The Auditor General of Ontario says it was unnecessary, inappropriate, and ultimately destructive for the Laurentian University senior administration to deliberately pursue insolvency protection in the courts rather than accept government assistance.
The Special Report on Laurentian University details years of financial mismanagement at Laurentian University which culminated in the unprecedented and unnecessary decision to file for insolvency protection under the Companies’ Creditors Arrangement Act (CCAA) on February 1, 2021.
"The Auditor General is absolutely unequivocal in concluding that Laurentian University’s administration did not have to, and should not have, turned to the CCAA,” said CAUT executive director David Robinson. “There were other processes available, including government funding and the financial exigency provisions in its collective agreement with the academic staff association. Instead, a deliberate choice was made to pursue an expensive, court-driven, opaque process which by-passed collective agreement provisions and was not intended to nor should it ever apply to publicly funded institutions.”
Auditor General Bonnie Lysyk found that, for over a decade, ill-conceived capital expansions, combined with weak governance oversight, led to Laurentian University’s financial crisis. While the Laurentian administration’s public messaging suggested it was academic staff salaries that were to blame for the financial woes, Lysyk’s wide sweeping review found that salaries were in fact 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.”
Lysk found that a 75% increase in costs associated with Laurentian’s senior administration, including a $1.4 million fund for discretionary expenses for senior administrators, and $2.4 million spent on Special Advisors to the President and other senior administrators, were also key drivers of rising costs. According to Lysyk, as Laurentian’s financial situation worsened, it inappropriately accessed restricted funds intended for research projects and retirement health benefits which were comingled with general funds.
The costs associated with pursuing protection under the CCAA have totaled $54.7 million at a time when Laurentian’s overall debt stood at about $107 million.
“You have to question why senior administrators felt it was more appropriate to spend scarce resources on legal and consultancy fees rather than on its core mission of teaching and research,” Robinson notes. “In the end, the CCAA process resulted in nearly 200 lost jobs, elimination of programs, and a significant impact on the community.”
Robinson welcomed the news that 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 with the federal government for the explicit exclusion of public post-secondary institutions from the CCAA and to ensure the act is amended to prioritize workers from all sectors,” Robinson added.