The University of Otago is bracing for tough times ahead as lower than expected student numbers begin to hit the bottom line.
The comment, from financial services director Grant McKenzie, comes after it was revealed last month that student numbers were 2.3% lower than last year. When setting the budget for this year, the university had predicted numbers to increase by 0.8%.
The drop in student numbers was beginning to hit the university's income. Domestic tuition fees in the year to the end of March fell by $769,000 and government funding was down by $445,000, Mr McKenzie said in a report tabled at yesterday's council meeting.
Over the course of the whole year, domestic tuition fees were estimated to bring in about $3 million less than last year.
While student numbers typically increased by between 800 and 1000 between now and the end of the year, there was ''little doubt that enrolments in 2013 will be lower than originally expected'', he said.
The university was ''carefully'' investigating the fiscal implications of the drop in numbers.
''The budget review ... is likely to be difficult ... as the university absorbs the impact of lower student numbers and attempts to maintain an adequate surplus in order to fund planned capital expenditure,'' he said.
The university's operating surplus for the year to the end of March was $6.264 million, which was $425,000 (7.3%) greater than budget and $1.082 million greater than at the corresponding time last year.
Operating income for the quarter was $147.779 million, which was $1.528 million less than budget and $138,000 less than at the corresponding time last year. The variance was mainly because of the decline in student numbers.
Operating expenditure to the end of March was at $141.515 million, $1.953 million (1.4%) less than budget and $1.22 million (0.9%) higher than last year. This was in part because of savings in salaries following delays in the appointment of staff and a lower power bill because of warmer than usual weather.
The university remained in a ''strong'' financial position, Mr McKenzie said.
