AR-03-03: Northern Marianas College - Facts and Circumstances Surrounding the Termination of Employees of Northern Marianas College (Issued 2/19/03)

Summary

This report presents the Office of the Public Auditor’s (OPA) evaluation of the facts and circumstances surrounding the termination of 11 employees of the Northern Marianas College (NMC) as part of a reorganization announced on September 23, 2002. The evaluation’s objectives were to determine: (1) NMC’s basis for terminating the 11 individuals; (2) whether NMC adhered to applicable laws, NMC policies, and employment contract terms in terminating the 11 employees; and (3) the fiscal impact of the terminations.

Our review of documentation and responses from structured interviews with NMC Regents, staff, faculty, terminated individuals and the NMC President showed that the NMC Board of Regents (the Board) entrusted the NMC President (the President) with broad authority to conduct a reorganization and was very supportive of the way it was conducted. OPA found that the President conducted the reorganization quickly, but most individuals exclusive of Board members perceived they had little, if any, input into the reorganization. Most respondents, other than Board members, disagreed with the manner in which the reorganization was conducted indicating it was insensitive to employees being terminated or reassigned. OPA obtained no direct evidence showing that employees were personally targeted for termination. However, many NMC officials and employees suspected that the opinions of a few key individuals may have helped the President make his decisions.

The documentation supporting the President’s reorganization was less than thorough as it was only accompanied by the new organization chart and a draft memorandum to the Board that did not adequately specify what was to be done and when, how it was to be implemented, and who were to be affected. While the Board informally acknowledged the President’s decision on the reorganization, it: (a) did not vote on the reorganization even though the previous organization chart was included as Board policy and a Board vote was needed to change this policy, (b) did not meet as a full board monthly as required by Board policy, and (c) did not provide Board minutes in a timely manner on a matter of concern to the community. Also, the President chose not to follow reduction-in-force (RIF) procedures even though NMC Policy 4358 includes "program restructuring" as a condition warranting compliance with RIF procedures.

The President failed to adequately involve NMC staff in the reorganization process contra to one of the college accreditation standards to be followed. The President terminated employees by using the "without clause" provisions of the employment contracts. Contracts for six of the 11 terminated employees had already expired when they were given termination notices. NMC continued to pay terminated employees although these employees were instructed to discontinue providing services. NMC filled four position vacancies without advertising them contra to Board policy. Also, NMC failed to comply with the Administrative Procedures Act requiring it to publish its regulations in the Commonwealth Code. Also, after one of the 11 terminated employees appealed his termination, the Civil Service Commission issued an opinion stating that NMC employees are covered by the Civil Service Act.

Finally, it appears that first year savings resulting from the reorganization will amount to about $250,000. This will increase to $523,743 annually after the first year when savings were reduced by the need to make lump-sum payments of accrued annual leave together with 60 to 90 days of termination pay.

Accordingly, we recommend that:

1. the Board Chairman review with the Board of Regents their responsibilities as Board members, begin to meet on a more timely basis as a full Board, and promptly document their actions as required by Policy;
2. the Board Chairman reiterate to Board members the need to thoroughly review policy level actions involving: (a) organizational structure in light of NMC goals and objectives as required by Board Policy 1000, and (b) the establishment of faculties or staff as required by Board Policy 1009;
3. the Board Chairman and the President strongly consider strengthening processes in place for obtaining broader employee involvement in NMC decisions by implementing a policy to address it and thus comply with WASC accreditation standards;
4. the President (a) document his reorganization with objectives, time-lines, and fiscal impact; (b) identify positions affected; (c) provide a mechanism to assess whether the results have met the reorganization’s objectives; and (d) identify legal and human resource issues such as compliance with applicable laws, policy, and accreditation standards;
5. the Board Chairman review with the Board of Regents its policy on reductions-in-force (RIF), and clarify when RIF procedures should apply;
6. the President inquire with the Western Association for Schools and Colleges (WASC) as to whether or not the Administration Procedures Act should apply to NMC; if WASC determines that they should apply, the President should ensure that NMC policies are published as regulations as required by the Administrative Procedures Act; if WASC determines they do not apply, the President should bring this matter to the Board to propose legislation which would exclude NMC from the Act;
7. the President seek legal determination as to whether four recent reassignments were made in accordance with Board policy and, if not, take appropriate action to rectify the situation;
8. the President seek legal determination as to the legality of employing and compensating staff who have no valid NMC contracts; and
9. the President seek legal determination as to the legality of compensating individuals instructed not to work at NMC.
10. The President and the Board consult with its legal counsel to determine the effect of the Civil Service Commission’s decision on NMC employment status.

In its letter response dated January 31, 2003, NMC agreed with Recommendations 3 through 6, as well as 8 and 9, and did not adequately respond to Recommendations 1, 2, and 7. Recommendation 10 was later added.

Download Report No. AR-03-03
Go to Reports Page

N O T I C E

OPA Reports and Decisions are published in Adobe Acrobat (PDF) format. You will need the FREE Acrobat Reader to view them. Click here or the icon to get it.