A lot of states are like that. However, the state law just sets the minimum requirement. You need to read your faculty handbook. My state need to renew contract every year regardless who you are. It also requires one year notice for layoff for all "professor" titled faculty. My Chairman is considered the tough one, and he lets people stay around without funding for five years. One faculty in my department brought in total of 25k (it is an internal grant, too) and still last five years.