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The president said despite the lean budget, the university’s objectives for the 2003-04 fiscal year include a merit salary increase for faculty and staff, absorbing health insurance cost increases to UK employees, providing more scholarships on the basis of need and merit, and funding improvements that invest in the school’s future.

June 24, 2003 (Lexington, Ky.) -- The University of Kentucky Board of Trustees today approved a $1.4 billion fiscal year 2003-04 budget that UK President Lee T. Todd Jr. called challenging in its creation and reflective of UK’s role as a catalyst for intellectual, social, cultural and economic development in the Commonwealth of Kentucky.

“This budget reflects our strategic plan,” Todd said. “We have focused on faculty, staff and students, and high-priority academic programs. We will make notable gains in fiscal year 2003-04.”

For the third straight year, UK will experience significant decreases in state appropriations. The university’s 2003-04 state appropriations will total $308.5 million, $13.7 million less then the original fiscal year 2001-02 appropriated amounts.

“The development of the budget was a challenging task,” Todd said. “In addition to managing a recurring state budget reduction while enrolling more students, we continue to strive to become one of America’s top 20 public research universities.”

While state dollars dwindled, UK enrollment burgeoned, reaching an all-time high of 34,011 students in fall 2002. The growth is primarily due to more first-time freshmen, a substantial increase in doctoral students and a rise in enrollment at the Lexington Community College (LCC).

The president said despite the lean budget, the university’s objectives for the 2003-04 fiscal year include a merit salary increase for faculty and staff, absorbing health insurance cost increases to UK employees, providing more scholarships on the basis of
need and merit, and funding improvements that invest in the school’s future.

“Competitive salaries for faculty and staff are imperative for the university to become one of the 20 best public research institutions in the nation,” Todd said.

Anticipating the shortfall in state appropriations, Todd asked each of the school’s colleges to slash their FY 2003-04 budgets by an average of 1.5 percent in general-fund supported expenses. Support units took an average 2 percent cut. UK also raised the cost of undergraduate, resident tuition by 15 percent for the upcoming 2003-04 school year, which will yield $18 million more than last fiscal year. The university also reallocated about $9 million internally, including $2 million gleaned from the transition to the provost model of governance.

Todd said the change to the provost model will help the university capitalize on its intellectual diversity and save money by combining support functions and services at the UK Chandler Medical Center with similar units elsewhere on campus.

“The university is in a time of change – decreasing state support, increasing enrollments and higher expectations,” Todd said.

The new operating budget increases UK spending by $20 million over FY 2002-03 with the major revenue sources being state appropriations, 22.2 percent; UK Hospital, 22.9 percent; and tuition and fees, 11.3 percent.

UK’s Bucks for Brains initiative survived state budget shortfalls when the Kentucky General Assembly passed a 2002-04 financial plan inclusive of debt service to issue $120 million in taxable bonds for the Endowment Match Program (popularly called Bucks for Brains). UK will be eligible to match $67 million with private gifts to create and enhance endowed chairs, professorships, and mission-related activities. The debt service on this bond issuance will be paid by the state.

Budget Highlights

• The FY 2003-04 budget includes an average salary increase of 3 percent for faculty and staff, to be distributed based upon merit. The budget also includes funds for faculty promotions, a 2 percent increase in salaries for teaching assistants and a 2 percent minimum salary grade scale adjustment. Total General Fund cost for salary enhancements: $9.8 million.
• The university has assumed the total increase in health insurance premium costs of approximately 9.6 percent for its employees. With the exception of pharmacy costs, employees will see no change in their health insurance costs. Total General Fund cost increase of the Employee Health Insurance Program: $2.6 million.
• The institution’s scholarship budget has been increased to cover the tuition rate increase, a new need-based scholarship program, funding for the second year of the
  Legacy Tuition Scholarship Program, and continued support for the Governor Scholars and Governor School for the Arts Scholarships Program. The budget includes
  $1 million from the UK Athletics Association Inc. in support of the increased scholarships. Total General Fund scholarship increases: $4.6 million.
• More than $4 million of recurring and nonrecurring funds are budgeted for the strategic investment in high-priority academic and research programs, recruitment and appointment of college and program leadership, and support for enrollment growth and improved retention as listed below.
  • Subsequent to the report of the Futures Task Force, a call for proposals was issued to advance Futures priority areas. Based on the proposals received, more than $550,000 will be invested in seven initiatives: the School of Music; plant bioengineering in the College of Agriculture; risk-related behavior in the colleges of Medicine, Arts and Sciences, and Communications and Information Studies; race, ethnicity, and civic identities in the College of Arts and Sciences; organic chemistry; genomics (biology); and foreign language education for the College of Arts and Sciences and the College of Education.
  • $500,000 to support a call for proposals for the Chandler Medical Center colleges to advance the Futures priority areas.
  • $700,000 for the strategic investment in high-priority programs including: the enhancement of the College of Law in response to the American Bar Association accreditation issues; the further development of the Center for Oral Health Research in the College of Dentistry, support for the School of Architecture in the College of Design, enrollment growth in the pharmacy doctorate program, and enrollment growth in the School of Public Health masters and doctoral programs.
  • $670,000 for graduate student support to address the increased cost of tuition waivers and health insurance provided to teaching assistants, research assistants and fellowship recipients.
• $460,000 for academic administration and leadership initiatives, including supplemental funds for the recruitment and appointment of new deans and directors and an operating expense incentive program to increase first- to second-year student retention and extramural funding.
• Approximately $1 million to LCC for program improvements to support increased enrollments including part-time instructors, faculty and staff positions, instructional equipment, supplies, and operating expenses.
• $100,000 for a Quality Enhancement Program to invest in program improvements identified through periodic reviews.
• $300,000 to offset inflationary costs for monographs, serials and journals in the University Libraries.
• $476,300 for maintenance and operation of new facilities coming online, including the Gill Building and the Center for Rural Health.
• $1 million for renovating and equipping classrooms.
• $499,300 for the enhancement of the institutional data warehouse, to support the interface with Immigration and Naturalization Service’s database in compliance with federal immigration laws, and a virus protection software site license.
• $54,000 for a programming position in Research Information Services to support the UK Graduate School.
• $390,000 to improve lighting at the Guignol Theatre.