriculture". See Chapter 372, Laws of Maryland 1916. In 1920, the General Assembly "merge[d] and consolidate[d] the University of Maryland, incorporated by the Act of 1812, Chapter 159, as supplemented and amended by the Act of 1882, Chapter 88, with the Maryland State College of Agriculture, incorporated by the Act of 1916, Chapter 372". See Chapter 480, Laws of Maryland 1920. This merger conferred on the Regents of the University of Maryland all of the powers, rights, and privileges of the Board of Trustees of the Maryland State College of Agriculture, including the entitlement to Morrill-Nelson and other federal funds.

At present, the land grant institutions in Maryland are the University of Maryland College Park and University of Maryland Eastern Shore.6

6 According to the National Association of State Universities and Land Grant Colleges: (i) the College Park campus last year received $44,000 in conventional land grant funds, while (ii) the Eastern Shore campus received $6,000 in conventional land grant funds, plus an additional allocation of almost $1,000,000 under the Food and Agricultural Act of 1977, Pub. L. 95-113, §§1444 and 1445, 91 Stat. 1007, 1009 (codified at 7 U.S.C. §§3222 and 3223), a special supplemental funding program. As to the potential effect of closure or consolidation on the continued receipt of funds under this special supplemental program, see note 9 below.

III
Ability of State to Redesignate Land Grant Institutions

Having explained the purpose, history, and principal features of the Morrill-Nelson Act, and this State's actions in relation to the federal grant program, we now turn to the legal implications of closing or consolidating a college that currently receives land grant funding. It is apparent from the statutory text and history, as well as pertinent case law, that the Maryland General Assembly has the authority to designate, and to redesignate, a college or colleges to receive land grant funding.

Several sections of the Morrill-Nelson Act support this proposition by clear implication. As pointed out above, the land grant aid is furnished to the several states themselves [§§301, 322, 324, and 329], and is subject to several conditions explicitly imposed on the states [§§303, 305, 308, 323, and 325]. Section 305 prescribes that each state participating in the land grant program "shall express its acceptance [of the Morrill-Nelson Act provisions] by its legislature" and "shall provide, within five years of its acceptance . . . , at least not less than one [agricultural] college" as the recipient(s) of the land grant funds supplied to the state.

Several court decisions reviewing the land grant statutory scheme confirm that the grants are conveyed to the states and neither confer nor implicate a continuing expectation of funding on the institutions designated by the states. In State of Wyoming ex rel. Wyoming Agricultural College v. Irvine, 206 U.S. 278 (1907), the Supreme Court analyzed the wording and operation of the Morrill Act of 1862 and the Morrill-Nelson Act of 1890. It declared that "the grant made in this statute is clearly to the state, and not to any institution established by that state". The Court continued: "It is so obvious that these appropriations are made to the state, and not to any institutions within the state, and that the states, acting through their legislatures, are to expend the appropriations in accordance with the trust imposed upon them, that it is unnecessary to quote the numerous expressions in this act which support that view." 206 U.S. at 283. The Court concluded that the fund, its interest, and the annual appropriations are the property of the state, not of any institution within it, and that it is the duty of the state legislature to select the beneficiary entitled to receive and expend the funds. "The agricultural college shows no title or right to this money under these statutes." Id.

In State v. Bryan, 39 So. 929 (Fla. 1905), the court reviewed a challenge to a Florida enactment that abolished the Florida Agricultural College, closed and consolidated other institutions within the state, created a board of control to manage all of the several institutions, and provided that they be supported by funding under the Morrill-Nelson Act. The court affirmed that the legislature had the power, at any time: to prescribe which college or colleges would be the recipient or recipients of the interest of the federal land grant funds; to withdraw the interest of this fund from one institution; and to designate another institution as the recipient of that interest. The court stated specifically:

"There is not and never was any private property in the trustees in the funds. They were derived from the government. The founder of this institution was the government of the state of Florida and the property which constituted its basis was public moneys of the state of Florida derived by it from the government of the United States in trust for the establishment of an institution of this character.

