Pace v. Hymas

Lois Pace (plaintiff) was a tenured professor at the University of Idaho (Idaho), working in a cooperative extension service offered through the College of Agriculture (the service). Pace’s contract provided that faculty could only be terminated for adequate cause, with the university having the burden of proof. One such cause was financial exigency, defined as an imminent financial crisis that could not be alleviated except by a reduction in employment. In 1981 Idaho, and specifically the service, had to deal with changes to its funding and budget. As a result, the Idaho State Board of Education (the board) declared a financial exigency, and Pace was terminated. Leading up to the decision, the Idaho legislature appropriated funding for the service that was $412,000 less than what Idaho had requested but $773,100 more than it had received the previous year. At the end of 1981, a surplus of $383,500 was discovered in the service’s budget, $112,000 of which was uncommitted. Pace filed suit against members of the board (defendants), arguing that Idaho had violated her substantive-due-process rights. Idaho alleged an affirmative defense, pointing to the existence of a financial crisis. A district court sided with Pace and issued several findings based on the record. The court found that (1) the board did not consider alternatives to reducing personnel; (2) the $112,000 portion of the budget surplus that was uncommitted could have been used to alleviate the financial exigency; and (3) the board had not been informed of the $383,500 surplus. Additionally, the district court shifted the burden of proof onto Idaho to demonstrate that there was an imminent financial crisis. Idaho appealed, raising two issues: (1) the district court erred in requiring it to demonstrate a financial exigency; and (2) whether there was sufficient evidence to support the district court’s finding that a financial exigency did not exist.