Otago Polytechnic needs an annual injection of $3 million of tertiary funding from next year to ensure its long-term financial viability, chief executive Phil Ker says.
And it is not alone.
Under-funding meant the country's 20 polytechnics collectively needed $50 million to $60 million, he said yesterday.
The institution was plagued by financial woes in the early 2000s but has turned that around and posted modest surpluses in recent years.
The expected surplus this year is about $700,000.
But Mr Ker said Otago was looking at a $1 million deficit next year, based on proposed Tertiary Education Commission (TEC) funding of about $30 million and assuming enrolment figures were similar to those experienced this year.
Unless further funding was forthcoming, the "worst case scenario" would be cost-cutting, which might include redundancies.
Otago is already in negotiations which might see six jobs go, after enrolments in the business and automotive technology departments failed to meet expectations.
Mr Ker said Government funding for next year would be confirmed within about six weeks.
"The situation is worrying, but it's not hopeless. We are still talking. All the doors aren't closed."
He praised a new TEC-funded benchmarking project which had established criteria for comparing polytechnics' financial performances, saying true comparisons could now be made.
"We can now compare apples with apples rather than apples with lamb chops."
Otago was one of nine institutions which had joined the project so far.
The comparison of 2007 financial results showed no polytechnic was performing well, and Otago was performing better than most, he said.
"None are doing well on returns on their core business, which is teaching. No-one is achieving the recommended 3%-5% on turnover. I think the benchmarking figures are indicative of the sector as a whole."
Mr Ker first raised his concerns about under-funding at a polytechnic council meeting last week.
Funding was one of the topics under discussion at the Institutes of Technology and Polytechnics annual conference, which Mr Ker attended in Wellington yesterday.
In a speech to the conference, tertiary education minister Pete Hodgson gave the sector no promises of increased operational funding, although he conceded the "possibility of the government acknowledging there are areas of systemic under-funding".
Polytechnics could also access a new $95 million capital fund which would be distributed by an independent panel over the next four years.
Mr Hodgson suggested polytechnics save money by clubbing together to buy everything from cars and insurance to computers, as well as "determinedly" amalgamating back office functions, such as payroll management.
"Co-operation is much more than a change in attitude. If co-operation is the more effective future, then how about securing its cost effectiveness too?"
