When Laurentian University invoked the Companies’ Creditors Arrangement Act (CCAA) on Feb. 1, 2021, many saw it as a canary in the coal mine. Two years on, there are lessons to be gleaned from the debacle that could serve to strengthen Canada’s university community.
For now, Laurentian’s insolvency remains an anomaly – not just in terms of its financial situation, but also with respect to its dealings with faculty and the government as well as the quality of its governance. On this last point, it’s a stark reminder that a board of governors – or any governing body – must be strong and have proper oversight, sufficient training, and the right mix of skills and diversity to be effective.
“One of the lessons [we’ve learned] is how important it is to have a board governance subcommittee that can identify and recommend members with complementary skillsets to serve on the board of governors: people who aren’t afraid to ask questions,” says Université de Moncton president Denis Prud’homme.
Michal Jaworski, governance lawyer and chair of the Langara College board of governors in Vancouver, points out that the role of a university’s board of governors differs from that of a board of directors in other sectors. “People from the for-profit sector come to a university and look at it a certain way and it’s not the same… So finding ways to educate the board members will help them comply with their fiduciary duties.”
To emphasize how complex the role can be, he proffers the adage “nose in, fingers out.”
“The hard part as a board member is knowing when to put your nose in, how much information to get, how to get it from the administration, to gain the knowledge you need so that you can oversee them correctly and hold the institution accountable,” says Mr. Jaworski, adding that the board also has to know when to stand back and let the administration do its job.
The Nous Group report on governance at Laurentian identified gaps in the board member recruitment process and a lack of diversity in their capabilities. Mr. Jaworski says a matrix of desired skills would go a long way. The matrix could be updated for specific projects, like adding a member with construction experience if the plan is to build new buildings.
Université de Montréal higher education administration professor Alexandre Beaupré-Lavallée agrees. “Once in a while you really need hard-noses whose only job is to ask the questions that other people can’t afford to ask.” Businesspeople can be good in that role when it comes to financials, for example.
And Dr. Beaupré-Lavallée points out that it’s important to look at the entire structure surrounding the board of governors. “The first sign that an organization is in trouble is a breakdown in communications. That’s one of the most visible signs,” he says. For all the management bodies to be able to do their job, transparency is key. “The minute things get murky, the risk goes up.”
He sees Laurentian as a case in point of what can happen when one party decides to hold back information.
Reinvesting in postsecondary education
It may be a one-off, but the Laurentian debacle is still “a sure sign of a structural problem,” warns Normand Labrie, a professor at the Ontario Institute for Studies in Education at the University of Toronto.
“Ontario is the province that invests the least per capita in government funding for universities. We’re a very wealthy province and yet we don’t invest enough in postsecondary education,” he says, pointing out that management costs have been increasing over the past 20 years, but government funding has not.
In the early days of the Laurentian crisis, Dr. Prud’homme worried that Université de Moncton might be the next institution in the hot seat if nothing changed when it comes to provincial funding.
Read also: Lessons learned from icebergs: reflections on learning and teaching
He has noticed that some governments are more aware that minority-language academic institutions are on shaky ground. “This year the [New Brunswick] provincial government gave us 1.5 per cent [as a budget increase] – almost double the average of the last 20 years,” he says. “Governments are largely oblivious about how tight our financial margins are.”
The federal government’s decision to invest millions of dollars in French-language schools in minority settings was also a boon for the Acadian institution, among others. As the only francophone university in New Brunswick, the institution will receive $21 million over three years to update its online course catalogue.
However, this isn’t a long-term solution. “I still maintain that we need the federal government to give us inflation-indexed [operational] funding to ensure the financial viability of French-language institutions outside Quebec. Provincial governments have to accept this idea as well; that the federal government has the right to invest in supporting these communities, which is an obligation under the Official Languages Act,” says Dr. Prud’homme.
