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and Program is to make it possible for those electing Phased Retirement to
access retirement plan funds without separating from the University after the
effective date initiating participation in the Phased Retirement Program.

      President Wethington elaborated on Mr. DeBin's explanation stating
that the 15 years of continuous service in the first policy change applies to
those electing early retirement. He said that the Board could approve an
exception in the case of financial exigency or in the case of a university
employee loaned temporarily to an outside entity such as state government.

      He said that the second policy change would make it possible for faculty
members, who have elected to take a phased retirement program over a
three-year period or less. He reminded the Board that they passed such a plan
in the last year that would allow a faculty member to do this. This change
would allow that faculty member to start drawing his or her retirement at the
time that the election is made. In other words, a faculty member could still be
working in the phased retirement program and be drawing his or her
retirement benefits during that time. The faculty members who have
expressed interest in the plan are ones that are likely to exercise the phased
retirement program.

      On motion made by Mr. Shoop and seconded by Mr. Grayson, PR 3A
was approved. (See PR 3A at the end of the Minutes.)

      Governor Breathitt thanked President Wethington for including
Professor Tom Dillehay and his colleagues in the President's Report.
Without the Tom Dillehays, his outstanding colleagues and others of that
distinction on campus, it is empty.

      G.   Acceptance of Interim Financial Report for the University of
Kentucky for the Seven Months Ended January 31. 1997 (FCR 1)

      Mr. Hardymon, Chairperson of the Finance Committee, reported that
the Finance Committee met and considered 11 items for action. FCR 1 is the
monthly interim financial report for the first seven months of the year
ending January 31, 1997. He noted that this is a time when the realized
income runs ahead of the expenditures because of the state appropriation
timing and because of the student fees. He noted that realized income for the
estimated budget for the year is 69%, and expenditures/commitments are
about 59% of the approved budget for the year. The University has a strong
balance sheet and a strong financial condition. He moved approval of FCR 1.
Mrs. Weinberg seconded the motion, and it passed. (See FCR 1 at the end of
the Minutes.)