University of Kentucky President Eli Capilouto will recommend bringing hourly workers to a starting rate of $10 an hour, a move that would affect at least 600 workers, he announced this week.
University officials said it would cost $1.3 million to make the change, which would not apply to student workers.
In addition, Capilouto will propose a 3.5 percent merit salary increase pool for the university's roughly 12,000 faculty and staff, up from 2 percent in each of the past two years.
The board of trustees will vote on the 2015-16 budget at its June meeting.
UK HealthCare will announce its salary changes at a later time, although the minimum wage increase does affect hourly workers in the university's health care division.
Under the proposed budget, health care costs and parking rates would increase by $1 a month.
State funding would stay fixed at $280 million, which leaves a $40 million hole in UK's potential spending plan for the next fiscal year, Capilouto said.
A proposed 3 percent tuition increase for in-state students and a 6 percent hike for out-of-state students would help close the gap. That money also would help increase financial aid and scholarships by $15 million. The total scholarship pool is more than $100 million.
Next year's total budget is expected to top $3 billion.
"I deeply appreciate the work you do, and the commitment you have, for this special place," Capilouto said in a campuswide email message. "This budget, which our board will consider in June, is yet another example of the tremendous work that we have done together in recent years as we have focused on transforming our campus so that we can better serve our students, the commonwealth and the broader world."
Staff trustee Sheila Brothers called the increased minimum wage "transformative."
"I am thrilled the university sees this as an important initiative," she said. "This can change lives. People can change neighborhoods, change cars and add padding to their retirement."