## Facts

- Edwin G. Scheuer, Jr. was a tenured assistant professor in Creighton University’s School of Pharmacy, within the Health Sciences Division.
- Faculty employment was governed by a university handbook treated as part of the employment contract; it allowed termination of tenured faculty only “for cause,” including “financial exigency.”
- The School of Pharmacy’s budget relied in part on federal “capitation funds,” which were threatened by declining enrollment and reduced federal support.
- The School of Pharmacy had operated at a deficit for several years; the Health Sciences Division projected a substantial upcoming deficit, with a significant share attributable to Pharmacy, plus increased expenses associated with moving into a new building.
- The university cut non-salary expenses and eliminated non-faculty positions but concluded additional reductions were necessary and decided to terminate four tenured faculty positions in the Health Sciences Division.
- Scheuer was selected for termination because his course could be covered by another faculty member with greater seniority.
- Scheuer sued for reinstatement, alleging breach of his tenure contract because “financial exigency” did not exist at the university-wide level; the trial court dismissed his petition.

## Issues

1. Under the handbook/contract, must “financial exigency” be shown at the level of the university as a whole, or may it be established at the division or school level?
2. Did the evidence show a “financial exigency” within the meaning of the parties’ contract sufficient to justify terminating a tenured faculty member?

## Decision

- The Nebraska Supreme Court affirmed the trial court’s dismissal of Scheuer’s petition.
- The court held the contract did not require proof of a university-wide financial exigency; a bona fide exigency in the relevant budgetary unit (the Health Sciences Division/School of Pharmacy) was sufficient.
- The court found the evidence supported the existence of a genuine financial exigency in the Health Sciences Division and Pharmacy School.
- The court declined to treat post-dated professional association standards as controlling contract terms.

## Legal Principles

- A faculty handbook may constitute part of a private university’s employment contract and is interpreted under ordinary contract principles.
- Absent clear contractual language requiring an institution-wide crisis, “financial exigency” may be assessed at the level of the organizational unit that actually bears budgeting and financial responsibility.
- External standards not incorporated into the contract, especially those adopted after the relevant employment and termination events, are not binding in construing contractual grounds for termination.
- Where a bona fide financial crisis exists and the institution has taken meaningful cost-cutting steps, courts generally will not second-guess the institution’s selection of positions to eliminate if the decision is consistent with the contract.

## Conclusion

The court held that Creighton did not breach its tenure contract by terminating Scheuer for “financial exigency” because the handbook permitted termination for cause, division-level exigency satisfied the contractual standard, and the record supported a real financial crisis in the Health Sciences Division and School of Pharmacy.


Scheuer v. Creighton Univ., 260 N.W.2d 595 (Neb. 1977)