Good morning. I had hoped to get you a bit more detail about what has happened at Laurentian in the last few days, but as usual there is less info available than there should be. Here’s what we know:

It’s not all over, obviously, but it’s worth starting to ask about what lessons we can learn from this whole affair.

The first question to ask here is “how did this happen”. And unfortunately, we don’t really know. It’s pretty clear, as I said back here, that financially the university suffered from a variety of problems on both the cost-side (salaries) and the revenue-side (failure to recruit international students), none of which were acute enough in any given year to signal the alarm but cumulatively were quite debilitating.

But more proximately, there were two specific events that need to be examined but which are currently shrouded in mystery. The first is who exactly was in the room when the decision was taken to start mingling the reserved and unreserved accounts. One gets the impression it happened quite a while ago, possibly before anyone currently in the administration was employed there. But who knew about this and when is a key part of the story, because it sure seems like the need to conceal this problem is one of the reasons why administration was reluctant to be transparent with its financial information.

The second has to do with the events of last summer, and the closing of Desjardins’ line of credit. Did the bank actually withdraw the line of credit? If so, why? Or, did Laurentian University’s President actually choose to renounce the line of credit in order to provoke a crisis? (The careful wording of Haché’s affidavit is ambiguous on this point). If there were non-CCAA alternatives that could have been taken and were not, that’s probably unforgivable.

Clearing up the truth behind these two issues are, it seems to me, key to moving forward. Staff at Laurentian have been through a lot without ever really being told why or how things got as bad as they did. For the community to heal and move forward, reckoning needs to occur. A very precise timeline of events needs to come out in the next few months simply to allow forward movement. I hope the Senate and the Board can force this kind of reckoning to occur.

Now, looking at root causes is not the same thing as looking for “fault”. Fault lies with management, period. Management’s job is to keep the ship afloat, and collectively, they failed. So did the Board. So did KPMG (someone should sue the living daylights out of KPMG for not flagging that the restricted/unrestricted line has been breached). I think there’s a fair case to be made that the institution as a whole and the faculty union specifically was resistant to change and that management was operating in an environment which made it difficult to make tough decisions, but at the end of the day that really doesn’t matter. Management is supposed to make tough decisions and they didn’t do it.

(That said, the idea being forwarded by certain folks at Laurentian that faculty union really wanted to selflessly help because they grieved to try to have the university declare financial exigency in both 2017 and 2020 is highly dubious. Mostly what the union was trying to do was to get management to cough up financial data which is a precondition to declaring exigency. As I wrote on Tuesday, the exigency process was not designed to actually reduce salary costs: it is rather designed to allow the union to argue why whatever financial problems exist either are not problems, or should be solved by some method other than salary reductions).

There is also the question of the responsibility of the provincial government. I think it’s significant, in the sense that an administration that wasn’t so keen on sticking the boot into higher education would have taken a more responsible path. It seems clear that Laurentian’s problems could have been solved with much less fuss simply by the provincial government forwarding a loan in the $35-million range and then clawing back that money from the annual provincial grant over a period of five to seven years. It would have cost nothing, yet at the same time it would force a significant penalty and some restructuring on the university without causing Monday’s apocalypse. That doesn’t mean that the province is “responsible” for what happened, because that would absolve management of things for which they should not be absolved. But it does mean the province deliberately passed up a chance to sensibly solve the problems.

The more fraught question is what lessons people outside Laurentian should take from all of this. The main one people seem to want to take is “more public funding”. This is of course what they call “highly motivated reasoning” which might happen to benefit their institution/constituency/whatever. If funding were really the problem, this problem would not have been confined to Laurentian and perhaps more to the point, it’s a form of magical thinking in which universities’ problems are always on the revenue side, never on the cost side. It never seems to occur to people that greater public funding might come with greater restrictions on spending, particularly when it comes to faculty salaries (one of the reasons that the average professorial salary in Ontario can be around the 95^th percentile of salaries province-wide is precisely that less than half of this amount is coming from the public purse: increase provincial funding and you’d better believe compensation would be a way hotter issue than it currently is).

Would more funding have helped? Maybe. But lack of funding wasn’t the cause. The cause was an unwillingness to make difficult decisions and an inability to collectively confront unpleasant financial realities before it was too late. And that’s the main lesson: institutions need to do whatever it takes to make sure reality can’t be ignored, to ensure that the entire community is well-informed about the true state of finances (and the degree of risk associated with them). You’re never going to get everyone to agree about how to spend money but operating under a fundamental misapprehension about how much there is to spend is fatal.