Polytechnics are under pressure with falling enrolments, bad audit reports and expectations that some will end the year with multi-million-dollar deficits.
The institutions' bosses are to meet Education Minister Chris Hipkins tomorrow, and they've told him their sector is under strain.
Charles Finny, independent chairperson of NZITP (New Zealand Institutes of Technology and Polytechnics), which represents the 16 institutes of technology and polytechnics, said the institutions were facing a downturn in enrolments and a funding system that was not fit for purpose.
"A number of institutions have got challenges and without the international students, for some institutions it would be extremely challenging indeed so we do need a new approach," he said.
"The sector is under pressure, no-one is denying that."
Mr Finny said one of the biggest problems was that enrolments in institutes of technology and polytechnics were counter-cyclical, with low enrolments when the economy was strong and employment was high, and high enrolment when employment rates were lower.
At present, strong employment had combined with a drop in the number of school leavers, he said. The institutions were also facing competition for low-level courses from the private sector and for degree enrolments from universities.
Tertiary education commentator Dave Guerin said the sector was in a delicate position.
"It's in a fragile state at the moment. Many organisations are doing okay, but domestic enrolments are down due to the school-leaver cohort getting smaller, but also the strong labour market means many people are going into a job instead of going into tertiary education and alongside that international enrolments are coming down."
Tertiary Education Union president Sandra Grey said 10 of the 16 institutes were planning course cuts and job losses.
She said all tertiary institutions were struggling, but the smaller institutes were in the worst position.
"It's most acute for smaller institutions because the policy just doesn't support small communities, small polytechnics.
"So there's a problem across the sector but we are seeing deficit budgets or financial results where some of these institutions are making multi-million-dollar losses because they just don't have the funding to run their core service, which is education."
Ms Grey said the government needed to solve the problem.
"We can't let this continue as a nation because actually communities like Kerikeri, communities like Timaru, need to have good quality training in those communities because businesses need, because our kids need it."
Mr Hipkins said the Tertiary Education Commission monitored institutions' viability and as part of that work it had proactively raised issues the polytechnic sector was facing.
"I am advised that the TEC [Tertiary Education Commission] has been having ongoing discussions with the ITP [Institutes of Technology and Polytechnics] sector and individual ITPs on these issues, and that the TEC has requested to meet with me to discuss them," Mr Hipkins said.
He said the government wanted a sustainable ITP sector and a strong network of tertiary institutions across the country, including in the regions.
The commission's chief executive, Tim Fowler, said factors including increased competition had driven down the profit margins of polytechnics and institutes of technology though most were making ends meet.
Mr Fowler said the institutions had made savings and were working together but many were now relying heavily on income from international students to offset falling income from other sources.
"TEC, in consultation with the ITPs and other agencies, is currently developing a work programme to actively manage sustainability and viability issues for the ITP subsector. We expect this to drive significant change in the subsector in the next three years," he said.