It never was the purpose of the state of Florida to give these trustees any private right to this property. Throughout the whole legislation they are shown to be simple public agents to manage a public property. The only right they have to it is by the legislation of the state, and every section of these acts shows that it was founded by public funds and for a public purpose. Trustees of University v. Winston, 5 Stew. & P. (Ala.) 23; Trustees of Dartmouth College v. Woodward, 4 Wheat 518, 4 L. Ed. 629." 29 So. at 950.7

7 It is also illuminating to note that a relatively recent merger of an agricultural college into a larger state university system was accomplished without affecting funding under the Morrill-Nelson Act. Specifically, in 1971 the Arkansas legislature converted the Arkansas Agricultural, Mechanical and Normal College ("AM&N"), a predominately black state-supported school, into a campus of the University of Arkansas system. See Russell v. Board of Trustees, 502 F. Supp. 916 (D.C. Ark. 1980). This merger appears to parallel the consolidation of the Maryland State Academy (predecessor of the University of Maryland Eastern Shore) into the University of Maryland system.

In a telephone conversation, the general counsel for the University of Arkansas related that the land grant funding issue never arose, presumably because the AM&N successor campus continued to receive a portion of the Morrill-Nelson Act funds. This again is apparently similar to Maryland's distribution between the College Park and Eastern Shore campuses of the University of Maryland.

Furthermore, both the text and history of this State's legislative measures, creating the Maryland Agricultural College [Chapter 97, Laws of Maryland 1856], designating it as the recipient of federal land grant funds [Chapter 178, Laws of Maryland 1865], providing it with a fiscal "rescue" appropriation [Chapter 53, Laws of Maryland 1866], establishing it as a State institution [Chapter 372, Laws of Maryland 1916], and merging it with the University of Maryland [Chapter 480, Laws of Maryland 1920], fortify the view that the Maryland General Assembly has the discretionary authority to designate or to redesignate the recipient(s) of Morrill-Nelson Act funds.

Indeed, the General Assembly explicitly reserved this discretionary authority in the 1865 Act that first identified the Maryland Agricultural College as the land grant designee: "nothing herein shall be construed to prohibit or preclude the General Assembly, at any time hereafter, from making any other disposition of said funds, not inconsistent with the Act of Congress making said donation". [Chapter 178, Maryland Laws of 1865.].8

8 In 1882, the General Assembly reduced its own annual appropriation to the Maryland Agricultural College from $6,000 to $5, prompting a court challenge by the college. In Maryland Agricultural College v. Keating, 58 Md. 580 (1882), the Court of Appeals held that the General Assembly, in founding the college in 1856, had reserved the right in any future session to withdraw any or all of the endowment appropriated. The Court stated:

"The eleventh section of the charter having reserved, in express terms, the right to withdraw, 'at any future session', all or any part of the endowment granted by the charter, it is very clear, that the purpose of the Legislature was to keep the matter of the appropriation to the College under the constant supervision of the Legislature; so that at any subsequent session the same might be lessened or entirely withdrawn, as the condition of the College, or the exigencies of the State Treasury, might justify or require. It was intended to keep the institution under the eye of the Legislature, that its usefulness might be the subject of the inquiry and consideration at each session of that body; that the endowment might be continued or withdrawn, in whole or in part, as the institution met, or failed to meet, the expectations of its benefactors. The intent of the Legislature to withdraw the whole donation except the $5 given, is so unmistakeably expressed, that appellant's counsel admit that to be beyond controversy." 58 Md. at 583.

See also Jackson v. Walsh, 75 Md. 304 (1892), which decided that the State of Maryland, as equal joint owner of the Maryland Agricultural College, could realign the representation of the board of trustees because these governing matters were clearly under the control of the General Assembly.

In other words, should the General Assembly decide to redesignate the recipient of the land grant funds, either as part of or independent of the closure or consolidation of the college concerned, it is our view that a court would affirm the General Assembly's discretionary authority to do so.9

9 There are, however, other special grant programs that must be evaluated if the General Assembly decides to redesignate the recipient of land grant funds. Most notably, provisions of the Food and Agricultural Act of 1977, Pub. L. 95-113, §§1444 and 1445, 91 Stat. 1007, 1009 (codified at 7 U.S.C. §§3222 and 3223), authorized annual appropriations of special funds "to support continuing agricultural research" and "the acquisition and improvement of research facilities and equipment" at 1890 land grant institutions, i.e., predominantly black institutions providing agricultural programs and engaging in agricultural research. The University of Maryland Eastern Shore is a recipient of these special funds. See note 6 above.

To the extent that the U.S. Secretary of Agriculture deems allocations under this particular Act to be grants to the eligible institutions, rather than to the states, the General Assembly's ability to redesignate a land grant institution, without jeopardizing this special funding, would be limited. In other words, although the General Assembly has the inherent power to close or consolidate an 1890 land grant institution, outright closure could conceivably jeopardize the special funding received under the Food and Agricultural Act of 1977. On the other hand, a consolidation or merger of an 1890 land grant institution with another predominately black institution conceivably would not affect this funding, assuming agricultural programs and facilities were maintained.

