Rutgers Restructuring Turns Ugly

Tara Nurin | June 27, 2013 | More Issues, Politics
Accusations of revenge and retaliation greet Sweeney proposal to dissolve Board of Trustees

Rutgers rip
Characterizing it as “unconscionable,” “unconstitutional,” and “illegal,” the Rutgers University Board of Trustees roundly denounced a bill that’s been fast-tracked by legislative leaders without a committee review. The measure seeks to abolish the board and transfer its authority to the school’s Board of Governors.

The legislation was formally introduced Monday by Senate President Steve Sweeney (D-Gloucester), who is being accused of seeking revenge after the board thwarted his proposal to split off Rutgers-Camden and join it with Rowan University.

After holding a closed session at an emergency meeting called yesterday, the trustees issued a resolution charging that the bill has no stated public purpose and calling it an “unwarranted politically partisan intrusion into the governance and operation of Rutgers.” Outside counsel and the university administration, including the senior vice president and general counsel, concur with the trustees.

The bills (S-2902/A-4315) had their first reading on Monday, soon after they were posted by Sweeney and Assembly Speaker Sheila Oliver (D-Essex). They’ve already had their second readings, but as of press time, the bills were not listed on either chamber’s schedule.

Meanwhile, Assemblyman John Wisniewiski (D-Middlesex) alerted his Democratic colleagues yesterday that in response to the Sweeney bill, he plans to introduce his own legislation today calling for a commission to conduct a six-month study on Rutgers’ structure of governance.

The board’s resolution also says that passing the bill could jeopardize the move to incorporate the University of Medicine and Dentistry of New Jersey (UMDNJ) into Rutgers, set to take place Monday. What’s more, some argue that this entire situation is prompted by a desire for revenge on the part of Sweeney who didn’t get his way with the original restructuring bill.

Sweeney dismisses such allegations. In a statement released Monday, he called the current system of governance at the university unworkable.

“Not only does that complicate the process of getting things done at the University, but it also waters down accountability,” he said. “When things go wrong at Rutgers, as they have in many instances over the past several weeks and months, we get fingers pointing in a thousand different directions as to who can do what to solve the issue. That must end.”

The Letter of the Law

As noted, Sweeney’s bill would give control of the university over to the Board of Governors. Beginning Monday the board will consist of 15 members — eight of whom will be appointed by the governor. Under the new legislation, all 15 members of the board would be gubernatorial appointees — with one coming from Camden County and one from Essex County. The latter would be recommended by the Senate president and House speaker.

“They are going to dismantle a board that has existed since 1766 with no deliberation, no hearings, no opportunity for public comment. This is payback pure and simple,” emailed Andrew Shankman, a Rutgers-Camden history professor who spearheaded much of last year’s resistance to the restructuring.

That “payback” — at least in theory — has everything to do with the original New Jersey Medical and Health Sciences Education Restructuring Act, passed last spring after months of controversy and rewrites. It is scheduled to go into effect this coming Monday.

Though a spokesperson for the Senate Democratic Office, which released Sweeney’s statement, did not return repeated calls and emails for comment, it’s speculated that, at least officially, Sweeney rushed the bill because he wants to get approval before Monday.

The restructuring act, also sponsored by Sweeney, originally sought to spin the Rutgers-Camden campus off from the university. After intense negotiations and threats of legal action from the Board of Trustees, the final version retained the campus while dismantling UMDNJ and merging most of it into Rutgers.

Gov. Christie and Sen. Don Norcross (D-Camden), who was a co-sponsor of the original act and whose older brother, Democratic boss George Norcross, pushed strongly for it, disputes the accusation that retaliation is motivating Sweeney.

“It’s about how can we make things run more efficiently. I think this is something that was talked about long before the reorganization bill came up but people then thought that would be perceived as retaliatory. But here we are a year later and it’s time to . . . look very closely at it,” Sen. Norcross said.

Breach of Contract

As stated in the Trustees’ resolution, in the event that the bill is passed, the board will file an order for a permanent injunction against its implementation and a judgment declaring the law a “breach of contract, a violation of Rutgers law, and unconstitutional.” According to Shankman, the board has reengaged former Solicitor General and constitutional attorney Neil Katyal, who was hired by the board last year to prepare a legal defense strategy in the event that Trenton passed a version of the bill that it didn’t like.

