Former Laurentian president declines comment on AG report criticism

SUDBURY - The actions of Dominic Giroux, Laurentian University’s president from 2009 to 2017, came under criticism in Ontario Auditor General Bonnie Lysyk’s special report on Laurentian, which was released last week.

Sudbury.com reached out to Giroux for reaction to the report’s contents, but a spokesperson for his current employer, Health Sciences North, said he has “declined comment on this matter.”

Giroux left the university in 2017 to become the CEO of Health Sciences North (HSN), Sudbury’s hospital.

We also reached out to Daniel Giroux, chair of HSN's board, for comment in light of the AG's report, and we received a written response this week. (Daniel Giroux is of no relation to Dominic GIroux),

"The HSN Board has full confidence in the leadership of its President and CEO," said Daniel Giroux, who also touted the hospital CEO's success in turning HSN's deficit when he arrived into a yearly surplus, his handling of the pandemic response in Northern Ontario, and his success in receiving grants and donations for capital development, among other items.

"Therefore, the Board is extremely confident in the job Dominic has done as CEO – a job that was recently validated by being chosen by his peers to be the Chair of the Ontario Hospital Association at a time of great challenge in Ontario’s health care sector," added Daniel Giroux's statement.

Following Dominic Giroux’s departure from Laurentian, he was replaced at the university by interim president Pierre Zundel. Robert Haché became Laurentian’s president in 2019. Haché, in turn, left the university earlier this month in relation to the university’s insolvency.

In the wake of Laurentian declaring insolvency in early 2021, the Standing Committee on Public Accounts of the Legislature of Ontario requested that the Auditor General of Ontario perform a value-for-money audit of LU for the period 2010-2020.

Giroux was the university’s president for the majority of that period of time.

While Giroux wasn’t around for what Lysyk describes as the “strategic” planning of Laurentian’s restructuring under the Companies’ Creditors Arrangement Act (or CCAA), she has plenty to say about his role in the university’s financial decline.

The AG report does not name names regarding specific actions that were taken, instead referring to people’s titles. 

But it’s possible for readers of Lysyk’s report to cross-reference that information, as she includes appendices with a full list of LU administrators from 2010 to 2022, as well as a list of board of governors members as of March 31, 2020.

Risky ‘build it and they will come’ approach

Lysyk said Laurentian came to be in a perilous financial position resulting largely from a series of “questionable strategic decisions” made by senior administration and a “lack of competent financial oversight and transparency” from the board of governors.

“Although Laurentian’s operations were impacted by several external factors, the main cause of its financial decline from 2010 to 2020 was its poorly planned and costly capital expansion and modernization,” said Lysyk, in the report’s overall conclusion.

“As the university began to amass more than $87 million in debt to pay for this capital expansion, the senior administration exacerbated the situation by making a series of questionable financial and operational decisions, including amending its internal policies to allow it to incur even more debt and increasing its senior administration’s costs. 

“The poor management of the university’s financial affairs and operations was allowed to continue because of weak board governance and Ministry oversight.”

In the years prior to 2010, Laurentian was already facing financial difficulties. 

The province had hired consultants Courtyard Group, who produced a 2009 report saying universities in Northern Ontario were likely to face enrolment issues for some time, and advised that maintenance needs should take priority over space modernization.

Lysyk said after Laurentian hired a new president in 2009 — Giroux — “from then on, the university moved to expand and upgrade its facilities and programs in an attempt to increase enrolment, donations and research grants.”

“It appears Laurentian’s Board and senior administration took a risky ‘build it and they will come’ approach,” Lysyk said.

The primary responsibility for Laurentian’s financial deterioration falls to the university’s senior administrators, who undertook capital expenditures without fully considering how the related debt would be repaid, said the AG. 

Her report says in 2013, Laurentian’s board approved the proposal to delay elimination of the accumulated deficit to 2027/28, instead of 2018/19. 

The then President and Vice-Chancellor (Giroux) commented that the proposal to delay deficit reduction was “definitely a signature moment.”

Lysyk also outlines how Laurentian made up for a shortfall in external funding through the “inappropriate use” of restricted assets. 

