2021 Laurentian University Financial Crisis

The 2021 Laurentian University Crisis is a controversial and unprecedented financial crisis at Laurentian University in northern Ontario, Canada. After experiencing financial difficulties over a period of years, the university filed for creditor protection on 1 February 2021. The university subsequently announced the closure of 69 undergraduate and graduate programs as well as the termination of 194 full-time workers, including 116 full-time faculty positions, 41 unionized staff and 37 non-union jobs (24 of which were in management and executive positions). It also marked the first time in Canadian history that a public university sought recourse under the Companies' Creditors Arrangement Act (CCAA).

The crisis has provoked sharp criticism of both the university administration and Doug Ford's provincial government as well as sparking discussions surrounding the state of postsecondary education in Canada, including the future of Indigenous and Franco-Ontarian education. Concerns have also been raised about the impact of the cuts on the cultural and economic life of northern Ontario, with some estimates predicting an immediate economic hit of well over $100 million to the city of Greater Sudbury.

Restructuring plans

On 1 February 2021, Laurentian University president Robert Haché confirmed that the University had filed for creditor protection. Court filings revealed that the university's liabilities amounted to $321 million, including $91 million in loans from three Canadian banks.

The university continues to be operational, offering a total of 107 undergraduate programs and 33 graduate programs. In regard to the program closures, the university indicated that "We anticipate that approximately 10 per cent of undergraduate students...will be affected in some way by these program adjustments.”

As part of restructuring, the university announced that it was considering the sale of some of its real estate, including the last undeveloped waterfront on Sudbury's Lake Nepahwin.

From 2014 to 2021, the university spent over $160 million on new infrastructure, with around $140 million of that total coming from government subsidies and private donations.

The president reported at the university senate in September that over $9.8 million had been expended on restructuring costs. The court-appointed monitor also had earlier indicated that the university would be spending nearly $10 million in additional costs by February 2022, as well as $1.8 million in interest loan fees on the debtor-in-possession loan from Firm Capital that was received through the CCAA insolvency process.

In October, the university announced that it had contracted the Nous Group to do an operational review.

The university has extended the deadline for completion of the restructuring process several times.

Despite declaring insolvency on February 1, 2021, Laurentian University consulted with insolvency counsel at least as early as March 2020. On August 28, 2020, the Laurentian University Board of Governors engaged the accounting firm Ernst and Young as a "financial advisor to assist LU in its restructuring efforts and if necessary, act as the Court-appointed Monitor...should LU decide to seek protection under the CCAA." Laurentian University did not announce their hiring of Ernst and Young until October 1. In early November, the Executive Committee of the Board created an "a special In Camera Ad Hoc Committee on Contingency Planning" that was to provide oversight and direction for the CCAA process. On December 10, 2020, Laurentian University requested assistance from the government of Ontario, asking for $100 million, almost half of which would go toward "“termination and severance payments.” Laurentian proposed that it could work with $30-$40 million but that amount would not be enough to avoid entering the CCAA. The province replied that it could not offer $100 million unless Laurentian University agreed to a third-party audit of the university's finances but that it could offer $12 million to cover operations until the end of March. Apparently, Laurentian University administration declined both of these offers.

In December, the courts granted the university's request to remove the $500,000 cap on the legal fees of independent counsel for the Board of Governors. There also was approval for the appointment of three claims officers to deal with the approximately 1,500 claims from creditors for over $360 million, and a grievance resolution officer to address grievances filed by the Laurentian University Faculty Association.

Cut programmes

The university announced that it was closing 58 undergraduate degree programmes, of which 34 were English-language programmes and 24 were French-language. It also announced that it was cutting 11 of its graduate programmes, which was about one-quarter of the university's graduate offerings. The university said the cuts were targeted at programmes with historically low enrolments.

Arts

Arts degrees were among the programmes that were eliminated, including several languages, philosophy, music, and the French-language history programme. The programme closures drew significant concern from the community about the impact it would have on local culture, as many local arts institutions and festivals had ties to the university.

