Colleges in Dire Financial Straits

[marshwiggle]

More on Laurentian:

Colin blames the Minister of Colleges and Universities, Ross Romano, for failing to come to the rescue of the institution and engage in the CCAA process.

He also points the finger at poor governance practices of Laurentian's senior administration over several years.

So it's both the government's fault and the fault of years of bad administration.

Apples AND oranges, apparently.

Well, three budgets in a row of higher ed funding cuts certainly didn't help. All the northern universities (i.e. Algoma, Lakehead, Nipissing) have struggled recently, especially because they don't have the same access to international students as universities in sourthern Ontario do. IIRC Laurentian's public funding has fallen to ~26% from around 80% back in the day (the decline precedes this government, of course). I haven't kept up enough to know how involved/responsible Romano is, but he doesn't strike me as the sharpest--or best-intentioned--knife in the drawer.

It still seems kind of an indictment of academia that in all of the people they interviewed, with all of the expertise of the academics involved, that while everyone says the institution must be saved, not a single person offers any economically reasonable suggestion for anything, other than the government just giving them more. Is EVERY SINGLE program absolutely vital? No matter what the economics are?

This kind of uncompromising stance creates a kind of symbiosis with a government who is happy to cut funding since there's no room whatsoever for (and thus no value in) compromise.

[polly_mer]

I read through the lists of closed programs at Laurentian and said, yup, those are the programs that tend to be cut when cuts happen.

If one can go to Montreal or Quebec, then why would one accept Sudbury? 150k population isn't at all competitive for those who want an urban center and is much too huge for the country mice among us.

The fact that paring back Laurentian hits the region hard is closely related to why urbanites would want to be elsewhere with many more jobs and country mice would rather be living off the land instead of precarious employment.

[Parasaurolophus]

I read through the lists of closed programs at Laurentian and said, yup, those are the programs that tend to be cut when cuts happen.

It's surprising because many of those programs have good employment outcomes, and quite a few are (well, were) cornerstones of the university's brand identity as it (and the city) tried to shift away from total reliance on the mine and towards new horizons. Those environmental programs (now cut!) were instrumental in re-greening a city that was, just thirty years ago, pretty gross thanks to the nickel mining, and restoring the surrounding landscape.

It may well be that those programs were unsustainable; I don't know. But I don't trust that a corporate insolvency structure--which has never been used for a university before, and which wasn't necessary (since other protective measures were available)--made calls in the university's (or public's) best interests.

If one can go to Montreal or Quebec, then why would one accept Sudbury? 150k population isn't at all competitive for those who want an urban center and is much too huge for the country mice among us.

It's mostly a question of affordability. That chunk of Ontario is remote and empty. Heading to southern Ontario or Québec is prohibitively expensive for a lot of people; heading to Sudbury, not so much.

[marshwiggle]

If one can go to Montreal or Quebec, then why would one accept Sudbury? 150k population isn't at all competitive for those who want an urban center and is much too huge for the country mice among us.

It's mostly a question of affordability. That chunk of Ontario is remote and empty. Heading to southern Ontario or Québec is prohibitively expensive for a lot of people; heading to Sudbury, not so much.

There's also the University of Ottawa that has a lot of French language programs. It's probably the closest option for people who still want to study in French. (And some of the students will actually live between Ottawa and Sudbury, so it may even be closer.)

[Parasaurolophus]

Laurentian is designated under Ontario's French Language Services Act, so its French programming is supposed to be protected. We'll see how that plays out.

Also worth noting that midwifery (cut!) was subject to provincial caps and was always full and with a long waitlist. The cuts are about paying creditors back immediately, not viability or long-term health.

There's some excellent reporting on the restructuring process here.

[spork]

Laurentian is designated under Ontario's French Language Services Act, so its French programming is supposed to be protected. We'll see how that plays out.

Also worth noting that midwifery (cut!) was subject to provincial caps and was always full and with a long waitlist. The cuts are about paying creditors back immediately, not viability or long-term health.

There's some excellent reporting on the restructuring process here.

Important paragraph:

"The real problem here, of course, is that Laurentian's leadership waited until it was much too late to confront its financial problems.  It did not really admit a serious problem until it was far too late and the actual options on the table were so terrible that CCAA seemed like the only option.  Because of the ridiculous secrecy involved in the CCAA process, there is no way to know for sure why Laurentian got backed into this kind of corner.  Was it because well-meaning people kept losing small amounts of money every year, and, like a poor gambler, kept hoping they could turn it around until COVID hit?  Or was there actually some kind of malfeasance involved that was kept under wraps?  We should know, but we simply don't."

[marshwiggle]

Some interesting stuff from the timeline of Laurentian's finances:

At the end of the 2006-7 year, LU was at the peak of its fiscal health with an accumulated surplus of $8.1M. Under the direction of President Judith Woodsworth, LU had erased an accumulated deficit that in 2000 had grown as large as $6.4M. However, between 2001 and 2007, LU generated surpluses every year, with the exception of an $860k deficit in 2003.

If only they had continued....

For example, as late as 2017, LU boasted that it "balances [its] budget for seventh consecutive year."
Despite its ability to approve balanced budgets, the LU Board of Governors oversaw deficits in every year of Campus Modernization except 2017-18 (and the restated 2012-13). The Board increased LU's accumulated deficit to at least $32.3M by the end of 2017-18.

