Handbook of Operating Procedures

Guidelines for the Closure of an Organizational Entity

The following guidelines and checklists have been developed to assist administrators responsible for a closure to identify the applicable administrative issues that must be addressed and acted on to ensure an orderly closing of an organizational entity.

To ensure an orderly transition of any closure, one individual should be designated with responsibility and authority in a closure. In some cases, a "closure team" should be established. The team should include appropriate administrative and/or academic representatives involved in the closure; the individual assigned primary responsibility and accountability for the closure or his/her delegate will have responsibility for coordinating the team. The team approach is multipurpose: it serves as a conduit for clear communication across multiple organizational lines; it facilitates the identification and resolution of issues in a timely manner; and it facilitates evaluation of the progress of an orderly closure and revision of the tentative target date, as necessary.

The following questions should be considered when determining whether a closure team is necessary:

• Will the closure have an impact on other departments? If so, which departments?
• Will the closure have an impact on academic endeavors?
• Who are the "customers" of the unit to be closed?
• What will be the impact on patients, contractual clients, research, or other contractual agreements?
• How will factors such as regulations, licenses, permits, registrations and similar legal requirements affect the closure?

The guidelines and checklists are to be used to assist closure team personnel through the closure process. The checklist will also serve as a "sign-off" by responsible parties confirming that all issues have been addressed and are complete. For additional assistance, contact the appropriate department.

I. PLANNING

• Identify key person(s) responsible and accountable for the administrative closure in the affected unit and identify a key person in the operating/administrative unit responsible. (University Leadership)
• Evaluate and establish a closure team when developing the closure plan to ensure responsibility of the various aspects of the closure are assigned and authority is appropriately delegated. (Head of the Operating Unit)

II. COMMUNICATION

Notify Institutional Advancement when discussions are first taking place about the possibility of closing a department/unit. (Closure Team Leader) Note:  It may be necessary to notify all communication team leaders within Institutional Advancement.

Appoint a person to give status reports to Institutional Advancement as meetings progress so that a communication strategy can be developed. (Whether the closure takes place or not, Institutional Advancement staff should be informed of ongoing discussions.) The communication strategy should be a well-organized, straightforward strategy that addresses the impending closure using three individual plans. These plans, which can be developed simultaneously or as appropriate to a given situation, are as follows: (Closure Team Leader)

Media Plan

1. Develop a media plan before a decision has been made on the closure.
2. Identify an official spokesperson who will be available to speak with the media. This person should be knowledgeable about the facts regarding the possible closure and comfortable and experienced in dealing with the press.
   • Institutional Advancement – Media Relations , in conjunction with the official spokesperson, should be the official conduit of information to media outlets and should be responsible for communicating an impending closure in the most favorable manner possible. (For more information on procedures, refer to HOOP Policy 5 Handling Communications with the Media.) The Media Relations Team can be reached 24/7 via the Media Hotline at 713.500.3030.

Internal Plan

1. Consult with Human Resources (“HR”) for review of issues related to closure and established policies and procedures (i.e., necessary documentation, identification of affected employees, and coordination of required notification period). (Closure Team Leader)
2. Inform employees and those directly affected by the plan of facts to avoid unnecessary rumors, concerns, etc.  Administration should announce the closure to employees directly affected at an assembly-type meeting. At that time, administration will address personnel issues as well as answer questions. (Leadership)
3. Communicate information about the closure to other units that will be affected by the closure. (Leadership)
4. Announce the closure to other  employees and students not directly affected by the closure via a letter from  administration or the appropriate dean and/or via mass e-mails, News on the Go, The Leader Update, or the intranet. (Institutional Advancement)
5. Once the actual date of closure has been determined and approved by the appropriate administrative personnel, official notification of personnel affected by a closure can begin in accordance with established policies and procedures in the Handbook of Operating Procedures.

Note: For information regarding notification to classified employees, refer to HOOP Policy 52 Reductions in Force; and for administrative and professional employees, refer HOOP Policy 130 Separation Due to Reorganization or Closure. Appropriate documentation must be submitted to HR and approved prior to dissemination of official written notification to employees.

