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the items to be audited next year, it will bring that to the Board's attention as part of the
Finance Committee report.

      He reported that Deloitte worked with the Subcommittee on their audit scope for
the fiscal year ending June 30, 2003. The typical engagement letter had been reviewed
previously, but it was opened for questions. He said that their staffing requirements and
the background of their staff are very important to the University. They discussed the
changes in the accounting rules which seem to be going on in all forms of finances and
talked about the non-audited services that they are performing which the University has
some obligation to look at in order to keep their independence appropriate. It was a very
informational meeting.

      J.    Finance Committee Report

      Mr. Hardymon reported that the Finance Committee met at 11:00 a.m. and had a
quorum. He noted that most of the items on the agenda were consent items. The main
things that were discussed were the tuition and fee adjustments and the room and board
rates. He mentioned the four consent items involving pledges and gifts and said that he
wanted to make sure the Board is properly recognizing these pledges and gifts without
going into the depth that it had in the past. FCR 1 is a gift and pledge from Charles D.
Lucas, Jr. for Parkinson's Disease Research totaling $50,000. FCR 4 is a gift from
Douglas Stough to the Athletic Department for $180,000.

      Mr. Hardymon then referred back to FCR 2. He pointed out that one of the Board
members was influential in this 2002 Memorial Fellowship Endowment Fund. It is being
started with a $51,000 donation over half of which comes from Glenn Sim's life
insurance policy. He noted that Don Sturgill and George Barker are also involved in this
very important gift.

      Mr. Hardymon said that FCR 3 is for the University of Kentucky Oral History
Endowment Fund. He said that it is important that some of the university's long-time
friends see the value of this fund and have made donations. Major donors include
William T. Young, Louie Nunn, Gloria Singletary, Charles Wethington, Gail Hart, and
William B. Sturgill.

      K.    Report of Leases (FCR 5)

      Mr. Hardymon said that FCR 5 is a Report of Leases and such items are truly in
the consent category. These leases are under $30,000 in value. One is an addendum for
more space in Lexington, and three are new leases in Sandy Hook and Hazard.

      Mr. Hardymon said that three-quarters of the Finance Committee meeting
involved FCR 6 and 7. He said that President Todd would comment on FCR 6 before he
made the Finance Committee report and gave their motion on it.



President Todd gave the following presentation on tuition increase: