Board of Community College Trustees v. Adams

The Board of Trustees of the Baltimore County Community Colleges appeals from the granting of a writ of mandamus requiring it to reinstate Jane Adams and Gwen Nicholson, tenured professors at Essex Community College, appellees, to *665their prior positions. Appellant presents three questions on appeal:

I. Did the trial court commit error in awarding mandamus relief to the Appellees?

II. Did the trial court commit error in ordering the reinstatement of the Appellees to teaching positions that no longer existed?

III. Did the trial court commit error in ordering back-pay to be paid to the Appellees?

The Facts

Certain facts are basically uncontested. Appellees were tenured professors at Essex Community College. In 1991, the governing bodies, the State and county, that funded most of the operations of the college drastically reduced appropriations to the school. The college, believing that personnel and staff cutbacks were inevitable, began to study the programs and courses it offered to determine which, if any, programs were to be scaled back or terminated. A process was put in place by the “Division Chairs,” presumably the heads of the various departments at the college, called the Four Flags for Andy1 program. Under it, each department and program was evaluated in terms of enrollment, section size, and other considerations. A committee was then formed composed of the Dean of Instruction, a representative of the faculty senate, a representative of the Academic Council, and a representative “from the counseling area.” The committee met over a period of several months considering all of the material on the budgetary crisis, enrollment, etc. This committee then made certain recommendations on how the financial difficulties should be addressed. It recommended termination of seven *666programs. The Board of Trustees, appellant, ultimately approved the program terminations in 1993. One of the programs terminated was the “Office Technology” program, in which appellees taught.

Appellees, in March of 1993, were apprised by a dean of the college that they would be terminated on July 1,1994. Appellees submitted additional information to the dean, but the decision remained unchanged. Appellees then initiated the grievance process of the college. Ultimately, the grievance process ended with a hearing before the Board of Trustees— the final step in the grievance process. The Board denied the grievance.2 As a result of the termination of the program, appellees were ultimately terminated from their faculty positions in 1994. At no time were any allegations made that appellees were being terminated for behavioral or qualification problems.

There is a preliminary issue as to the scope of the trial court’s findings that needs to be addressed. The issue is whether the trial court addressed the issue of the financial reasons underlying the terminations. We hold that it clearly did. We explain.

In appellees’ complaint for mandamus relief, they asserted: The purported reason for the termination of [appellees] was the discontinuance of the associate degree program in Office Technology, in which [appellees] had been teaching. [The] decision to terminate [appellees] was “based solely on a review of programs and functions.” Thus, in contradiction of the express terms of their Contracts, [appellees] were not terminated for any of the enumerated grounds therein____

c. The termination of the Office Technology program was not sufficient cause under [appellees’] Contracts to terminate them. [Citation omitted.]

The provisions of the contract executed in the early 1970s, that was apparently a standard form contract of that time, *667upon which appellant’s complaint was based, provided in relevant part:

[A]fter said faculty member has been placed on continuous tenure, his [her] appointment may not be terminated except as provided herein.

... The Board of Trustees may dismiss said faculty member ... for immorality, dishonesty, misconduct in office, incompetency, insubordination, or willful neglect of duty....

The contract contained no specific provisions relating to procedures that would apply if the college was forced to terminate programs for reasons not related to the personal performance or conduct of a professor. It contained no provisions for priorities between tenured professors, reassignments, relocations, retraining or the like. It is agreed by all parties that appellees’ performance and conduct was not in question.

The complaint later asserted that in the grievance process appellees initiated, the Faculty Appeals Committee found that they were not terminated “for any of the reasons set forth in their Faculty Contracts.” They noted that counsel for appellant in a letter to the Faculty Appeals Committee had maintained: “Thus, because the elimination of the program [sic] in question as one means of addressing [the college’s ] financial difficulties, and because the elimination of the programs eliminated the subject matter of the contract, then neither party could be required to perform their obligation under the contract.” (Brackets in complaint; emphasis added.) Appellees also asserted in this complaint that the Faculty Appeals Committee found that no formal “financial exigency” had been declared. They noted that the college’s president denied their grievance in spite of the Faculty Appeals Committee’s recommendations. Appellees ultimately asserted in the complaint that they “have a plain and clear right to have continued employment ... until they are discharged for one of the enumerated reasons set forth in their contract.”

