The proposal, a copy of which was obtained by the Otago Daily Times, said non-clinical support workers would reduce from 6.2 to 2.9 full-time equivalent at Te Whare Oranga in North Taieri.
The facility provides supported accommodation for seven people.
Losing two Ministry of Health-funded high-needs intellectual disability clients sparked the changes because of a drop in funding.
However, the Southern District Health Board not granting inflation-related funding increases played a part.
"Due to financial pressure resulting from the change in client mix and the Southern DHB only passing on contract increases well below inflation over the last three years for our Maori mental-health clients, Te Whare Oranga operates at a financial loss in its current configuration," the proposal said.
The "awake night shift" would become a sleep-over under the proposals.
Pact chief executive Louise Carr said the provider was consulting staff about the proposals.
"The level of staffing in any given service is always related to the client mix and client support needs and there has been a change in the clients supported at Te Whare Oranga, which has prompted the proposed changes."
Southern DHB funding and finance general manager Robert Mackway-Jones would not comment on yearly funding reviews.
The proposed changes were in line with Pact's service contract, he said.
