The institution’s budget, released to the Otago Daily Times, proposes a $15.5 million deficit for the year, compared with an actual deficit of $22.5m for 2024.
Acting vice-chancellor Prof Jessica Palmer said the university was committed to returning to surplus as required for all universities.
"We have agreed that we will do this over the next couple of years.
"This will be achieved by a combination of increased revenue and further efficiencies and savings."
Prof Palmer said the reduction in per-student funding for universities next year, and uncertainty over research funding, continued to be major issues to deal with.
"We will continue to advocate for increased funding that allows us to undertake the important work we do in research and teaching in a sustainable and impactful way.
"We are still to set the budget for 2026, but it is being done in the wider context of the university receiving less money from the government next year, while needing to continue to reduce the deficit."
Executive dean of Bond Business School Prof Robin Gauld said Otago University was facing a "perfect storm" of issues.
"Clearly the funding is not adequate for the sort of historically determined requirements and programme delivery, and then you’ve got all the capital development and building costs that Otago faces.
"There’s a lot of old buildings and infrastructure and all of this costs a lot of money to maintain.
"I hear that enrolments are looking pretty healthy — so all of that’s going in the right direction — but it’s making the amount of money available meet the costs of delivery. That’s the big challenge."
Prof Palmer said one of the goals of the university’s strategic plan, Pae Tata, was to achieve greater efficiency in space utilisation across the campuses.
"We have undertaken several projects in 2025 that have enabled us to release or repurpose about 5000sq m of space and we intend to make similar savings next year."
This included the relocation of marine sciences to the Geology Building to make space savings and provide an earth sciences hub in the centre of campus, and the relocation of health sciences staff from a leased property into university property, she said.
"These initiatives are allowing us to save space and money, while also providing opportunities for other initiatives which support our wider campus goals and strategies."
Protect Otago Action Group spokeswoman Rosie Cruickshank said she was disappointed by the budget’s approach.
"It’s frustrating to see the university just continuing to take the kind of approach of making education about money and finances and not standing up for students or for staff in the way that we think it should be.
"I think the university has a platform. They can make demands of the government. They’re a major institution."
When asked whether the university would be able to make the changes in order to return to surplus, Prof Gauld said he was unsure.
"It probably just depends on bringing building costs down and trying to ensure there is the right number of students in every course that’s on offer and the right number of staff."
