The increase in Laurentian University’s capital from 2010 to 2020, along with “poor financial management”, were major factors in Sudbury School’s insolvency last year, according to a preliminary report by the Ontario Auditor General.
In her “Preliminary perspective for Laurentian University“Submitted to the legislature on Wednesday, Bonnie Lisick said Lorentian refused to seek financial help from the province and made a mistake when she chose to go through the Companies ‘Creditors’ Agreement (CCAA) for restructuring.
“As of March 3, 2022, the university has charged fees for legal and other financial advisers related to its insolvency, amounting to more than $ 24 million,” the chief auditor said in the document.
Sudbury University declared it insolvent in February 2021. On April 12 of that year, it cut 69 programs, affecting approximately 932 students. Lorentian also fired 195 staff and teachers with little warning and leaving.
Like all universities, Lisik said, the COVID-19 pandemic affected Lorentian’s finances, but its problems began long before that, in 2010, when it began expanding its campus in Sudbury.
“There was no revenue to support the payment of principal and interest on these investments,” Lisik told CBC News.
She said there did not appear to be any intentional breaches by Laurentian, adding that her plans to expand the capital were well thought out. But she said the university’s board of governors had failed to ensure proper oversight, and the Ministry of Colleges and Universities had not intervened in time when it was clear that Lorentian was in financial trouble.
From 2010 to 2020, Lisik also found that Laurentian’s senior administration spending rose 75 percent, reaching a peak of more than $ 4 million a year in 2018.
Lorentian CCAA move error: AG
In her preliminary perspective, she said the size of Lorentian’s top administration was consistently larger than other universities in Ontario, about the same size. In addition, the salaries of some senior administrators have exceeded the limits set by legislation designed to cap public sector pay.
Lysyk said Laurentian’s decision on his financial problems, restructuring under the CCAA, was a mistake.
The CCAA was created as a tool to restructure insolvent private companies, but has never been applied to a public university like Laurentian.
“In this particular case, we believe that Lorentian had to unite a stronger request from the ministry and work with the Ministry of Colleges and Universities to draw up a plan, even a year in advance, to support them in their endeavors. forward, “Lisik said.
She noted that the nearby University of Nypping, located in North Bay, ran into financial difficulties in 2014. But Nyxiping worked with the Ministry of Colleges and Universities initially to seek funding and improve its position.
Lorentian University in Sudbury said it was bankrupt in February 2021. In April of that year, it cut 69 programs and laid off more than 100 staff and faculty. (Jonathan Minho / CBC)
Influence from external parties
In his preliminary view, Lisik said he believed Laurentian was influenced by outsiders to use the CCAA, up to a year before declaring him bankrupt.
“In August 2020, Laurentian raised the CCAA’s potential to the Minister of Colleges and Universities, but did not specify how much financial assistance was needed from the province to avoid filing with the CCAA,” the document said.
“An explicit request for funding to the ministry was not made until December 2020, when the request was significant and the intervention period was short.”
I see how a university I love and a community I love have practically burned down. – Kathleen Cotilla, Lorentian student
Kathleen Cotilla, a political science student at Lorentian, said the preliminary report came as no surprise to her and reflected concerns from students, staff and faculty after the university declared it bankrupt.
“I love the community that Lorentian gave me,” Cotilla said.
“But I’m just as angry. And that process made me incredibly angry because I’m watching the university I love and the community I love burn in the flames.”
Kotila said it was significant that Nipsing University had managed to get out of its poor financial situation by working closely with the Ministry of Colleges and Universities.
“It’s really sad to see that Lorentian had this opportunity to do it, and they chose not to do it.”
Albrecht Schulte-Hostede is a professor at the Laurentian University School of Natural Sciences. (Albrecht Schulte-Hostede)
The professors react
Albrecht Schulte-Hostede, a professor at the Laurentian School of Natural Sciences, said the auditor’s preliminary findings showed that the consultants had influenced university executives to file for bankruptcy and go through the CCAA process.
“It simply came to our notice then [Tuesday] we were somehow celebrating the one-year anniversary of the dismissal of more than 100 teachers, ”Schulte-Hostede said.
“And today in this report we learned that all this was unnecessary, that the university administration made a conscious choice to go down this path.”
Schulte-Hostede said the university is now a “shadow of what it once was”, but added that he was optimistic now that many former board members had resigned.
He said Jeff Bungs, the interim chairman of Lorentian’s board, had “said all the right things” so far.
Fabrice Colin, president of the Laurentian University Faculties Association, said the preliminary report confirmed things his association had been claiming for 14 months.
The key point, he said, is that the CCAA process is not the right remedy for Lorentian’s financial problems – something the teachers’ association has been saying all along.
Colin said Lorentian’s leadership would need to be more transparent with faculty in order to move forward and recover.
“We have definitely seen a change in tone and approach after the arrival of the new board members and the new board president,” he said.
“There seems to be a commitment now to more transparency and more cooperation, so that’s encouraging.”
Laurentian responds to AG’s findings
In a written statement, Laurentian said he would carefully consider the chief auditor’s findings.
The university said it has implemented a number of reforms and initiatives in recent months to ensure its financial sustainability.
He noted that the province provided recent financial support when it refinanced a $ 35 million loan from the debtor.
The statement said it was renewing its board of directors and had completed a review of its operations and management.
“We know that our successful recovery will come from significant changes in the institution,” the statement said.
“Laurentian is absolutely committed to seeing this transformation to completion – and will do whatever it takes to acquire the skills, operational efficiency, transparency and accountability that are required and expected of Lorentian.”
Call for resignations
In a written statement, the Canadian Association of University Teachers (CAUT) called on Laurentian President Robert Hache and all senior administrators to resign following a preliminary report by the chief auditor.
“It is absolutely outrageous that university management has used money earmarked for employee health benefits and academic research for its capital projects and other purposes,” CAUT Executive Director David Robinson said in a statement.
“It has then diverted more than $ 24 million to expensive consultants and lawyers dealing with unnecessary insolvency proceedings, while pushing for staff cuts and program cuts.”
Robinson said Hache and other top leaders needed to step down so that Lorentian could regain public confidence.
Add Comment