In addition, LU's long-term debt grew from $54.2M in 2012 to $96.3M in 2018.

Over slightly more than a decade, they went from an accumulated surplus of $8.1M and long term debt of  $3.8M and a balanced budget to an accumulated deficit of $32.3M  and long-term debt of $96.3M.

Given that all of the Ontario universities get their funding from the same provincial government, a lot of that change in fortune was obviously due to decisions made at Laurentian; i.e. not the government's fault.

[Parasaurolophus]

Over slightly more than a decade, they went from an accumulated surplus of $8.1M and long term debt of  $3.8M and a balanced budget to an accumulated deficit of $32.3M  and long-term debt of $96.3M.

Given that all of the Ontario universities get their funding from the same provincial government, a lot of that change in fortune was obviously due to decisions made at Laurentian; i.e. not the government's fault.

I imagine most of that stems from their building spree of the last few years (IIRC, it was ~$100mil).

I remember when Queen's got caught out by its own building spree back around 2008. It seems like a fairly common occurrence; you'd think they'd learn not to get caught out the same way.

[Wahoo Redux]

It's easy to see what people should have done after the fact, not always before. Who could possibly see 2008, Trump, or COVID coming?     

[marshwiggle]

It's easy to see what people should have done after the fact, not always before. Who could possibly see 2008, Trump, or COVID coming?   

But that's the irony; Laurentian came into 2008 debt-free and with a balanced budget. They should have sailed through pretty smoothly. The "building spree" didn't happen overnight, or all at once, so the decision makers just embraced their fantasies rather than following the kind of rational course that they'd been on for the few years prior and apparently kept doubling down on the idea of "If we build it, they will come."

[polly_mer]

I read through the lists of closed programs at Laurentian and said, yup, those are the programs that tend to be cut when cuts happen.

It's surprising because many of those programs have good employment outcomes, and quite a few are (well, were) cornerstones of the university's brand identity as it (and the city) tried to shift away from total reliance on the mine and towards new horizons. Those environmental programs (now cut!) were instrumental in re-greening a city that was, just thirty years ago, pretty gross thanks to the nickel mining, and restoring the surrounding landscape.

It may well be that those programs were unsustainable; I don't know.

Choosing a poor new brand identity isn't new in higher ed, especially places that are seeking a new mission as a running from instead of an embracing to.

I am not at all surprised that environmental programs are on the chopping block, especially if math and physics are also being chopped.  Those programs tend to be unsustainable as a trendy mission of the past few decades.  The people who successfully remediate regions as leaders then move on to the next place. 

The jobs doing remediation every day are mostly not the people with the environmental studies degrees.  Those specific degrees are much less useful than a strong back or being engineer in something else who has specialized in remediation as part of graduate work.

History has not been kind to mining places that picked their new mission as environmentalism without the strong science and relevant engineering, especially the supposed jobs are local instead of international.  French knowledge of the intro science is far less useful than English proficiency at the advanced science.

Midwifery may be in demand, but I bet it's expensive to run.  At one point, Super Dinky was losing hundreds of dollars for every nursing credit delivered.  The break even point was something like 3 people fewer than the maximum capacity and there was no way to back fill upper-division students who left for personal reasons.

I did research related to finances for potential new majors at Super Dinky.  The high-demand majors were too expensive to start up and run for the first three years.  Yep, we could have had 50 new students in athletic training, but getting that set up was $3M minimum along with trying to hire high-demand faculty who could choose to live somewhere other than the cornfields.

The majors we could afford to start were generally not going to fill fast enough to be sustaining within three years because there were so many more slots already in the region than students and no one is moving cross-country to major in English or philosophy at a no-name place while paying $40k.

[Wahoo Redux]

The hits just keep coming.

IHE: Faculty Salaries falling

[dr_codex]

The hits just keep coming.

IHE: Faculty Salaries falling

Not good reading.

But even if the headline says the numbers don't include layoffs, I bet they include retirements.

N=1, so take that for what it's worth, but my place was decimated by retirements and deaths. More than decimated, since we lost about 20% of f/t faculty. Most were tenured, many were Full, and several had been Full for decades. They are (slowly) being replaced, but in the manner that you'd expect: t/t hires, VAPs, and adjuncts. Until enrollment and the job markets stabilize a bit more, we are going to proceed cautiously.

I know that we are an outlier. Pre-Covid, the average age of f/t faculty was north of 60; it is much lower now. And the average salary is much lower, even if you keep it within rank brackets. (It's one of the reasons that we've avoided furloughs and layoffs.)

But I don't think we're a total outlier.

There's been lots of talk about a demographic shift among students; I'm betting that we're going to see one among faculty, too.

[Ruralguy]

We are less extreme, but more or less expeiencing the same, though we have a huge middle aged cohort. When we all retire, the youngest faculty now will be in their forties and still have quite a bit of time left. If they can hire our replacements, then I think the college will be significantly younger. But things may change. Now more people are retiring early because covid and shaky enrollments have spooked people. It might be worse in 10 years...heck, we might not even exist, but we could be a little better off and maybe will want to work until they are 70 or 75.

[Wahoo Redux]

In the meantime, the U.S. pledges $125M in military aid to the Ukraine.