On February 1st, 2021, Laurentian University sent shockwaves across the province when it obtained creditors protection. As the first publicly funded university or college ever to do so in Canada, the future of Laurentian is uncertain. Laurentian is legally insolvent, which is easily and erroneously confused with bankruptcy. There is an important distinction. The institution cannot satisfy its financial obligation but the stay of proceedings order, obtained through Companies Creditor’s Agreement Act protection, prevents the university’s lenders and creditors from pursuing damning action such as suing for breach or forcing bankruptcy. This legal fortress has bought the university some time to collect themselves and plot their next miracle.
Laurentian’s financial quagmire has been festering for over a decade and it is the culmination of some inevitable and preventable variables. It’s easy to assume that Laurentian’s cash drought is just collateral damage from COVID-19. Like most universities, Laurentian did experience some declining enrolment because of the pandemic but where they differ from other universities, is that their piggy bank was already hollow and brittle.
According to Laurentian’s 2020-2021 financial statement, the university was carrying $10.7 million in debt from the 2020-2021 school year alone and had run a deficit seven of the last eight years. According to a report by Bloomberg News, Laurentian University owes Canadian banks $91 million. Many students and community members are furious with the Laurentian Board of Directors, but this is more complicated than just an ill-advised board. It is important to contextualize this crisis within the framework of petering post-secondary funding and the conditions unique to managing a bilingual University in an industrial northern city. Nonetheless, this incident has sent a metaphorical cold front to universities across southern Ontario, leaving the awkward question: if it can happen to them, can it happen to us? What exactly about Laurentian is different?
One of the key factors contributing to Laurentian’s insolvency is the high operating costs of a federated university (an institution that is the sum of multiple schools merging). Laurentian is an amalgam of three affiliated universities that merged in the 1960s: the United Church's Huntington College, the Anglican Thorneloe College, and the Roman Catholic Collège du Sacré-Coeur (later named the University of Sudbury College). Currently, all students are enrolled and all degrees are accredited through Laurentian University but Laurentian has kept the federated system in homage to its history. Academic disciplines are associated with their respective affiliated university. The federated system lends itself to an intimate learning environment and Laurentian is proudly home to small class sizes and personal relationships with faculty.
However, there is one major setback to the comforts associated with a federated university: it’s more expensive to manage. Like, a lot more expensive. Three individual universities within the Laurentian apparatus means almost triple the administrative payroll. The federated system was a mainstay when Algoma in Sault Sainte Maire and Nipissing in North Bay were affiliated with Laurentian because they afforded those campuses individual identities while maintaining cohesion. But now that the Laurentian campus is localized (with the exception of Université de Hearst) the federated system is predisposed to redundancies. Regardless of the benefits, the federated system was hemorrhaging money from Laurentian’s net income.
A lot of the selling points of the federated system: small class sizes, Profs that know your name, campus charm; fit the narrative that Trent claims. Trent was established in 1963 as a collegiate school, inspired by Durham University in the United Kingdom. The colleges have fellows but are primarily members to the overarching university faculty and are compensated through the university-- not the colleges.
The Principal of Catherine Parr Traill College, Dr. Eamon, provided some further information about the financial management of Trent’s collegiate system:
Trent has centralized Housing Services, Student Affairs, Health and Wellness, Athletics, Facilities Management, Information Technology, Registrar, Recruiting, administration and faculty. This saves a lot of money and reduces the redundancies found elsewhere. The Trent Colleges do have their own separate staff, facilities and non-academic programs. However, these are entirely funded through a student ancillary fee and provide a good kind of redundancy, i.e. more opportunities for students to get engaged, participate in student government, work in a College Office, or have access to a senior university management.
Principal Eamon explained that the collegiate system has the optimal approach to centralization, which balances financial stability and college autonomy. He stated that “Trent has the financial strength and uniform level of central services while having the rich diversity and individualism of its colleges.” Although the optics of federated and collegiate institutions are similar, fortunately Trent’s collegiate system has the elasticity to adapt as the university’s business model evolves.
Much of the discourse around insolvency is being chalked up to bad business practices regarding international students. It is a well known absurdity that international students pay exponentially higher tuition fees than domestic students. The neoliberal framework of Canadian universities is predicated on fleecing international students. Alex Usher, president of the consulting firm Higher Education Strategy Associates, explains that universities have three revenue streams: tuition fees, government funding and private investment. Government investment has not budged since the 2008 financial crisis. Private dollars are welcomed but there are ethical concerns about private investment swaying the neutrality of public education. This means that universities are forced to stretch tuition dollars as far as possible.
Early in his tenure, Premier Ford made it clear that he was no darling to education. Upon arrival, the Progressive Conservatives slashed the Liberal’s keystone OSAP program. The Ford government introduced a pseudo alternative: a wholesale 10% cut to tuition for all students. This is considered a regressive tax. It does not change based on the students level of income therefore it benefits those who can go without it and is insufficient to students who actually need financial aid to attend a post secondary institution. This 10% cut came as an unexpected blow to post secondary institutions, many of whom were already carrying deficits. But there was one income stream that was conveniently excluded from Ford’s tuition cuts: international student tuition. Post secondary institutions are bound by the Province’s austerity measures. As a result, international students are an economic fulcrum, upon which the entire university rests.
This business model has thrust some universities into unprecedented prosperity, like University of Toronto and York University, but other institutions, like Laurentian, have been outperformed. Alex Usher commented that:
“If Laurentian had increased its international enrolments at the same rate as other Ontario universities, it would have an extra 277 students, and another $7.8 million in gross revenue in 2018-19, as well as another $20 million or so in the bank from previous years”.
Algoma and Nipissing University (Sault Saint Marie and North Bay, respectively) both have high rates of international enrolment therefore the disparity at Laurentian cannot be attributed to the northern location. At this point, the public does not know why Laurentian failed to attract substantive international enrolment but it is expected that Laurentian’s new business model will include the business savvy, yet dubious, practice of overcharging international students.
Laurentian is currently sorting all of its expenditures and deciding what to cut. It is expected that administrative and faculty salaries will be reduced. It is assumed many programs will be cut and consequently many will lose their jobs. The unfortunate reality is when the numbers are crunched, vocational programs will likely pass the sniff test, leaving deep cuts to language and arts programs. Might I remind you this is a public institution and we can agree it is against the best interest of the public to narrow learning opportunities in our province. In fairness, many of Laurentian’s financial woes were preventable. But in all fairness, the provincial government allowed post secondary funding to devolve to the point that universities have to mine international students just to be financially viable. The longer you stare at this problem, the uglier it becomes.
Earlier this year, at the February 5th Board of Governors meeting, Trent President Leo Groarke is quoted stating:
We have a responsibility to the university to have a university that is sustainable from a financial, and I’d say, environmental point of view. If you think about what is happening at Laurentian these days, that is something to be taken seriously. Because as a board we need to think of sustainability not just for the next two years but for hundreds of years in the future… Lastly, I would say we have a responsibility to Ontario, to Canada and to the world, to do what I think we can do, which is find a way forward that balances all these complex responsibilities.
No post secondary institution is impervious to the forces that dragged Laurentian University. The economic position of post secondary education forces universities to prioritize business practices over the virtues of education. This doesn’t align with the dignified ideal of post secondary education but it is where we are at. So long as universities cannot rely on sustainable public funding, they will conduct themselves relative to the principles of business rather than the merits of education.
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