Due to their special employment relationship with the university, faculty will be treated according to established policies and procedures of UT System in any such events, depending on the basis for the decision to eliminate an organizational entity or abandon a program. (Refer to HOOP Policy 120 Abandonment of Academic Positions or Programs.)

External Plan

1. Develop an external plan to ensure appropriate communication with any external customers/clients that have an affiliation or prospective affiliation with the unit to be closed. Customers/clients could include donors, patients, referring physicians, agencies, students, alumni, grantors, hospitals, clinics, other medical centers and medical service firms. (Closure Team Leader)

Donors

• Send a list of all endowments and gifts from private funding sources designated to support that entity to the Vice President of Institutional Advancement, UTHealth, 7000 Fannin, Suite 1219, Houston, Texas 77030, along with copies of all documents/correspondence relating to the gifts for the university's central development files.
• Prior to closing, schedule a meeting between a designated representative of the administration of the closing entity and the Assistant Vice President for Fundraising and Advanced Programs to review and discuss all requirements relating to the continued stewardship of endowed funds and to ensure the university  is in compliance with the original intent of the donor(s).
• The Office of Institutional Advancement, in concert with the Office of the President, will initiate all contact with donor(s) to ensure that their interests continue to be met. (Office of Institutional Advancement)

Patients, Former Patients, Referring Physicians, and Health Care Agencies

• It is essential to notify  patients in advance of a closure to ensure continuity of services.
• In any communication to patients and former patients, include service options available and other pertinent information, such as the name of a physician referral and address, the address where patient records are located and the procedure for release of patient records (e.g., how to obtain and/or transfer records if within the university), notification of telephone number change/disconnection, billing/collection information.
• Notify referring physicians and appropriate agencies of program closure as appropriate.

Students and Alumni

• Initiate discussions with current students regarding the timing of closure, impact on degree programs, and referral to other acceptable programs in the area.
• Refer prospective students to other acceptable programs in the area if at all possible.
• Inform alumni of any changes in record keeping.

Others

• Initiate discussions with entities with whom we have contracts that are affected by a possible closure.

It is also important to determine which other clients will be affected by a program closure to ensure appropriate communication in a timely manner.

III. AUDITING

• At the discretion of the president or executive vice presidents, contact the Office of Auditing and Advisory Services to assist in any capacity deemed appropriate in the closing of an organizational entity. Any requests from other individuals for the services of Auditing and Advisory Services should be directed to the president or executive vice presidents. (Closure Team Leader)

IV. FINANCE

NOTE: It is essential that an individual who is responsible and accountable for the financial aspect of the closure be identified. An individual responsible for continuity following the closure must also be identified. The primary administrative individual with overall responsibility for the closure must sign off on the closure/transfer of all accounts. Important issues to be addressed include the transition/transfer and termination of organization manager responsibility on all accounts. Computer system access authorization for changing/updating/terminating are to be followed. The following issues require decisions and actions prior to closure: (Closure Team Leader)

Accounting

• Dispose of residual fund balances.
  1. Determine if a residual fund balance surplus/deficit exists. If a deficit exists, determine from where it will be covered; if a surplus exists, determine to where it will be transferred.
  2. If appropriate, have account organization manager(s) changed and notify General Accounting where any subsequent ledger sheets should be sent (if other than to the organization manager).
• Settle unencumbered obligations.
  1. Determine who will initiate transactions to settle unencumbered obligations and what procedure will be followed to obtain approval to pay them.
• Anticipate possible special reporting and/or audit requirements.
  1. Coordinate with Auditing & Advisory Services to determine if any special external reports are (or will be) due and determine who will prepare, and who will review/approve, these reports.
  2. Coordinate with Auditing & Advisory Services to decide whether any special audits of the closed entity are likely to be conducted. If audits are likely, decide where/how/by whom the audit team will be accommodated and, if possible, have them contact the audit team.
• Settle accounts receivable balances.
  1. Determine who will be responsible for subsequent billings, who will be responsible for and will apply collections, and who will initiate/approve any patient refunds.
  2. Determine who will resolve any credit balances, and what guidelines will be followed, who will be responsible for any subsequent researching of patient accounts, and who will process/approve any bad debt write-offs.
• Take necessary actions regarding other non-capital assets or liabilities.
  1. Determine whether other non-capital assets or liabilities exist, and determine appropriate actions.
  2. Reconcile and turn in Petty Cash/Change Fund to the Bursar’s Office.
  3. Identify inventories for possible resale (contact Capital Assets Management).
  4. Identify and resolve any deposits held that belong to others.
  5. Identify and close/transfer responsibility for any special bank accounts.
  6. Identify any office supplies and their disposition.
  7. Identify any outstanding travel advances and/or reimbursement requests.
• Expedite closing blanket encumbrances or pre-encumbrances.
• Review all blanket encumbrances or pre-encumbrances and decide how they can be closed and who will close them.

