Inside Higher Ed:  Shared Crisis:

Citing a recent wave of unilateral moves to eliminate academic programs
by university administrators claiming financial crisis, the American
Association of University Professors today released new guidelines
designed to tighten the definition of financial exigency and increase
faculty participation in deciding whether to close programs. …

AAUP accepts that academic programs may be  cut due to true financial
exigency or sound educational reasons, said Bérubé, professor of English
at Pennsylvania State University and immediate past president of the
Modern Language Association. But some of the cuts in recent years have
not been based on a “you’re bankrupt and owe money to the mob tomorrow”
imperative, but rather “festering” financial crises related to the
greater economic climate in which administrations have looked to cut
instructional costs before other, extracurricular priorities, such as
athletics. …

John Lombardi, a former president of the Louisiana State University and
expert on institutional finance, said that financial exigency has
historically been a point of contention between administrations and
faculty precisely because it means different things to different groups
at different levels of the institution. Union groups tend to hold that
any available funds should be spent on keeping jobs, while
administrators have to balance a wider variety of obligations.

American Association of University Professors, The Role of the Faculty in Conditions of Financial Exigency:

In recent years, American institutions of higher education have begun
closing programs that should be part of any serious educational
institution’s curricular portfolio and have been implementing policies
that further erode the ranks and the discretionary power of the tenured
professoriate. Program closures on the scale we have recently witnessed
represent a massive transfer of power from the faculty to the
administration over curricular matters that affect the educational
missions of institutions, for which the faculty should always bear the
primary responsibility. In most cases the decisions to close programs
are made unilaterally and are driven by criteria that are not
essentially educational in nature; they are therefore not only
procedurally but also substantively illegitimate. Increasingly,
administrators are making budgetary decisions that profoundly affect the
curricula and the educational missions of their institutions; rarely
are those decisions recognized as decisions about the curriculum, even
though the elimination of entire programs of study (ostensibly for
financial reasons) has obvious implications for the curricular range and
the academic integrity of any university.

This report responds to this state of affairs in two ways: one, by
making recommendations intended to strengthen shared governance and
faculty consultation with regard to program closures and, two, by
addressing the gap between Regulation 4c and Regulation 4d of the AAUP’s
Recommended Institutional Regulations on Academic Freedom and Tenure.
Regulation 4c pertains to financial exigency, and Regulation 4d
concerns program discontinuance based on educational considerations.

First, as to governance and consultation, this report insists that
faculty members must be involved in consultation and deliberation at
every stage of the process, beginning with a determination that a state
of financial exigency exists. We offer specific recommendations for such
faculty involvement. …

Second, this report proposes a more detailed and specific definition of
“financial exigency” that will extend the standard of exigency to
situations not covered by our previous definition. As set forth in the
introduction, our new definition names a condition that is less dramatic
than that in which the very existence of the institution is immediately
in jeopardy but is significantly more serious and threatening to the
educational mission and academic integrity of the institution than
ordinary (short- and long-term) attrition in operating budgets.
Financial exigency can legitimately be declared only when substantial
injury to the institution’s academic mission will result from prolonged
and drastic reductions in funds available to the institution and only
when the determination of the institution’s financial health is guided
by generally accepted accounting principles. In proposing this new
definition, however, we insist that financial exigency is not a
plausible complaint from a campus that has shifted resources from its
primary missions of teaching and research toward the employment of
increasing numbers of administrators or toward unnecessary capital
expenditures.

The AAUP has long acknowledged that a college or university can
discontinue a program of instruction, but our standard has been that if
the discontinuation is not undertaken for financial reasons, it must be
shown to enhance the educational mission of the institution as a whole;
we have long acknowledged that programs can be cut in times of financial
exigency, but only if an appropriate faculty body is involved in the
decision-making process, beginning with the determination of whether an
institution is experiencing bona fide financial exigency. But by and
large, the program closings of recent years do not meet any of these
standards. They represent a violation of the principles on which
American higher education should operate and must be contested by a
vigorous, principled, and informed faculty.