IV
Personnel Considerations Arising Out of Closures and Consolidations

A. Introduction

Aside from the land grant funding issue, there are other considerations that must be anticipated and addressed by the General Assembly if it contemplates closing or consolidating particular public institutions of higher education.

The closure or consolidation of colleges and universities promises to be a complex and controversial undertaking, requiring resourceful planning and meticulous implementation. Of course, the General Assembly will have to attend to the basic business-oriented issues of providing for the transfer of property assets and the disposition of contractual obligations.10 Even more problematical from a planning standpoint, however, are issues dealing with faculty and staff.11

10 The State Procurement Law (Article 21 of the Maryland Code) and related regulations (COMAR Title 21) afford considerable latitude for terminating an agency's contractual obligations, based both on reasons of convenience and failure of funding. Nevertheless, it may be prudent for the General Assembly to specify in any enactment closing or consolidating public institutions of higher education the manner in which outstanding institutional contracts for supplies, services, and construction are to be handled. This could be done by either reinforcing or qualifying the discretionary termination provisions reflected in the State Procurement Law and its regulations.

11 Consider this observation in a recent publication, focusing on closure and consolidation of colleges: "When a college undergoes major corporate changes, when it merges or closes, one of the most time-consuming and difficult areas is invariably dealing with faculty and staff. Legal, moral, and psychological issues are all closely entwined in virtually every decision which affects staff." O'Neill and Barnett, Colleges and Corporate Change 81 (1980).

The central personnel consideration is the treatment of faculty and staff who have acquired tenure or related rights of continuous employment. For example, would tenured employees be terminated along with non-tenured employees? Would tenured employees be granted a priority in an overall position-elimination scheme? Would tenured employees be transferred to the surviving institution or reassigned to other public colleges in the State's higher education system?

Although the particular approach adopted will no doubt depend on whether closure or consolidation is contemplated, on the size and nature of the institutions involved, and on the nature of the underlying fiscal and enrollment situation prompting closure or consolidation, it is important to appreciate the legal definition of "tenure" and the grounds on which tenure may be abrogated.

B. Acquisition of Tenure Rights.

Individuals in certain categories of faculty and staff positions in the Maryland public higher education system, after satisfactorily serving a prescribed period of probationary employment, acquire a legally protected interest in their jobs. Specifically, tenured employees are protected from termination on arbitrary grounds or by unreasonable means.12 Thus, tenure compels the college or university to demonstrate "just cause" in dismissing a tenured faculty member.

12 See, e.g., Johnson v. Board of Regents of University of Wisconsin System, 377 F. Supp. 227, 235, 239 (D. Wis. 1974).

Tenure rights may arise in several ways. First, tenure may be contractual, arising from an express provision in the employment contract or from a set of rules and regulations incorporated into the contract. This is the source for faculty tenure in the University of Maryland system.

A second way in which tenure may arise is by State statute or agency personnel regulations. This is the basis for tenure for (i) faculty members in all State colleges and universities other than the University of Maryland, (ii) certain associate staff members in the University of Maryland system, and (iii) non-probationary classified personnel in all of these institutions.

A third way in which tenure may arise is when a public employee has been continuously employed for a significant period of time so as to indicate from the circumstances that "de facto" tenure exists.13 However, the employee must demonstrate that he or she has a legitimate claim of entitlement to that employment, as a property interest; more than a unilateral expectation or abstract need or desire must exist.14 Contracts that are for an express number of years or that are probationary or provisional contracts do not create such an expectancy, because a property interest in continued employment is lacking.15 Although the courts have not definitively resolved the issue, it is our position that "de facto" tenure does not exist within the Maryland higher education system because the governing contractual, statutory, and regulatory provisions are explicit regarding duration and qualitative requirements for attaining tenure.

13 Perry v. Sindermann, 408 U.S. 593, 602 (1972); Bignall v. North Idaho College, 538 F.2d 243, 246 (9th Cir. 1976); Johnson v. Fraley, 470 F.2d 179, 181 (4th Cir. 1972); Ronald C. Brown, Tenure Rights in Contractual and Constitutional Context, 6 J. of Law and Educ. 279, 312 (1977) (referred to below as "Tenure Rights").