In short, it ultimately ended up spending employees’ health benefit funds, funding for research projects and donations on capital projects.

“Laurentian University approved significant capital projects in the period 2009/10 to 2019/20, even after maximizing the amount of long-term debt its primary lender would provide,” said the report.

“That led to a situation where the funds it had available to use — known as unrestricted funds — were dwindling. When Laurentian reached the point where it was unable to fully fund its capital projects, the University inappropriately dipped into funds restricted for other purposes, such as employee health benefits and academic research projects.

“Senior administration informed the Laurentian Board that this activity was ‘internal financing.’ It is unclear whether adequate information was provided to the members of the Board to enable them to understand that this ‘internal financing’ was coming from restricted assets.”

Ballooning costs for senior administrators

Lysyk’s report also outlined what happened with Laurentian’s senior administration under Giroux’s leadership.

She said between 2010 and 2020, Laurentian’s senior administrator costs grew by about 75 per cent, increasing between 2010 and 2018 and declining thereafter. 

In 2018, the cost for senior administrator salaries at the university peaked, at over $4 million. The relative size of its senior administration had been consistently larger than most other Ontario universities. 

The total cumulative financial growth for these salary expenses between 2010 and 2020 cost an additional $10.1 million.

Lysyk also said of the 71 hiring decisions of senior administrators between 2010 and 2020 that her office reviewed, 23 were for interim or acting appointments for which no formal recruitment process occurred. 

The AG team 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. 

For instance, there was no business case justification for all 16 new positions created within senior administration.

As well, Lysyk said the university made expensive hiring decisions, without documented justification, to hire special advisors for the president and senior administrators; this cost over $2.4 million from April 2010 to December 2021. 

From 2009/10 to 2019/20, Laurentian appointed 10 special advisors at an average annual salary of $155,000, with some compensation as high as $175,000.

Some staff received discretionary expense accounts from Laurentian who normally would not receive such funds in a university.

From 2010 to 2021, Laurentian provided its senior administrators and staff access to $2.4 million in discretionary expense funds. 

Of this amount, $1.4 million was used during this period: $1 million by senior administration and staff and $400,000 by faculty deans and heads of academic programs.

The AG’s audit team also reviewed compensation provided at the senior administrative level at Laurentian for the 10 years beginning in 2010 and found that this employee group was compensated a total of $389,000 more than legislation permitted at the time.

Lysyk said the job titles of Laurentian administrators were renamed to get around rules for compensation put in place by the province for certain types of executives positions. 

For example, the Chief Information Officer was re-named Associate Vice-President, Information Technology.

Giroux’s merit pay and ‘unusually advantageous' employment contract

Lysyk said that Laurentian’s president from 2009 to 2017 (Giroux) was given merit pay awards tied to pursuing the very capital projects that became significant contributing factors to the University’s financial difficulties.

Between 2010-11 and 2016-17, Giroux had annual performance metrics related to the timely completion of a number of capital projects. These were reviewed by the Senior Management Review and Compensation Committee (SMRC).

“Even though the President was unable to meet some of the timelines for these projects set by the Board, the SMRC Committee continued to award him the maximum merit pay,” said Lysyk’s report.

“For instance, 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 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.”

In a section of the report outlining how Laurentian spent $8.5 million on hiring external legal counsel for work in the 11 years leading up to April 20, 2021, Lysyk outlined what happened after Giroux left the university in 2017.

“Instead of relying on its own internal legal counsel, Laurentian paid three external legal firms over $42,000 to review and interpret the University’s obligations to the outgoing President upon his departure in 2017,” the report said.

“The former president had an unusually advantageous 2014 employment contract. 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. 

“One year of administrative leave at full salary, totalling $286,970, was paid to the former President following his departure in 2017. 

“The amount was paid out over a period of three years, at less than $100,000 per year, which meant it was not required to be publicly reported in accordance with the Public Sector Salary Disclosure Act, 1996, for any of the three years ($95,605 in 2018; $95,681 in 2019; and $95,684 in 2020).”

Heidi Ulrichsen is Sudbury.com’s associate content editor. She also covers education and the arts scene.