Capital Assets Management

• Facilitate reconciliation and transfer of capital assets-equipment inventory.
  1. Identify an individual in the entity who is responsible for and coordinates the reconciliation and transfer of the equipment inventory.
     • This individual should schedule a preliminary meeting with Capital Assets Management (CAM) to review the current status of the inventory and to discuss UTHealth policies and procedures related to the equipment disposition.
  2. CAM must take a final inventory prior to the closure and certify that proper documentation and approvals have been obtained to remove the assets from the organization's inventory.
  3. The individual responsible for the equipment as well as the manager of capital assets management must sign-off on the final inventory report. (Refer to the Capital Assets Management Handbook.)

Contracts and Grants

A. Service Contracts and Others for Which Services Are Provided or Received

• If contracts exist, contact the Office of Legal Affairs to review them for terms regarding termination or reassignment. Most contracts have, at best, a 30- or 60-day notification clause. Some contracts may not have an "out" clause until the contract terminates according to its terms. Therefore, depending on the time required to close an entity, negotiations with the other party may be required.
• Notify the Post Award Finance Team (PAF) of any changes occurring.

B. Sponsored Project Activities

• Identify an administrative individual and principal investigator(s) responsible for the contracts and grants in the entity and an individual responsible for continuity following the closure.
  • The primary individual responsible for the closure must sign off on the closure/transfer on all contracts and grants accounts.
• On notification of the closing of an organizational entity, the Office of Sponsored Projects (OSP) will provide the closing entity with a report  of those sponsored projects requiring action.

C. Pending Sponsored Projects

Grants:

• To change the principal investigator, revise appropriate pages of the application and resubmit it to the granting agency through OSP.
• To relinquish the proposal, notify the agency, in writing through OSP, of proposal relinquishment.
• If accounts are on guarantee that are being terminated, notify PAF.

Contracts:

• To change the principal investigator, secure the funding agency's approval. Notify OSP in writing of the new principal investigator, and OSP will revise appropriate contract pages.
• To terminate execution of the contract, notify the agency, in writing through OSP, of the university's intent to terminate the contract prior to execution.

D. Active Sponsored Projects

Grants:

• To change the principal investigator, submit a written request (include curriculum vitae), through OSP, for a change of principal investigator to the agency.
• To transfer the grant along with the principal investigator to a new institution, secure the approval of the department chair, dean, receiving institution, and funding agency. Also, ensure all progress reports, final invention statements and/or any other documents required by the funding agency have been completed. Once the appropriate approvals have been secured and reports submitted, notify OSP and the grant will be relinquished.
• To return the award, provide the funding agency with a progress report and request that OSP return unspent funds.
• Notify PAF of any pending changes.

Contracts:

• To change the principal investigator, secure the funding agency's approval and notify OSP in writing of the change. OSP will execute the appropriate contract amendment.
• To terminate the contract, notify the funding agency (consistent with contract terms), in writing through OSP, of the termination.
• Notify PAF of any pending changes.

E. Terminated Sponsored Projects

• Individual projects should be reviewed to ensure all obligations have been met and all outstanding receivables received. On completion of the review, notify PAF, in writing, all obligations have been met and request the account be closed.

