Protect Otago Action Group spokesman Dr Olivier Jutel said the commission’s decision this week to reduce the allocation of funds for the University of Otago and other tertiary providers by $51.8 million this year and a further $56m next year was "appalling", given the university’s financial situation.
Other institutions affected were Te Pūkenga, Victoria University of Wellington (VUW), Massey University and Auckland University of Technology (AUT).
"It’s a really perverse austerity-driven money-go-round," Dr Jutel said yesterday.
The TEC has decided to reduce the allocations of funding due to lower-than-expected university enrolment.
"It shows the funding model is broken," Dr Jutel said.
"It was literally money that was promised to the universities."
In a July 28 briefing to Education Minister Jan Tinetti, the TEC said "if a tertiary education organisation does not have the volume of learners to support the funding it has been allocated, it should return that funding to the TEC in a timely manner, rather than use it for other purposes (including earning interest)".
"For Te Pūkenga, Otago, AUT and Massey we consider there are limited financial risks from reducing funding levels for 2023 in-year," the briefing said.
"We have engaged with these institutions and there is a general acceptance and understanding of the process being followed."
When the university was contacted about the TEC’s decision, a spokeswoman said "this adjustment — between the forecast and actual numbers — happens every year, so was expected."
"It was accounted for in our budgeting, so we do not need to adjust our overall savings target."
The TEC briefing said "given the financial challenges, Otago and the VUW have asked the TEC not to adjust funding during 2023 (and instead recover in 2024) to support their cash position".
However, the Otago University Students’ Association has sent a letter to the TEC expressing concern about the decision.
"The University of Otago and other tertiary education organisations should not be further punished for situations well beyond their control," it said.
"The current fiscal environment and loss of student income has created enough financial hardship on universities as it is."
The university is looking to make savings in its operating budget of about $60m per year, after being hit by lower-than-expected enrolment and other financial issues post-Covid.
It is going through several "management of change" processes to cut back on staff, and earlier this year, the university accepted 107 voluntary redundancies.
Dr Jutel said the TEC’s decision was particularly egregious because the government recently gave tertiary education institutions an extra $128m in funding to save courses and jobs.
A Tertiary Education Union spokesman said it was frustrated to see the TEC wanted to "cut its way out of a problem in tertiary education that they have created".
"The funding problem within our tertiary education institutions is obvious.
"When the entire sector, from universities to Te Pūkenga and wānanga, is grappling with funding problems, we need to look at the funder: that is the Tertiary Education Commission."
The spokesman said the union members wondered "what the purpose of the TEC is if it isn’t about ensuring our universities, Te Pūkenga and wānanga can be resourced so as to ensure quality teaching, research and skills-based learning".
"It is clear that the Tertiary Education Commission is not an advocate for the sector," he said.
