Belt-tightening needed

Academic divisions at the University of Otago have agreed to tighten their belts in the wake of a multimillion-dollar shortfall caused by a failure to meet forecast student numbers.

This comes as chief financial officer Sharon van Turnhout said at yesterday's council meeting the possibility of the university not making large enough surpluses to fund its capital development programme was ''worrying''.

A report from chief operating officer John Patrick tabled at the meeting said having lower-than-expected student numbers was expected to cost the university $4.183 million by the end of this year.

Despite overall student numbers increasing by the slightest of margins this year, the 0.1% increase revealed earlier this year did not match its forecast for a 1.7% increase.

International numbers fared even worse, declining 3.7% on last year against a forecast for a 2.6% increase.

Mr Patrick said this, and the fact expected insurance proceeds from the Christchurch earthquake of $2 million were paid out last year instead of this year, was placing pressure on the university's budgeted operating surplus of $20.597 million for the year.

To make up for the tuition income shortfall, the university had identified savings of $2.069 million from its corporate budgets, but the academic divisions were expected to find savings to make up the remaining $2.114 million.

The surplus for the year was now expected to come to $18.597 million, with the drop in insurance income not expected to be recovered through savings.

Ms van Turnhout earlier emphasised the importance of the university meeting its surplus targets, after she was questioned by council member Roger Tobin.

If it did not meet these targets, it would not be able to fund all of its massive capital works programme.

Mr Tobin said the financial report tabled at the meeting was ''the most serious warning we have had for some time about the vulnerability'' of the university's financial position.

• The university's surplus for the year until the end of April was $5.857 million, which was $2.471 million lower than expected, largely due to a shortfall in tuition fees.

The university's cash on hand, much of which would be spent on its building programme, was ahead of budget at $169.702 million.

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