The University of Otago has announced an operating surplus of $26 million last year, the highest recorded surplus since the figure peaked in 2007 at $26.35 million.
The surplus was $9.22 million above what was initially budgeted; however, the likelihood of maintaining future operating surpluses has been put into doubt by a number of construction projects planned by the University over the next few years, including the earthquake strengthening of campus buildings.
The $26 million reported may be an optimistic spin on the numbers, with the adjusted surplus a significantly lower sum of $18.144 million. Adjusted surpluses reflect the effects of unrealised gains and losses on shares held, actuarial accruals, carry-forward changes and other significant one-off items. Critic smiled and nodded at this explanation and recommends that all readers be accompanied by a friend studying advanced finance to explain what the hell this actually means. Critic’s finance advisor was away on fieldwork in Botswana and was unable to do the job.
A University Council meeting report revealed Financial Services Director Grant McKenzie viewed the University’s financial position as “solid” although he did express concern that the adjusted figure was lower than in previous years.
The report also detailed that the University had concluded the year with a record $62.98 million total cash on hand. This represented a 9.15% increase from 2010 and was a result of delayed capital expenditure projects such as transforming the now wistfully lifeless Gardies into the Marsh Study Centre.
McKenzie remarked that a substantial increase in the demand for cash would likely occur as many approved projects from the priority development plan moved from design to construction.
In order to maintain surpluses, the University looks set to face a challenge more arduous than relinquishing its obsession with destroying all things remotely scarfie. Mr McKenzie also reported that this would not be easy in an environment of “severe government fiscal constraint”. Critic speculates that yearly fee rises will help to ease the University’s pain.
“What would you do?” no longer a hypothetical question
