If it did not act, the university was headed for a problem of similar magnitude next year.
"The $60 million that needs to be saved is based on challenges being faced in 2023 and beyond," acting vice-chancellor Helen Nicholson said.
The university shared more information yesterday about the financial situation that could result in several hundred job losses.
It had already budgeted for a deficit of $12.4 million, that relied on $25 million of savings being achieved this year when domestic enrolment income came in below forecast.
Poor retention of students was the crucial factor in the domestic enrolment shortfall, accounting for about 70% of it.
"It appears to be driven in part by the cumulative impact of Covid-19 disruption and fatigue," Prof Nicholson said.
Retention was usually stable year to year and had previously held firm during the pandemic.
The drop-off this year was unexpected.
Compounding the situation was a drop in university entrance (UE) achievement rates.
This, too, had previously held up well during the pandemic.
"The proportion of UE-qualified school leavers proceeding to study also appears to have dropped a little, and commencing mature student enrolments also dropped more than expected," Prof Nicholson said.
"Broader factors that are challenging all universities in their domestic forecasting at present include the ongoing strength of the job market, gap-year opportunities — for some to travel and for others to work and save for later study — and student responses to the rapidly rising cost of living."
Such responses included reducing study loads to take on part-time work.
Ambiguous information was provided last week about enrolment forecasts and the university has since clarified the situation, correcting a comment in the Otago Daily Times by an anonymous staff member.
Prof Nicholson said yesterday 4% growth in overall enrolments had been forecast this year, but the university was tracking to a 0.9% fall.
The university had budgeted for 1.8% domestic growth and would not get it.
Reopening of borders prompted a growth forecast for international enrolments of 50%.
"We are on track to achieve forecast international enrolments, but not achieve our domestic enrolment forecast," Prof Nicholson said.
What would have been needed for the forecast to hold was normal levels of retention of students who enrolled last year, together with no major disruptions to the pipeline of students starting study.
Prof Nicholson said the university was forecasting during unprecedented uncertainty.
Applications for the first round of redundancies started yesterday; it is expected further rounds will be needed.
The university had seemed to be on a more positive track earlier this year.
When a summary of the accounts was presented to the university council last Thursday — the same day as the $60 million hole was declared — it showed an operating surplus for the period ending February 28 of $10.3 million, $5.8 million higher than the budgeted surplus of $4.5 million.
Cash on hand was $7.3 million greater than budget.
However, tuition-related income is largely recognised in March and July, at the time of enrolments for the first and second semesters.
"This shows the impact of enrolment numbers as early as possible, allowing time for decisions to be made about the consequences of variances against income budgets."