This time, Rutgers-Camden constitutional law professor Allan Stein says the legislature’s proposal is even more clearly unconstitutional than the last.

“This bill is unambiguously unconstitutional. It’s as clear as any legal question can be,” he said.

According to a contract signed in 1956 between the Board of Trustees and the state, the board cannot be dissolved without consent, and Article I Section X of the U.S. constitution stipulates that no state may abrogate a contract. The Supreme Court reaffirmed that principle in 1819.

In addition, New Jersey’s own constitution states that Trenton may not pass any law impairing the obligation of a contract, whether between two outside parties or itself and another party.

“It’s particularly suspect when a state passes a law breaking its own contract,” said Rutgers-Camden law professor and state constitution expert Robert Williams by phone yesterday. “What a world it would be if you could make a pact with the state, then it passes a law that says the deal’s off?”

Rutgers’ Dual Boards

The state Office of Legislative Services issued an opinion yesterday clarifying that any attempt to dismantle the board may require approval from both governing boards. Last year, the nonpartisan office asserted that the Legislature cannot make any significant changes to the university without the consent of both of its boards, although an attorney hired by Sweeney at the time found otherwise.

The concept of a dual board is unusual in academia, but at Rutgers, it arises from the fact that the college was private and governed solely by the Board of Trustees until 1956, when members signed a binding agreement to turn over operations to the state in exchange for funding and assurances that the school would be kept free of political interference.

It was then that the two parties created a Board of Governors to oversee daily operations while the trustees maintained an advisory role and final authority over what the bylaws call “fiduciary responsibilities over assets of the university in existence before 1956.”

However, the trustees do appoint five members to the Board of Governors, and the 59-member trustee board, which currently has only five gubernatorial appointees, has sole discretion to nullify the contract if it feels the state is mismanaging its obligations.

In his statement, Sweeney seems to suggest that too many layers of governance complicated the athletic department scandal that resulted in the firing and resignations of several top departments heads, including former athletic director Tim Pernetti. Yet based on information in the public domain, the Board of Trustees as a whole was at no point involved in the decision-making. It was was not even made aware of the videotape that exposed the misconduct of the school’s basketball coach and sparked the national controversy.

In unpublished op-ed obtained by NJ Spotlight, Rutgers professor Stein further refutes Sweeney’s assertion. “In its 56-year history since handing governance to the Board of Governors, the Board of Trustees has made exactly one important decision: it refused to give its Camden campus to Senator Sweeney, and the Board of Governors concurred in that decision. It has almost no other role in the operation of the university. By “unwieldy,” the Senator means “they prevented me from taking over their university,” he wrote.

Selling the School

The university and its faculty union have both formally opposed the bill, and Board of Governors member and former New Jersey lawmaker Gordon MacInnes says he hopes his old colleagues will refrain from rushing the bill through.

“This is a very dramatic change in the governance structure of the university, and I think it’s terribly important that it not be done in haste. I know that when things are done quickly like this there is often great regret, and I wouldn’t want that to happen,” he said.

MacInnes, like others, points out that were the university to alter its governance, the low-interest bonds it sells would probably struggle to find buyers — and that could mean it would incur higher interest rates that he believes could cost the school tens of millions of dollars. As it stands, administrators have worked hard to attract the buyers it needs to refund the UMDNJ bonds, which is necessary to complete the merger with UMDNJ.

As the Board of Trustees and others warned at length during last year’s legislative process to pass the restructuring act, the school’s credit rating has already been downgraded and changed to a “negative” earlier this month as a result of the university’s taking on the debt of the lower-rated UMDNJ.

“If the debt for UMDNJ cannot be defeased then UMDNJ needs to continue to exist. It’s legally obligated to honor its agreement with its debt holders,” Rutgers Senior Vice President of Finance and Administration Bruce Fehn said after the meeting.

In published news reports, Sweeney calls the bond argument a spurious one. “They’re putting out information that this is going to hurt their bonding [of school debt]. That’s flat-out false,” he said. “There are bonding law firms out there that will tell you that. I’m sure [school attorney] John Farmer will have someone write a letter about that, but it’s not true.”

But Fehn counters, “If there’s a material change to the structure and finances of the university, people who’ve bought the bonds may reconsider their decision to purchase before they close on Monday.”