No publicly funded university has ever tried what Laurentian is about to do to settle its debts and avoid dissolution. There’s no guarantee it will work, but with fall classes under way, some staff and students see reasons for hope.
Janice Liedl, a professor of history at Laurentian University for 30 years, can’t help but notice how her university has changed.
The building that she works in, located at the heart of the university’s Sudbury, Ont., campus, is a third-empty now. When she walks the halls she passes closed doors with a blank space where an occupant’s name plate should be. There are fewer professors and fewer lectures on the go.
“It used to be a fight to find a classroom. It’s less a fight these days,” she said.
When Laurentian declared insolvency in February, 2021, Dr. Liedl kept her job. But her department vanished. More than 100 of her tenured colleagues were fired and dozens of academic programs were slashed. The future of the entire university, a lynchpin in Sudbury and Northern Ontario, was cast in doubt.
Rather than receive a financial bailout from the provincial government, as other struggling universities have done in the past, Laurentian filed for protection under the Companies Creditors Arrangement Act, a law designed for private corporations that allows considerable leeway to terminate employees and cut costs. It had never before been applied to a publicly funded university.
On Sept. 14 of this year, the university’s creditors voted to approve a plan of arrangement that will settle the university’s debts at a fraction of their value. The result is a relief to the university’s administration and to its staff and faculty. Had the vote failed, the university said its only option would have been to dissolve.
Dr. Liedl said it feels like Laurentian, having survived a brush with death, is perched on a ledge. It’s not home safe, but it can catch its breath and consider its next move.
The students arrived this September with a renewed optimism after two anxious, pandemic-interrupted years, Dr. Liedl said. The campus they’ve returned to is a changed place. The senior leadership is poised to depart, as the president and provost have said they’ll soon retire after faculty pushed for their ouster. Enrolment is starting to stabilize, but applications from Ontario high school students were down 40 per cent this year, a sign of the damage inflicted on the university’s brand.
And there are still questions that need to be answered: Who created this mess? Why did no one see it coming? And after all the damage done, can the university be rebuilt?
The path out is far from assured.
The Laurentian campus sits between a lake and a nature preserve, surrounded by the dramatic outcroppings of the Canadian Shield. The air smells of cedar and spruce and students can weave their way to class on paths cut through the northern forest. Built in the 1960s, it has about 8,000 students and a mandate to provide accessible post-secondary education in the bilingual and tri-cultural – francophone, anglophone and Indigenous – context of Northern Ontario.
When president Robert Haché took up his post at Laurentian in July, 2019, the university had stubborn annual deficits of a few million dollars and long-term debts of more than $90-million. But the attitude around campus was that Laurentian would muddle through, just as it always had.
The university had much to celebrate at that point. Its students had the highest post-graduation employment rate in the province, according to Dr. Haché, and amongst the highest starting salaries. It also had one of the largest populations of students who are the first in their family to attend university.
When COVID-19 forced campus to close in March, 2020, Dr. Haché sounded an alarm. He said the pandemic could threaten the viability of the university. By October he was saying Laurentian had reached a fork in the road: it could continue to aspire to being a leader in research, or it could refocus as a smaller, undergraduate university.
Many of the issues the university faced were slow-moving and well-known. The demographic situation in Northern Ontario is unfavourable, with little to no growth in the university-aged population. Other small universities that have fared better financially have built satellite campuses close to the booming Greater Toronto Area.
Laurentian tried to expand in Barrie, but in 2016 the previous provincial government did not support the university’s plans to grow in the region and Laurentian eventually closed its Barrie campus.
International students, whose higher tuition fees have become a crucial revenue source at nearly every Canadian university, did not flock to Sudbury. The biggest cohort at Laurentian came from Saudi Arabia and when a diplomatic spat erupted with the Canadian government in 2018 nearly all left. Before insolvency Laurentian drew only about 3 per cent of its student body from abroad, badly trailing the national average of more than 15 per cent.
The 2019 Ontario government decision to cut domestic tuition fees by 10 per cent and freeze them for two years further dented university finances.
But the big blow appears to have been a campus modernization program that cost more than $60-million, with new buildings and renovations to existing ones. The building spree more than doubled the university’s debt without bringing in much new revenue or enrolment. At the time, Laurentian was led by the youngest university president in the country, Dominic Giroux, who was hailed as a wunderkind former civil servant without the traditional academic background his post usually requires. He left in 2017 and now leads Sudbury’s Health Sciences North. Mr. Giroux did not respond to interview requests.
Former board chair Claude Lacroix also did not respond to interview requests, and Dr. Haché declined requests citing the continuing court process.
An Ontario legislature committee on public accounts, seeking answers on what happened at Laurentian, passed a motion in 2021 asking Auditor-General Bonnie Lysyk to conduct a special audit of the university’s operations. A preliminary report from Ms. Lysyk this April called the campus building boom of the 2010s a risky “build it and they will come” strategy that was the primary cause of its financial deterioration. She described poor financial management in the administration and weak oversight from the board.
Ms. Lysyk also concluded that insolvency could have been avoided if university administrators had taken steps to seek a bailout and work with the provincial government, as other universities in similar situations have done. Instead, she concluded, the university deliberately chose the radical path of the CCAA.
Steven Meyer, who was until last year a professor of geography, vividly remembers the moment he started to wonder about Laurentian’s viability.
He was looking out his office window at what struck him as another improbable building project when an e-mail from the administration arrived asking staff to stop printing documents to save the cost of paper.
“I’m just looking at all this construction and I get this memo across my desk saying you’ve got to stop using paper,” he said. “It almost felt surreal.”
By all outward appearances the university was thriving. The campus looked better, and researchers were setting up new labs.
“Little did we know they had no ability to afford this,” said Dr. Meyer.
