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Budget Challenge

Recently, university officials have conducted meetings with senior administrators and deans to discuss the details of our budget challenge. We want to share those details with you by focusing on the principles that drive our decisions, specifics about the challenges we face, and some of the strategies we will use to confront this problem and prepare for a brighter future.

"Many of these decisions will cause pain. They will require shared sacrifice. But they are necessary, if we are to meet our financial obligations, honor our principles of education, research, service and health care and lay a foundation for the future.

The fact that so many institutions across the country are making many of the same decisions makes them no less painful. We will be challenged and tried in ways most of us have never experienced.

We will get through this. We will be innovative and resourceful. We will find new ways and create new approaches to meet daunting challenges. After all, as Kentucky’s university, we were created to serve this Commonwealth. Now, once again, we must show the world what Kentucky can do."

Read the full message from President Capilouto.

View a comprehensive presentation with budget updates.

For any questions, please email coronavirus@uky.edu.

Our Principles

Our principles have driven and will continue to drive will everything we do:

  • We will preserve the missions we’ve held for more than 150 years: education, research, service and health care.
  • We will ensure the health, safety and well-being of our campus community.
  • We will continue to focus on a return to safe and normal operations as soon as possible.
  • We will position UK to thrive when we emerge from this crisis.
  • We will communicate with the campus clearly and transparently.

Our Strategies Moving Forward

To confront the shortfall challenge, President Capilouto said the university – in conjunction with its Board of Trustees – will initially enact eight strategies that will help reduce costs for the coming year:

  • Continuing a hiring pause, announced several weeks ago, for the foreseeable future.
  • Enacting low-activity/no-pay policies in units where work has ceased or been reduced significantly – effectively a furlough plan where for a period of 90 days, UK will pay both the institution’s and employee’s share of health premiums.
  • Implementing in some units layoffs or reductions in force.
  • Reducing for one year the university’s retirement contributions to individual employees from 10 percent of the employee’s salary or wages to 5 percent. The UK board will consider this proposal at its May 5 meeting.
  • Not providing merit increases July 1st for the coming year. For the last seven years, UK has enacted merit increases for employees. As a result, UK is not going to increase employee health premiums or parking rates in 2021.
  • Delaying expansion of a planned family leave policy.
  • Delaying plans to make mandatory participation in UK’s retirement program for new employees hired after July 1, 2020, who are under the age of 30.
  • Moving forward with shared services for several key areas and exploring additional areas in the coming months. 

State Budget

Given the uncertainty surrounding the COVID-19 pandemic, the General Assembly approved a one-year state budget on Wednesday, April 1. The budget adopted held basic General Fund support for our work at nearly the same level as this current year – approximately $260 million.

Read more

Latest Campus Message

President Capilouto communicates with campus upcoming choices and challenges the University of Kentucky will face throughout the COVID-19 crisis.

Read more

More Information on the Budget

The University of Kentucky is facing a $70 million shortfall between anticipated revenues vs. expenditures required to advance its missions in its undesignated general funds for the 2021 fiscal year. What makes up that budget gap?

  • More than $40 million is the result of declines in institutional investment income and tuition revenues related to COVID-19.  Virtually all higher education institutions are being impacted by what’s happening in the financial markets, where returns on invested short-term funds are dramatically lower than last year. Moreover, because of an uncertain and fragile economy, families and students are facing incredible disruptions that make education, no matter how valued and vital, a challenge. The uncertainty about the economic recovery from COVID-19 makes it more difficult for students and their families to plan.
  • Nearly $30 million results from ongoing commitments and increased costs that are essential to what we do: scholarships and financial aid for students; strategic investments, such as student mental health, the Disability Resource Center, and college incentive funds; health premiums for our employees; and an essential commitment we made to raise starting wages to $12.50 an hour for workers.

What specific steps is UK taking to reduce that gap?

