While many factors led to insolvency at Laurentian University, actions during the tenure of former president Dominic Giroux had a prominent role.
That’s the conclusion of Auditor General Bonnie Lysyk, who never names Giroux specifically in the report, but raises serious questions about what went on during his time at LU.
Giroux was president from 2009 and 2017, a period when several major capital projects took place or were started. He left in 2017 to take his current position as head of Health Sciences North.
HSN spokesperson Jason Turnbull said Thursday that Giroux is “away this week on hospital business” and not available to comment until at least next week.
In her report, Lysyk said Giroux received bonus pay for projects at Laurentian University that ended up putting the school in financial difficulty.
The school was burdened by a massive capital spending campaign that included the east residence ($20.6 million in debt), a new research lab (a $5.9 million debt), a campus modernization completed in 2018 (a $43 million debt) and student centre in 2019 (an $8 million debt).
“In spite of the increasingly poor financial condition of the university, the administration continued to pursue major capital expansion instead of addressing the accumulating annual financial deficits,” Lysyk said in her report.
In 2013, faced with growing debt, rather than making hard decisions, the administration instead changed a plan to eliminate its deficit by 2019 and extended it to 2028.
“The board motion stated ‘the cumulative deficit does not impact the university’s capacity to borrow for capital projects,’ since Laurentian’s cumulative deficit is ‘not owed to a third party’ and the university is ‘not subject to a credit rating,’” the report said.
“The then president and vice-chancellor (Giroux) commented that the proposal to delay deficit-reduction was ‘definitely a signature moment.’”
In 2010, the board of governors approved a plan that would keep debt from building a new residence off the books. The argument was that any project expected to generate enough revenue to pay for itself was not really a debt.
The move was made not because it made fiscal sense, Lysyk wrote, but because Giroux said it was the only way to move forward.
“This policy change was based on a recommendation from the president, who indicated that without making the debt policy less restrictive, Laurentian would not be in a position to propose a new student residence on campus and stay in compliance with the policy,’ the report said.
Lysyk was also critical of the hiring spree of administration staff under Giroux that not only swelled the ranks of non-teaching staff, but was done using questionable hiring practices.
“Between 2010 and 2020, Laurentian’s senior administrator costs grew by about 75 per cent, increasing between 2010 and 2018 and declining thereafter,” the report said.
“In 2018, the cost for senior administrator salaries at the university peaked, at over $4 million … As well, the university made expensive hiring decisions, without documented justification, to hire special advisers for the president and senior administrators; this cost over $2.4 million from April 2010 to December 2021.”
Even when Giroux left to lead Health Sciences North, it cost LU money. The school spent $42,000 in 2017 on three legal firms to “review and interpret” LU’s obligations to Giroux as he left.
“The former president had an unusually advantageous 2014 employment contract,” Lysyk wrote.
“It afforded him one year of paid administrative leave at full salary for each full five-year term completed and the right to eventually return to Laurentian as a full professor at the 90th percentile or higher of a full professor’s salary, despite having never worked as a professor.”
KEPT OFF SUNSHINE LIST
Giroux received a full year’s salary — $286,970 – after he left in 2017. But it was paid out over three years, which meant it was less than $100,000 a year and wasn’t reported on the Sunshine List.
In 2010, Giroux expanded discretionary expense accounts to include non-teaching administrators. Previously only available to staff to pay for research costs, the restrictions were now lifted.
“By 2013, Laurentian had extended this expense account to the president and nearly all non-academic senior administrators, who do not perform research,” Lysyk wrote.
The expense account cost the university $71,000 in 2013 but rose to $360,000 in 2018 after the policy change. Where did the money go?
“Our review of discretionary fund expense reimbursements noted examples of reimbursements for personal electronics (for example, smartwatches, high end tablets and laptops, and wireless headphones and speakers), Spanish lessons, home Internet services, professional services (for example, personal coaching), tuition for an overseas master’s degree that was offered by Laurentian to a former employee and conference travel and attendance that was unrelated to employee positions,” the report said.
Not only did the size of the administration grow, the way people were hired raised serious questions. For example, 23 of the 71 people were hired without a recruitment process.
“We reviewed the recruitment files for the remaining 48 hiring decisions for permanent senior administrators and found that the rationale for creating the new positions in each case was unclear and that support for the selection of successful candidates was insufficient,” the report said.
In some cases, a formal hiring process was followed, only to be scrapped in favour of hiring someone the administration suggested.
Giroux also received bonuses for leading the capital projects. However, the bonuses weren’t tied to whether the projects actually increased revenues or improved the university’s fiscal position. All that was required was for construction to be completed on time and on schedule – but even that guideline was ignored.
“On May 26, 2015, the board awarded the president the maximum five per cent merit award on his base salary of $286,815, which equated to $14,341,” the report said.
“The amount was awarded despite the fact he did not meet capital project completion timelines for either the School of Architecture or campus modernization in 2015 and 2016, respectively.”
Read the full report here.