Laurentian bankruptcy: neoliberal policies get the failing grade

The February 1 announcement that Sudbury, Ontario’s Laurentian University had gone bankrupt made front page headlines and sent shock waves across the country. There’s good reason for this – universities are public institutions, and they are supposed to be funded and regulated for the specific purpose of guaranteeing their resilience and longevity as critical centres of education, research and scholarship. Laurentian, we are told, is the latest casualty of the coronavirus pandemic.

But the noble image that most people have of higher learning is belied by the facts of neoliberal government policies over several decades. Viewed from this angle, Laurentian’s crisis is not surprising or isolated. Far from being the result of COVID-19, this is the outcome of years of deliberate underfunding and privatization.

Laurentian University was created as part of the huge postwar expansion of post-secondary education (PSE) across Canada. Through much of that extended period, Ontario’s funding model for PSE included generally stable government funding based on student enrolment and program mix at the specific institution, combined with provincially-regulated tuition rates (the largest source of private funding). As a result of this model, individual universities relied on student enrolment for a large part of their revenue from both public and private sources.

Starting in the 1970s, however, the stability of university funding was weakened through a combination of slower economic growth and shifting government funding policies. In 1977, for example, the federal government of Pierre Trudeau introduced sweeping changes to the process of transfer payments to the provinces, which led to reductions in PSE funding. In response, universities gradually became more reliant on privatized funding, most notably through increased tuition fees.

Research shows that as neoliberal policies took hold, Ontario government grants to universities dropped from about 80 percent of operating revenues in 1980 to about 50 percent in 2004 and to just over one-third in 2017. This decline has been made up by tuition and other student fees. In 1980, these revenues provided around 15 percent of operating funds, increasing to 45 percent in 2004 and nearly quadrupling to 56 percent in 2017. Fees paid by students, both domestic and international, are now the largest source for university operating revenue. This marks an enormous shift from public to private funding.

These funding policies have been developed and maintained, albeit to different degrees, by successive Conservative, Liberal and NDP governments in Ontario. At present, Ontario provides less public funding per student than anywhere in Canada and has the highest tuition fees in the country.

Within this shift are other developments, including deregulation and huge increases for international student fees and tuition for professional undergraduate programs. These trends have further distorted university funding, making it more dependent on specific programs (especially ones that are closely tied to corporate interests) and on generally racist profiteering from international students.

Taken together with other dynamics in capitalist society (such as urbanization and the resulting depopulation of rural and northern regions) this comprehensive change in PSE funding has severely undermined the stability and quality of smaller and less prestigious universities, particularly those in Northern Ontario and other areas outside of major urban centres.

In a nutshell, elite universities in the largest cities are better able to compete for students and the revenue they bring. Offering higher prestige, an expanded range of programs and a cosmopolitan setting, institutions like the University of Toronto (U of T) can attract a steady stream of students and ride out wave after wave of government cuts. On the other hand, universities like Laurentian face static or even declining enrolment, leaving them increasingly dependent on government funding. For example, while less than 30 percent of U of T’s operating budget for 2016-17 relied on public funding, the figure was over 46 percent for Lakehead University in Thunder Bay and over 55 percent for North Bay’s Nipissing University. Put another way, privatization of university funding provided University of Toronto with roughly 35 percent more operating revenue over its Northern Ontario counterparts.

The problem doesn’t stop there. Reliance on government funding means vulnerability to government austerity measures. Smaller and northern universities have come under enormous pressure to cut “unviable” programs (usually liberal arts) and limit their focus to key areas of specialization (usually with a corporate or “labour market” connection). In turn, this further limits their ability to attract students and results in greater dependency on the government, making them even more susceptible to demands for program cuts.

It’s an accelerating, ever-tightening spiral that university workers and faculty have been warning about for years. Far from an isolated case, Laurentian’s bankruptcy should be seen as the point at which the crisis broke into the open.

The university has applied for creditor protection under the federal Companies’ Creditors Arrangement Act (CCAA), claiming that it owes $91 million to three Canadian banks and stating that it was unable to pay its workers in February. The CCAA is notoriously anti-worker, providing no explicit protections for employees and placing their claims (including to pensions and unpaid wages) at the very bottom of the priority list. Since the 1990s, the legislation has been used increasingly by companies seeking to use financial difficulties as a conduit for reducing wages, eliminating pensions and busting unions.

Notably, the provincial government’s statement on the Laurentian bankruptcy only made mention of supporting students and did not reference faculty or other university workers.

Rather than defend public education and fight for adequate PSE funding, university administrations have typically done the government’s bidding. Last summer, Laurentian chopped 17 programs across 13 academic departments. These cuts came just a few months after the university cancelled its entire Theatre and Motion Picture Arts program. A very large proportion of the cuts in the summer were in French language programs, leaving the province’s Franco-Ontarian community (which makes up one-quarter of Northern Ontario’s population) with vastly diminished academic opportunities. Interestingly, Laurentian’s president Robert Haché said that the cuts were “not spur of the moment decisions” and have been in preparation “on an ongoing basis over many years.”

In a joint press release on February 2, the Laurentian University Faculty Association (LUFA) and Ontario Confederation of University Faculty Associations (OCUFA) noted that the current crisis is rooted in deliberate policy decisions. “Perhaps Laurentian University’s move to claim creditors protection isn’t as surprising as it first seems. This is what happens when public institutions are not properly funded and when collegial governance gets eroded, with important decision-making processes moved behind closed doors.” The two bodies called on the provincial government “to step in immediately and provide long-term funding to secure the future of Laurentian University so that no student’s education and no person’s job is needlessly lost. Laurentian University’s senior administration and its Board of Governors, including its four government representatives, should stop hiding behind closed doors, respect the university’s constitution and bylaws and start working with the university community so that important decisions are made in a transparent, accountable, and responsible manner.”

In November, the Communist Party’s Ontario Committee issued a statement noting that the provincial government is “using the COVID-19 pandemic as an opportunity to fast-track legislation that grants university status to three private institutions.” The party is calling for the defense of post-secondary education, warning that the Ford Conservatives’ policies will exacerbate a crisis that already exists.

“The government has also indicated it will move ahead with previously announced plans to introduce “performance-based” funding, in which public funding would be pinned to labour market needs. Under this scheme, post-secondary institutions would no longer receive funding based on enrollment – an arrangement that is already inadequate, especially for smaller institutions and those in areas outside major urban centres – and would instead be financially supported according to student outcomes such as hiring rates and employment earnings. Without a doubt, this will benefit professional programs and those that are linked with specific industrial entities, at the expense of a huge range of liberal arts, humanities and languages programs, and critical intellectual inquiry such as Marxism, feminism, anti-racism and anti-colonialism.”

Building a movement to defend and expand PSE is critical. The immediate task is opposing any effort by the provincial government or Laurentian University’s administration and creditors at gutting jobs and incomes, cutting programs or further privatization.

[Photo of students supporting Laurentian faculty during 2017 strike to win stability and supports for quality education. Credit: Lambda student newspaper.]


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