KY budget sent to Beshear cuts millions from higher ed funding over next 2 years
Most of the Kentucky’s public universities will see funding cuts over the next two fiscal years under the state budget approved Wednesday by lawmakers.
The budget outlined in House Bill 500, the executive branch budget bill, includes a 1.9% cut to the general fund in fiscal year 2026-27 for the state’s universities and Kentucky Community and Technical College System and 3.7% cut in 2027-28. Kentucky State University, Morehead State University and Murray State University are exempt from the university general fund cuts.
While universities do not rely entirely on state funding for their budgets — other revenue comes from tuition and fees, and federal funding — these cuts would result in millions lost for university budgets across the state.
The University of Kentucky, the state’s largest university, would lose $6 million in the coming fiscal year and $11 million in the following fiscal year, the university said.
“Budgets as large and complex as that of the Commonwealth are always a product of compromise among so many competing and important state needs,” UK President Eli Capilouto said in a statement. “Finite resources mean tough decisions. This one is no different: numbers shifted and changed from the Governor’s proposed budget to those of the House and Senate and then, finally, a conference committee composed of leaders from both chambers.”
The bill now goes to Gov. Andy Beshear, who could pass or veto the budget.
There was little discussion on the proposed cuts in the Senate on Wednesday, and legislators did not explain why Morehead, Murray and KSU are not subject to them. Universities across the state have approached the budgeting process, particularly in the current fiscal year, with a dose of uncertainty, as higher education policies have been shifting at the state and federal level.
University of Louisville President Gerry Bradley said in a statement that while the university is grateful for the funding to build a new STEM academic building, the cuts to the general fund will present “a substantial challenge to our core operations.”
The university will lose $2.59 million in 2026-27 and $5.04 million the following year. This “effectively reverses the growth in state operating support we have fought to receive over the past three bienniums,” Bradley said.
“An operating reduction of this magnitude directly hampers our ability to advance the University of Louisville’s mission to educate and serve the public, advance knowledge and improve the quality of life and health across Kentucky’s communities,” Bradley said.
The state budget also includes $115 million in performance funding for each year of the budget.
Performance-based funding is a complex formula that has been in place since 2016, with changes made in 2024, which gives state money to public universities and the community college system based on their performance in certain metrics. It looks at 11 metrics, including the number and types of degrees awarded each year.
It also looks at the number of STEM+H (science, technology, engineering, math and health) degrees earned, as well as the number of degrees earned by minority and low-income students, according to the Council on Postsecondary Education, Kentucky’s body that oversees higher education.
While Morehead is exempt from the general fund cuts, Sen. Stephen West, R-Paris, spoke against Kentucky’s performance funding model Wednesday. Morehead, which is located in West’s district, has a smaller budget and receives a smaller slice of the overall performance funding allocations.
The funding model generally favors state institutions, like UK and U of L, with larger enrollments, more graduates and physically larger campuses.
“I believe we’ve come to a point where we can see that the performance-based funding formula is not working for the comprehensive (universities),” West said.
Speaking specifically to the square footage component of the funding model — in which 30% of resources are distributed based on “vital campus operations,” including a calculation based on the university’s square footage — West said Morehead has not been adequately funded as new buildings have been constructed and older ones torn down.
“By doing that, they have been punished in the formula,” West said, “and so the formula goes on as we march down this road, and if we do not add money to the operating base of Murray and Morehead, we are, in effect, starving them out of existence.”
West also pointed to the large difference in the budgets of Morehead ($139 million) and UK ($8 billion), saying that makes it difficult for Morehead to compete on the same playing field.
“I find it troublesome that there’s no increase in operating funds for Morehead State University and many other comprehensives,” West said.
Changes at KSU
Also given final passage and sent to the governor for approval was Senate Bill 185, which remakes Kentucky State University into a polytechnic institution with a focus on training in trades that align with the state’s workforce needs.
KSU would offer four-year degrees with an emphasis on career training, and hand financial oversight to the CPE. The bill originated as lawmakers considered closing the university, which has been plagued by budget shortfalls and accreditation concerns in recent years, bill sponsor Sen. Christian McDaniel, R-Ryland Heights, said.
A group of alumni expressed support and appreciation for the bill Wednesday, urging lawmakers to pass it.
As part of becoming a polytechnic university, KSU would offer no more than 10 areas of study for in-person students over the next five years, along with online programs, its College of Education and other degree programs deemed necessary by CPE. The school would also have a target enrollment of at least 1,000, and retain only the faculty needed to support that enrollment.
Financial oversight would again go to CPE. All transactions greater than $20,000 would need to be approved by that council. The university was previously under CPE financial oversight from 2021 to 2025.
KSU would remain a landgrant university — a federal designation for schools with education related to agriculture, science, engineering and military science — and a historically Black university.