*668Appellant moved to dismiss the complaint, asserting that mandamus was an inappropriate remedy in that there was clearly an adequate remedy at law, ie., a suit for damages. Appellant also asserted that mandamus was inappropriate in that the Board’s final action was nonappealable, leaving only the remedy of damages, and that appellees were improperly using a writ of mandamus to obtain judicial review of the Board’s discretionary action.

Later, appellees filed an amended complaint for mandamus, and in it they again conceded the existence of the “Four Flags for Andy” program that was created to select programs for termination. They acknowledged that “Four Flags” had selected the “office technology” program for termination, but contended that it was done “secretively” and “arbitrarily.” This amended complaint was a superseding complaint in that it did not incorporate the prior complaint. Appellees asserted due process deficiencies in the grievance process, and complained that at the final stage of the grievance process, they had been improperly limited in respect to time allotted to present their position. They noted, again, that appellant’s original contracts were not course specific but that their contracts simply were to “teach in the community college.”

Appellees additionally complained that other professors with less tenure had been rehired and that male professors had been rehired. They also noted that an outside faculty agency had concluded that appellant had acted improperly and that there were still courses at the college that appellees were qualified to teach. That outside agency indicated that it had a belief that the college had improperly failed to relocate the professors.

Again, appellant filed a Motion to Dismiss based mainly on its belief that mandamus was an inappropriate claim. In its new Motion to Dismiss, appellant proffered the following additional argument:

9. That to the extent that the amended complaint seeks to have this court control or direct the statutorily mandated authority over the expenditure of public monies allocated to *669the Board, mandamus relief is likewise unavailable as decisions concerning expenditures of public funds are by their very nature, discretionary actions as to which mandamus relief will not lie. [Emphasis added.]

Ultimately, appellant attempted to file an amended answer to the amended complaint that stated in relevant part:

6. [Appellees] are not entitled to the mandamus relief sought because the termination of their positions as alleged in the Amended Complaint was done because of the severe financial difficulties facing the [appellant at] the time the action was taken, which financial difficulties required the termination of seven different academic programs at the College and the termination of ten full-time tenured faculty positions. The elimination of the seven programs and the termination of the ten faculty positions occurred following a lengthy and detailed review of the academic programs at the College in response to the financial crisis created by cutbacks in state and local funding.

9. [Appellees] are not entitled to the declaratory relief sought as the termination^] ... occurred as a result of the financial difficulties experienced by the College ... requiring termination ... in accordance with generally accepted principles concerning the concept of academic tenure.

The trial court initially rejected the answer as untimely but ultimately permitted the matters in that answer to be presented and litigated and the trial court resolved them — thus basing its findings on a resolution of that issue. In its oral opinion, the court stated:

As such, it is the Court’s opinion that I should strike all of the testimony regarding that particular defense and should grant the writ of mandamus. I suspect as my Uncle Gus Grason who sat on this bench and the Court of Appeals for many years suggested at one time, I am a mere whis[t]lestop on the way to the Appellate Court. So, I am going to continue and decide what I determine to be the actual merits of the controversy here so that the Appellate Court *670will not feel compelled to return it for a decision on the facts itself. [Emphasis added.]

As we shall later indicate, the trial court made findings on the financial situation at the college. His findings were, however, as we shall indicate, clearly erroneous.

Discussion

There is one primary underlying question for this Court to resolve:

May tenured faculty with no behavioral or qualification problems be terminated when the course or program she or he teaches is terminated due to financial difficulties?

The parties have not directed us to any Maryland cases directly on point. We have found only one, County Bd. of Educ. v. Cearfoss, 165 Md. 178, 166 A. 732 (1933), that suggests, in well reasoned dicta, that the answer is yes. We shall address Cearfoss later. Our review of the authorities elsewhere indicates that the great weight of authority supports a holding that tenured professors may be terminated for reasons unrelated to them personally — such as discontinuance of courses, school consolidations, and, as in the case sub judice, financial shortfalls. We shall discuss certain statutory provisions relating to community colleges, several cases concerning the clearly erroneous rule, then distinguish two of our recent cases, and ultimately discuss the relevant case law on tenure.