Midwifery

Laurentian was one of the three Ontario universities that offered an undergraduate programme in midwifery, and the only university outside of the province of Québec that offered the degree in French (and the only bilingual programme in Canada). Despite receiving 400 applications a year for the 30 spots in the programme, midwifery was among the programmes cut. The elimination brought particular criticism, especially as the province was facing a shortage of midwives. Some commentators also raised concerns about the impact of the cuts on regional healthcare in Northern Ontario, while others raised concerns about the impact it would have on women. However, in testifying before a federal parliamentary committee, university president Robert Haché responded that the province's funding was insufficient to sustain the programme.

In April, the provincial government announced that it intended to ensure the continuation of a bilingual midwifery programme. The government had previously stated that it would redistribute the funding Laurentian received to the midwifery programmes at Ryerson University and McMaster University. In May, the Ontario Midwifery Consortium announced that it had received temporary funding from the province for Ryerson and McMaster to train virtually the Laurentian transfer students and oversee their placements.

Science

Nobel Prize laureate Arthur B. McDonald, a former director of SNOLAB, criticised the elimination of the university's programmes in physics and mathematics, noting that Laurentian was a founding member of SNOLAB and that the loss of new students could significantly impact astrophysics research in Sudbury. Other programmes that were cut included radiation therapy, ecology, zoology, and environmental science, despite the university having been the driving force behind Greater Sudbury’s internationally recognised regreening program.

Sports

In mid-April, the university announced that it would be cutting its varsity swimming and ice hockey programmes for both men and women. Even if usual U Sports transfer rules would be suspended for the affected student athletes, this still created a situation of uncertainty surrounding their athletic scholarships. Voyageurs men’s hockey head coach Craig Duncanson stated that "we were told we fiscally made sense, because if you take the hockey program, there’s 30 students at the university who wouldn’t be there, so you’re taking people out who are taking up empty chairs," while women's hockey head coach Stacey Colarossi criticised the university for continuing to recruit players into March 2021, stating that "it gave our women’s athletes a false sense of hope, especially since it came out so late."

Some members of the university's swimming programme expressed concern over the university's transparency, as they had raised over $8,000 in December for the university's Olympic pool and athletics centre, but were unable to track how the university had expended the funds.

Animal euthanasia controversy

As part of the cuts, the university announced the closure of its Animal Care Facility. The closure meant that several hundred animals in the lab's care, mostly mice and rats used for medical research, would be euthanised. News of the euthanisations provoked public controversy, with several animal rights advocates calling for the university to send the animals to shelters instead for adoption. The university defended its actions, stating that "these research activities will be wound down under the oversight of a veterinarian following animal welfare guidelines in accordance with the Canadian Council on Animal Care and the Ontario Ministry of Agriculture and Food and Rural Affairs." However, some students involved in the research also criticised the university, with one telling CBC News that:

Federated and affiliated universities and colleges

As part of its restructuring, the university announced plans to end its relationship with the three other federated universities effective May 1, claiming that the move would allow it to save over $7 million per year. They included the University of Sudbury, Thorneloe University, and Huntington University. However, two of the federated universities pledged to fight Laurentian's decision in court. Ronald Caza, a lawyer representing the University of Sudbury, accused Laurentian of acting in bad faith and of attempting to destroy the federated universities, claiming Laurentian saw them as competitors. Court documents suggested that Thorneloe University was at risk of going bankrupt if its relationship to Laurentian was severed. A harbinger of the Laurentian crisis had been Thorneloe's abrupt shutdown in 2020 of its theatre and motion picture arts' programmes due to financial pressures.

In mid-March 2021, the University of Sudbury announced that it was undergoing consultations with l'Assemblée de la francophonie de l'Ontario to become a fully autonomous, francophone university.

On 2 May 2021, the Ontario Superior Court of Justice cleared Laurentian to cut ties with the federated universities. Only Huntington University did not contest the court decision.

