The University of Otago has denied "gaming" the system in order to appear higher on league tables which rank their quality of research performance and says it has "nothing to hide" over the way it takes part in the process.
This comes after the Tertiary Education Commission last week released a report by KPMG, which the Tertiary Education Union (TEU) said confirmed that institutions had been gaming the performance-based research fund (PBRF) process.
Following the release of the report, TEU national president Dr Sandra Grey said universities were guilty of "hiding" staff they considered would compare poorly in terms of research output.
In the last PBRF round in 2006 Otago University was top, with 4.22 (out of 10), ahead of Auckland University on 4.19.
The next round is due to take place this year.
Otago University vice-chancellor Prof Harlene Hayne said the TEU had misinterpreted the KPMG report and the university had "nothing to hide" in the way it took part in the process.
"There is absolutely nothing more important to this university than our reputation, so although we are really keen to come first in the PBRF, we will do nothing to win that is against the rules or that makes us a bad employer," Prof Hayne said.
One of the issues which caused confusion in the report was the percentage of staff who were ineligible for the PBRF at each institution, she said.
While the number of ineligible staff (38%) at Otago University seemed high, this was because staff who only taught for a short stints in the health science curriculum were included.
There was also room for confusion over the percentage excluded for being under "strict supervision", which at 32.4% was significantly higher than other institutions, she said.
The figure was higher because Otago University answered the question differently.
Had they answered the question the same way as other institutions the figure would have been 15.9%, under Auckland University, which excluded 19.3% of staff.
It was "disheartening" to have its honesty questioned because the university had "worked so incredibly hard to be squeaky clean", Prof Hayne said.
"It's really important both for the Dunedin community and perhaps even more importantly for the staff at this institution to know that the University of Otago is not gaming the PBRF."
Dr Grey stood by the TEU's interpretation of the KMPG report and said the system put too much emphasis on research and needed to be changed.
"We need a balance in our institutions and that's what we are not getting with this exercise."
She had spoken to union representatives in Dunedin who said there had been a number of redundancies and retirements at the university directly linked to PBRF ranking.
