Next week, the University of Kentucky Board of Trustees is expected to approve UK's largest budget ever, a $3.4 billion document that reflects a burgeoning health care enterprise paired with continued reliance on tuition paid by out-of-state students.
With its labyrinth of new buildings for patients, UK HealthCare has grown to a $1.3 billion enterprise, an increase of more than $200 million over last year. The health care division now accounts for 41 percent of the university's budget.
In contrast, the state provided its flagship university a mere 8 percent of UK's total budget, the lowest percentage ever. State funding to UK has been cut $55 million since 2008 and now stands at $280 million a year.
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Those cuts have helped fuel an 85 percent increase in tuition at UK during the past decade.
The latest budget includes a 3 percent tuition increase for in-state students, one of the smallest jumps in recent years. However, out-of-state students, who pay roughly twice as much as in-state students, will see a 6 percent increase.
Still, that does not appear to diminish their desire to come or UK's desire to admit them; this fall, 37 percent of the freshman class will come from outside Kentucky. The upcoming freshman class will also be the biggest ever, with about 5,250 students.
The total student body will be more than 30,000, with about 27 percent of those students from out of state.
The UK Board of Trustees already has approved tuition rates but will vote on the full budget at its June 19 meeting. Trustees have been given a series of budget briefings this week.
The budget also includes a proposed 3.5 percent merit pool raise for faculty and staff. President Eli Capilouto recently proposed bringing all starting salaries to $10 an hour. Those initiatives will cost about $16 million.
For students, the budget includes a record $103 million for institutional scholarships and financial aid, almost double what UK gave in 2011. Although most of that money goes to merit aid grants, which are given regardless of financial need, officials said 35 percent of this year's in-state freshman class is eligible for federal Pell grants, which are given to low-income students. Seventeen percent of in-state freshmen will be the first members of their families to go to college.
"Aid is increasing while the rate (of growth) of tuition is going down," Eric Monday, executive vice president of finance and administration, told a small group of trustees Monday. "That's correlated in a very positive way as we focus in on affordability and access for our students."
UK's cost of attendance — an estimate of tuition, fees, housing, books and general living expenses — for the upcoming school year will be $26,700 for in-state students and about $40,000 for out-of-state students .
The budget also reflects UK's enormous portfolio of new construction projects, which will cost $76 million in debt payments next year. Those include continued expansion of UK's medical center, a new science building, and expansions and renovations of the law and business schools. Officials said UK's debt payments make up 2.86 percent of its total budget, a drop from 3.25 percent the year before.
In all, UK has $1.7 billion in ongoing construction projects, only some of which are paid for by UK. About a quarter of those projects are new residence halls, privately funded with developer EdR, formerly known as Education Realty Trust. Aramark, which runs UK's dining services, is financing a new dining/classroom building near William T. Young Library.
Trustees chairman Keith Gannon said he thought the university had been creative in dealing with the financial adversity of the past few years, and this year's budget captured the board's priorities well.
"We're investing in our students, we're working to retain our faculty and staff, we're continuing to invest in housing, and I think those are all positives," he said.
Gannon, who grew up in rural Kentucky, said he was keeping an eye on the delicate balance between UK's dual roles as the state's research flagship and as a land grant university, originally created to help the state's citizens.
"We can never forget our land grant mission," he said. "I think we're continuing to improve the product we provide, and that helps our students and their chances of success. But we must remain attentive to serving all of our students, even those who come from lower-income backgrounds."
Although Capilouto has found many ways to make up for state cutbacks, he said neither he nor the rest of the state's university presidents have given up on persuading state lawmakers to re invest in higher education.
"We have, for example, been discussing with our sister institutions in the state how a commitment to performance funding, based around the idea of student success and making progress toward our institutional missions, could further demonstrate the importance of state investment and how that investment directly translates into tangible benefits for our commonwealth," he said. "At UK, the budget we are asking board members to adopt places a clear focus on student success at all levels. We want to make the case to policy makers that they can leverage even more success by investing in UK."