Ministry report cites Durham College weaknesses

DURHAM -- Weaknesses surrounding Durham College's budgeting process are identified in a recently-released report commissioned by the Ministry of Training, Colleges and Universities.

A lack of monitoring and accountability for budgets and the complexity of financial transactions between Durham College and the University of Ontario Institute of Technology are some of the observations made in a summary report, based on the findings of Dr. Ralph Benson and his team, retained by the Ministry last year to look into the school's finances.

In response to a request for an interview with Dr. Benson, a Ministry of Training, Colleges, and Universities spokesperson said it would be inappropriate for Dr. Benson to comment publicly on the report because he was brought in to provide confidential advice to the minister regarding Durham College.

MPP Jim Wilson, Progressive Conservative critic for colleges and universities, wasn't really critical of the Ministry's decision to keep the report confidential.

"I've also been a cabinet minister and generally if there's a report done for advice to the Minister, they generally keep that pretty close to their chest," Mr. Wilson said in a voicemail response to This Week. "But I do encourage all colleges and universities to be transparent, particularly with response to finances because they're dealing with public funds."

The Ministry became involved in reviewing Durham College's finances last winter at the school's request, following deficits of $11.5 million in 2006/2007 and $9.9 million in 2007/2008. The school ran another deficit of just under $4 million in 2008/2009.

"We acknowledge the college had a number of significant issues but we approached them head-on," said Don Lovisa, Durham College's current president.

The performance of the college and the excess of its expenditures are due, in part, to the weaknesses of its organizational structure and its decision-making process, the report stated.

Some challenges noted include appropriate monitoring and oversight of key activities, particularly in its arrangements with UOIT, and in its international division.

Although the report wasn't a surprise, the school's weaknesses "absolutely" came as a surprise to Mr. Lovisa when he took the president's position in May 2008. One would expect an institution with Durham College's history would have good procedures and practices, he said.

"They weren't in place," he added.

Colleges, like any organization, evolve over time, he added.

"When times are good, sometimes organizations will become lax because they can," Mr. Lovisa said.

But when the tables turn, one realizes the rules are no longer effective, he added.

"Our salaries were going up faster than our grants and our expenditures were going up faster than our revenue," Mr. Lovisa said.

Leah Myers was appointed president in April 2006 and the school ran its first accounting deficit that year, 2006/2007.

The books were in good shape when Ms. Myers took the reins, according to the school's past president Gary Polonsky, who was also the founding president of UOIT.

"During my tenure as president of Durham College, I took a number of steps to identify and begin to address the multi-faceted financial issues faced by the college," Ms. Myers said in an e-mail response to a request for comment. "I am heartened by the progress made by president Lovisa, with the benefit of the advice of Dr. Benson and his team, to establish a firm and sustainable financial footing for the college."

Ms. Myers served as the college's president for two years following Mr. Polonsky's retirement, which also marked the inception of independent presidents for the college and university. Prior to her appointment, Ms. Myers was the executive lead at the Ministry of Research and Innovation.

"There was no downward financial situation when I retired, but I do note that today the college seems to be doing just fine," Mr. Polonsky said.

If there were issues, they seem to now be resolved, Mr. Polonsky said, adding he has total confidence in Mr. Lovisa and his team.

Mr. Lovisa says he discovered the school's weaknesses in financial reporting within the first six months on the job. Having the two institutions work so closely together also complicated some of the finances, Mr. Lovisa said. Both institutions were operating with the same chief financial officer, but Durham College now has its own and the school's accounting systems are separated.

"It's allowed a dedicated CFO to keep his eye on the ball," he said.

Along with a new CFO has come new reporting systems, including monthly budget updates.

Right now, Durham College's main focus is to deliver on its balanced budget, Mr. Lovisa said.

"If you look at the report, there are many items that say continue," he said, listing the work that has occurred for correction purposes.

As for the school's approximate $24-million debt remaining from the deficits, plans are in place to eliminate it within a couple of years, Mr. Lovisa said.

"And we are in good shape right now," he added.

The $40 million the government has provided the school with over the last couple of years for capital projects attests to that, he added.

Aileen Fletcher, Durham College's board of governor's chairwoman, wasn't surprised by some of the weaknesses noted in the report.

"Certainly there were some areas of concern that the board was aware of," she said, citing reporting processes to the board.

"We were getting updates but they weren't nearly as detailed," Ms. Fletcher said, adding there were significant challenges in getting information caused by the relationship between the college and UOIT and the growth of the university.

One of the recommendations the report makes is for a thorough and comprehensive evaluation of the president to be conducted by the board on an annual basis to ensure the school's objectives are being met.

"A board is only really as effective as the information it receives," she said.

Previously it was difficult to get the information needed to make decisions and it wasn't always provided as quickly as they would have liked, she added.

"The result of course in the end is sometimes the board would find itself in a deficit position," she said.