Consequently, the federated universities closed their respective undergraduate programs which, with the exception of gerontology, were taught in the faculty of arts. The programs included ancient studies, communication studies, études journalistiques (taught in the French language), folklore et ethnologie (taught in the French language), gerontology, Indigenous studies, philosophy, religious studies, and women, gender, and sexuality studies. Huntington's online gerontology program was taken over by Laurentian, as were six courses in Indigenous studies that had been taught at the University of Sudbury. However, none of the faculty were transferred. Altogether, 28 full-time faculty members were terminated on June 30 - 7 at Huntington, 7 at Thorneloe, and 14 at the University of Sudbury. Further, Thorneloe's overall staff complement went from 40 employees to 4. There is no published information on staffing declines at the other institutions.

The institutions affiliated with Laurentian included the Northern Ontario School of Medicine and l'Université de Hearst. In mid-April 2021, the provincial government announced that it was introducing legislation to allow them to become fully independent, degree-granting institutions. This would notably make l'Université de Hearst the second fully-francophone university in the province to receive an independent charter, after l'Université de l'Ontario français. The school of medicine's dean commented that the school had not been consulted on the government's decision and expressed concern about the status of the institution's funding since $20 million of its funds were deposited at Laurentian at the time of the insolvency declaration. Nevertheless, the legislation was subsequently passed. At a November town hall, the Northern Ontario School of Medicine University president stated that $14 million in bursary funds had been directed to Laurentian before the insolvency, but there was no indication as to their status.

Laurentian University partners with certain Ontario colleges to accredit students with undergraduate degrees. In October 2021, St. Lawrence College said it would no longer partner with Laurentian University to grant 4-year nursing degrees. It became one of the first colleges in Ontario to take advantage of an Ontario initiative that allowed colleges to grant standalone nursing degrees. While St. Lawrence College continues to offer a joint Bachelor of Business Administration degree through Laurentian, the university also owes the college the funds for student scholarships.

Impact

Impact on students

The scale of the cuts, including the elimination of many degree programmes, left a significant number of students with deep uncertainty about the state of their studies. Some students were left in a situation where they would be unable to complete their degree at Laurentian, due to the necessary courses having been cut, and would have to face the prospect of transferring to another university.

Some commentators expressed concern that there could be a mass exodus of francophone students in particular. Concerns have also been raised about the prospects for international students, especially as they pay significantly higher tuition fees than domestic students. The loss of their degree programmes could also potentially raise issues for international students concerning the status of their visas.

Although enrolment in the spring 2021 term was not affected, there was a 33 percent decline in the enrolment for the first-year class for the fall 2021 term. In November, the university announced that the overall enrolment had declined
by 14 percent.

In January 2022, a precipitous decline of 43.5 percent in enrolment applications for the fall 2022 term was reported, with applications for programs in the French language falling by 52 percent.

Impact on faculty and staff

The university's collective agreement with the faculty provided for severance to be paid to terminated members based on years of service. However, the Companies' Creditors Arrangement Act process superseded the agreement, leaving many of the terminated faculty in a precarious state. In April, the faculty members ratified a new collective agreement that included salary concessions and rollbacks. The Laurentian University Faculty Association president said the contract was signed under duress, with the board of governors threatening to shut down the university if the agreement was not ratified. The association condemned the cuts and, with the Ontario Confederation of University Faculty Associations and the Canadian Association of University Teachers, called for the resignations of the university's senior leadership as well as the province's minister of colleges and universities. At the end of July, the faculty association filed a claim against the insurance that covers the senior administration and board of governors from litigation. The claim alleges the misuse and loss of earmarked funds including the retiree health benefit plan, research funds, professional allowance, and loss of sabbatical credits for terminated faculty members.

The Greater Sudbury City Council announced plans to provide assistance to Laurentian staff whose positions had been eliminated by helping their search for employment in the region.

The terminations of the faculty members took place on April 30 and May 15. There is no published information on how many were able to find employment in the region or elsewhere. It does appear, however, that the majority of them were in the mid- to late stages of their careers.

