The tertiary education industry watchdog is "confident" the University of Otago can manage its financial risks.
Papers provided to the Otago Daily Times showed the tertiary education sector was still in a difficult state financially, despite the extra top-up of government funding in last year’s Budget.
It assessed Otago University to be at a "medium" financial risk alongside Lincoln and Waikato Universities. Victoria University of Wellington and Massey Universities were "high risk".
Canterbury University, Auckland University of Technology (AUT) and Auckland University were regarded as "low risk" financially.
The Tertiary Education Commission’s paper was provided as advice to Tertiary Education Minister Penny Simmonds, who is reviewing a raft of changes across the sector.
"We do not consider there are immediate risks to the financial viability of any university", the report said.
"However, there are medium-term risks to the financial position of several universities, some of which need consideration now ... These risks include not only financial risks to the Crown but also lost opportunities in how the university sector can deliver better outcomes for New Zealand."
The report noted Otago had recorded a near break-even result in 2023, but was budgeting for a deficit in 2024.
"A further decline in domestic equivalent full-time students has been reported in 2024 and, although a decline was budgeted, Otago will need to focus on stabilising domestic enrolments going forward.
"While significant staff restructuring and operational savings are under way to ensure medium-term sustainability, we have confidence that Otago’s plans are achievable."
It comes as the university continues to make staff cuts in order to achieve "permanent and lasting savings" as lower-than-expected enrolments have led to higher-than-expected deficits.
Departments affected by last year’s restructuring processes included the schools of languages, science communication, peace and conflict studies, geology and computing.
More than 200 university staff lost their jobs in the process.
Otago University chief financial officer Brian Trott said its strategic objective was to move to a low-risk rating.
"The main driver behind our financial situation is the fact government funding has not kept pace with inflation.
"We are actively addressing this through a large number of initiatives ... to move to a more sustainable financial situation."
This included through streamlining and restructuring university courses, voluntary redundancies and improving its use of physical spaces to reduce costs, he said.
"The university budgeted for a $28.9 million deficit this year.
"However, our latest forecasts suggest we will likely perform better than anticipated with the end-of-year deficit projected to be less than initially budgeted."
The report said the entire university sector reported a $138m unaudited surplus for 2023, but the underlying result was a deficit of $66m if the result was adjusted to exclude gains in net trust income and one-off gains and "unusual items".
Six out of the eight universities reported a deficit last year—the exceptions were Auckland and AUT, which recorded unaudited surpluses (excluding net trust income and other adjustments) of $67.8m and $10.8m respectively.
