I don’t know how many blogs I have written about Laurentian since February 1, 2021.  Probably a dozen or so.  But with the release last Thursday of the Ontario Auditor General’s final report into the whole affair, I think this is where we can close the book.  If you have been diligent enough to read all my posts – particularly this series from last January – my guess is that nothing in the AG’s report will surprise you all that much.  But for the sake of closure, buckle up and I will take you through the document. 

Three are three main points to consider.  One has to do with the management since 2020 and whether ex-President Robert Haché actually had “no choice” but to declare insolvency.  If there is a bombshell in this report, it lies in the fact that the AG confirms that Laurentian a) did in fact unnecessarily rid itself of $14 million in cash by repaying its outstanding balance on its line of credit with Desjardins in the fall of 2020 and b) chose not to avail itself of any of the $25 million in available cash in February of 2021.  It also turned down various forms of aid offered by the provincial government in the weeks leading up to the declaration of insolvency under CCAA.  That is, Haché deliberately drove the bus over a cliff.  It was all unnecessary: other paths forward were possible.

(The AG also details the ludicrous amount of money that were leeched out of university by various types of lawyers and consultants such as Ernst and Young – roughly $30 million.  The university also had to cough up nearly $25 million for breaching its debt agreements.  So while the university did manage to rid itself of a substantial amount of debt through its eventual settlement with creditors, it also spent a ton of money as well.  It’s not at all clear that was a sensible trade.)

The second point has to do with how you interpret the run-up to 2020 – that is, the pre-Haché period.  Here it basically comes down to whether you think weak/cavalier management was exclusively to blame for the catastrophe (which, recall, did not necessarily have to lead to insolvency) or whether a lot of bad luck was involved, too.  Personally I am sympathetic to the argument that the events of 2019 (the provincial government’s decision to cut tuition fees) and 2020 (lost revenue from COVID) were pretty decisive in turning the university’s bad financial position into a potentially lethal one. 

And this is where an AG who had even a clue about how universities work or indeed university data would have come in handy. One huge mistake in the document is the assertion that Laurentian faculty salaries did not contribute to financial pressures on the institution.  This is based on the assertion that Laurentian had lower average salaries that comparable universities Nipissing and Lakehead.  Far be it from me to say that the Auditor General misunderstands higher education matters – though it’s worth keeping in mind that her godawful take on student grants in late 2018 was the reason the government of Ontario cut a billion dollars from student aid – but here is the data on average academic salaries at those three universities over the past ten years, in real dollars, as those universities reported to Statistics Canada. 

Figure 1: Average Faculty Salaries, in real $2020, Lakehead, Laurentian and Nipissing

You don’t have to argue that this salary gap was a “cause” of Laurentian’s collapse, but the fact is that if pay rates had been similar to Lakehead, total expenditures would have been somewhere between $15 and $20 million less over the decade to 2021.  It didn’t help, put it that way.  Also, peculiarly, after spending quite a bit of time (erroneously) claiming that academic pay wasn’t a factor, the AG curiously chose to switch tack and claim that Laurentian’s Senate should have spent more time looking at the financial viability of programs in the years pre-2021. 

The third point has to do with government.  I think the Ford government comes off reasonably well in this telling of the story: basically, it was unaware of the financial situation at Laurentian until very late in the day, and correctly resisted being hustled into a strings-free bailout.  Now, the AG spins that as a negative (“the government should have known, the government should have had more tools to intervene”, etc.), but given that the government did not have such powers or clairvoyance, what they did seems proper. 

And as for the system-level recommendations made by the AG…well, they are a weird mix of things which are both anodyne and totally unworkable (e.g. “determine to what extent universities are spending funds as intended for specific priorities (such as the bilingualism grant for French-language services), follow up with universities to understand any reasons for discrepancies and better align funding with actual needs.”  The one genuinely weird recommendation is the one suggesting that the Ministry be permitted to appoint a supervisor to take control of university operations when there are “serious financial sustainability concerns” (I can think of few things that would bring an institution to a halt faster than making all operations go through one person). 

In short: this report will become the standard reference for talking about the Laurentian debacle.  It is i) brutally but appropriately scathing about how the insolvency was handled, ii) is mostly correct but a little bit messy when talking about the years-long build-up and iii) not especially aggressive with respect to recommendations for the future which is probably a sign that the AG doesn’t think a repeat of Laurentian is very likely to happen anywhere else.

Fingers crossed.