Laurentian University has fully implemented 48 per cent of the recommended actions in the Ontario Auditor General’s 2022 special report detailing the circumstances that led to the university’s 2021-2022 insolvency.
The April 2022 preliminary report on Laurentian University from then-Ontario Auditor General Bonnie Lysyk and the full November 2022 report concluded the university did not have to file for creditor protection under the Companies’ Creditors Arrangement Act (or CCAA).
Laurentian’s decision to undergo insolvency restructuring under the CCAA was unprecedented in the post-secondary sector, and has led to federal law being changed so that colleges and universities are now specifically banned from doing so.
Lysyk’s report included recommendations for the university, its board of governors and senate, as well as the Ministry of Colleges and Universities and the Office of the Integrity Commissioner of Ontario.
Laurentian University, under previous leadership, initially refused to provide privileged (confidential) information to Lysyk’s audit team, but did end up eventually having to hand over most of the requested documents.
Ontario’s current auditor general is Shelley Spence. Her team paid a followup visit to Laurentian in May to see how it was doing with implementing the recommendations from the 2022 report. A report stemming from that checkup was released Dec. 3 by the auditor general’s office.
The report said 48 per cent of the auditor general’s 2022 recommendations for LU have been implemented, and another 33 per cent are in the process of being implemented.
However, there has been little or no progress on 17 per cent of the recommendations, and two per cent are no longer applicable.
In an internal email, Laurentian University president Lynn Wells thanked the auditor general’s office for its “diligent efforts to track our progress.”
She said that “notably” the report shows “Laurentian University has implemented or is in the process of implementing 81 per cent of the recommendations from the 2022 Special Report. The report also recognizes that the requirements of the CCAA process create constraints on those recommendations for which little progress has been made.
“We look forward to undertaking these projects as soon as is practicable,” she said.
“While we recognize that there is still a lot of work to be done, we should all appreciate the progress that has been made,” Wells continued. “Over the past few years, Laurentian University has been through a difficult period, and one that has left its mark on many of us. The report shows that, by working together, we can continue to build a great future for our institution.”
The auditor general’s report said many of the recommendations in the “little to no progress” category relate to capital planning.
“As part of the university’s emergence from the CCAA restructuring process, it entered into a loan agreement with the Ministry of Colleges and Universities (Ministry),” said the report’s introduction.
“Under the loan agreement, the university is not permitted to incur any capital expenditures exceeding $10 million, individually or in aggregate, during the 15-year term of the loan without the prior approval of the ministry. As a result, the university has not entered into or proposed any new major capital projects.
“The university does have a five-year capital plan that primarily focuses on addressing critical deferred maintenance projects, which is incorporated into its financial forecasts that it submits to the ministry.
“However, the university has not prepared a longer-term capital plan that is consistent with its new 2024–2029 Strategic Plan. The university intends to develop a new long-term capital plan that will be strongly influenced by its Strategic Plan and a renewal of its campus master plan.”
The report said Laurentian has fully implemented recommendations such as preparing budgets on the same basis as the university’s consolidated financial statements, and establishing a board skills matrix, a new conflict of interest policy for board members and term limits for all board members.
It also now publicly posts board information packages and minutes of both closed and open sessions in a timely manner.
The report said following Laurentian’s exit from insolvency in November 2022, it has made a number of operational and governance changes.
“However, there is still much work under way,” said the report.
“In April 2023, the university engaged external consultants to develop a detailed operational transformation plan (Transformation Plan) to provide the university with the systems, processes and policies to best support its academic and research missions.
“Many of the actions to support the implementation of our recommendations are contained within the Transformation Plan and are ongoing.”
One of the recommendations is no longer applicable, the report said, following a change in the Laurentian board of governors finance committee’s terms of reference.
The recommendation was specific to criteria in the finance committee’s former terms of reference, which have since been removed.
The auditor general’s 2022 special report on Laurentian also contained recommendations for the Ministry of Colleges and Universities and the Office of the Integrity Commissioner of Ontario. It said 23 per cent of the report’s 13 recommendations for the colleges and universities ministry have been fully implemented, and both of the two recommendations for the integrity commissioner have been fully implemented.
Laurentian University Faculty Association (LUFA) president Fabrice Colin said the checkup by the AG’s office is “critical” so that “the errors that were made in the past won’t be repeated.”
He said he was especially happy to see progress in the recommendations that relate to transparency.
Colin said one thing that jumped out at him is the fact that Laurentian has not yet prepared a long-time capital plan, although he understands the difficulty LU is in, given its current post-CCAA restrictions.
“But it’s important to do it, because we know that bad decisions on the front of capital expenses can impact really badly the finances of the institution,” he said.
While the auditor general’s followup report focuses more on the operational aspects of the university, Colin said he wants to note that the original report “clearly established that the faculty members, the salaries and the programs were not the cause of the crisis.”
Heidi Ulrichsen is Sudbury.com’s assistant editor. She also covers education and the arts scene.