The University of Otago will be required to dip into its savings to get through the Covid-19 pandemic, its council has been told.
A report to the council this week showed staff expenditures were responsible for an operating deficit last year.
The deficit for the university parent, which is the main university body, was $9 million, which was $1.1 million higher than forecast.
This resulted partly from provisions made for the university’s voluntary redundancy scheme and costs associated with pay bargaining, the report said.
The university had cash reserves to pay for major projects until mid-2022, at which point it expected to begin borrowing money.
It did not borrow money in 2021.
University chief financial officer Sharon van Turnhout said the effect of Covid-19 would continue to put pressure on cash flow for some time and savings would be required to ensure the university recovered from the pandemic. The University Group, which includes the University of Otago Foundation Trust and the Hocken collections, reported a surplus of $4.3 million, a 1.8% return on income, which was below the Tertiary Education Council target of 3%.
The university’s investment income was $2.5million for the full year. This was $100,000 higher than first forecast because of cash made available in part by delayed capital expenditures.
Cash on hand in 2021 was $68.1 million higher than forecast because of an increase in research income and delayed spending on capital projects.
Net cash outflow was $99.2 million at year’s end, which was $45.3 million less than forecast, again because of delays in capital projects.
