The University of Otago's healthy financial position has been
underscored by a better-than-budget operating surplus of
$18.58 million, despite some earthquake-related costs
involving the university's Christchurch campus.
A recently-released financial statement covering the first
eight months of this year, until August 31, shows an
operating surplus of $18,587,000.
This is about $2.1 million better than budget for the year to
date.
But this outcome is $12,875,000 less than the $31,462,000
surplus achieved by the university at the same stage last
year.
The financial report noted the major causes of the
better-than-budget variance were savings and timing issues in
consumables spending ($3,269,000) and extra overhead
recoveries and funds received from external research funders
for capital purchases ($1,754,000).
Other factors were extra investment income ($363,000) and
savings in depreciation due to delays in capital spending
($446,000).
These favourable factors had been partly offset by costs
associated with the Christchurch earthquakes and the timing
of repairs and maintenance ($1,290,000).
Other offsetting factors included lower-than-budgeted tuition
fee income because of fewer student enrolments ($1,870,000).
The report also noted the university's occupancy costs were
$1,495,000 (5.9%) greater than budget.
The major cause of this was repairs and maintenance for the
university's Christchurch campus after the recent
earthquakes.
Most of these costs would be recovered from the insurers.
Adding to this unfavourable variance had been
higher-than-budgeted external rental costs to provide
temporary replacement space near the Christchurch campus, and
extra space that was being rented by Otago University
property services.
Total income for the year to date was $392,017,000, which was
slightly less than the $392,961,000 budget.
This was due to lower than budgeted tuition fees largely
offset by higher sundry income, greater Government funding
and improved investment income.
Expenditure for the period was $373,430,000, which was about
$3 million under budget.
Savings, including in consumables, and in salaries,
contributed to this favourable variance.
University financial services director Grant McKenzie noted
that savings continued to be made across the university.
This was in expectation of "a more difficult 2012" as the
rate of revenue growth in the university continued to
decline.
"The university's cash flows are strong and the financial
position remains healthy with no real external debt," Mr
McKenzie said in the report.
• Domestic tuition fees were $1,337,000 (2.1%) less than
budget, and the largest declines in domestic students had
occurred in the academic divisions of commerce and sciences.
International student fees were $534,000 (1.9%) less than
budget.
The international fee variance was caused by a small decline
in forecast international equivalent full-time students
(EFTS) and a change in the mix of papers, with more students
enrolled in lower value papers, such as commerce and
humanities, and fewer in higher value papers, such as health
sciences and sciences, the report said.
john.gibb@odt.co.nz
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