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A career fair is held inside the Regina campus of the First Nations University of Canada on Jan. 28, 2010.Troy Fleece

Canada's only aboriginal-run university is scrambling to reform its dysfunctional hierarchy in a last-ditch campaign to prove that the famed institution deserves more than $12-million in revoked government funding.

Both the federal and Saskatchewan governments recently announced they would terminate grants that comprise more than half the budget of First Nations University of Canada, a response to persistent mismanagement and resistance to reform at the Regina school.

Chief Guy Lonechild, head of the aboriginal organization that oversees the school, announced a new board of governors yesterday, whittled down to 11 members from 25 - a measure the federal government first demanded nearly five years ago.

"We're very happy we made the changes today and wish they would have been implemented some time ago," said Mr. Lonechild, head of the Federation of Saskatchewan Indian Nations. "We are serious about getting back to the table with the federal and provincial governments."

The university will have to close down "within weeks" if its government grants are not restored, Mr. Lonechild added.

But Saskatchewan's Advanced Education Minister said the measures raise more questions than they answer. "I'm not going to close the door," Rob Norris said. "But as of today, including these small steps to renewal, we still don't have confidence in this institution."

With the board realignment, it's unclear who's in charge at the embattled university, Mr. Norris added. Late yesterday, he received a report suggesting the old board was not willing to surrender control and that members were preparing a lawsuit.

Mr. Norris said he will consider ideas for saving the university in some form during an aboriginal education summit next month.

Chuck Strahl, federal Minister of Indian and Northern Affairs, was more resolute, saying his government had tried to get the university to make fundamental changes for years, without success.

Mr. Strahl added that deadlines to meet accreditation standards were repeatedly ignored, as were demands that the school's governance be improved.

The most recent episode in the university's scandal-plagued history emerged in December, when senior financial officer Murray Westerlund was fired mere days after submitting a report that accused senior staff of taking improper leave payments and filing exorbitant expenses for trips to Hawaii, Montreal and Las Vegas.

The accusations chafed an already raw relationship between the school and government.

A problem was reported regarding expense accounts, said Mr. Strahl. "But that worries me less, frankly, than the governance issues."

A federal government report on the school's woes is eight months late, as a result of constant foot-dragging at the university, said the minister.

When the province terminated funding to the university last week, Mr. Strahl said, Ottawa was left with no choice but to do likewise.

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