The University of Otago is facing a tight financial situation next year, with Government policy, flat enrolments and increased costs beginning to bite at the institution's finances.
The university's proposed budget for 2013, which is set to come up for approval at a university council meeting tomorrow, notes that setting the budget in the current climate was a "challenging process".
Otago University director of financial services Grant McKenzie said in the proposed budget that the response of the university's service divisions to the tight financial environment had been to "cut costs in anticipation of budget cuts".
The academic departments meanwhile had increased the use of savings built up from previous budgets, which were called "carry forwards".
The proposed budget predicts the enrolments environment will stay flat, with a slight increase in domestic full-time students from 17,426 equivalent full-time students (EFTS) forecast this year to 17,638 next year.
Full-fee paying international EFTS are forecast to fall for the second year in a row from 1555 EFTS predicted this year to 1487 next year.
In predicting student numbers the university notes it is "amongst the most difficult time in at least two decades" to forecast.
"Global uncertainty remains a significant factor and the extent to which the aftermath of the Canterbury earthquake will continue to impact on enrolments is difficult to call with great confidence."
As well, "reduced Government funding for the tertiary sector" also made setting the budget harder.
The proposed budget reports a forecast total income of $600.9 million and expenditure of $585 million, with an operating surplus of $19.125 million, up from the $18.981 million operating surplus forecast this year.
This would mean the university would fail to meet the Tertiary Education Commission requirement for a minimum operating surplus of 3% of revenue - with a 2.6% return. The university was also expecting that it would not meet the guideline this year, with a return of 2.3% forecast.
Mr McKenzie predicted difficult times would continue beyond next year with "further savings and efficiencies" needed.