The COVID recession is having all sorts of effects on the economy, now even putting a university into creditor protection — the first in Ontario’s history. Sudbury’s Laurentian University announced Feb. 1 it was running out of cash to cover its payroll. The university will still offer programs to its students, but a financial plan will have to be put in place to satisfy creditors. Otherwise, it will go into receivership.
Not surprisingly, the faculty union came out swinging, criticizing Laurentian for a lack of fiscal transparency and the Ontario government for not bailing it out. A provincial rescue might make some sense if COVID lockdowns were the only culprit causing financial stress. But bailouts reward poor decision-making and can lead to further problems down the road. Which means any bailout should be conditional on major institutional reform. That might well involve expenditure cuts, but innovative revenue-generating programs that meet the market’s needs are also a possibility — an attractive one to governments that, short of cash given the pile-up of pandemic deficits, won’t want to throw around money without good results.
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