The Laurentian University Debacle Should Be An Election Issue
It’s provincial election season and there’s no shortage of important issues that affect Northern Ontario and Sault Ste. Marie.
Obviously, cost of living or ‘pocketbook’ issues are dominating headlines, a result of prices for staples steadily rising. This increased economic strain has a disproportionate impact on communities in Northern Ontario, something felt every time you fill up your gas tank or buy groceries.
Last week, the Federation of Northern Ontario Municipalities hosted a debate for provincial party leaders and it provided a sense of the issues that will characterize the campaign trail.
Conspicuously absent was any serious discussion about a debacle that rocked Northern Ontario over the past two years: the bankruptcy and restructuring of Laurentian University in Sudbury.
By now, the general details are familiar to many. Essentially, Laurentian was pushed to the financial brink by incredibly poor management and risky investments that inflated its debt during a time in which tuition wasn’t increasing (due to a provincial freeze) and a global pandemic was about to strike.
As a publicly funded institution, you’d imagine the government would step in with a modicum of assistance, to pull all the stakeholders together, assess the situation, and navigate a restructuring process that could be minimally destructive for Laurentian.
That didn’t happen.
Instead, the province mirrored Laurentian with poor management of its own and only exacerbated the crisis.
Laurentian floundered and relied overwhelmingly on paid consultants that steered them unnecessarily into the Companies' Creditors Arrangement Act (CCAA), a bankruptcy protection process that’s intended for private companies.
It was unprecedented, but I won’t outline all the heart-wrenching details, including devastating job losses and community-wide reverberations.
If you’re interested in a forensic analysis of what happened at Laurentian, one of the best analyses can be found here.
For at least two reasons, what happened at Laurentian is an issue that matters for Sault Ste. Marie.
First, Sault Ste. Marie had a hand in the Laurentian debacle, so to speak.
The Ontario Minister of Colleges and Universities was the local MPP, Ross Romano. Romano infamously lost his Colleges and Universities cabinet portfolio in the wake of Laurentian’s demise, summarily shifted to Government and Consumer Services, where he weathered more controversy.
Romano’s political fortunes in this election ought to hinge on how voters assess his actual track record on the job. Therefore, voters in Sault Ste. Marie can be an important accountability mechanism for someone that didn’t deliver, if they so choose.
Second, despite Laurentian being in a different city, it’s still in Northern Ontario. One can only imagine the social and economic impact on Sault Ste. Marie if Algoma University or Sault College imploded in a similar fashion.
Northern Ontario boasts only four universities – Algoma, Lakehead, Laurentian, and Nipissing – so the hollowing out of one will inevitably have a regional impact. In the north, where higher education opportunities and economic diversification are desperately needed, universities are both an important anchor and a sector that merits investment and growth.
For those doubting the economic case for universities, I invite you to crunch the numbers for yourself. A recent report analyzing the impact of Queen’s University (where I find myself at the moment) found that it was directly and indirectly responsible for more than $1.6 billion in the regional economy, including around one-tenth of all of the jobs and economic activity.
Romano consistently told the public that he couldn’t reasonably comment on happenings at Laurentian because of the unfolding CCAA (legal) process. When asked about what and when he knew about Laurentian, he’s changed his story. More recently, his office informed the public that he learned about Laurentian’s financial woes in January of 2021.
That’s probably untrue.
Romano’s cabinet calendar – accessed through a freedom of information request – shows that he had a phone call with Laurentian’s president, Robert Haché, on March 13th of 2020.
There’s very little chance that Haché, by that time deeply mired in an impending institutional collapse, wasn’t speaking to Romano about what was unfolding behind the scenes.
Thankfully, more clarity has come in the form of a short preliminary report from Ontario’s Auditor General.
According to Auditor General, Bonnie Lysyk, the university’s leadership “strategically planned and chose to take steps to file for creditor protection.”
Among the report’s ‘preliminary observations’ are two that stand out, in particular:
1) “For its part, the Ministry of Colleges and Universities (Ministry), which is the primary government ministry responsible for monitoring the financial health of post-secondary institutions, did not proactively intervene in a timely manner to provide guidance to help Laurentian slow—or ultimately respond to—its worsening financial deterioration.”
2) “We believe Laurentian did not have to file for CCAA protection; it strategically planned and chose to take steps to file for creditor protection in the Ontario Superior Court of Justice on February 1, 2021. As Laurentian’s financial situation grew increasingly dire, the university did not follow the normal broader public sector precedent by making comprehensive and clear efforts to seek financial assistance from the Ministry. It instead focused on advocating to elected officials and their staff, on the advice of external consultants. In August 2020, Laurentian raised the potential of CCAA to the Minister of Colleges and Universities [Romano] but did not clearly define how much financial assistance was required from the province to avoid a CCAA filing. An explicit request for funding to the Ministry was not made until December 2020, at which point the ask was significant and the timeline for intervention was short. Had it sought to work earlier and more transparently with Ministry staff, had it not prematurely paid off and relinquished its line of credit in 2020, and had it accepted the temporary funding assistance that the province ultimately offered, Laurentian would have had sufficient time for its financial situation to be reviewed jointly with the province and a go-forward plan put in place.”
In other words, none of this needed to happen.
To be clear, most of the blame can be put squarely at the feet of Laurentian’s astounding lack of management. But at the precise moment when government was supposed to exercise its good judgment and financial oversight, it completely abdicated its responsibility.
Despite shuffling Romano out of his previous portfolio, there’s not been a shred of accountability from the Ontario government. The precedent that’s been set – a publicly funded university going through a CCAA bankruptcy process – isn’t just a tragedy for Sudbury and Northern Ontario, it’s something that could affect higher education across Canada.
On a final note, there’s an incredible irony about the lack of effort expended by Romano to address the Laurentian debacle.
Romano’s family lived in Sudbury for a while, so he spent more time in that city than anyone could reasonably expect for an MPP that represents Sault Ste. Marie. Although his (then) family home in Sudbury was a mere 10-minute drive away from the Laurentian campus, the crisis didn’t seem all that important to him.
The people who lost their jobs, had their programs interrupted or terminated, or once had livelihoods indirectly connected to the university didn’t do anything wrong.
They didn’t vote for the people that failed them.