Campus News

UK Approves $2.7 Billion Budget; Increase Driven by Clinical Revenues

LEXINGTON, Ky. (June 14, 2011) -- The University of Kentucky Board of Trustees Tuesday approved an operating budget of nearly $2.7 billion for 2011-2012, a 7 percent increase over the previous year even as state support has stagnated in the wake of a deep national recession.

The increase in the budget is being driven primarily by the continued growth of UK’s health care enterprise.

”We have lived these 10 years in the shadow of the bitter reality that even as we set our sights significantly higher for ourselves and for Kentucky, economic conditions undercut the state’s ability to support our heightened ambition,” UK President Lee. T. Todd Jr. said in his budget message to the Board of Trustees. “We could have reacted to this previously unfathomable change in our financial environment by seeking the safe path. ... What has made this chapter in our university’s history so remarkable is that even as the state we serve has been unable to increase its support to us, we nevertheless increased exponentially the service we have provided to it.

"We simply found other ways — through efficiencies in operations and an increasing diversity of financial resources — to seek Kentucky’s future.”

Most significantly, as UK’s budget has grown in recent years, even in the midst of a deep national recession, state support as a percentage of the budget has continued to decline. In this year’s proposed budget, state support is 11.3 percent, down from 25.6 percent in 2001, the first year of Todd's presidency.

Todd announced in September 2010 that he would step down in June 2011 after 10 years as president. Dr. Eli Capilouto, formerly the provost at the University of Alabama at Birmingham, becomes UK’s 12th president on July 1.

Details of the proposed UK budget for 2011-2012 include: 


  • Even with General Fund revenues increasing a little more than $25 million or 4 percent, costs for the university have gone up nearly $33 million, leaving a nearly $7.8 million budget gap. Cost increases include a proposed 3 percent merit raise pool for non-hospital faculty and staff. Faculty and staff on the academic campus have gone without raises for three years. The hospital budget includes a 2 percent merit raise pool for its employees. 
  • Other increased costs include additional support for academic support services, student financial aid and utilities and maintenance, among other items. 
  • UK is putting an additional $5 million into financial aid to try to keep pace with tuition increases. In addition, the university is adding $1.4 million to fully implement the university’s substantial reform of its entire general education curriculum. The university also continues to invest in other efforts to improve retention rates – a series of initiatives known as the “War on Attrition.” This past year, UK had a record retention rate of 81.8 percent. Including this $1.4 million allocation, more than $5 million has been used to implement reform of the general education curriculum over the last two years primarily by shrinking class sizes through support for approximately 65 faculty and teaching assistant positions. 
  • The hospital operations’ General Funds are expected to exceed $1 billion in 2011-2012, the first time that number has exceeded $1 billion; and it now represents nearly 40 percent of the overall university budget. 
  • Student tuition and fees represent about 12 percent of the budget, $314.3 million. The Board of Trustees at its May meeting approved 6 percent tuition increases for the coming year, which were approved by the state Council on Postsecondary Education  on Friday, June 10. 
  • The university’s moderate tuition increase of 6 percent is not enough to offset cost increases. A budget gap of nearly $8 million is being closed through reallocations and reductions throughout the campus.
  • State support, which is down $3 million from the current year and down nearly $32 million (over 10 percent) from 2007, represents about 11 percent of the budget at $300 million.

Even with the significant economic challenges — represented in previous years and again in this proposed budget — Todd cited several gains toward UK’s state-mandated goal of becoming a Top 20 public research institution as evidence that the university has been a prudent and effective steward of its resources.

In particular, Todd told trustees, undergraduate enrollment during his tenure has increased 11.2 percent; research expenditures increased from $212 million to $360 million and service to the state significantly expanded through programs such as the 47 Commonwealth Collaboratives, specific projects designed to tackle challenges in areas such as health care, the environment and economic development.

”Let it be said of us that in an hour when state support was stagnant ... we again answered the clarion call of mission and mandate,” Todd said. “Along our shared journey, we also renewed our collective belief in what is possible, lifting our sights beyond the immediate clouds to the breaking of sunlight on the horizon.

"Our university continues to be a proud and worthy instrument for the ideals of the land-grant mission. Let it be said of us that in our decade together, we rediscovered the daring to dream.”