Four of five regents are officially out at Western New Mexico University.
Photo illustration by Justin Morrison/Inside Higher Ed | Vectorig/DigitalVision/Getty Images
Facing withering scrutiny from state officials over a costly exit agreement with outgoing president Joseph Shepard, four of Western New Mexico University’s five regents have now resigned, the university confirmed Tuesday.
State officials found that Shepard improperly spent more than $360,000 in taxpayer funds for travel, luxury resorts and furnishings for his campus residence after a 2023 investigation by Searchlight New Mexico first brought attention to his questionable financial moves at WNMU. Regents have also been accused of violating WNMUs’ travel and procurement policies.
(Shepard has denied any wrongdoing and rebutted claims of improper spending.)
Amid the fallout, Shepard and the board agreed to terminate his contract in a move both parties said was mutual. Regents agreed to pay him nearly $2 million in severance as well as an additional $1.5 million via other benefits, including a faculty position.
Given how his contract was structured, the board could have fired Shepard without cause and parted ways with him for a little less than $600,000. The decision to pay him handsomely on the way out prompted state officials to accuse the board of fiduciary mismanagement.
A Wave of Resignations
On Dec. 31, Democratic governor Michelle Lujan Grisham sent a letter to regents urging them to resign “in order to maintain the future health and stability of Western New Mexico University.”
The letter came 11 days after the board approved Shepard’s exit agreement.
“In the spirit of a clean slate of decisionmakers at the university, I am asking for your immediate resignation to help ensure that Western New Mexico University will be able to regain its equilibrium and once again serve its students first and foremost,” Lujan Grisham wrote.
By Tuesday, when the board was next scheduled to meet, four of the five members had resigned. The meeting, at which regents were scheduled to launch a search for an interim president to replace Shepard, did not occur due to a lack of quorum.
Only student regent Trent Jones remained.
“Regent Jones, who serves as the board’s treasurer, will continue to serve on the board temporarily to ensure the uninterrupted processing of university payments, including student financial aid,” university spokesperson Mario Sanchez wrote to Inside Higher Ed by email.
Regent Lyndon Haviland was the first to step down, doing so on the same day the governor made the demand. She was followed by Daniel Lopez, who resigned Jan. 1, and Dalva Mollenberg on Jan. 2.
Board president Mary Hotvedt—who had praised Shepard for “selflessly stepping down for the good of the university in the face of ongoing issues”—also tendered her resignation Jan. 2. (Though Hotvedt’s term expired on Dec. 31, she was slated to serve until officially replaced.)
None of the outgoing regents referenced the controversy in their resignation letters.
In a Tuesday afternoon statement, Lujan Grisham said her office is in the process of looking for new appointees to serve on WNMU’s board.
“My office is already reviewing candidates to replace the former WNMU board and usher in a new era of accountability at the university. All public universities in New Mexico must uphold their fundamental fiscal responsibility to the people of this state and the students they serve,” Lujan Grisham said.
The governor also blasted the board for its “tone-deaf decision” on the severance package, pointing to economic needs across the state.
“The amount of money contained in Dr. Shepard’s separation agreement could have addressed food insecurity across the entire WNMU student body for a full year,” Lujan Grisham said.
Legal Options
What a newly reconstituted Board of Regents might mean for the much-maligned Shepard deal is unclear. If a new board were to try to walk back the deal, which has already been signed, Shepard could file suit and WNMU might be liable for covering his legal expenses in the case.
However, state officials have taken another approach to undo the deal Attorney General Raúl Torrez asked a state court Monday to halt the disbursement of severance payments, which he called “an egregious misuse of public funds” in a news release.
A $1.9 million severance payment is due by Jan. 15, according to the terms of the exit agreement. Torrez is seeking a temporary restraining order to prevent the payout “until a full evidentiary hearing on a preliminary injunction can be held.” The attorney general noted in a legal filing that two investigations into improper spending at WNMU are underway and argued that the exit agreement or severance payments may be “voidable or unenforceable due to lack of consideration, unconscionable terms” and “a lack of lawful purpose,” among other reasons.
Torrez argued that the exit agreement and severance pay may “eventually be set aside as invalid because the board breached their fiduciary duties.” But time, he stressed, is crucial.
“Absent court intervention, the state will likely suffer the concrete harm of the waste of almost $2 million dollars in public funds on top of the waste that has already been identified by the [Office of the State Auditor],” Torrez wrote in the emergency motion. “That payment, if made prior to the completion of the Special Audit, will likely be unrecoverable by the time that audit and any subsequent litigation based on its results are complete.”