We have to make reductions in our operating budget. There’s no way around that. Every college, department and unit will face budget cuts. We will not, however, make cuts across the board. On average, across the institution, the cuts will be 10 percent. Below are listed some steps we are taking:

  • Colleges, departments and units will submit plans for making reductions over the next few weeks.
  • We will continue our hiring pause for the foreseeable future.
  • We will enact low-activity/no-pay policies in units where work has ceased or been reduced significantly, and the work can’t be done remotely. In effect, employees in those areas will be furloughed. The university, for a period of 90 days, will pay both the institution’s and employee’s share of health premiums.
  • There will be, in some units, layoffs or a reduction in force. Those reductions in force will be determined at the unit level utilizing our existing HR procedures and subject to review by deans or senior administrative officials.
  • We will, for one year, reduce the university’s retirement contributions to individual employees from 10 percent of the employee’s salary or wages to 5 percent. Our board will consider this proposal at its May meeting.
  • We will not be able to provide merit increases July 1st for the coming year.
  • We will delay expansion of our family leave policy.
  • We will delay our plans to make mandatory participation in our retirement program for new employees hired after July 1, 2020, who are under the age of 30.
  • To better leverage our resources, we will move forward with shared services via dual-reporting line relationships for several key areas and explore additional areas in the coming months. 

As an employee, how will the university’s budget for FY2020-21 impact me?

The university is making plans for how we move forward financially. Many of these decisions will require shared sacrifice. But they are necessary, if we are to meet our financial obligations, honor our principles of education, research, service and health care and lay a foundation for the future.

  • We will continue our hiring pause for the foreseeable future.
  • We will enact low-activity/no-pay policies in units where work has ceased or been reduced significantly, and the work can’t be done remotely.
  • There will be, in some units, layoffs or a reduction in force.
  • We will not be able to provide merit salary or wage increases July 1st for the coming year.  
  • We do not plan to increase the employee’s share of health premiums or employee parking rates for fiscal year 2020-21.
  • We will delay expansion of our family leave policy.
  • We will delay our plans to make mandatory participation in our retirement program for new employees hired after July 1, 2020, who are under the age of 30.
  • To better leverage our resources, we will move forward with shared services via dual-reporting line relationships for several key areas and explore additional areas in the coming months. 

How did the university come to these decisions?

Our principles have driven, and will continue to drive, everything we do:

  • We will preserve the missions we’ve held for more than 150 years: education, research, service and health care.
  • We will ensure the health, safety and well-being of our campus community.
  • We will continue to focus on a return to safe and normal operations as soon as possible.
  • We will position UK to thrive when we emerge from this crisis.
  • We will communicate with the campus clearly and transparently.

How will the 2020 legislative session and the state budget impact the university’s FY2020-21 budget?

Given the uncertainty surrounding the COVID-19 pandemic, the General Assembly approved a one-year state budget on Wednesday, April 1. The budget adopted held basic General Fund support for our work at nearly the same level as this current year – approximately $260 million. You can read President Capilouto’s full message to campus on April 17 here. For more information on the state budget, visit this website.

UK is receiving nearly $18 million from the federal government for dealing with COVID, the CARES Act. Can those dollars be used to help with the budget shortfall?

No. There are prescribed uses for those dollars, and we are working through that process now.  Under the guidelines adopted for distribution, approximately $8.9 million must be disbursed for student financial aid needs. The rest of those dollars — approximately $9 million — is to be targeted for COVID-19 related costs.

How does the Payroll Protection Program apply to UK’s budget?

The University has a legal obligation to continue to pay employees to the greatest extent practicable, according to the Payroll Protection Program, or PPP, which is a provision of the federal CARES Act. While the University is committed to retaining and paying its employees, there are circumstances where it is not practicable to do so, even with the aid the federal government has made available to universities and hospitals like ours.

Where can I find more information on retirement and other employee-related topics?

Please visit this page for all employee information as it relates to COVID-19 and the budget.