Relevant Statutes

Maryland Code (1974, 1997 Repl.Vol.), § 16-103 of the Education Article, Powers of board of trustees, provides:

(a) In general. — In addition to the other powers granted and duties imposed by this title ... each board of community college trustees has the powers and duties set forth in this section.

*671(c) General control; rules and regulations. — Each board of trustees shall exercise general control over the community college....

(d) Salaries and tenure. — Each board of trustees may fix the salaries and tenure of the president, faculty, and other employees....

Other sections are also relevant. Section 16-104(b)(3) of the Education Article provides in relevant part that the president of a community college “[s]hall recommend the discharge of employees for good cause; however, any employee with tenure shall be given reasonable notice of the grounds for dismissal and an opportunity to be heard.” Section 16-301, Budget, provides that the board of trustees and the president “shall prepare and submit” a budget to the county governing body. The governing body then reviews the budget and has the power to “reduce it.” Section 16-305 provides the basis for the computation of revenue sources and responsibihty/sharing by the State and the county (or counties in respect to regional community colleges). The budgetary amounts are at all times dependent upon whatever appropriations are made by the respective governing bodies. Section 16-304 requires county governing bodies to make appropriations for certain “major functions” and restricts the colleges by not allowing them to “spend more on any major function than the amount appropriated for it.”

In order to frame the economic situation appropriately, we consider the specific factual parameters of the time. Initially, we discuss a brief history of the statutes establishing the funding of community colleges. In the 1970s, the State’s contribution to community colleges was “5Q%” to “55%” of “current expenses” with per student caps. The county’s share was “28%” to “32%” of “current expenses.” By 1988, the State’s share was “50%” but with per pupil caps. The county’s share remained at between 28% and 32% with caps. The statute required the county to maintain its then current funding or lose any future increases in State assistance. By 1988, there were provisions for supplemental funding as well. The current statute has a much more complicated funding *672procedure in which the State’s contribution is based on the amount it contributes on a per pupil basis to the State’s four-year universities. See the codifier’s note contained in the 1992 Cumulative Supplement. It focuses on the State’s revenue shortages reflected in many other areas of the State budget, as we shall indicate, as the precipitating factor in the reduction of funding to community colleges. It was this reduction that apparently caused the financial problems at Essex Community College and appears to reflect the situation and period at issue in the case sub judice. The note indicates that, notwithstanding the statute’s funding specification, “the amounts due ... may be reduced by the Governor ... ‘if the state experienced certain revenue shortfalls.’ ” Under differing revenue reductions, the Governor was authorized to make reductions in the total budget of the community colleges of Baltimore County of either $14,592,589, $11,542,161, or $8,244,401. See the annotations to Md.Code (1974, 1991 Repl. Vol., 1991 Cum.Supp.), § 16-403 of the Education Article. It was the implementation, or the potential of implementation, of these State budgetary constraints that apparently precipitated the financial problems of the college at issue during the period when the “Four Flags For Andy” and other programs were put in place to address the actual financial problems and anticipated future problems.

There have been at least four cases that have been resolved at the appellate level arising out of the State’s budget problems in the early 1990s. The most recent case is Comptroller of the Treasury v. Nelson, 345 Md. 706, 694 A.2d 468 (1997), involving informal suspension of reclassifications based upon an informal memorandum from the Governor freezing hirings; Workers’ Compensation Comm’n v. Driver, 336 Md. 105, 647 A.2d 96 (1994), cert. denied, 513 U.S. 1113, 115 S.Ct. 906, 130 L.Ed.2d 789 (1995), involving the effect of “lay off’ provisions in respect to State employees whose positions are terminated due to budgetary reductions; Judy v. Schaefer, 331 Md. 239, 627 A.2d 1039 (1993), where recipients of public assistance challenged the Governor’s right to reduce budget appropriations; and Maryland Classified Employees Ass’n v. Schaefer, *673325 Md. 19, 599 A.2d 91 (1991), cert. denied, 502 U.S. 1090, 112 S.Ct. 1160, 117 L.Ed.2d 407 (1992), involving an increase in the work week for State employees. While the cases generally involve direct attacks against the budget reductions as opposed to indirect attacks by the raising of challenges to the results of the budget reductions, there are some similarities. We note that the State’s budgetary problems were widely known throughout the relevant period, as is evidenced, at least in part, by the cases.

