Student numbers are expected to increase at the University of Otago next year, turning around three years of declining enrolments at the institution.

The prediction student numbers would increase by 1.7 per cent to 18,918 full-time equivalent students (Efts) next year was made in the university's budget for next year, which was tabled at yesterday's council meeting - its last for the year.

The budget along with the university's forecast performance for this year - also tabled at the meeting - added to a picture of the university being in a strong financial position in the face of a challenging funding environment.

In the budget for next year, university director of planning and funding David Thomson said a range of factors were behind the prediction of a small increase in student numbers next year.


These included additional places being offered at Dunedin residential colleges - which included the opening of a new college in the former LivingSpace building on Castle St - and pipeline growth from increased first-year enrolments both this year and last year.

However, he noted the university remained "in a period which is amongst the most difficult time in at least two decades in which to forecast with confidence".

"Global uncertainty remains a significant factor, and the extent to which the aftermath of the Canterbury earthquake will continue to impact on enrolments is difficult to call with great confidence," he said.

The predicted 18,918 EFTS was still below the 18,951 enrolled at the university last year, and 3.8 per cent below the university's peak of 19,661 students in 2010.

Changes to student loans and allowances access and the introduction of limitation of enrolments had impacted domestic enrolments in recent years, Mr Thomson said.

Financial services director Grant McKenzie said setting next year's budget had been a "challenging process".

"Trying to achieve a balance between maintaining an adequate operating surplus and ensuring that the academic departments have adequate resources deliver their outputs was difficult."

"The outcome is a surplus that meets the minimum guidelines set by the Tertiary Education Commission but is less than council's approved fiscal strategy."

Despite the challenges the university's financial position continued to be "strong with no external debt".

For next year the university was expecting an operating surplus of $20.597 million which was down on the forecast surplus of $21.375 million this year.

Speaking at yesterday's meeting, Mr McKenzie said factors, including the timing of insurance proceeds from Christchurch's earthquake, could make this year's surplus climb higher than the forecast figure.

Mr McKenzie is taking up the role as Dunedin City Council group financial manager in January.

Asked by council member Michael Sidey if there was anything the council needed to be careful of in future years, Mr McKenzie noted significant spending on planned new buildings planned would decrease the amount of cash on hand - which had provided a significant amount of investment income for the university in recent times.

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