In April, 2021, he and more than 100 other colleagues – all of them tenured academics – along with about 80 staff members, lost their jobs. They were fired via Zoom.
More than a year and a half later, Dr. Meyer said many of his colleagues are still struggling to come to terms with it. Their careers and livelihoods were sacrificed to give the university a shot at survival.
Dr. Meyer, now retired at 58, was due more than $600,000 in severance, but under the plan of arrangement approved on Sept. 14, he will get only 14 to 24 per cent of what he’s owed. Still, he voted in favour, along with more than 85 per cent of the university’s other creditors.
There had been a lively debate, he said, about whether to vote down the proposal and call the bluff of those who said the university could be dissolved if the vote failed.
“As bad as it is I’m not sure we could do any better,” Dr. Meyer said. “I’m not sugar coating this, we’re getting screwed. But I guess I’m taking the wider approach. Sometimes in life you get the sharp end of the stick.”
Dr. Meyer said he still enjoys hearing from students, writing reference letters and providing advice, but he has largely moved on from his old career. He knows of colleagues still struggling to get over how they were treated. He suspects some may never recover.
“We are being sacrificed so the institution can go on,” Dr. Meyer said. “The lion’s share of this restructuring is happening on our backs … But am I happy Laurentian is going to go on? Of course I am. There’s way too much at stake for the city for this university to cease.”
There’s no question students have been affected by the restructuring process.
For students like Cheick Sangare, a 22-year-old from Côte D’Ivoire, the loss of courses taught in French has made it almost impossible for him to complete his degree in business administration.
“I really want to finish my studies on time and graduate,” he said. As an international student, he’s paying nearly $30,000 a year in tuition so delaying graduation by even one semester is financially difficult.
He said the difference between the options available before and after the cuts of last year is “enormous.”
“It’s disappointing,” he said. “Sadly, for those of us in upper years, there just aren’t enough courses.”
El-Hadji Diop, who is also studying business and works for the francophone student association, has had a similar experience. “My first year I could take what I wanted: philosophy, journalism, sociology,” he said. “Then they cut the programs. It’s hard to find courses. Basically, I don’t have many options.”
Avery Morin, the president of the Laurentian Student General Association, said for many students the bigger picture of the university’s finances is not top of mind. Many are simply focused on pursuing a degree, and as long as classes are offered they trust the university will still exist in the future.
She said she chose to study at Laurentian because she wanted to stay close to home.
“I’m very comfortable here, it’s an opportunity to stay close to my roots,” she said.
In June, the government said it would spend up to $53.5-million to purchase some of Laurentian’s real estate, a key decision that provided the funds that made the plan of arrangement possible. The proposed real estate sale could include buildings used primarily by one of the university’s former jewels, the Northern Ontario School of Medicine. The medical school began as a joint venture between Laurentian and Lakehead, but was made its own separate university last year in part to protect it from the insolvency process.
Alan Thrasher, a third-year kinesiology student, said he worries that the need to raise money will lead to the sale of the lands that surround the university, currently the site of dozens of kilometres of walking trails and nature preserve.
“This university is vital to Sudbury,” Mr. Thrasher said. “I’m worried that they don’t have a plan to get out of debt.”
Virginia Torrie, a professor of law at the University of Manitoba and the author of a recent book on the history of the CCAA, said there is no empirical evidence tracking how successful the CCAA process has been for the entities that have gone through it over the medium to long-term. It’s not uncommon for companies that undergo restructuring to do it all again a few years later. There’s no guarantee Laurentian will be able to come out the other side.
It’s also not known whether there will be a process of accountability that could determine who was responsible for this mess.
Jeff Bangs, who was appointed chair of the Laurentian board in January, said the university has an opportunity to turn the page. He said in the coming weeks Laurentian, which now has an almost entirely new board, can begin to “take back control” of its administration, which has been closely overseen by a court-appointed monitor during the insolvency process. He said the monitor and the provincial government will both have input in the university’s next steps.
The auditor-general will issue a final report on Laurentian in the coming months that might offer some guidance, he said
In the meantime, Mr. Bangs said he intends to begin the process of rebuilding the university’s faculty complement and its program offerings. But it will take time and every decision will need a business case, he said. “We let a lot of people down. Now’s the chance to become a shining example of how to run a university properly,” Mr. Bangs said.
Laurentian will soon announce a new interim president and the process will begin to find a permanent replacement for Dr. Haché, Mr. Bangs said.
He also hopes that student recruitment can begin to accelerate, now that students can have greater confidence in Laurentian’s long-term future. But the damage to the university’s brand has been substantial.
Application data show that student confirmations in September were up slightly, thanks largely to international applicants. But applications from Ontario high school students, who have traditionally made up the lion’s share of Laurentian’s student body, were only 2,900 this year, down from 4,900 a year ago and 5,680 in 2019, a drop of nearly 50 per cent.
Dr. Liedl said she spent much of the past year trying to help students whose programs had vanished complete their degrees. For some, that meant cobbling together enough courses from the remaining options to graduate. For others, it meant changing programs or transferring to another university. Laurentian estimates that approximately 900 students had their course plans disrupted.
Dr. Liedl’s history department was dissolved. She was named director of a new school of Liberal Arts, but the number of tenured faculty in the arts and humanities has been drastically reduced, she said. Subjects such as philosophy and political science and Indigenous studies have lost all or nearly all their tenured professors.
She worries that in its next phase the university will present itself primarily as a mining and engineering school and narrow its offerings, particularly at the expense of the humanities.
“We lost some of the core elements of the university,” she said. “[Laurentian] built for an optimistic future when we should’ve been building for a future we could reasonably create.”
POSTSECONDARY EDUCATION REPORTER
The Globe and Mail, October 4, 2022