Laurentian University has made a strategic decision to opt for creditor protection instead of working with the Ontario government to fix its finances, the state’s Auditor General says in a preliminary report, leading to nearly 200 job losses, millions in additional costs and damages to the institution’s post-secondary reputation. The university did not seek full help from the government as its financial situation deteriorated, nor did it find an alternative way that could have prevented some of the harmful effects of insolvency, says Auditor General Bonnie Lysyk. Instead, the university has been planning for a year, with outside consultants and lawyers, to use the Companies Creditors Arrangement Act, which provides ample scope for emergency cost-cutting measures. “We believe Laurentian did not have to apply for CCAA protection,” the report said Wednesday. “If he had sought to work earlier and more transparently with the staff of the Ministry, if he had not repaid early and had not waived the credit limit in 2020 and if he had accepted the temporary financial assistance finally offered by the province, Laurentian would have enough time for His financial situation will be reviewed jointly with the province and a promotion plan will be implemented “. Laurentian became the first Canadian-funded university to apply for CCAA protection in February 2021, a decision that unleashed a controversial process that eliminated one-third of the university’s academic programs. The university also fired 195 professors and staff, including dozens of full professors. More than 900 students had their lesson plans disrupted as lessons and curricula disappeared. New student applications have since plummeted, raising further doubts about the school’s future. The report said Laurentian’s financial problems date back more than a decade to a campus modernization and expansion plan, described as a dangerous “build it and it will come” approach. The new buildings more than doubled the university’s debt between 2010 and 2016, but did not generate enough additional revenue or attract new students. As its financial woes escalated, the university spent funds earmarked for research purposes and employee health benefits just to keep the lights on. They inappropriately called these transfers “internal financing,” the report said. The report identifies mismanagement by the university and poor oversight by the board and its audit committee of the failure to stop these practices. The Auditor General also points out the Ministry of Colleges and Universities (MCU) for failing to intervene proactively and respond to Laurentian’s deteriorating finances. The idea of using the CCAA to address Laurentian’s financial woes was first mooted by an outside law firm working with university administrators in 2019. Laurentian appears to have decided to follow this path in the spring of 2020, the report said. . The university did not go to the MCU and did not explain its situation and did not ask for help, nor did it activate the financial need clause in its collective agreement, which would have led to a more time-consuming process of working with the faculty union to reduce costs. In August 2020, Laurentian reported the possibility of using the CCAA to then-Minister Ross Romano, but gave no details of his condition or formally requested a bailout. The explicit request for help to the ministry was made in December 2020, when the amount requested was large and the time was short, the report states. The decision to follow the CCAA also led to huge additional costs for the university, with more than $ 24 million being spent on lawyers ‘and consultants’ fees and a $ 24.7 million charge resulting from changes to its loan agreements. The university initially claimed that its difficulties stemmed in part from the cost of paying its teaching staff, but the report says this did not happen. Administrative costs, which have risen by 75 percent over the past decade, were higher than in comparable schools, and school costs were similar, the report concludes. Using the CCAA, instead of the financial need clause in its collective agreement with the professors, the university was able to dismiss people with little or no dismissal outside the rules agreed in their contracts. “The report confirms everything we have said in the last 14 months. “We have always said that the CCAA process is not appropriate,” said Fabrice Colin, president of the Laurentian School Association. The Canadian University Professors Association called the report a “condemnation” of Laurentian’s administration and called for the resignation of President Robert Haché and other senior officials. Laurentian responded to a Globe request for an interview with Dr. Haché with a statement from the interim chairman of its board, Jeff Bangs. The statement said the council welcomes and will carefully consider the report’s findings. Asked if Laurentian had been misled by expensive advisers, Lysyk told reporters at Queen’s Park that it was clear that the CCAA process was gaining momentum, but that in the end the university council and administration were responsible. “I think what happened here is that they turned to people who they thought would give them a choice they may not have thought of in the past to deal with a lot of work that would take a lot of work,” he said. The Auditor General also said it plans to make recommendations to increase oversight of the university’s finances in a future final report to ensure that no other institution is in the same situation. He said other provinces have more rules about their university finals, such as the need for a balanced budget and the control of capital expenditures. Ontario Colleges and Universities Minister Jill Dunlop said the government has taken steps to protect the interests of students throughout Lorentian’s troubles. He stressed that the university is an independent, autonomous institution that has made its own decisions. France Gélinas of the opposition NDP, the MPP for the Sudbury region Nickel Belt said the report showed that the government could have intervened to prevent Laurentian from crossing the cliff and that new rules were needed to ensure that the same would not happen in other institutions. Reported by Jeff Gray The Morning and Afternoon Newsletters are compiled by Globe editors, giving you a brief overview of the day’s most important headlines. Register today.
