Polytechnic chief executive Phil Ker said the proposed learning centre changes were the "most difficult" he had faced in his five and a-half years at the polytechnic.
A review of the centres has been initiated and formal consultation with staff will continue until November 13, with final decisions made by November 18.
About 20 full and part-time staff, amounting to about 13 equivalent full-timers, are employed at the polytechnic's four Dunedin community learning centres.
Numbers could be cut by about half under the proposed changes, which involve closing the Forth St centre and deploying remaining staff more flexibly throughout the other three Dunedin centres, in George St, in South Dunedin, and in Mosgiel.
Level two courses are currently free, except for some NZQA charges, but it is proposed to introduce fees.
It is planned to gain a financial improvement for the polytechnic of at least $500,000 through cost reductions and moving some enrolments to better-funded programmes.
The number of Dunedin students undertaking part-time community courses, in computing skills and business studies, could eventually drop from about 3000 a year to about 2000.
The self-directed courses were clearly valuable educationally, in allowing members of the public to improve employment skills and to boost confidence in their study abilities, in some cases leading to full-time study at the polytechnic.
The courses, which will in future attract significantly less government funding, will remain accessible but may not be as strongly promoted.
The polytechnic is under pressure to cope with the withdrawal of $3 million of funding in 2011 as a result of government decisions.
In an email message sent to polytechnic staff late last week, Mr Ker advised with "considerable regret" that he had met staff at the polytechnic's four Dunedin Community Learning Centres to initiate a review, with the intent of "scaling back significantly" the work put through the centres.
"This is a sad day for the polytechnic when we are forced into making decisions that are not related to the educational needs of the community but are driven entirely by a need to adjust what we do to a grossly inadequate funding system."
