The University of Kentucky's operating budget will hit two milestones in the upcoming fiscal year — its total will reach $3 billion for the first time and state support will slip below 10 percent for the first time.
UK's Board of Trustees approved the record-breaking budget Tuesday without discussion.
Most of UK's growth has been fueled by UK HealthCare, which reached revenue of $1.1 billion this year, up 17.6 percent from the year before. UK HealthCare now makes up almost 40 percent of UK's total budget.
Also fueling growth at UK is a 10 percent increase in student enrollment in the past decade; this year's freshman class is projected to be a record 4,800 students. About 34 percent of those students will come from out of state, paying higher tuition, another UK record.
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Total student enrollment is projected to be 29,385.
UK raised tuition 5 percent for next fall, partly in response to a 1.5 percent cut to higher education by the General Assembly. UK has lost $55 million in state support since 2008.
Higher tuition helped offset declining state support. Today, students pay about 61 percent of the cost of their education while the state pays about 39 percent, said Angie Martin, UK's Chief Budget Officer.
Tuition increases also helped UK pay for a 2 percent merit salary increase for faculty and staff, the second raise in two years.
"We are growing as an institution because the best and brightest students in the region, along with their families, see UK as the right investment for their futures," said President Eli Capilouto. But, he warned, "we still need the state as a partner in that journey if we are to honor our mission as the source of answers to the commonwealth's most intractable challenges."
However, UK officials are not waiting for new state funding, instead relying on deals with private companies to fund the biggest initiative on campus right now: new housing and dining facilities.
Martin said that the university's costs to provide housing are starting to go down as new dorms are moved under the management of Education Realty Trust, which is building numerous residence halls on campus. On Tuesday, trustees paved the way to outsource dining services to Aramark, which will build new dining facilities and give UK a portion of its commissions.
The university also is undertaking about $1.1 billion in new construction on 27 different projects, including an expanded Commonwealth Stadium, a renovated Gatton School of Business and Economics and a new science building. Although some trustees have expressed nervousness about the size of UK's debt load, Martin said the school uses 3.2 percent of its budget to pay down debt. The state generally limits debt service to 6 percent of the budget.
UK's growth is not without struggle. The university has had a goal of 17 students for each professor since 2009, but that ratio is now 18.6 to 1.