14 Board of Regents of State Colleges v. Roth, 408 U.S. 564, 577 (1972).

15 Id. See also Ring v. Schlesinger, 502 F.2d 479 (D.C. Cir. 1974); Parker v. Board of Educ. of Prince George's County, 348 F.2d 464 (4th Cir. 1965); Tenure Rights, 6 J. of Law and Educ. at 302.

C. Termination of Tenured Employees

As noted above, before employees in the Maryland higher education system acquire tenure, they must satisfactorily complete a probationary period, which will vary depending on the applicable rules. Thereafter, tenured employees may only be discharged for "just cause", i.e., in accordance with substantive grounds for dismissal and procedural due process protections stipulated in the contract, statute, or personnel rules. Usually, dismissal "for cause" relates to a tenured employee's job performance, such as neglect of duty, insubordination, misconduct, or incompetence. However, stipulated grounds for termination may also include bases having nothing to do with an employee's job performance: for example, loss of salary support, program discontinuance, or staff reorganization.16

16 The University of Maryland, for example, has adopted the following rule for associate staff employees: "None of the above shall be construed to nullify the ability of the University to lay off an associate staff member from his position for reason of a demonstrably bona fide lack of supporting funds or change in program requirements. A minimum of a 30-day notice with pay shall be given any person laid off because of fund curtailment or change in program requirements, and the University shall make every effort to find substitute employment for a person losing salary support. Any such person laid off shall have the right to return to his position upon the restoration of a funding source for the position within a year of his termination. Individuals shall be informed of layoffs or prospective layoffs at the earliest possible time." Personnel Policies and Rules for Associate Staff Employees of the University of Maryland, §5 (p. 19).

It is noteworthy that, even where the applicable tenure rules do not explicitly provide for termination for financial reasons, courts have generally considered financial exigency to constitute valid (although implied) grounds for terminating tenured positions.17

17 See, e.g., Krotkoff v. Goucher College, 585 F.2d 675, 680 (4th Cir. 1978); Chung v. Park, 514 F.2d 382, 387 (3rd Cir. 1975); Graney v. Board of Regents of University of Wisconsin System, 286 N.W.2d 138, 149 (Wis. 1979). See also Tenure Rights, 6 J. of Law and Educ. at 288.

Financial exigency, a more exacting standard than program discontinuance or staff reorganization, has been defined as an imminent financial crisis that threatens the survival of the institution as a whole and that cannot be alleviated by less drastic means.18 An imminent financial crisis is tantamount to "an urgent need to reorder the nature and magnitude of financial obligations", and is usually prompted by declining student enrollment and shrinking financial resources.19 The adequacy of the institution's operating funds, not merely its capital assets, must be examined, and there must be more than a temporary or minor shortage.20

18 See authorities cited in note 17 above.

19 Note, The Dismissal of Tenured Faculty for Reasons of Financial Exigency, 51 Ind. L.J. 417, 422 (1976) (referred to below as "Financial Exigency").

20 Krotkoff v. Goucher College, 585 F.2d 675, 681 (4th Cir. 1978); Financial Exigency, 51 Ind. L.J. at 420.

Case law dealing with termination of tenured employees by reason of financial exigency typically involves "individual" faculty terminations prompted by abolishing or restructuring particular instructional departments or programs, rather than by institution-wide closures or consolidations. In such individual terminations, the courts have generally imposed an obligation on the institution, first, to employ reasonable standards in selecting which faculty to terminate and, second, to take reasonable measures to find alternative employment for the employees.21 In other words, in individual terminations for financial reasons, an institution need not observe the full panoply of procedural due process elements governing conventional dismissals "for cause", e.g., dismissals involving alleged incompetence, insubordination, or other performance-related grounds.22

21 See note 16 above.

22 See, e.g., Krotkoff v. Goucher College, 585 F.2d 675 (4th Cir. 1978).

D. The Russell Case

As pointed out above, there is a paucity of court decisions that delineate the rights of tenured employees when the institution itself ceases to exist. There is, however, a recent case involving legislative consolidation of public institutions: Russell v. Board of Trustees, 502 F. Supp. 916 (D.C. Ark. 1980), aff'd, 657 F.2d 1008 (8th Cir. 1981).23

23 For a recent case involving court ordered consolidation of two public university campuses, see Geier v. Blanton, 427 F.Supp. 644 (D.C. Tenn. 1977), aff'd 597 F.2d 1056 (6th Cir. 1979), cert. denied, 444 U.S. 886 (1979). However, in directing the merger of the predominantly white campus of the University of Tennessee at Nashville into the predominantly black Tennessee State University, the Court in that case did not directly address tenure or employment issues.

