Figures released to the Otago Daily Times showed the financial performance at the end of last year "exceeded expectations" — registering a $22.5 million deficit against a budgeted deficit of $28.9m.
Acting vice-chancellor Prof Jessica Palmer praised the "significant effort" of staff, but said there was much work to do.
"The university continues to operate in a financially constrained environment and while we have made some progress, there is more work to be done to strengthen our financial position.
"What is important is the progress made in all areas to contribute to improving the university's overall financial position, through both reducing expenditure and increasing revenue streams."
Prof Palmer said changes to funding streams such as the Marsden Fund put the university in a difficult space for some of its academic disciplines, and would have an impact in the future.
"This will require attention as we adapt to the evolving funding landscape."
Over the past three years, the university has gone through a series of restructures in response to declining revenue and lower-than-budgeted student numbers.
The university is on track this year for its first increase in student numbers in nearly five years — but the Tertiary Education Commission requires the university to return to surplus.
Asked whether there could be any further restructuring, Prof Palmer was non-committal.
"We need to keep working together to find efficiencies, savings and new sources of revenue, while we continue to invest in our people, our systems and in achieving our strategic goals.
"We continue to work on a large number of initiatives, including reviewing programmes and papers and streamlining our academic offerings and working closely with other tertiary institutions. More efficient space utilisation is another key element that can help contain costs, and we have been making ongoing progress in this area."
Tertiary Education Union co-president Craig Marshall, of Otago University, said while it appeared the worst was over, there were still some concerns about the university’s position in the future.
His "overriding concern" was the way the university was funded.
"We’re not sure what the government Budget will bring, but we believe that there was an increased 4% funding [for universities] and that it is likely to expire and not to be renewed and of course, that’s going to create pressure.
"I think it’s fair to say that we’re not expecting a lot from the current government in terms of addressing some of the underlying funding issues. So it is likely to be a question of trying to maintain our position, maintain the university’s position."
Mr Marshall said the university appeared to be slowing down on widespread restructuring.
"I’m not sure that it’s good — it’s just perhaps somewhat less bad."
Prof Palmer said the university would embark on several "revenue raising" projects over the next few years.
Some of these had already been flagged in its strategic plan Pae Tata, such as aiming to increase the number of enrolled fulltime-equivalent students at the university to 24,000 by 2030 — at the moment there are about 19,000 — while others were still "commercially sensitive".
