assure the faculty and staff that their health care will not go up. There may be some
changes in co-pays, but as far as their monthly expenditures, that amount is necessary.

       He said that there are fixed costs such as utilities, operating costs and just general
inflationary costs for $2 million.

       He reported that the need-based scholarships are something new that has been
added. There is $1 million that Linda George, Director of Student Financial Aid, can use
to help with need-based situations so the students who will feel the impact of the tuition
increase can be given some financial support that will come to them prior to them having
to take on any additional debts. This is an effort to try to keep these students from feeling
the brunt of the increase.

       President Todd said that the administration's goal is to get the operating money
that is needed to run the institution. It is not to tell the people in the lower income
bracket that they cannot come to the institution. This million dollars is a new pool of
money, and it will be turned into UK one-year grants. He reiterated that this new
scholarship money is another reason that the administration must move quickly with this
decision so the materials can be prepared and letters can go out to students by April 1St.

       President Todd reported that the University provides a lot of scholarships. He
said that it is not as many as he thinks they need to be giving, but he is working on that.
He mentioned several tuition-based scholarships (Singletary Scholarships, Merit
Scholarships, Governor Scholars, and Governor School for the Arts), and pointed out that
when tuition is raised, it costs the University money for all of those scholarships. When
you total that, $3.6 million is required to supplement those scholarships. He said that the
University's need for right now is $24.3 million. This is the need that the University has
to make up. He said that the following slides would show where that money is going to
come from. With the tuition increase that is proposed, the University will get back $14.5
million. This will bring the need down to $9.8 million.

       President Todd said that the Provost model savings, as the University goes to the
one-university concept, should net about $2 million out of that effort. That will get the
need down to $7.8 million. A reorganization of the Medical Center Chancellor's Office
and Medical Center is in progress.

       He said that they are going to continue to push overhead cost recovery, going
back to those units who can find other ways to pay for their expenses to get them out of
the general fund as much as they possibly can. He noted that they have done quite a bit
of this already, but they think they can do more. They anticipate an approximate $1.8
savings in that effort. That still leaves $6 million that will have to come from program
reductions from both the academic and non-academic side. Provost Nietzel is working
with the Deans and giving them some targets to cut. This will not be across the board. It
will have to be targeted in ways to find that money. It is important to know that even
though a tuition increase is proposed, it is not without pain. