However, the recovery of a high-powered trust fund appears to have spared some of the institution’s financial blushes.
The university’s 2023 annual report says the institution’s operating deficit for the year was much larger than expected, at $20.6 million — $8.7m more than the $11.9m it had budgeted.
But the deficit was offset by a $20.1m surplus recorded by the University of Otago Foundation Trust from investments performing well in an upswing in global markets.
This resulted in the University Group, which includes the University of Otago, University of Otago Holdings Limited and the University of Otago Foundation Trust, recording an overall operating deficit of $0.4m for the year, compared to a budgeted deficit of $2m.
Chancellor Stephen Higgs and acting vice-chancellor Helen Nicholson said in a joint introduction to the annual report that the difference in budgeted and realised operating costs was largely due to fewer than expected enrolments.
Total university equivalent fulltime students were 18,960 in 2023, 5.1% lower than the 2023 target, and 1.1% down on 2022, resulting in a significant decrease in expected income.
The reduction in secondary school students achieving University Entrance and ongoing border issues for international students both impacted the pipeline of new students commencing at the university, they said.
"The attractive employment market, both in New Zealand and overseas, coupled with a decline in prior year paper pass rates, also had an unfavourable impact on student retention rates."
The report also noted staff worked "incredibly hard" with "belt tightening in every department and division", which led to significant savings.
By the end of 2023 the university had accepted 151 voluntary redundancies, accounting for an equivalent full-time staff (EFTS) reduction of 115.6.
It had also made 65 redundancies, for an EFTS reduction of 41.87
"We acknowledge all of these staff," the report said.
Operating costs included about $7m in restructuring costs incurred during 2023.
The deficit hole was largely plugged by the Otago University Foundation Trust, a registered charitable trust that receives and administers donations, bequests and sponsorships, which had a "pleasing" effect due to the good performance of the investment markets in 2023, the annual report said.
In also noted that while it was a good outcome, the surplus was largely a recovery of the trust’s losses of 2022.
In 2022, the university borrowed for the first time in modern times.
Borrowing facilities of $400m were established for capital investment in building and digital infrastructure planned over the next decade.
The report noted the university had borrowed less than 50% of what it intended due to strong fiscal controls during the year.
"The financial operating environment for tertiary institutions continues to be challenging and recovery of international student numbers is an important focus for the university.
"This situation was exacerbated by the fact that, for the past 10 years government funding of the tertiary sector has not kept pace with inflation."
The 2023 annual report was released late last month.
