A Message to the Ontario Government

In addition to taking to task Laurentian’s senior leaders, board, legal advisors and consultants, the OAG criticizes the Ontario government for weak oversight of Laurentian.  She calls for government intervention to forestall future similar scenarios.

Government has all the tools it needs and while due diligence is advised, intervention is unnecessary.

What’s the Goal? Assuring Accountability

The OAG notes that the Ministry of Colleges and Universities started monitoring university finances back in 2014.  However, even when it did become aware of financial concerns, it “did not attempt to proactively intervene”.   We can all agree that universities must be accountable – accountable for the public monies they receive, and accountable for fulfilling their societal roles.  We can hopefully agree that the government has an obligation to ensure that the public monies provided to universities are used responsibly and for the purposes for which they are intended – that’s the minimum we expect as taxpayers isn’t it? Included in assuring accountability is ensuring that the institution to whom the funds are going is financially sustainable.

Institutional Autonomy is Important But So is Institutional Accountability

Those of you who follow my work know that I hold dear the concept of institutional accountability.  Universities play an important societal role that government is grossly ill-equipped to lead them in performing.  Governments don’t want the job either.  The OAG agrees with me.  Importantly, the OAG confirms that universities play important roles in society and to be able to play those roles, they require autonomy from government.  The OAG calls for “academic independence” to be “strenuously upheld” but also calls upon government to ensure the financial sustainability of institutions and institutional accountability for the public funds they receive.

So how does government ensure the accountability of universities while retaining the necessary amount of distance?

Increased Compliance, Government Intervention or …?  

The language of the report gives rise to various possible ways in which the Ministry of Colleges and Universities could decrease the likelihood of another Laurentian. They fall into two categories: 1) increased compliance obligations and, 2) government intervention. On the increased compliance side, the OAG suggests that: “annual funding should be dependent on each university demonstrating to the Ministry that it has fully functioning governance structures in place, and that, there should be legislated limits on university deficits, borrowing or major capital expenditures. On the increased intervention side, other suggestions that arise from the OAG report (either directly or indirectly) include:

  • enacting legislation allowing the Province clear legislative power to step in and unilaterally require changes to a university’s operations, or:
  • implementing mechanisms to allow the government to “proactively intervene to more thoroughly assess the institution’s finances and identify opportunities where it can help” perhaps by “introducing legislation that formalizes the Ministry’s prerogative to appoint a supervisor to help a university when there are serious sustainability concerns, and to set limits on deficits, borrowings and major capital expenditures”.

Underestimating Government Influence and Power – What May Be Missing from the OAG’s Report?

The OAG Report underestimates the power and influence government exercises over Ontario universities and fails to take into account the tools already at the government’s disposal.  At the provincial level, we don’t need more legislation or more government intervention.  The government could simply decide to use the tools it has more effectively.

As a major funder of university activity, government has a massive influence on the sector.  From the perspective of universities, while government funding has been reducing as a proportion of university revenue, the involvement of the government in the sector has been increasing.  The Report confirms the increased involvement of the Ontario government in financial oversight since 2015.  The government regulates university compensation practices and procurement, among other things. Ontario universities negotiate strategic mandate agreements.  The government announced performance metrics several years ago.  Government policy initiatives have resulted in province-wide sexual violence policies and freedom of expression policies.  The Province has the power to appoint university board members in varying numbers across the Province.  The Ministry is entitled to do wide-ranging due diligence before entering into any funding agreement with any university.

Bottom line: The Province can get universities to do a lot and I don’t agree with the OAG’s observation that “the Ministry does not have the clear legislative power to step in and unilaterally require changes to a university’s operations”.  Clear legislative power is not necessary given the importance of government funds to Ontario universities.  Clear legislative power is not the problem, the problem is that even when it had the information, the Ministry didn’t step in.  It didn’t use the wide variety of tools at its disposal, and most importantly, it didn’t do its due diligence and its funding power to insist on a plan for financial sustainability – it really would have been that easy.

A Simple Thought – Hold University Boards Accountable and Clarify their Role in Protecting the Public Interest

There is much work to do to shift universities to focus more on the effectiveness of their own governance.  Ensuring financial sustainability is a primary job of the board of governors.  Compliance is another.  As Peter McKinnon says,

Self-governance is possible in public institutions only if its mechanisms and behaviours are compatible with sound governance principles that adequately protect the public interest.[1]

At the provincial level, Ontario has suggested that it wants to engage in more oversight of universities.  In terms of concrete action, the Ontario government has passed changes to the composition of Laurentian’s Board of Governors reducing its size from 25 to 16.  This was done in Schedule 7 to Bill 84 – Fewer Fees, Better Services Act, 2022 – it received Royal Assent March 3, 2022.  Laurentian has already implemented this change to its board.  A review of the debates around this Bill, reveal that the rationale for the change is unclear except for Associate Minister Nina Tangi’s assertion during second reading of the Bill on February 23, 2022 that “[R]educing the board size would create a more efficient and nimble board. It would be better equipped to respond to the immediate challenges that Laurentian is facing and to drive necessary and timely challenges to LU’s operations—including the important task ahead of transforming the university”.  During the debates, other MP’s pointed out that reducing board size is hardly enough.  More to come?  Making the Laurentian university board smaller, as an action alone, doesn’t make a lot of sense.  A small, uneducated, and ill-equipped board can serve a university as badly as a large one.

Right now, board members join university boards and they are educated (inconsistently and differently at each institution) about their roles and the university by the very people that they are to oversee. But here’s a thought, perhaps scary in its simplicity:  what if the province were to clarify that the role of the university board is to act in the public interest as well as the interests of the university, considering all stakeholders? What if university board members had to take a course on university governance? What if every university board had to issue an annual report (not to government but to all its stakeholders) signed by every board member certifying financial sustainability, compliance, and effective governance? My guess is that you’d see a dramatic shift toward improved governance practices and greater focus on oversight and accountability.

There’s a lot to consider arising from the OAG report and I’ll be trying to write a couple of other blogs over the next couple of weeks.

[1] Peter MacKinnon, University Leadership and Public Policy in the Twenty-First Century – A President’s Perspective (Toronto: University of Toronto Press, 2014).