Glossary of Terms

This page provides a glossary of useful terms that will be helpful in understanding the new financial model.

  • Allocated expenses: Expenses allocated to the Colleges and other revenue generating units (RGUs) in order to cover the cost of the public good or service provided by support and resource units.
  • Allocation metric (cost driver): Metric used as a proxy to allocate expenses to Colleges and other revenue generating units (RGUs). Example allocation metrics include student credit hours, FTEs, and square footage.
  • Auxiliary units: Units considered generally self-supporting (revenues equal expenses) and include Athletics, UK Healthcare, Dining, Housing, Student Center, University Health Services, and Parking. These units will continue to pay a service assessment to the University for their usage of central services.
  • Bad debt expense: Past due student accounts where the university writes off the expense after all efforts for collection have been exhausted.
  • College-based financial aid: Financial aid awarded to students that is managed by a College and supported out of that College’s resources.
  • Core state funding appropriations: Funds allocated by the Kentucky Legislature to the University net of state appropriations assigned to mandated programs (e.g., mandated state appropriations).
  • Cost allocation: Process by which net expenditures associated with Support and Resource Units are allocated to Colleges and other RGUs based on agreed upon allocation metrics (cost drivers).
  • Direct expenses: Expenses that fall directly under the control of a College or Unit.  Includes expenditures for salaries, benefits, and other general operating expenses.
  • Enrollment: College in which the student is enrolled. For example, a student selecting a major in Business would be enrolled in the College of Business & Economics.
  • F & A: F&A costs are real expenses incurred by the university in support of sponsored projects, but which by federal regulation cannot be charged directly to a specific grant, contract, or other sponsored agreement. All grants, contracts and other sponsored agreements accepted by UKRF will be charged the maximum allowable federally-negotiated F&A cost rate. The currently applicable rates are listed in the table of “Current F&A Rates” maintained by the Office of Sponsored Projects Administration.
  • FTE (Full-Time Equivalent): UK counts FTEs (for faculty, staff, and students) as: 1 full-time position = 1 FTE and 1 part-time position = 1/3 FTE
  • Hold harmless principle: Having a "hold harmless" principle means that in the first year that the new budget model is implemented, the model will not be used to adjust College's budgets. Operationally, it means that the University will hold back enough funds centrally in a Strategic Initiatives Fund (SIF) that it can "true up" Colleges to ensure a balanced budget in the hold harmless year.
  • Mandated State Appropriations: Funds allocated by the Kentucky Legislature to the University for the support of mandated programs, such as Cooperative Extension.
  • Revenue Generating Units (RGUs): Units that have substantial ability to influence revenue generation through credit hour production, funded research productivity, or other means. In the value-based model, the RGUs are the colleges (including Martin School and Patterson School) and centers & institutes that report to the VPR or Provost.  **Auxiliary units are treated separately from RGUs in the UK Value-based Model.
  • Earned SCHs of Instruction: Student credit hours as defined by the home college of the faculty member(s) providing the instruction for a course.
  • Strategic Investment Fund (SIF): Pool of financial resources under the control of the president and his senior leadership used to invest in University wide strategic priorities.
  • SIF assessment: Assessment that provides revenue to the Strategic Investment Fund (SIF); the assessment is calculated as a percentage of three specific revenue streams including tuition net of College-based financial aid, performance-based state appropriations, and fees.
  • SIF subsidy: Financial subsidy awarded out of the SIF fund to a College or other RGU.  Initially, a SIF subsidy will be intended to balance a College or other RGU’s recurring budget.  Over time, the amount of the SIF subsidy for each College and RGU will be impacted by performance against strategic priorities and metrics.
  • Sponsored research direct expenditures: Expenditures on a grant that are required to conduct the project for which the sponsor is directly billed.
  • State appropriations: Funds allocated by the Kentucky Legislature to the University.
  • Support and resource units: Units that have limited ability to influence revenue generation through credit hour production, enrollment, or other means. These units generally provide support services to revenue units. Leaders within these units are primarily held accountable for managing expenses and providing optimal service levels. Included in support and resource units are the budgets of academic support units, administrative support units, campus resources, facilities, and research administration.
  • University-based financial aid: Financial aid awarded to students and/or Colleges that is managed at the University level and supported as a common good through the formulaic allocation of costs to Colleges and other RGUs