In Nelson, the Court of Appeals distinguished the facts of that case from the facts of Maryland Classified and Judy. The controversy in Nelson involved the effect of a memorandum from the Governor that directed a “hiring freeze ” upon a merit-system employee’s right to reclassification. The Court noted that the executive order in Maryland Classified was distinguishable from that in Nelson because it “was clearly authorized by the statute.” Nelson, at 718, 694 A.2d at 474. Distinguishing Judy, it stated in Nelson, “There, we held that the Governor’s reduction of the appropriations was in accordance with a statute which specifically delegated such authority to the Governor.” Id. at 718, 694 A.2d at 474.

The Nelson Court also distinguished its holding from Driver, in which

two state employees argued that, despite the existence of a budget bill provision which expressly eliminated appropriations for their positions, they were entitled to the protection of the merit system rules applicable to laid-off agency employees.

Nelson, at 717, 694 A.2d at 473-74. The Nelson Court noted, in respect to Driver, as we ultimately imply at the conclusion of our opinion, “ ‘the decision to delete from the budget bill the appropriations for [the employees’] positions must be treated wholly as the decision of the General Assembly.’ ” Id. at 717, 694 A.2d at 474 (quoting Driver, 336 Md. at 118, 647 A.2d 96). The Nelson Court then concluded its discussion of Driver:

In support of its conclusion in Driver, this Court relied upon Hopper v. Jones, 178 Md. 429, 13 A.2d 621 [ (1940) ], where *674this Court similarly held that the layoff statute is inapplicable when an enacted budget bill expressly deleted the appropriation for a particular employee’s position.

Nelson, at 717, 694 A.2d at 474.

In the case sub judice, the “lay-off’ statute, Maryland Code (1957, 1988 Repl.Vol., 1991 Cum.Supp.), Art. 64A, § 35(b), is not applicable to appellees and was not, in any event, relied upon by them. It is uncontested, moreover, that the budget legislation applicable here drastically reduced appellant’s budget. Unlike Nelson, in this case the General Assembly allegedly created legislation3 that specifically authorized the Governor to reduce the budget of the Baltimore County Community Colleges, and this is what was actually done.

The Driver Court noted:

Under Article III, § 52, of the Maryland Constitution, the General Assembly, and only the General Assembly, can enact the annual budget for the State. Under § 7-213 of the State Finance and Procurement Article, the Governor, and only the Governor, can reduce appropriations in the budget up to 25% after the budget has been enacted.

336 Md. at 119, 647 A.2d 96. Referring to Hopper v. Jones, 178 Md. 429, 13 A.2d 621 (1940), the Driver Court continued:

The Hopper opinion indicated that the language encompassed the abolition of a position by the agency itself or by the budget process when jobs were reduced without targeting specific positions, but that the language did not cover the total removal of funding for the specific position in the state budget.

336 Md. at 120, 647 A.2d 96.

In Maryland Classified, the Governor, by executive order, increased the work week of many State employees from thirty-five and one-half hours to forty hours per week without a corresponding increase in compensation. The Governor’s *675order directed the Secretary of Personnel and “the appointing authorities to ‘take all actions necessary ... to implement this directive.’ ” 325 Md. at 21, 599 A.2d 91. Maryland Classified Employees Association, which represents many State employees, filed a declaratory judgment action seeking to have the Governor’s order declared void ab initio. They argued that the Code of Maryland Regulations specified a thirty-five and one-half hour work week and that the Governor’s order could not change the work week because (1) since he was not the appointing authority he could not change the work week; (2) that another statute required extra compensation for hours worked above a “work week” as defined in the Regulation; and (3) that the Governor was not empowered to make changes inconsistent with the thirty-five and one-half work week “absent legislative authorization.”.