The Russell case involved the Arkansas legislature's merger of the Agricultural, Mechanical and Normal College, a predominantly black institution, into the University of Arkansas system. The Court reviewed this merger specifically in the context of the successor institution's lowered mandatory retirement age. It sanctioned the application of flexible standards to tenured employees who might claim abridgement of employment rights as a consequence of a merger:

"The Court concludes that where, as here, an institution-wide policy is being changed by a quasi-legislative action, the notice and opportunity to be heard need not be as personal or as individualized as would be required if one or more individuals were being denied a property interest which still remained generally available to a class of similarly situated individuals. The Court holds that the Board of Trustees was not required to give the plaintiff personalized notice of the contemplated change in the retirement age or give him a personal hearing in which he could be heard individually by the Trustees regarding the change." 502 F. Supp. at 921.

The Court in Russell did discuss the need to provide general notice to the faculty that a change in policy was being considered, as well as a reasonable opportunity for those affected to comment concerning the contemplated change. The Court considered the interests of the faculty to have been adequately accommodated by the following features of the merger:

— a state statute was passed providing for the merger;

— faculty members from both institutions were appointed to the merger committee;

— the committee developed and discussed at length a comprehensive merger plan;

— faculty meetings were held at both institutions at which all aspects of the merger were open to discussion;

— all faculty received a copy of the merger committee's recommended plan.

Although, in Russell, the Court was specifically concerned with a challenge to a policy of the successor institution reducing the retirement age, the case does provide general guidelines that may serve as a suitable framework for a Maryland legislative enactment providing for the closure or consolidation of a public institution of higher education and any consequent measures affecting tenured positions.24 Also potentially useful for reference purposes is the Maryland enactment in 1973, merging the previously private University of Baltimore into the Maryland State Colleges and Universities system: Chapter 694, Laws of Maryland 1973.25

24 The Arkansas "Act of Merger" contained this provision: "The Presidents of [AM&N] and [UA], other officials, faculty and staff members of each institution shall develop plans to provide for an orderly transition of [AM&N] into the University of Arkansas. The Presidents of each institution shall be responsible for designating officials or others of their respective institutions to develop such plans and the Presidents shall be responsible for the coordination of the planning by the two institutions to provide for a smooth and orderly transition. All final plans and agreements shall be in written form. The final plan of merger shall provide for the accommodation [sic] by the University of Arkansas of the employment contracts, tenure rights and academic rank of the faculty and staff of Arkansas Agricultural, Mechanical and Normal College in effect during the 1970-71 academic year." 1971 Arkansas Act 1138 (1971).

25 See also Chapter 480, Laws of Maryland 1920, which merged the Maryland State College of Agriculture with the University of Maryland.

E. Additional Authorities

Finally, we suggest consulting two pertinent publications for legislative planning purposes: O'Neill, Joseph P., and Barnett, Samuel, Colleges and Corporate Change (Conference-University Press, 1980); and Millett, John D., Mergers in Higher Education: An Analysis of Ten Case Studies (American Council on Education, 1976).

26 Mr. Millett notes that, because of legislative consideration, mergers of public institutions (or consolidation of a public college with a private college) take considerably longer than do mergers of private institutions, even absent the politically sensitive issues surrounding closure or consolidation of black colleges. Messrs. O'Neill and Barnett, in addition to identifying major personnel issues, advocate that the institution should assist in outplacement efforts, ranging from letters of reference to complete career counselling and placement services.

The authors of both publications, while advocating their particular point of view, nevertheless note pivotal and peripheral personnel issues deserving attention: e.g., notice to employees, severance pay, unemployment insurance, transitional health and pension plans, and the like.26

V
Conclusion

In summary, it is our opinion that the closure or consolidation of a land grant institution will have no impact on the funding that the State receives under the Morrill-Nelson Act, so long as the General Assembly designates another institution as a land grant college in accordance with the terms of the federal statute.

There are, however, several other issues that the General Assembly should address in any act providing for the consolidation or closure of public institutions of higher education. Principal among them is the manner in which personnel, particularly tenured employees, are to be treated. In our view, it would be prudent for the General Assembly to deal with this paramount issue in the legislative enactment, whether by choosing to delineate precisely how personnel are to be treated or by deferring to institutional governing boards for the crystallization of concrete plans. Of course, the resources of this Office will be available to you and the General Assembly for further guidance and assistance.

Stephen H. Sachs, Attorney General
James J. Mingle, Assistant Attorney General
Avery Aisenstark
Principal Counsel,
Opinions and Advice