When the budgets were prepared last year, the university was headed for a $12.4 million deficit for 2023, based on $25 million of savings needing to be found.
The vice-chancellor reminded staff at a forum in February significant savings needed to be achieved this year.
A task force had also been established to support senior leaders to deliver financial improvements, acting vice-chancellor Prof Helen Nicholson said.
This week, the university called for a round of voluntary redundancies.
This followed the university declaring it needed to reduce its annual operating budget by about $60 million and that salary savings would need to be a significant component.
The Otago Daily Times asked what the original plan was for finding $25 million in savings and if mass layoffs had always been part of the plan.
It appears there was a growing realisation decisive action was required.
"There was no change in strategy," Prof Nicholson said.
"When enrolment numbers were confirmed in March, it became apparent that our financial situation was going to worsen."
Staff had been advised last year savings needed to be achieved and financial improvement targets were agreed at the time the budgets were developed in September.
The senior leadership team then started work with university leaders to identify activities that could no longer be afforded, Prof Nicholson said.
This was mostly put down to students choosing not to return to study this year.
Projections for international students held up, but not for domestic enrolments.
This created a $20 million hole, on top of the financial challenge that existed already.
"It was the worse-than-expected forecast enrolment situation — both in terms of its 2023 and downstream impact — that tipped things to the point that we needed to commit to a plan for voluntary redundancies," Prof Nicholson said.
Poor retention was identified as being crucial.
"Maintaining retention would have produced growth, because we had the positive pipeline impacts of big domestic first-year intakes in 2021 and 2022 continuing though their studies," Prof Nicholson said.
"These included the two largest cohorts of commencing school leavers in Otago’s history."
Retention levels had been stable in previous years, including through the Covid-19 pandemic.
Prof Nicholson said broader factors affecting all universities in their domestic forecasting included the ongoing strength of the jobs market, gap-year opportunities and the rising cost of living resulting in some students reducing study loads and taking on part-time work.
Some potential students were choosing to travel and some would save up to pursue study later.