Fiction: A reduction in state appropriations can be easily absorbed in UK’s $3.4 billion budget.
Fact: The $280 million appropriated to the University of Kentucky from the state is the first dollar into the University’s operating and capital budget – it supports all other revenue-generating endeavors and is key to UK’s central missions of teaching, research and service.
Some $2.7 billion of the University’s budget is restricted, which means there are a strictly prescribed set of expenditures for which it can be utilized. Additionally, many of the units within this category – UK HealthCare and Athletics to name two – sustain their activity solely with the revenue they generate.
The remaining $750 million represents the funds we use to teach, discover, create, and operate the University. The state’s contribution is an essential driver of this fund pool.
Fiction: Kentucky has reduced UK’s appropriation by $55 million since 2008 while tuition revenue has increased by $221 million, so they can absorb another reduction.
Fact: Between fiscal year 2008 and 2016, state appropriations to UK on a recurring basis have been cut by $55 million. In the same time period, there's been a $221 million increase in revenue from tuition and fees. The increase in tuition revenue is driven by changes in rates, growing enrollment, higher retention and residency mix.
For example, over that same period, UK has added more than 4,000 students, the majority of whom are non-resident students who pay a higher tuition rate. UK has also increased its retention rate, leading to more degrees conferred each year.
That money was used to offset the state reduction and enhance the academic enterprise. It allowed us to make investments in the academic enterprise, campus safety, student support services, advising and instruction.
In other words, UK is now more attractive to Kentucky students and those beyond our borders, and is helping those students succeed and graduate at higher rates.
Fiction: The University is using its tuition revenue to build new buildings instead of investing in students.
Fact: First, UK utilized the additional revenue to offset the $55 million in recurring cuts in its state appropriations. Second, UK increased student financial aid and scholarships that do not have to be repaid by $56 million. As a result, more than half of UK resident students graduate without debt. Third, UK invested $110 million in the academic enterprise, campus safety, student support services, advising and instruction.
The University’s investment in campus is primarily (90%) driven by support from sources other than the Commonwealth of Kentucky. The largest source of funds driving the campus transformation is equity from private partners, philanthropy and support from UK Athletics.
Fiction: The economy is still unstable and states must invest elsewhere.
Fact: Of the 20 states in the south, only four, including Kentucky, are decreasing their state funding for higher education. The remaining 16 states have increased their funding over the last two years.
Fiction: UK is building new residence halls, academic facilities and research buildings. In light of all this growth, cuts would have a minimal impact on the institution.
Fact: To be sure, UK is undergoing one of the most robust campus transformations in higher education. Nearly $2 billion in projects have been initiated or approved since July 2011. However, in the midst of declining state support, the University had to act creatively, in partnership with the private-sector, to drive this transformation and maintain its commitment to access and affordability.
Only 10 percent of that total capital investment is supported by state and federal dollars. The remaining 90 percent is possible because of private partners, donors, UK Athletics and strong fiscal stewardship. The investment in our residence halls bolsters our recruitment effort, which is succeeding as the University is experiencing its highest number of annual applications.
Fiction: UK’s robust athletics enterprise can help offset budget cuts.
Fact: UK Athletics’ partnership with UK’s academic enterprise reflects a steadfast commitment to putting students first. UK Athletics is one of a handful of programs in the country that is self-sustaining. That means their own revenues pay for all of their own expenses, including overhead, athletic scholarships, coaches’ salaries, facilities, among others. In 2013, Athletics contributed $65 million to the construction of the Academic Science Building in the heart of UK’s campus, which will serve more than 35,000 students annually. Athletics also provides funding of $1.7 million in academic scholarships annually.
UK Athletics’ status as a self-sustaining unit ensures the University does not need to subsidize its activity with tuition revenue or state appropriations.
Fiction: UK should not be one of the top priorities for the state.
Fact: The University of Kentucky drives the state’s economic engine. The state gets a return of 12 times on its investment of $280 million. UK employees contribute more than $90 million in state and local taxes and that number continues to grow each year through the high-wage jobs the institution creates and brings to Kentucky. UK’s research enterprise alone has a more than $580 million annual impact on Kentucky’s economy, affecting more than 8,000 jobs that generate $21 million in state and local taxes.
Since 2009, the University has seen substantial growth in areas that parallels workforce trends—a 38 percent growth in the number of graduates in engineering, 15 percent in medicine, 11 percent in health sciences, 10 percent in nursing, 18 percent in business and 22 percent in other STEM-related fields.
The University of Kentucky is positioned to be a partner for progress in addressing the state’s most pressing issues: health disparities and access to care; public assistance spending; and workforce development.