Opening the books
Dr. Labrie wouldn’t be surprised if provincial governments step up their oversight of universities in the coming years. In Ontario, for example, the auditor general’s 2022 annual report included a value-for-money audit into financial management in Ontario universities.
“The fact that there have been audits like this indicates the government is making an effort to look at what’s going on in the universities. It doesn’t necessarily solve the problem […] It shows the government intends to have more control over how universities are run,” says Dr. Labrie. But more oversight doesn’t necessarily translate to a better education, he warns.
Dr. Beaupré-Lavallée also believes that Ontario, and possibly other provincial governments, will want to monitor university management more closely. He hopes, however, that the increased level of scrutiny won’t become excessive. Experience has shown that innovation and the quality of the work environment decline rapidly when too many restrictions are imposed.
Sue Wurtele, president of the Ontario Confederation of University Faculty Associations (OCUFA), hopes that the Ontario government will think long and hard before taking any action. “The government really needs to do a better job of understanding and appreciating the consequences of its actions.”
She points out that Ontario’s auditor general’s special report on Laurentian University confirmed that Ontario government’s decision under Premier Doug Ford to cut tuition by 10 per cent starting in the 2019/20 academic year without replacing the lost funding was one reason Laurentian’s finances fell into disarray.
University oversight may well increase, but Drs. Beaupré-Lavallée, Labrie, and Wurtele believe that laws and regulations to ensure good governance and management already exist and just need to be diligently enforced.
Don’t overlook the role of the senate
Dr. Wurtele sides with those who hold that a strong board is essential. In her opinion, Laurentian’s board should have been more concerned by the nature and increasing number of grievances filed by the Laurentian University Faculty Association (LUFA) since 2016. “It tells you that the relationship between the two is stressed.”
She adds that bicameral universities must also have an effective senate. She has noticed that financial subcommittees in Ontario senates hold less sway than they once did. These types of subcommittees look at program decisions from a financial perspective. “Increasingly what you see in senates is a deterioration of that financial lens and the assumption that this is something only the board of governors ought to have an eye on. And when you do that, when you take the financial lens away from senate, it’s not surprising that you end up with a situation where the financial consequences of academic expansion can’t be properly and fully contemplated.”
Be wary of overly enthusiastic consultants
In her special report, Ontario’s auditor general states that Laurentian’s management and administration were pushed into seeking protection under the CCAA by external legal and financial advisers “giddy with excitement to try something new.”
Does that mean administrations should automatically be wary of outside consultants? “Consultants aren’t inherently bad, but they should be one voice among many,” cautions Dr. Beaupré-Lavallée.
He says consultants have the freedom to think outside the box, to go big, but shouldn’t have the final say. “If you’re hiring consultants to do your job, the institution is in serious trouble, because a consultant doesn’t owe the board, management or the senate anything.” That said, he has yet to meet a consultant with ill intent.
Dr. Beaupré-Lavallée’s take echoes that of U de Moncton’s president, who also believes consultants should be used as little as possible and only to weigh in on things like complex legal matters. Dr. Prud’homme maintains that keeping disputes out of the courts also allows management to put those funds to better use elsewhere.
Amending the law
Mr. Jaworski points out that Feb. 1, 2021, is when everyone learned that the CCAA applies to public institutions. Since then, multiple bills aimed at preventing this have been introduced.
The one furthest along is Bill S-215, sponsored by franco-Ontarian Senator Lucie Moncion, a Laurentian alumnus. In December 2021 she reintroduced a bill sponsored by the former MP for Sudbury to exempt universities from protection under the CCAA. After months of negotiation, the wording was revised.
“Bill S-215 calls for the government to hold a consultation with all stakeholders to determine how the Companies’ Creditors Arrangement Act and the Bankruptcy and Insolvency Act could be amended to create a provision that would be more appropriate for universities,” she says.
