Otago Polytechnic's surplus expectations rise

Otago Polytechnic is heading for its best annual financial performance in almost 15 years.

The 2010 budget had been revised and an operating surplus of $2.094 million, was now expected, $250,000 better than initially budgeted, chief operating officer Philip Cullen said yesterday.

The polytechnic has had wildly fluctuating fortunes in recent years. It ended last year with a surplus of $749,000 for group activities and $550,000 for academic activities.

That was a significant improvement on 2008, when it recorded its worst financial result in five years - a $337,000 deficit for group activities and a $519,000 deficit for academic activities.

The main reason for the deficit was a redundancy bill of $1.09 million.

Mr Cullen attributed the expected improvement in the surplus to increased enrolments, additional government funding and profits from one-off and new activities.

Equivalent full-time student enrolments (efts) were expected to be above budget by 124 at 3638, and were particularly strong in the health-related courses.

International revenue was expected to be up $504,000 on the initial budget, with the number of international enrolments rising from 135 to 161.

The polytechnic would reduce its borrowings this year from $3.5 million to $1.3 million, Mr Cullen said.

Capital expenditure would remain the same at $5 million.

However, he said the improved operating surplus was countered by costs associated with catering for additional efts, costs associated with the introduction of the emissions trading scheme and some rent rises for leased property.

The polytechnic is not expecting a strong financial result next year.

Chief executive Phil Ker has already signalled a major budget challenge as the institution tries to find savings of $2.9 million to offset a cut in government funding.

In addition to trying to cut costs throughout its academic and business operations, the polytechnic council is considering increasing student tuition fees and services levies next year to bring in about an extra $1 million.

- allison.rudd@odt.co.nz