Board to Consider 5 Percent Tuition Increase; Increases in Compensation, Financial Aid

LEXINGTON, Ky. (May 9, 2014) — The University of Kentucky Board of Trustees today approved a proposal to increase tuition and mandatory fees for resident students by 5 percent in Fall 2014.

The increase – the second lowest in more than 10 years – is a cornerstone of one of three guiding principles that UK President Eli Capilouto said will be the basis for the university’s budget that the board will consider in June:

·         Continuing consistent faculty and staff pay raises

·         Ensuring no across-the-board cuts and minimizing any impact on our academic core.

·         Proposing moderate tuition and fee increases to ensure affordability.

“We are part of an institution that places students first in everything that we do,” Capilouto said. “In this budget, we will propose specific strategies to keep college affordable, continue to increase the compensation to our faculty and staff, and maintain our commitment to a revitalization that makes this university a national model for a thriving, public research and residential campus.”

Elements of the tuition and mandatory fees, housing and dining proposal being considered by the Board of Trustees Friday include:

Tuition, Mandatory Fees and Housing

·         Last week, the Council on Postsecondary Education authorized the state’s public universities to increase tuition and mandatory fees by no more than 8 percent over the next two years.

·         UK’s rates for Fall 2014 will reflect a 5 percent tuition increase for resident students and 8 percent for non-resident students. First-year in-state tuition and mandatory fees would go from $4,983 per semester to $5,232 this coming fall, an increase of $249.

·         An increase in financial aid provided by UK of $11 million is planned for the preliminary budget. In 2014-2015, UK would provide $86 million in scholarships and financial aid that do not have to be repaid, up from $75 million this current academic year.

·         In 2014, the four-year average for tuition increases will be 5 percent, if the board adopts this year’s rates. In 2006, the four-year average for increases was 13.1 percent. Since 2008, UK’s annual state appropriations have been cut by $55 million – from $335 million to $280 million. That includes a 1.5 percent – or $4.3 million annual reduction – in the university’s state appropriation for the budget year that will begin in July. So, the four-year average tuition and mandatory fee increases have declined even though state appropriations have also been reduced.

·         In Fall 2013, 85.5 percent of resident undergraduates received financial aid or scholarships that did not have to be repaid. The average out-of-pocket expense for tuition and mandatory fees for those students was $1,079 for the semester – about $200 less than the previous year.

·         The mandatory tuition and fees will not have to be increased beyond the CPE set ceiling for Fall 2014 even though the university will begin design and construction of a $165 million renovation and expansion of its Student Center. Capilouto said private fundraising, Student Center reserves and careful financial management are helping the institution hold down fee increases, which traditionally pay for facilities such as a Student Center.

·         Housing rates for new residence halls built since 2006 will increase by 3 percent. Rates for the traditional double room residence halls will not increase. And rates for single occupancy rooms in these older residence halls will be reduced by 19 percent. UK’s new residence halls are “subscribed” at 180 percent, while its older residence halls are only half-full in terms of requests at this point. UK is in the process of replacing the vast majority of its residence halls through a public-private partnership with EdR.

·         Dining rates – depending upon the meal plan – would increase between 3 percent and 4 percent. One meal plan will have no increases.

“While no numbers can diminish the fact that families are bearing more of the cost burden for higher education in the wake of declining state support,” Capilouto said, “we can be proud that this university is keeping the needs of Kentuckians first.”

UK employees and the budget

Capilouto also announced that for the coming year, he will propose a budget that includes a 2 percent merit pool for salary and wage increases for faculty and staff on top of the 5 percent pool we created last year. The FY 2014-15 budget will be presented to the Board of Trustees for consideration on June 10.

“We must continue investing in our most valuable resource – our people,” he said.

With state funding cuts, the plan to raise compensation, and increases in fixed costs such as utilities and financial aid, UK will confront nearly $40 million in funding needs beyond what was in our budget this current year. However, two years ago, Capilouto said “we made often-painful decisions to cut costs, which included the elimination of several hundred positions along with other management strategies identified to minimize impact on the academic core. Because we made tough decisions then, we are in a better position now to address continued financial challenges.”

As a result, Capilouto said the upcoming budget proposal will not include across-the-board cuts to handle the state reductions and increased funding needs. Specifically, he said the budget proposal will include an internal reallocation of $7 million made possible through efficiencies, the creation of new revenues, and realignment of the budget. In addition, funds previously earmarked for capital renewal will fund the remaining $3 million gap.

“That said, we cannot cut our way to a brighter future. It may be seductive to think so, but it is illusory to believe it,” Capilouto said. “In the last three years alone, with our board's leadership, we have started -- or been authorized to begin -- nearly $1 billion in construction of new facilities and renovation of existing buildings that are transforming our campus. The state's investment in all of that is $35 million. UK has generated the rest through public-private-partnerships, a unique collaboration with our athletics department to fund academic space, fundraising and greater efficiencies in our operations and administration.

The university is, without question, doing its part. We will continue to urge the state to re-invest in this institution, which is so vital to Kentucky's future.”