The senator says the various committees have completed their review of the bill and the Senate is now going over it line by line. She expects there to be more changes. The bill’s constitutionality has also been assessed. Senator Moncion wants to meet with Francois-Philippe Champagne, minister of innovation, science, and industry, to confirm that she has his and the government’s support before going any further.
In December 2022, Charlie Angus, MP for Timmins-James Bay, introduced Bill C-309 in Parliament. It would prevent universities, colleges, school boards, municipalities, and hospitals from using the CCAA.
The downside of Mr. Angus’s bill, says Senator Moncion, is that it doesn’t offer a solution, which is one of the reasons Bill S-215 was amended along the way. What she’s proposing could even allow the government “to expand [the consultation] to municipalities, school boards, and hospitals.”
“I went to Ottawa when the university presidents met in the fall and I spoke to many of them. Some agreed with the bill and others weren’t sure,” she says.
Despite several attempts, University Affairs was unable to reach Mr. Angus by phone to discuss his bill.
France Gélinas, member of the provincial parliament for Nickel Belt, the riding surrounding Sudbury, wants to see the Angus bill pass to keep something like what happened at Laurentian from happening again. “If it doesn’t pass, we’ll look at what we can do in Ontario. But it would be better if it were done at the federal level,” says Ms. Gélinas.
Ms. Gélinas says she attended a meeting of the committees of Canada’s provincial and territorial auditors general last August. “We had a packed agenda for our three days in Ottawa, but Laurentian University dominated the conversation. They were all scared of the same thing happening in their province or territory.”
The Laurentian administration’s reluctance to comply with the auditor general’s requests for access to documents led to Ontario’s Auditor General Act being amended so that it can be interpreted in only one way.
And what about French speakers?
Laurentian’s restructuring has shaken franco-Ontarians’ confidence in the institution. “What franco-Ontarians have learned is that when bilingual universities face adversity, we no longer matter. We matter for the money the federal government gives them, we matter for the extra funds they’re able to get, but our needs and the vitality of the French-speaking community don’t matter,” says Ms. Gélinas.
On Jan. 20, 2023, Laurentian announced it will be hiring 10 new professors, including two for its French programs. LUFA sees this as a good first step but believes there’s still a lot of catching up to do, especially on the francophone aspect.
Senator Moncion believes current efforts to bring French-language programs to the University of Sudbury is one example of a creative community-driven solution that could benefit from her bill. “Consultations can lead to this kind of win-win solution,” she says.
For Dr. Beaupré-Lavallée, the University of Sudbury’s move to become an independent French-language university is one outcome that will be interesting to follow over the long term. “If they maintain even half the enthusiasm they have [in their document to the Postsecondary Education Quality Assessment Board – which makes recommendations to the Ontario government on applications for university designations], they’re going to be okay. We need to give them the puck. It’s an opportunity to empower the French-language higher education system,” he says.
These are all important observations, but perhaps the most critical issues are not addressed: do university administrators, from Dept Chairs up, have the training and skills to manage these complex organizations in very complex environments? Are faculty members (and sometimes students) sufficiently skilled to be effective contributors to participatory and collegial management processes? Are those with strong management skills able, given the very diffused decision making structures and processes within most universities, to exercise those skills? Why is complex adaptive management frequently the subject of teaching and research but not actually applied to the way a university is managed and governed? And given that most businesses are not guided by public purpose complexity management principles and practices, what role is there for business leaders in governing a university?
Transparency is almost zero at this uinversity may be that is the main problem .They don’t like to listen as if they know everything. At the beginning of the year 2018 ,I saw a comment about the uinversity ,it was saying that “Laurntion don’t have good organization ” and that problem is unresolved until now.
Thanks for these interesting comments, Julien. And thanks to Michal Jaworski, too, for his valuable insights into the role of university and college boards of governors.
You missed a major lesson. It is possible to commit fraud as a president of a university and still manage to get appointed to the Ontario Medical Association, where one influences access to health care and health care policy for all Ontarians.