"It has panned out as we expected, if not as we wanted," chief executive Phil Ker said this week.
The Government signalled two years ago it was cutting core funding to the tertiary sector from next year and Otago Polytechnic would lose about $3 million.
Otago was hoping the impact would be cushioned by the Government funding additional student places through its funding agency, the Tertiary Education Commission (TEC).
But Mr Ker said in August he had been told that would not happen.
Final TEC funding was confirmed last week, he said.
It was enough to maintain equivalent full-time student places (efts) at the same level as this year, about 3300 - about 200 efts shy of the number of places the polytechnic had sought.
More students are enrolling in multi-year degree courses and the polytechnic wanted more places to accommodate students already in the system as well as those wanting to enrol for the first time.
Mr Ker said the confirmed funding would enable the polytechnic to "put forward a budget that works" next year.
It was anticipating an operating surplus of $2.87 million, which would be the best surplus achieved in more than a decade, he said.
A surplus of $2.1 million is forecast this year.
But next year's budget was "not without pain", he said.
The polytechnic has been reviewing programmes, costs and staffing levels for two years.
In September, it announced 15.1 full-time equivalent (fte) positions affecting about 20 staff would go by the end of the year through redundancies and voluntary retirements.
Mr Ker said on Thursday no further job losses were expected unless next year's enrolments were weaker than anticipated.
The TEC funding and budget were approved by the polytechnic council in the non-public part of its meeting last week.
Mr Ker said the council also approved a proposal outlined in September to increase student support levies by about 30% next year to $490 for full-time students, and to increase tuition fees by 4% across the board.
The increases will add almost $400 to a full-time student's costs next year.
Students can add the amount to their student loans.
• The University of Otago expects to find out next month how many TEC-funded places it will have next year.
Tertiary Education Minister Steven Joyce announced last month an extra 2895 TEC-funded university places for the next two years, but universities have not yet been told what their allocations will be.