At the December meeting of the university senate, the administration was accused of misleading the Laurentian University Staff Union in the 2020 renegotiation of its collective agreement that resulted in pay cuts. LUSU also gave $450,000 of its funds to the university so that its members would not have to take unpaid furlough days. The union said it was not notified at the time that the university was in consultation with external insolvency counsel. The university president responded that there was a reference to it in the initial affidavit of the university's insolvency filing. However, the only public reference to Laurentian seeking external insolvency counsel in March 2020 appeared to be in documents related to the speaker’s warrant issued through the Ontario legislature on Dec. 9 (see Provincial Government, below).

According to the Laurentian faculty association, the overall number of full-time faculty members at the university (including the federated universities) declined from 400 to 250, and from 300 part-time to 200.

Impact on Franco-Ontarians

The crisis was characterised by many as a Black Monday for the Franco-Ontarian community, with Théâtre du Nouvel-Ontario manager Marie-Pierre Proulx stating that "we don't have any other choice but to take it personally, as an attack on our culture and our situation." Senator Josée Forest-Niesing stated that "the Francophone minority community in Northern Ontario depends on Laurentian University for its development, support and future."

Over 60 percent of the university's French-language programmes were affected by the cuts, a disproportionate number compared to the English-language programmes. This came despite the university's official status as bilingual and its status under the French Language Services Act. Kelly Burke, the province's French Language Commissioner, released a statement in April that she was reviewing the situation after receiving criticism over her earlier silence.

The university's pledge to continue its bilingual status was met with skepticism among many Franco-Ontarians, with Joanne Gervais, executive director of L'Association Canadienne-Francaise de l'Ontario, calling for the university to "explain how you cut 60 per cent of your French programming and still expect us to accept you or think of you as an ally or somebody there to serve our community." The Regroupement étudiant franco-ontarien announced that it would be fighting the cuts, stating that "francophone communities are always disproportionately affected by austerity measures in bilingual institutions."

On April 23, Carol Jolin, president of the Francophone Assembly of Ontario, appeared before the federal parliament's Standing Committee on Official Languages, criticising the university's lack of transparency on how it had been spending federal funding aimed at supporting French-language programmes in Canada.

Some commentators called for a rethink in how French-language education is offered in Ontario, with some proposing the creation of a federation of French-language universities. In November, a petition was read in the Ontario legislature urging that all Laurentian programs taught in the French language be transferred to the University of Sudbury.

The government of Ontario had previously been criticised by the Franco-Ontarian community for a series of cuts in late 2018, including the elimination of funding for the Université de l'Ontario français and the elimination of the French Language Services Commissioner, in what was dubbed a Black Thursday for the community. Those previous, as well as the crisis, contributed to a sense of unease surrounding the future of the Franco-Ontarian community and francophones communities elsewhere in Canada, with one columnist for Le Soleil using the term "francodéprime" to describe the situation.

In June 2021, the province's commissioner for French language services announced an investigation of the university's cuts to French-language programs. The provincial ombudsman's office also indicated it would investigate the cuts to English-language programs.

Impact on Indigenous communities

The crisis provoked serious concerns about the future of Indigenous education and research in northern Ontario.

The Laurentian University Native Education Council stated that it had been excluded from discussions surrounding the future of the university, with former chair Roxane Manitowabi stating that "Indigenous Studies needs to continue in our community and students deserve to be educated in the north."

Some commentators accused the university of breaking Canadian commitments to reconciliation with Indigenous peoples, in particular the Truth and Reconciliation Commission of Canada's call for governments to provide adequate funding for Indigenous education.

Other commentators accused the university of misleading Indigenous communities over the future status of language revitalisation programmes. The University of Sudbury reached an agreement to provide six Indigenous Studies courses over the summer for students who needed the credits to graduate, but Laurentian was criticised when the course teaching positions were not initially offered to the University of Sudbury professors who had been scheduled to teach them. The courses for the spring session were eventually taught by faculty members of the University of Sudbury and Trent University.

