Laurentian University announced Wednesday it is staring down the barrel of a multi-million-dollar deficit crisis due to the COVID-19 pandemic.
While the full impact of the pandemic on the university sector remains to be seen, COVID-19 combined with the university's pre-existing financial pressures means Laurentian has to update and accelerate its plan to address a shortfall of potentially $15 million in fiscal year 2020-21, said a press release.
“The pandemic has created an additional and urgent financial crisis for Laurentian,” said Lorella Hayes, vice president of administration. “Our university has faced financial challenges over the past few years. We were, however, implementing our sustainability plan and seeing significant positive results.”
Prior to COVID-19, Laurentian University was tracking a small deficit of less than $1 million for the current fiscal year, which ends on April 30. The pandemic could well that deficit to approximately $6 million for the current fiscal year.
In addition, pre-COVID-19, the university was already dealing with a $9-million shortfall for the next fiscal year, 2020-2021, resulting mainly from the permanent reduction and frozen domestic tuition fees and reductions in provincial funding levels.
Laurentian said it was executing a balanced approach of continued cost reductions and enrolment growth. The university is now amending its financial forecast, and planning for additional cost reductions to ensure the 2020-21 budget can be balanced.
Laurentian, like post-secondary institutions across the North and across the country, stand to lose a major source of revenue due to the pandemic shutdown: International students.
A report last week from the Northern Policy Institute highlighted just how dire the situation could be, not just for post-secondary schools but also for the communities in which those schools operated.
If there is a 20-per-cent drop in international student enrolment, the Northern Ontario post-secondary sector as a whole stands to lose $23 million. If that drop climbs to 50 per cent, that becomes $58 million. If there's a 50-per-cent drop in international students, that represents an estimated $50 million loss to local economies in the North from decreased spending.
“If we don't take action, the combination of a potential enrolment drop, our pre-existing financial challenges and new impacts of COVID-19, could be the tipping point that threatens the financial viability of the university," Haché said.
The university is holding a town hall to share information on the financial challenges with its community members and call on them to share bold new ideas.
LU said it has also taken a number of immediate actions, including:
- Suspension of new employment hiring;
- Deferral or elimination of numerous vacant positions;
- Reduction in casual, part time and limited term contracts, and;
- Suspension of all non-essential operating expenses.
“These difficult decisions were not made on the basis of performance, but rather, on the basis of our financial challenges,” said Lorella Hayes. “We thank our colleagues and workforce for their immense contributions to the university. All these employees performed important and valuable work — we hope to be able to offer them work again in the future.”
Laurentian will accelerate the implementation of its existing sustainability plan. The university also has a number of additional measures and sustainability initiatives under consideration, Haché said in the news release.
Laurentian said it was the first university in Canada to recognize the severity of the outbreak and suspend in-person activities, and was also the first to transition fully from in-person to remote learning.
The vast majority of its students are on track to complete the term on time, and the university is committed to continuing its program offerings in the spring and fall terms, the school said.