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The University of Otago has launched a voluntary redundancy scheme for staff as it seeks to contain spending in the face of losing international students and rising costs.

Acting Vice-Chancellor Professor Helen Nicholson said while the University had been able to respond to the immediate financial impacts of the Covid-19 pandemic, and was not facing any immediate financial crisis, the financial outlook beyond 2021 was challenging.

“After full consultation with the incoming Vice-Chancellor Professor David Murdoch and the support of the University Council, we will be launching a voluntary redundancy scheme on Monday, October 4.

“This has been a very difficult decision to make after all the sacrifice and hard work of University staff over the past 18 months.  We are making this decision now to ensure that the University remains financially resilient for the years ahead.”

Several factors had contributed to the University’s financial outlook, which had been exacerbated by the Covid-19 pandemic and the emergence of the Delta variant, she said.

Previous financial forecasting included an assumption international student numbers would begin to recover in 2022.

“We now know that rebuilding the international student cohort is unlikely to begin until 2023 and it could then take up to 10 years for student numbers to recover.  While our historic prudency in capping international numbers insulated us from a more severe impact, we are currently losing $15 million per annum in revenue because of the drop in international enrolments,” Professor Nicholson says.

The revenue from a rise in domestic student enrolments would not be enough to offset that and other financial pressures.

“Our income isn’t keeping pace with our expenditure. The reality is that funding and fee revenue we receive for each domestic student we enrol is not keeping pace with inflation, or with rising salary, operational and compliance costs.”

Budget forecasts had also been impacted by the substantial unplanned costs associated with leasing office space for about 500 staff and study space for 1000 students who were moved out of the Wellington campus’s main academic block in August because of its low seismic rating.

“I am very grateful for the way our Wellington staff and students have responded to this unexpected disruption. Finding new space for them is a priority,” Prof Nicholson said.

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Other factors influencing the decision included rising salary expectations and the cost of the University’s capital development programme. The University acknowledged that the cost of living in New Zealand was rising and wanted to be able to fairly compensate its staff.

“We are committed to providing a safe and appropriate working environment for staff and students now and in the future. Therefore, we are undertaking our capital development programme. While necessary, this programme is expensive, and the pandemic has escalated project costs.”

Prof Nicholson said the process would not impact on the ability of students to complete the programmes in which they were currently enrolled, or which commenced in 2022.

All permanent staff members, academic and professional, would be eligible to express their interest in voluntary redundancy.

Expressions of interest would open on October 4 and close on November 15. Most decisions on whether an application for redundancy was accepted would be made and announced within two weeks of the closing date.

Support services would be available for staff.