In October, the University of Sudbury and Kenjgewin Teg, an Indigenous education institute located on Manitoulin Island, announced the transfer of the intellectual property of some of the university's online courses in Indigenous studies to the institute. Kenjgewin Ted also intends to develop Indigenous Studies programming as well as open a University of Sudbury campus.

Reaction

Media coverage and commentary on the crisis has been massive, with over 1,100 news reports, opinion pieces, articles, blog postings, and radio and television broadcasts, according to a listing that has been compiled. The local media outlets have included CBC Radio Sudbury, CTV News Northern Ontario, Le Voyageur/La Voix du Nord, Radio-Canada, Sudbury.com, and the Sudbury Star. Both CTV News and Radio-Canada have provided folders of their ongoing news coverage.

Much of the reaction to the crisis has focused on concerns around how the cuts would affect northern Ontario, in particular the impact on women and minority communities. Other commentators expressed concerns about the state of postsecondary education across the country, noting that similar problems could occur elsewhere.

A number of commentators have analyzed the root causes of the crisis and how it may be resolved.

Former university administrators have given their perspectives, while others have defended the CCAA process.

Some donors to the university expressed disquiet about the lack of transparency over the ultimate destination of their donation funds.

Concern was also expressed about the status of the university's research grants when it was learned that the funds were co-mingled with operating funds. Federal granting agencies have since filed claims against Laurentian for more than $7 million.

At the end of February, the Greater Sudbury City Council unanimously voted to send a letter to the provincial government asking for funds to stabilize the university and to launch a review on the funding model for Ontario universities. Councillor René Lapierre, who had presented the motion, proclaimed that the university was "part of our heart of Sudbury."

The Canadian Historical Association and the Institut d'histoire de l'Amérique française released a joint letter condemning the cuts and underlining that the university was "a driving force for regional development and the heart of the Franco-Ontarian community in Mid-Northern Ontario." Other scholarly societies have also written letters of concern.

On April 14, the National Assembly of Quebec voted unanimously to denounce the cuts at the university and the underfunding of francophone institutions across Canada, as well as expressing solidarity with Franco-Ontarians.

In mid-April, university chancellor Steve Paikin resigned from the position, a few months before his second term was due to end. A successor was not named and no honourary doctorates were conferred at the university's spring convocation in June. In protest against the cuts, Franco-Ontarian writer Jean-Marc Dalpé returned the honourary doctorate that he had received from the university in 2002.

On May 1, a demonstration against the cuts was organized by the Sudbury Workers Education and Advocacy Centre. A handful of solidarity demonstrations was also held in other Ontario centres.

In New Brunswick, Université de Moncton rector Denis Prud'homme expressed concern that the same situation could happen to other universities in Canada, putting minority groups especially at risk. Patrick Noël, vice-president of the Manitoba Organization of Faculty Associations, expressed similar concerns, stating that action was needed in the near-future to prevent crises at other universities.

The prospect of a sell-off of the university's greenspace sparked community concern.

The indefinite closure of the university's Jeno Tihanyi Olympic Gold Pool, which occurred in the weeks before the insolvency declaration, also raised concern regarding the future of community swimming programmes.

Among the local groups with campaigns are Save Our Sudbury, Laurentian Nordic Ski Club, Nepahwin Lake Watershed Stewardship, and the Coalition for a Liveable Sudbury.

The Tricultural Committee for University Education at Sudbury, an offshoot of Save Our Sudbury, has urged that the university be placed in trusteeship with separate funds for Indigenous and Francophone institutions.

Provincial government

The government of Ontario Premier Doug Ford and its policies towards postsecondary education were the focus of much criticism, particularly centring on the cuts to education funding and the appointments of Progressive Conservative Party of Ontario supporters to university boards. The government was additionally criticised for its inaction over the crisis. Minister of Colleges and Universities Ross Romano released few statements on the situation, that mostly supported the university's decision to cut. As part of the CCAA proceedings, the courts denied a motion to release correspondence between the province and the university prior to the insolvency declaration. The province provided no Covid-related emergency funding to Laurentian, although funding was extended to other colleges and universities.

