After recording its worst financial result in five years last year, Otago Polytechnic is on track for a surplus this year.
The 2009 budget had been reviewed in recent weeks and the institution had revised its expected surplus upwards slightly to $506,000, chief executive Phil Ker said.
"It is a pretty confident prediction . . . because we are now so much closer to the end of the year. This was to be a big recovery year for us, and it has been."
Redundancy payouts to about 20 staff last year pushed the polytechnic to a deficit of $337,000 for the 2008 financial year.
Despite this year's surplus, the polytechnic was still facing tough times ahead and further redundancies could not be ruled out, Mr Ker said.
Government funding cuts will see Otago's core funding drop by $1.7 million next year, and by $3 million - about 10% of its present government funding level - in 2011.
In addition, the Government has capped tertiary rolls, meaning Otago and other tertiary institutions cannot increase revenue by enrolling more students.
Mr Ker said about 30 polytechnic staff usually left each year and department managers had been told not to replace staff unless absolutely necessary.
So far this year, about 12 vacancies had not been filled.
Every department had also been asked to find ways to increase revenue and cut costs to ensure maximum profitability next year and beyond.
"Quite a bit of change" was needed to ensure the polytechnic was ready to manage within the reduced funding regime, Mr Ker said.
Redundancies might need to happen in departments which were unable to balance their budgets any other way.
While the polytechnic's core business would not change, the way it carried out its business had to be "tightened up considerably", he said.
"We need staff to [do the] work on that. Changes like these cannot be imposed from above."
