Tuition and salaries will increase at the University of Kentucky next year.
Next week, the UK Board of Trustees is expected to pass a 5 percent tuition increase for in-state students and a 2 percent raise for employees. Tuition for out-of-state students will increase 8.5 percent.
Officials briefed members of the Board of Trustees this week about the $3.5 billion budget for the 2016-2017 fiscal year. The board will vote on the budget next week.
Including a 3 percent increase in housing costs, the total annual cost of a UK education for Kentucky students will be about $25,904.
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President Eli Capilouto said that despite losing $12.6 million in state funding, UK will stick to its priorities of giving merit raises to employees and increasing institutional financial aid by 12.5 percent, to $117 million.
“An institutional budget signals for everyone our priorities,” Capilouto said. “You fund what you care about. It invests in student success and academic excellence, research and care that tackles our commonwealth’s most pressing challenges and creating and sustaining a community where everyone is welcome regardless of their race, gender, ethnicity, religion, perspective, or identity. And it invests in our people, who do the remarkable work essential to the success of our students and our commonwealth.”
Almost half of UK’s budget comes from the fast-growing UK HealthCare, which now has annual revenue of about $1.5 billion. After a decade of cuts from Frankfort, state funding now makes up just 7 percent of the university’s budget.
After tabulating the cost of state budget cuts, increased fixed expenses and targeted investments, UK officials said the school faced a $48.5 million deficit next year. Those costs included an additional $7.9 million for certain colleges and departments; $7.8 million for increases in utilities and health insurance; $7.6 million for the merit raise of 2 percent, the fourth salary increase in as many years; $12.6 million in state funding cuts and $12.6 million for financial aid increases.
To eliminate that deficit, officials proposed a variety of changes, including tuition and fee increases of $24.8 million.
The school also plans to generate an additional $10.8 million in new tuition revenue by starting or growing targeted academic programs, increasing the freshman class size and improving student retention by 1 percent. They also plan to generate $6.9 million from energy conservation programs and new campus sponsorships. Another $6 million comes from cuts to the College of Medicine, the agricultural extension healthcare program and an administrative reorganization that will eliminate 75 staff jobs.
Officials said the freshman class will set a new record of 5,200 students, about 38 percent of whom will be from out-of-state and pay much higher tuition rates.
UK officials are sensitive to public backlash from tuition increases, and pointed out that UK is still a good deal compared to the flagship universities in Illinois, Virginia, Tennessee and Missouri. Less expensive than UK are flagship universities in Indiana, Ohio, Maryland and West Virginia.
They also referenced a study of the freshman class of 2009, which found that nearly half graduated with no debt. Of those with debt, the average amount was $30,143. The U.S. average was $29,000, according to the Project on Student Debt.
Incoming faculty trustee Lee Blonder said she was pleased to see raises despite financial difficulties.
“I think the administration is making an effort to recognize hard-working faculty and staff in the face of substantial state budget cuts,” she said. “It’s a very tough situation all the way around, but we need to retain and reward the workforce in order to fulfill our mission.”
Student Government Association President Austin Mullen said tuition increases are unfortunate but necessary.
“Increases in tuition allow for the continuation of progress within our university, from hiring and retaining key faculty to increasing funding for need-based scholarships,” he said. “It is an incredible time to be a student at the University of Kentucky due to improvements in infrastructure and a strategic plan that sets goals to improve the quality of a student’s education. ... While a 5 percent tuition increase is in no way ideal, I believe the return on investment for an education at this university far surpasses the price a student pays to attend UK.”
Earlier this year, Gov. Matt Bevin proposed 9 percent budget cuts for state universities, a move that was described as “draconian” by Capilouto. The final state budget whittled the cuts down to 4.5 percent.
Bevin has also ordered a current year cut of 2 percent, or about $5 million for UK, but that move is hung up in a court case brought by Attorney General Andy Beshear.
More recently, UK officials have not referenced state budget cuts, saying the 75 staff job losses were part of a needed reorganization.
“There’s not much dividend to complaining or whining,” Capilouto said. “We just want to get on with our work.”