UK Trustees Approve Budget for 2010-11 Academic Year

LEXINGTON, Ky. (June 8, 2010) – University of Kentucky President Lee T. Todd Jr. said today that despite budget cuts that have resulted from the economic climate, the university budget for 2010-11 illustrates the university's focus on moving forward with its mission of education, research, and service.

The university's balanced budget that totals $2.5 billion was approved by the UK Board of Trustees today. The budget reflects a 1.4 percent reduction in state support to be absorbed during the 2010-2011 fiscal year. Since December 2007, state support for UK is down $28.6 million.

The 1.4 percent reduction comes at a time certain operational costs continue to increase, including utilities, employee benefits, and student financial aid. The previously approved 6 percent increase in tuition does not account for the full amount of these increasing costs. The result is a net $7 million shortfall for FY 2010-11.

In anticipation of a reduction, deans and administrators have been aligning their budgets accordingly for several months, even though the exact amount of the reduction in state support was unknown.  The shortfall has been covered by reducing budgets for operating expenses such as supplies and travel and eliminating vacant positions.

As previously announced in March, the budget for 2010-11 does not include base pay increases for faculty or staff.  However, UK will provide one-time payments of up to $1,000 to eligible faculty and staff earning less than $70,000.  The one-time payment will be phased out for faculty and staff earning up to but less than $75,000, with a $200 minimum.  In addition, UK is covering the full cost of increases in health care benefits for most faculty and staff. Given the competitive nature of the health care industry, senior leadership continues to analyze whether UK HealthCare has the capacity and justification for a base salary increase instead of a one-time payment for its employees.

The university's 2010-11 undesignated general fund budget includes an increase in funding needs of $15.9 million, including fixed cost expenses of $7.3 million in benefits for employees and retirees, as well as increases in utility costs. Scholarship budgets will increase $2.9 million to maintain current student financial aid commitments.

Additionally, as announced last year, the University of Kentucky faculty has adopted a new general education curriculum. The revised curriculum is the most significant reform in undergraduate education at UK in a generation and is being fully implemented, which will require an investment of $2.7 million during the 2010-11 academic year.

"This budget is far from perfect,” said President Todd. “But I think it is a fair budget – one that acknowledges the economic climate in which we find ourselves, while allowing the university to continue to leverage the momentum our students, faculty and staff have established during these difficult financial times.
 

"Our investment in the reform of our general education curriculum will strengthen the quality of undergraduate education. It will allow us to continue to provide Kentucky children with the best education in the state – a world-ready education that meets the demands and challenges of a new century. This budget also includes a modest 'Fighting Fund' that can be used by the provost to retain our best and brightest faculty who have been targeted for recruitment by other institutions. 

"We had to do something for our faculty and staff, which is why we proposed the one-time payments for most of our employees. I wish we could do more for those in our campus community who do so much for this university and our Commonwealth each and every day. Additionally, we will cover the cost of the increase in health care premiums for most employees to ensure that our employees’ paychecks will not lose value."

The 2010-11 year is also the third consecutive year in which tuition revenue accounts for more of the general fund budget than comes from state funds. As UK's overall budget has more than doubled from $1.2 billion to $2.5 billion since 2000-01, state support has decreased from 25.6 percent of the university's budget to 12.5 percent. The increases in UK's overall budget include revenue growth in several areas: research grants and contracts, development efforts, and UK HealthCare. UK HealthCare's budget for 2010-11 will be $927.8 million.

Todd emphasized that the ambition for UK to reach its full potential remains strong, regardless of the current budgetary landscape.

"Despite the economic conditions, we will not waver in our mission to serve as the catalyst for a stronger Commonwealth," said Todd. "This institution knows full well that becoming a Top 20 public research institution is critical to the future of citizens all across the Commonwealth. And with that thought in mind, we move forward as committed as ever before."