The employees claimed that they had “a property right in their employment [that] cannot be taken from them without due process of law,” Id. at 23, 599 A.2d 91, and that the Governor’s actions violated the “separation of powers” provisions of Article 8 of the Maryland Declaration of Rights. The employees further claimed:

[T]hat because they “accepted jobs with compensation established on a 35 1/2 hour work week, ... worked at those jobs for many years, ... made child care, home and family commitments based on the State’s promise of a 35 1/2 hour work week, [they] have acquired a vested right ... in the continuation of a 35 1/2 hour work week, and compensation for hours worked in excess of 35 1/2 hours.” Moreover, based upon these alleged facts, the plaintiffs averred that they have an express or implied contract with the State to work a 35 1/2-hour work week, with overtime or compensatory time for all hours worked in excess of 35 1/2 hours; and that as a result of the Governor’s order, their contract with the State has been breached and will cause them monetary and nonmonetary damages.

Id. They also claimed:

[T]hat the Governor’s order violated provisions of Code (1988 Repl.Vol., 1991 Cum.Supp.), Article 64A (the State’s *676Merit System Law), pursuant to which the Secretary of Personnel promulgated the State’s “Salary Plan.” ... The plaintiffs alleged that the Secretary’s Salary Plan has the force of law and includes a rule that the rate of pay for any employment classification cannot be changed except as authorized by the Legislature; and when the salary plan became effective, the duties and classifications of the plaintiffs were those performed within a 35 1/2-hour work week. Consequently, they averred that “the salaries and compensation for the classifications in the salary plan were established by the Secretary and approved by the Governor fully recognizing that the compensation rates were a 35 1/2 hour work week and that the employees would receive additional overtime compensation for all hours worked in excess of 35 1/2 hours per week.” According to the plaintiffs’ suits, to increase the hours of the work week results in lowering the rate of pay for positions within the salary plan, an action that cannot lawfully be initiated except by the Secretary in accordance with the provisions of § 27 of Article 64A; that •the pay plan cannot otherwise lawfully be amended; but that “the Secretary and Governor failed to act as required by said section which requires that the amended pay plan be reported to the General Assembly by the 15th day of a regular session which was not done.” Because of this failure, the plaintiffs asserted that the Governor’s Executive Order, which in effect altered the salary plan, was not within his lawful authority and was therefore invalid.

Id. at 23-24, 599 A.2d 91.

The specific questions raised by the employees were:

1. Whether the Governor’s Executive Order requiring the Plaintiffs to work a 40 hour work week without additional compensation violates the doctrine of Separation of Powers.

2. Whether the Governor’s Executive Order requiring the Plaintiffs to work a 40 hour work week without additional compensation violates the Plaintiffs’ contract rights.

*6773. Whether the Governor’s Executive Order requiring Plaintiffs to work a 40 hour work week without additional compensation violates the Plaintiffs’ procedural due process rights.

4. Whether the Governor’s Executive Order requiring Plaintiffs to work a 40 hour work week without additional compensation violates the State’s Pay Plan Law.

Id. at 25-26, 599 A.2d 91 (emphasis added).

The Court noted:

The [employees] maintained in the circuit court, as they do before us, that the Governor’s Executive Order constitutes a “taking” of the property interests of State employees in contravention of their due process rights. Specifically, they argued that by increasing the number of hours worked without increasing compensation, the Governor deprived them of their right to additional compensation without the traditional due process rights to notice, hearing, and an opportunity to be heard. As to this, Judge Thieme observed that there was no “taking” of a constitutionally protected property interest because the existing regulation of the Secretary of Personnel clearly defined the work week and specified that it is subject to change at the discretion of the appointing authorities. Consequently, he said, that since there was no property interest, there could be no denial of due process. He concluded that “[f]ar from creating an entitlement, the work week regulations affirmatively deny the creation of any property interest in a 35 1/2-hour work week.” In so concluding, the circuit court held that nothing in the Supreme Court cases relied upon by the plaintiffs mandated a different result. We are in full accord with Judge Thieme’s reasoning.

