The Tertiary Education Commission, which oversees the funding of tertiary education, publicly released its November 2023 briefing to incoming minister Penny Simmonds yesterday.
It said the university sector faced "unprecedented financial challenges".
TEC chief executive Tim Fowler confirmed to the Otago Daily Times the two "high-risk" universities were Victoria University of Wellington and Massey University.
Where institutions are at risk, the TEC can intervene or advise the minister to intervene.
Otago, Lincoln and Waikato Universities were considered "medium risk", Mr Fowler said.
"We use a range of quantitative and qualitative information to assess tertiary education institution (TEI) performance and risk.
"This takes into account financial information but also operational, educational, management and governance risks.
"Utilising this information, we determine an overall risk rating for each TEI.
These assessments were subjective and included the confidence the TEC had that each TEI was "appropriately managing and mitigating the risks it is facing", he said.
The TEC briefing outlined a range of problems facing the tertiary education sector.
"Government funding to the sector has fallen well behind inflation in recent years, and Covid-19 border closures reduced international fee revenue.
"Many institutions have also been slow to adjust to declining domestic learner numbers and shifting patterns of enrolment.
"The varied institutional responses to these financial pressures continue to impact the range of programmes and services being delivered, and the network’s overall capability and capacity for higher education and research is at risk."
The briefing also said the tertiary education system did not deliver good results for everyone, and "persistent educational disparities need to be addressed to better enable New Zealand’s economic prosperity".
Recently, Otago University has been plagued by its own financial difficulties.
It plans to end this year with a $28.9million deficit, predicated on achieving savings of nearly $35m within the year, from asset sales and a savings target.
Although the TEC’s briefing did not single out Otago University, it said "many parts of the sector are reporting deficits, and some providers are experiencing liquidity challenges".
"This has required organisations to implement staff restructuring, seek operating savings, defer capital projects, sell surplus assets and revise operating models."
Meanwhile, the troubled mega-polytechnic Te Pūkenga was also facing scrutiny from the TEC shortly before Ms Simmonds announced plans to disestablish it.
The TEC considers Te Pūkenga to be at "high risk".
"There are a range of issues and challenges regarding financial viability that would need to be considered given the former institute of technology and polytechnic network remains unprofitable.
"We will work with you on how you envisage making changes to the sector to deliver a financially sustainable model and a high-performing vocational education and training system."
The mega-polytechnic brought together the country’s 16 institutes of technology and polytechnics and nine industry training organisations (ITOs), but Ms Simmonds has since signalled a return to a more regional-based model.
She has said she would be looking to devolve the responsibilities to "eight to 10" separate institutions, and the changes should be complete by the end of this year.
The briefing also said the Ministry of Education had also considered options for a potential review of higher education funding and financing.
