Te Pūkenga is hoping increased income from work-based learning such as apprenticeships will more than make up for falling income from other courses this year.
Chief executive Peter Winder told RNZ it budgeted for a $96 million increase in funding for in-work programmes this year, a $60m drop in income for its campus-based courses and a $17m drop for distance education.
The new funding system for certificates and diplomas, the Unified Funding System, increased the amount of money paid for in-work learning this year, but decreased funding for campus-based and distance courses - which Winder said were the source of most of the institute's expenses.
Asked if Te Pūkenga was better off under the Unified Funding System, Winder said that was yet to be seen.
"The key thing to note is that with the Unified Funding System, our government funding is still largely tied to the number of learners that are enrolled or engaged," he said.
"So it won't be until we're a bit further through the year that we can actually say what the impact has been because it all goes back to the number of learners that are engaged."
Winder said the institute had budgeted for a "very significant uplift in funding" for its work-based learning this year, and reductions in face-to-face and online delivery resulting in "a net overall increase in funding if we achieve budget".
However, he said enrolments in campus-based learning were lower than the institute had budgeted.
Staff reacted angrily when Winder recently told RNZ's Nine to Noon programme the institute was likely to cut hundreds of jobs.
Asked if staff had not understood previous statements about the scale of change required at Te Pūkega, Winder said the institute was going through significant change and consultation on a change proposal would begin in the week of 12 June.
"We need to respond to both the shift in demand from learners and the shift in funding from the government."
Tertiary Education Union national secretary Dr Sandra Grey said Te Pūkenga should not shift its focus massively to on-job learning.
She said the current boom in workplace learning was driven by economic conditions, and eventually it would change and campus-based courses would become more popular.
"This is a circumstance of our current economy where there's lots and lots of jobs. But at some point and we know this happens, a lot of trainees are going to find no one wants to have them with them, a whole lot of apprentices are going to find they need somewhere to train because companies are letting them go.
"We need to look at the long-term picture, which is a mix of provision."
Grey said the government's funding changes were making some courses unviable, especially in small communities.
She said some Te Pūkenga staff felt a decision about job losses and restructuring was long overdue and they were sick of the uncertainty.
But she said people at small campuses in small communities were especially worried.