In an unprecedented move, Laurentian University was granted court-ordered insolvency protection on February 1 under the federal Companies’ Creditors Arrangement Act (CCAA). The news immediately sent shockwaves across the campus and throughout the wider community, although it followed years of warning signs and charges by the academic staff association of administrative mismanagement, including lack of transparency and breaches of shared governance.
Fabrice Colin, President of the Laurentian University Faculty Association (LUFA), says he was stunned by the news and found out about the University’s CCAA order at the same time everyone else did: through an emailed statement by Laurentian President Robert Haché.
“We kept asking for proof of the financial crisis for nearly a year, which the Administration refused to provide. We have a very clear financial exigency process outlined in our collective agreement that allows us to sit down at the table, examine any significant financial challenges facing the university, and figure out a sustainable way forward,” Colin notes. “Instead, they took this public institution into costly court proceedings specifically designed for private companies. It is entirely inappropriate.”
Court documents filed by the University and accounting firm Ernst&Young show that the institution is facing a “severe liquidity crisis”, having run operational deficits since 2014 “in the millions of dollars.”
The documents also paint a dire picture of how close to the financial abyss Laurentian teetered: it would not have been able to meet payroll obligations by the end of February. The CCAA process allows Laurentian to borrow funds to continue operations while a mediation pursuant to the court proceedings takes place to come up with a plan to restructure.
The details about the year-over-year operational deficits highlighted in the court documents paint a very different picture than that previously portrayed by senior administrators. In 2017, the University announced a balanced budget “for the seventh consecutive year”, and then again in 2019.
Another surprise is that research grants are gone, the funds co-mingled with general expenditures and used for day-to-day operations.
CAUT President Brenda Austin-Smith says the University’s refusal to invoke the financial exigency provisions in the collective agreement raise grave concerns about academic freedom and tenure.
“Tenure, collegial governance and financial exigency clauses are critically important to protect academic freedom, which in turn protects quality education and research,” says Austin-Smith. “These principles are essential to the university structure but are foreign to the CCAA process.”
LUFA has questioned some of the enrolment and staffing assumptions underlying the administration’s report to the Court.
The Common Universities Data Ontario (CUDO) records indicate the number of Laurentian students has not changed significantly in the past decade. Total enrolment in 2010 stood at 6,205 full-time and 2,048 part-time undergrads. For 2018, the latest available data, there were 6,156 full-time and 1,774 part-time undergrads.
Meanwhile, the number of full-time academic staff has significantly decreased, falling from 420 in 2010 to 344 in 2020 according to University President Robert Haché’s own affidavit submitted to the court.
Colin says the real culprit behind the debacle is decades of provincial and federal underfunding, coupled with bad decisions taken by senior administrators and the Board of Governors.
“There was a lack of transparency and accountability, and really poor decisions that were made regarding campus modernization,” Colin says. “The government appoints five representatives to Laurentian’s Board of Governors, who should have been providing oversight in sound governance, not joining with senior administrators and other Board members in making irresponsible financial decisions. They closed their eyes to all the warning signs, for all these years.”
The situation at Laurentian is a rallying cry for all academic staff and their associations to defend and strengthen the shared governance oversight of their universities and colleges, including with respect to matters of budget and finance, according to Robin Whitaker and Marc Schroeder, co-chairs of the CAUT Ad Hoc Working Group on Governance.
“All too often, Boards and administrators claim that these issues are not senate or academic staff business. The Laurentian example is a striking illustration of why that argument is bogus. Rather than treat it as an exception however, we should take Laurentian as a cautionary tale about the dangers of a corporatized approach to higher education for institutions right across the country,” says Whitaker.
It also underlines the erosion of public funding across the sector. Confounding to many is the Ontario government’s refusal to intervene, by providing temporary relief funds to the beleaguered institution, and funding to ensure the longer-term stability of post-secondary education throughout the province.
Following a motion by Sudbury City Council, Mayor Brian Bigger wrote to Premier Doug Ford and Ross Romano, Ontario’s Minister of Colleges and Universities, to signal the need for more adequate funding and to highlight the value that Laurentian brings to the community.
“With over 850 employees and more than 6,000 students living and working in our community, Laurentian University certainly has a significant impact on our local economy, and it is socially and culturally important…which is immeasurable, ... reflected in the ongoing commitments to reconciliation with Indigenous people, the vibrancy of Franco-Ontarian culture fostered on campus, and largest number of first-generation students enrolled, in fact the largest share of any university in the province.”
In 2019, the Ford government cut tuition at universities and colleges across the province by ten per cent but failed to boost funding to make up for the reduction in tuition revenues. This followed years of public funding not keeping up with enrolment: Ontario provides the lowest per-student university funding in Canada.
But the federal government also has a role to play in saving Laurentian says CAUT’s Austin-Smith.
“Laurentian University is vitally important for its research and educational contributions to Northern Ontario, its commitment to reconciliation through supporting Indigenous students and programs, and its contribution to the vitality of a minority official-language community,” Austin-Smith points out. “Without emergency funding, Laurentian will face deep cuts to staff and programs, threatening its longer-term viability.”
The first phase of the CCAA process is set to wrap-up mid-April.