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The Otago University Students’ Association (OUSA) will bank on improved commercial fortunes to end a series of deficits.
Redeveloping the University Book Shop building at the Dunedin campus next year is expected to help the association produce more income from 2022.
However, next year’s deficit is expected to reach $250,000, and that comes on the back of deficits in 2019 and 2020.
The association is also adding an advisory board next year to provide financial advice to help put it on the path to long-term financial stability.
Association finance and strategy representative Josh Meikle said it had been working on plans for large-scale refurbishment of the book shop building since acquiring it in April last year.
The full cost of the project was expected to be $3.3 million.
"We anticipate seeing the benefits of this redevelopment from 2022 onwards."
In an effort to reduce next year’s deficit, the association applied this month to downgrade its status with the New Zealand Union of Students’ Association (NZUSA) to being an associate member. That could have saved just over $20,000, but NZUSA rejected the application.
Associate membership was designed for smaller associations, and NZUSA president Isabella Lenihan-Ikin said the Otago association needed to show it was financially unstable for that option to be used.
"The balance sheet is in a healthy position," she said.
The OUSA has total equity of about $15 million.
OUSA president Jack Manning said the application was based on the need to reduce next year’s deficit without compromising long-term service provision.
Mr Manning said the national executive decided the OUSA "did not display the financial need" to be granted associate membership.
"We are disappointed, but respect this decision, and will retain full membership of NZUSA in 2021."
In its application, OUSA said its goal was to break even from 2022, but it faced immediate challenges: its income was reduced due to Covid-19, and maintenance was needed on its buildings and facilities.
Capital projects that should result in a boost in income would also deplete reserves next year.
"Once 2021 projects are under way and completed, we should be seeing an increase in commercial income," the OUSA application said.