Id. at 35, 599 A.2d 91 (footnote omitted). It then discussed the State pay plan:

The plaintiffs urge us to find that the Governor’s Executive Order violated the State Pay Plan because it was inconsistent with certain procedures required by the Legislature before employees’ salaries may be amended. Specifi*678cally, they claim that the Governor contravened § 27 of Article 64A by altering salaries of State employees without the legislative approval required by that statute. In this regard, the plaintiffs say that a change in the work week is a change in the salary plan, and that such a change cannot be effectuated by an Executive Order.

In its most basic form, it is the plaintiffs’ argument that an increase in the hours of the work week is a “working condition” within the . contemplation of Article 64A, § 27(a)(l)(i) which, because the increase results in a reduction of salaries, constitutes an amendment to the pay plan. Hence, they say that this criteria for establishing rates of pay had to be factored into an amended pay plan and reported to the General Assembly before it could be implemented.

Id. at 36-37, 599 A.2d 91. The Court then opined:

The fiscal year 1991 State Budget documents show that the increase in the work hours resulted in a cost-savings through the denial of additional appropriations for new positions and by reducing overtime costs. The increased hours did not cause a reduction of any salaries within the pay plan. Because there was no amendment to the pay plan, no notice to the General Assembly was required under § 27(a)(3)(v). We, therefore, share Judge Thieme’s conclusion that the Governor’s Executive Order did not effectuate an amendment to the State pay plan.

Id. at 37-38, 599 A.2d 91.

Judy is somewhat more akin to the instant case than Maryland Classified. The appellants in Judy were recipients of funds from several State programs and agencies. There, section 7-213 of the State Finance and Procurement Article authorized the Governor, with the approval of the Board of Public Works, to reduce “any appropriation” by up to twenty-five percent if the Governor perceived the appropriation to be unnecessary. As we indicate elsewhere in the case sub judice, similarly, in this case, a statute governing the funding of the *679community college at issue permitted the Governor to reduce the appropriations to the Baltimore County community colleges by certain specified, substantial sums, upon the happening of revenue receipt reductions from specific taxes.

In Judy, the Governor reduced the budget of the specific agencies by several millions of dollars. Here, he apparently did the same, albeit pursuant to a different statute. The Judy Court noted that, “pursuant to an order signed by the Governor, the Comptroller adjusted the accounts of all state agencies to reflect the reduced appropriations.” 331 Md. at 242, 627 A.2d 1039 (footnote omitted). Thereupon, Judy filed a petition to enjoin the Governor and others “from reducing her public assistance benefits.” Id. at 243, 627 A.2d 1039. Much like the employees in Maryland Classified, Judy argued constitutional issues, including separation of powers, lack of authority, and that the Governor’s action was “arbitrary, capricious and unsupported by substantial evidence.” Id. The Court noted that the appellees, among other arguments, had asserted that the Governor’s action “was not judicially reviewable for arbitrariness, capriciousness or lack of evidentiary support.” Id. at 243-44, 627 A.2d 1039.

Judge Eldridge, for the Court, in an extensive history of the budgetary process, stated:

As the trial court recognized, fundamental to the resolution of this dispute is the nature of Maryland’s executive budget system. This Court, on several occasions, has discussed the requirements and history of that system. See Kelly v. Marylanders for Sports Sanity, 310 Md. 437, 450-461, 530 A.2d 245 (1987); Bayne v. Secretary of State, 283 Md. 560, 567-569, 392 A.2d 67 (1978); Md. Act. for Foster Child, v. State, 279 Md. 133, 140-153, 367 A.2d 491 (1977); Panitz v. Comptroller, 247 Md. 501, 505-509, 232 A2d 891 (1967); McKeldin v. Steedman, 203 Md. 89, 96-103, 98 A.2d 561 (1953); Dorsey v. Petrott, 178 Md. 230, 241-244, 13 A.2d 630 (1940); Baltimore v. O’Conor, 147 Md. 639, 644-646, 128 A. 759 (1925). We have not, however, dealt with the authority of the Governor to reduce an appropriation after the budget bill has passed.

*680These limitations were seen as essential to the task of devising a system that would avoid the accumulation of a deficit and ensure that the Governor’s plan of proposed expenditures could not be amended in such a way as to exceed estimated revenues. Article III, § 52(5a), expressly mandates that the Governor propose and maintain a balanced budget. The Goodnow Commissi