V. FACILITIES MANAGEMENT

• Identify key person(s) responsible and accountable for the closure or partial closure of a facility in the affected unit and identify an individual responsible following the closure to ensure continuity of required services.
• Contact the appropriate administrative departments for assistance in the closure process. The following considerations should be evaluated and appropriate action taken.
  1. Regarding closure/partial closure of a building, evaluate the impact on utilities, phones, copy services, mail services, computer/network services, security, storage of furniture, supplies, etc. (Facilities Operations)
  2. Regarding possible disposal of biohazard and radioactive materials, disposal of controlled substances in patient care and/or research areas.
• Laboratory Closure Involving Chemical, Biological, and/or Radioactive Materials

It is the responsibility of the principal investigator(s) or the primary laboratory owner(s) to have the laboratory "decommissioned" prior to closure. The principal investigator is responsible for ensuring all legal and regulatory requirements are met. Environmental Health & Safety must be contacted for assistance during the closure of the laboratory.

• Hazardous materials (e.g., chemical, biological, or radioactive material) in the laboratory must be properly disposed or packaged according to hazardous materials regulations for relocation.
• Scientific/medical equipment (e.g., centrifuges, incubators, water baths, laboratory hoods, ovens, autoclaves, scintillation, gamma counters) must be properly decontaminated, emptied, and cleaned prior to being surplused or relocated to another area.
• High voltage or energy source equipment must be rendered safe prior to being moved or surplussed.
• Partially used or unused gas cylinders must be returned to the distributor or manufacturer.
• Laboratory Closure Involving Laboratory Animals

If laboratory animals are used in research protocols, the principal investigator(s) is responsible for the following: 

• The Center for Laboratory Animal Medicine and Care (CLAMC) must be notified of the exact date when an animal use protocol will be terminated.
• All animals either being studied or awaiting study must be transferred to another investigator. If another investigator is not willing to accept the remaining animals, animals must be reassigned in accordance with established protocol. (Contact CLAMC.)
• All animal identification cards must be replaced if an animal transfer does take place.
• Security access cards for entry into the Animal Care Facilities must be returned for deactivation by the CLAMC Assistant Director or designee.
• The CLAMC surgery staff must be notified if the animal use protocols to be terminated involve the use of the experimental surgery facilities.
• Any keys issued for use in the CLAMC must be returned to the CLAMC Assistant Director or designee.

VI. RECORDS MANAGEMENT

On notification that an organizational unit will be closed, contact  Records Management Systems and Services to arrange for a consultation with the unit personnel to provide information on records issues and to identify the different types of records that exist in the unit. Records Management will offer advice and assistance, but cannot complete the following tasks for a large scale closure without additional financial assistance.

1. Records Management personnel will assist the closure team in identifying the specific records categories from the broad categories of records to be examined including Administrative Records, Employee Time Records, Equipment Inventory Records, Financial Records, Patient Accounting Records, Patient Records, Student Records, and Historical Records.
2. Records Management will assist the closure team in taking a physical inventory of the records, estimating the existing volume made, and noting of locations noted for use in developing a plan for disposition.
3. An interview process will also be used to gather other pertinent information about the records collection. During this process, Records Management personnel will take the following actions:
   • Identify key contacts who have knowledge about and access to active records stored in the office files and off-site inactive storage locations.
   • Identify external regulatory agencies to which the entity has reporting responsibilities.
   • Identify professional associations that provide guidelines for record keeping.
   • Identify upcoming audits.
   • Identify client/customer base and the provisions for their notification of closure.
   • Identify computerized records databases that are not supported by Information Technology, and determine what software and equipment combinations are necessary for maintaining the information.
   • Identify filmed records systems, indexes, and equipment used for reading the filmed records.
4. When the inventory is concluded, Records Management Systems and Services will provide a written recommendation for disposition of the records that will include recommended retention periods, recommended methods of destruction, recommended optimal storage methods and media, appraisal of records for historical value, and identification of the ongoing cost of maintaining the records for the required retention periods.

Consult the following for more information on records retention/disposition:

• The university’s  Records Retention Schedule.
• HOOP Policies 147 Handling Legal Processes,175 Responsibility for the Use of Information Resources, and 66 Internal Audits.

Updated 6/03, 6/08

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