Response to AG's report on Laurentian University's financial mismanagement

[marshwiggle]

Since this has been discussed in another thread.

From CBC:

In her report, Ontario Auditor General Bonnie Lysyk concluded Laurentian's financial collapse was due in large part to a poorly planned and costly capital expansion in 2010.

She said a lack of oversight from the university's senior leadership and its board of governors led to a series of poor financial decisions that culminated with the decision to apply for creditor protection under the Companies' Creditors Arrangement Act (CCAA).

[Hibush]

Capital expansion projects make a lot of sense...for the construction companies that do the work. And that work was harder to come by during the 2009-2010 economic slowdown. Were there influences from outside Laurentian that got this project greenlighted for reasons other than the schools financial success?

[mamselle]

A former dean I knew once said,

"The biggest mistake in upper admin is to accept a bunch of dedicated building donations that make you building-poor, and namesake-rich."

M.

[marshwiggle]

A former dean I knew once said,

"The biggest mistake in upper admin is to accept a bunch of dedicated building donations that make you building-poor, and namesake-rich."

M.

Yeah, but it's hard to attach a plaque to a balanced budget; much easier to attach to a building where you can be remembered for decades.

[mamselle]

True.

In a different setting a lab PI I knew suggested that that kind of balance looked good because capital expenses went into a different budget category, so the final result looked balanced, but you couldn't pull from one to satisfy a shortfall elsewhere...like wages.

M.

[Mobius]

This hard-and-fast divide between capital and operating budgets is often blurred. Maintenance can be deferred to pay operations or cuts to operations can be made
to pay for maintenance.

[marshwiggle]

True.

In a different setting a lab PI I knew suggested that that kind of balance looked good because capital expenses went into a different budget category, so the final result looked balanced, but you couldn't pull from one to satisfy a shortfall elsewhere...like wages.

M.

Absolutely, to the point of even getting donations to build a building when there's no commitment to budget increases to even cover the operating and maintenance costs of the building once it's finished. (A great example of this comes from all of the facilities in the world built for the Olympics, which sit empty after they're done.)

[apl68]

A former dean I knew once said,

"The biggest mistake in upper admin is to accept a bunch of dedicated building donations that make you building-poor, and namesake-rich."

M.

Yeah, but it's hard to attach a plaque to a balanced budget; much easier to attach to a building where you can be remembered for decades.

This explains a lot about how so many colleges end up with such an excessive proportion of their resources put into facilities.  Private donors want to give to bricks-and-mortar monuments to their  names, and state legislators treat university funding as pork barrel patronage for construction projects in different corners of the state.  I love bricks-and-mortar projects--doing the actual bricks-and-mortar work is how my family made our livings for generations--but that's not always what an institution or community needs.  I even know of a case where churches of a religious denomination that was not doing well in a particular town petitioned the denomination for help, and got a new white-elephant church building in reply.