Academic departments and service divisions at the University of Otago are taking steps to reduce costs in anticipation of what is being called a "grim" budget situation next year.
The cutbacks come after a second year of falling student numbers, with 700 fewer students enrolled in the university than when student numbers peaked at 19,918 in 2010.
University of Otago director of financial services Grant McKenzie told the university's council meeting yesterday that "generally all" the university's divisions were cutting back ahead of a "grim" financial outlook next year.
Next year's budget would be "very tight", largely as a result of lower student enrolments, Mr McKenzie said.
"Student numbers are still not as strong as I would like to see them," he said.
Responding to a question from council member and investment banker Michael Sidey asking if the university's positive cashflow stood the institution in good stead to face the "wall of worry coming", Mr McKenzie said: "Cashflow is very positive but I think we have got some challenges to meet budget this year."
The financial review tabled at the meeting showed domestic students' tuition fees were $752,000 (1.3%) less than expected and international fees $688,000 (2.8%) less than expected.
The university's operating surplus for the period to the end of July was $13.473 million, $935,000 more than budgeted and $6.077 million (31.1%) less than at the same time last year.
The university's total cash on hand at the end of July was $119.29 million, which was the highest it had been in the past five years and $11.438 million more than at the same time last year.
Mr McKenzie said in the review that the cash being built up would be used to fund a large number of "high value capital works and IT projects" likely to be started in 2013.