The Auditor General of Ontario’s Special Report on Laurentian University was released last week. It details financial mismanagement that led Laurentian’s senior administration to the unprecedented decision to seek insolvency protection rather than government assistance, a decision which the Auditor General says was unnecessary, inappropriate and destructive.
The Auditor General describes her review of Laurentian University’s operations and decision-making over the past decade as a striking example of what can happen when the principles of transparency, accountability, and high standards of governance, all expected of public sector organizations, are neglected. “Instead of transparently seeking additional provincial assistance, Laurentian accepted the advice of its external legal and financial advisors to take steps to obtain court protection from its creditors under the federal Companies’ Creditors Arrangement Act (CCAA). However, before it formally applied for CCAA protection, the University prematurely paid off its line of credit, disregarded a key stipulation in its faculty collective agreement that might have otherwise helped its restructuring, and neglected to work constructively with labour representatives.”
In addition, as noted by CAUT, the Auditor General’s review found that ill-conceived capital expansions, combined with weak governance oversight, were to blame for Laurentian University’s financial crisis. It was not, as suggested by Laurentian’s administration, academic staff salaries. The review found that salaries were lower than those of comparable universities and that, “…collectively, its academic programs had positively contributed to the University, helping to pay the growing costs of debt, senior administration and special advisors.” Key drivers of rising costs included a 75% increase in costs associated with the university’s senior administration and $2.4 million spent on special advisors to the President and others.
As the financial situation worsened, restricted funds intended for retirement health benefits and research projects, which were mixed with general funds, were inappropriately accessed.
In the end, costs of seeking CCAA protection totaled $54.7 million at a time when Laurentian’s overall debt stood at about $107 million, and the process resulted in nearly 200 lost jobs, elimination of programs, and a significant impact on the community.
The Ontario Ministry of Education has committed to working with any post-secondary institution facing financial concerns and to ensuring a strong public post-secondary system.
CAUT will continue to advocate for the explicit exclusion of public post-secondary institutions from the CCAA and for the Act to be amended to prioritize workers.