3 -



(CPE). Most of our benchmarks are already in the Top 20, and although we are not, we
compare favorably.

       Per capita income, being rather low in Kentucky, is sometimes used to justify our
ranking below some other institutions. But we should not allow ourselves to say we can't
do the things that other states do because of our lower per capita income. Higher
education is really the secret to raising per capita income. Kiplinger's rates us as a good
value with respect to room, board, and tuition - the cost of education. Among our
benchmarks, UK is the least expensive, and UK is fourth among the 100 institutions that
Kiplinger's tracks.

       Among schools in Kentucky, UK has the highest tuition but is above the
University of Louisville and Western by only a small amount. We do not appear to be
pricing ourselves out of the market. Our application rate since 2000 has gone up by
about 2,300 applications per year, breaking 10,000 again this year. We do not get as
many applications as we might otherwise because it is known that UK has a selective
admissions policy.

       As our admissions have increased, so has the quality of the students we have
admitted. The number of Governors Scholars and Governor's School for the Arts
students has risen. The number of high school valedictorians we have been able to attract
has increased. GPAs of the admissions class have improved. The number of entering
students who have taken advanced placement courses has almost doubled. Senate
Chairperson Ernie Yanarella has said that he could sense that the quality of the students
he is teaching has improved. Alan DeSantis, a top faculty member who often receives
awards for his teaching, feels that the caliber of his engineering students has risen. ACT
scores have gone up, as has the average fist-year GPA. UK has increased not only the
volume of students, but also the quality.

       UK is the only public institution in the state that has increased the percentage of
Kentuckians among its undergraduate population since 2000, from 84 percent to 85.8
percent.

       President Todd continued by discussing the decision-making criteria used to
determine the level of tuition proposed for next year. First, there is the change in the
state appropriation, which overall has decreased by about $14 million. UK is operating
with about $41 less per student than in 2000-01. At the same time, the higher education
price index has gone up 17.6 percent.

       The administration is trying to manage the institution and watch expenses
conscientiously. UK employment is down 52 positions that are paid by state and tuition
dollars, and down 28 positions in self-supporting units. UK has added people in areas
where federal research grants and contracts and hospital growth have been able to support
them. Overall, the change is 352 positions, with a reduction in those that are paid by
general fund dollars. This reduction has been accomplished by redirection of about $35