YUFA Subcommittee on Governance – Communique 7

In our December 2023 Report on the York University Board of Governors (BOG), we identified several grave deficiencies in representativity, transparency, accessibility, and accountability. These failings were largely confirmed by the Ontario Auditor General ’s Value for Money Audit on York University. In this follow-up report, we would like to highlight for YUFA members the implications of the AGO Audit for governance and based on our findings and those of the AGO, issue our recommendations to improve governance at York University.  

In general, the findings of the AGO Audit, based on the five years 2018/19–2022/23, point to a major failure in the BOG’s capacity to carry out its primary function of financial oversight:

• The BOG focused on capital expansion and financed this expansion by debt. Over the five-year period, York took on $100 million in debt, in addition to the $500 million it had borrowed prior to this period.
• The BOG approved these capital projects and increased the university’s debt-load despite a growing deferred maintenance backlog of over $1 billion by the end of 2022/23.
• The BOG increased the university’s debt at a time when the increase (16%) in total expenses largely exceeded the increase (3%) in total revenues, and revenues were highly dependent on international student enrolments subject to changing international geopolitics.
• During the audit period, York consistently did not meet the Ministry’s low-risk thresholds on two indicators related to debt: the debt-to-revenue ratio and interest burden ratio.
• The BOG did not prepare full business cases for major capital projects before proceeding with them. The AGO reviewed seven capital projects ranging in cost from $11 million to $261 million and found that none included a comprehensive financial viability assessment. In four of them, with total costs of $206.2 million, no financial evaluation at all had been undertaken.
• These capital projects were approved without providing sufficient contingency funds to cover unforeseen costs. For the six projects combined, there has been a $95.8 million increase over the original budget at the time of the AGO audit.
• In general, the BOG did not develop debt repayment schedules for capital projects. It approved the Markham campus expansion without considering how long it would take to recover the initial capital cost of $260.5 million to construct the building.
• This capital expansion was undertaken at the expense of investments in academic programs and support at a time when York was performing below the provincial average in graduation rate; graduate employment rate in a related field; graduate employment earnings; community local impact on student enrolment; research funding and capacity (that is, the ability to secure federal research grants); and experiential learning.
• Between 2018/19 and 2022/23, despite minimal increases in enrolment and revenues, the BOG failed to question the 37% expansion of the senior administrative team, resulting in total compensation for each group (Vice-Presidents and Assistant Vice-Presidents) increasing by 48% and 73%, respectively.

 Specifically, the AGO Audit identified several shortcomings in BOG governance that significantly undermine the BOG’s ability to carry out its financial oversight functions:

• The Executive Committee’s broad and vague Terms of Reference give it the ability to make deci­sions on behalf of the full Board without consulting with, or providing pertinent information to, the other governors prior to decisions being made. This means that a small group of eight Board members were able to make significant decisions without input from the remaining 17 Board members.
• The BOG’s closed appointment process, based on cooptation, does not include an overall assessment of what competencies should be represented by BOG members. Furthermore, members self-assessed their competencies. Even so, the AGO audit found the pro­portion of members with low competency in key areas worsened or did not significantly change over the five-year period.
• The exclusion of internal members (staff and faculty) from three key Board committees (Executive Committee, Finance and Audit Committee, and Governance and Human Resources Committee) deprives the BOG of added value and expertise.
• The BOG does not have a robust conflict of interest policy for BOG members.
• In the case of the York University Development Corporation (YUDC), which provides recommendations on capital projects, the Audit noted that members ‘were not required to sign or fill out any annual declarations of professionalism, confidentiality, or conflict of interest. There was no ‘comprehensive and detailed code of conduct would be applied that included written standards designed to promote integ­rity, deter wrongdoing, and provide clarity and compliance of expectations of Board member conduct.’

Based on our reports on the BOG and the YUDC and the findings of the AGO Audit, we make the following recommendations:

• Recommendation 1: Given BOG’s failure to carry out responsibly its primary function of financial oversight, we recommend that the current Chair of the BOG, and the Chairs of the two committees, Finance and Audit, and Land and Property, resign.
• Recommendation 2: Given the key role of the York University Development Corporation (YUDC) in developing major capital projects without adequate financial viability assessments and codes of conflict of interest, we recommend that the YUDC be dissolved, and its functions integrated within the relevant university services.
• Recommendation 3: Given that the BOG’s current self-cooptation appointment process for external members has failed to ensure a representative range of interests and competencies among BOG members, we recommend that a joint committee, composed in equal number of representatives named by the BOG and a representative elected from each of York University’s current staff, faculty, and student unions, and co-chaired by a union representative and a BOG member, be established to update the appointment process for external BOG members.
• Recommendation 4: Given the gravity of the Audit findings with respect to financial oversight failures and lack of rules on conflicts of interest, we recommend a comprehensive forensic investigation into the seven major capital projects undertaken by the University since 2018.

The YUFA Governance Committee can be reached by email directly at: [email protected]
or via YUFA at: [email protected]

YUFA Governance Subcommittee

Arthur Hilliker (ex officio)

Patrick Phillips

Theresa Shanahan

Philippe Theophanidis

Jim Vernon

Agnes Whitfield (Chair)