In February, the province commissioned a special adviser, Alan Harrison, to support the university. The position was subsequently extended as part of the government's Dec. 16 intervention (see below).

Labour leaders condemned the government for its inaction, including Tara Maszczakiewicz, regional vice-president of the Ontario Public Service Employees Union, who stated that "Mr. Ford and Mr. Romano choose to view a public post-secondary institution as a business. They are putting the first nail in the coffin of post-secondary education in Ontario." The Ontario Confederation of University Faculty Associations called for Romano's resignation as minister, claiming that he was aware of the issues facing the university months before the crisis became public, yet chose not to take action.The university president also indicated that both provincial and federal officials had been informed of Laurentian's financial problems over the past year. The minister was subsequently replaced in a June cabinet shuffle.

In April, the province's auditor general was asked to investigate the university's finances over the past decade following a motion passed by the provincial parliament's standing committee on public accounts. The university refused to provide documents to the auditor general that it considered to be privileged. The dispute was referred to the Superior Court for resolution. In a report, the auditor general said the university was creating a climate of fear among its employees that inhibited disclosure. While the court reserved a decision, the Ontario legislature approved a speaker's warrant that ordered the university (over its protest) to hand over the documents to the public accounts committee. While speaking in favour of issuing the warrant, Paul Calandra, the Government House Leader, chastised Laurentian University President Robert Haché and Board of Governors Chair Claude Lacroix, stating that their "utter disrespect for Parliament and the people of Ontario is shameful and we will not let it stand." The university has asked the Superior Court to suspend the warrant. On Jan. 12, 2022, the court ruled in favour of the university that it was not obligated to disclose privileged documents to the auditor general. A separate hearing was held on Jan. 18 on the university's request to stay the warrant. The court subsequently ordered the university to release all documents requisitioned by the standing committee save the ones under court order.

On Dec. 16, the province intervened by taking over the $35 million loan from Firm Capital, the debtor-in-possession lender, providing $6 million in Covid-19 related relief, and up to $22 million to cover enrolment declines and performance target failures. The support was contingent on "board governance strategy" that resulted in the resignations of the chair, vice-chair, past chair, and eight others. Five appointments from the business and corporate sector were subsequently announced.

Federal parliament

Federal Minister of Economic Development and Official Languages Mélanie Joly openly criticised the provincial government over its inaction on the crisis, stating that Doug Ford's government was avoiding its responsibilities. The province responded that the federal government only asked to meet after the program cuts and layoffs were announced. In late April, the federal government indicated its willingness to provide funding to help resolve the situation, in particular to support French language and Francophone education in Ontario.

Liberal Party of Canada MP for Sudbury Paul Lefebvre announced a proposed private member’s bill to the federal House of Commons that would ban colleges and universities from seeking creditor protection, stating that "what has happened here at Laurentian University cannot be repeated anywhere else across the country." He further stated that he wanted to ensure that provinces took their constitutional responsibilities, including their jurisdiction over education, "more than seriously."

Lindsay Mathyssen, federal New Democratic Party critic for women and gender equality, called for a study on the impacts of cutting Laurentian's midwifery program.

Timmins-James Bay MP Charlie Angus (NDP) was granted an emergency debate in the House of Commons, where he condemned the cuts and called for the resignations of the Laurentian president and board of governors, stating that they "should not be allowed near any public institutions, and not public education." In late April, members of both the federal and provincial New Democratic Party held a town hall with federal NDP leader Jagmeet Singh in attendance.

The Laurentian crisis was a topic of local and regional debate in the 2021 Canadian federal election, with a former Laurentian professor running as the Sudbury NDP candidate. However, the two Sudbury area seats were retained by the Liberals.

References

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French-language education in Ontario
Franco-Ontarian history
Laurentian University
2021 in Ontario
History of Greater Sudbury
Education controversies
Education finance in Canada