It has produced some of Australia's best and wealthiest actors, including Cate Blanchett, Mel Gibson and Sam Worthington, but the National Institute of Dramatic Art is not sharing in their riches after recording a financial loss of $792,764.

NIDA chairwoman Jennifer Bott admitted the deficit was larger than anticipated. The loss for last year represented 3 per cent of NIDA's total budget, and was a worsening of its financial position after 2012's deficit of $472,172.

This followed four years of surpluses totalling $1.5 million, which Ms Bott said was "in preparation for crucial investment in a new business model over the years 2012 to 2015".

The school expected to earn more money from its NIDA Open fee-paying courses, corporate training and the Parade Theatre in Randwick.

Ms Bott said the school was trying to diversify and increase revenue streams and had invested in new technology and marketing.

"In addition, NIDA has invested in new course design across all of its undergraduate and graduate courses to ensure we are offering a future focused student experience," she said.

A $536,000 increase in revenue to $24.3 million in 2013 was wiped out by an $800,000 rise in administration expenses, according to the annual report.

NIDA spent $6.9 million in administration in 2013 compared with about $5 million in teaching programs, but its greatest expense was $10 million on building and maintenance.

The school's wages bill rose substantially by more than $1 million, or 10 per cent, to $11.04 million.

"There were additional financial costs associated with this increased activity, especially in terms of depreciation and increased casual salaries, which resulted in a larger deficit than anticipated," Ms Bott said.

Mass staff departures, unhappy students, alienated benefactors and a diminished acting course were among criticisms made by former Liberal senator Chris Puplick in his 2012 essay Changing Times at NIDA.

A former NIDA board member, Mr Puplick savaged the school's director and chief executive Lynne Williams, claiming she had "no appropriate experience" to head the school.

He also said she had "a Thatcherite style, honed after a quarter of a century in the UK".

NIDA's then chairman Malcolm Long hit back, claiming Mr Puplick was disaffected and had been "carrying bile for the last two years since he left the board".

Despite the drama, Ms Bott said staff and student satisfaction was high, and Ms Williams had the full support of NIDA's board.

"Application numbers for NIDA courses continue to increase, and the broader arts and entertainment industry continues to support NIDA across the organisation's many activities," she said. 

NIDA claims to be Australia's top drama school, and has actors Hugo Weaving, Robyn Nevin and Richard Roxburgh and director Baz Luhrmann among its graduates.

But it has also failed to spot talent, famously rejecting Brendan Cowell three times as well as Rachel Griffiths, Georgie Parker and Anthony LaPaglia.

Its pre-eminence is also challenged by the Victorian College of the Arts in Melbourne and the Western Australian Academy of Performing Arts as well as acting studios such as 16th Street in Melbourne and Actors Centre Australia in Sydney.

NIDA received $7.36 million from the federal government for a total of 166 students last year.

Earlier this year, Arts Minister George Brandis told NIDA graduates he had contemplated a career in theatre before turning to law and politics.

A spokesman for Senator Brandis said: "The government applauds NIDA for their vision, commitment and continuing innovation in the investment in both their courses and key infrastructure which has ensured that NIDA remains the leader in training in dramatic arts in Australia."