State and Student Support | University Budget Office

State Appropriations

FY 2023-24 is the seventh year the Kentucky General Assembly has used performance funding models to allocate state appropriations to the public universities and the Kentucky Community and Technical College System (KCTCS). There is a model for the eight public universities and a separate model for KCTCS’ colleges. The performance funding model for the public universities is based on 11 metrics primarily focused on student success such as bachelor’s degrees produced, earned student credit hours, and undergraduate student progression. The competitive-based model rewards universities with rates of growth that exceed the sector average.

UK has achieved the highest number of growth rates above the sector average for every year the model has been in use. In fact, UK is responsible for the majority, and in some instances all, of the growth in the number of bachelor’s degrees awarded by the system.

SOURCES AND ALLOCATIONS

Since its inception, the Performance Funding Model has been used to allocate the Postsecondary Education Performance Pool to the public universities. Funding of the Postsecondary Education Performance Pool has varied over the years. From FY 2017-18 to FY 2020-21, approximately 11 percent of the public universities’ base state appropriations, or $103.4 million, was reallocated to the Postsecondary Education Performance Pool. For these first four years, the General Assembly did not appropriate any additional funds to the performance funding pool. For FY 2021-22, the General Assembly appropriated $13.5 million of new state funds to the performance funding pool for the universities and did not require any institutional matching contributions. Effective with these new funds, the annual allocations from the pool to the universities are non-recurring.

For FY 2022-23, the General Assembly placed $75.8 million of state funds in the performance funding pool for the universities, including the $13.5 million from the prior year. Given that the General Assembly did not add any new funding to the performance funding pool and that the annual allocations are non-recurring, once again there is $75.8 million available for allocation to the universities for FY 2023-24.

In April 2023, CPE ran the performance funding model for FY 2023-24 and UK achieved growth rates above the sector average on nine of the 11 metrics. As a result, UK’s share of the $75.8 million performance funding pool increased by $2.4 million to $33.3 million compared to the prior year.

Student Affordability

For AY 2023-24, senior leadership recommends 2.75 percent and 3.50 percent rate increases for most resident and nonresident students, correspondingly. The recommended rates comply with CPE’s tuition and mandatory fees ceilings and policy. Over the last 10 years, the four-year average annual increase for resident undergraduate students will have dropped from 5.3 percent to 1.7 percent.

In addition to restraining tuition rate increases, colleges and universities use student aid to combat affordability challenges for students and families. In fall 2017, the University of Kentucky began a deliberate financial aid strategy to make college more affordable by reducing students’ unmet financial need. Rigorous analysis over the last several years demonstrates that unmet financial need – when it exceeds more than $5,000 – is one of the leading causes of students not completing their degree programs. The UK LEADS (Leveraging Economic Affordability for Developing Success) Program, which has drawn national attention, targets grants and scholarships to students who have unmet financial need of $5,000 or more. UK’s goal is to continue to redeploy institutional aid based on data-informed strategies and predictive modeling that identifies the students whose only barrier to success is financial.

For the fall 2022 semester, 91 percent of undergraduate, resident full-time students at UK received financial aid – grants or scholarships that did not have to be repaid. For these students, their average out-of-pocket cost for tuition and fees was $493, less than 8 percent of the sticker price. The predominant source of student financial aid came from institutional grants and scholarships. Other student financial aid sources included federal grants, such as Pell Grants, which are awarded to students from lower income households, and state financial aid, including Kentucky Educational Excellence Scholarships (KEES) awarded to Kentucky high school graduates.

UK’s student financial aid strategy is to lower unmet financial need to less than $5,000 to improve student success. For the fall 2022 semester, about 68 percent of full-time resident students filed a Free Application for Federal Student Aid (FAFSA) as dependent students. Based on the data reported, 25 percent of these students are from families with a median income of $24,644. On average, these students received enough grants or scholarships to cover the full cost of tuition and mandatory fees plus an additional $3,171 that could be applied to other costs.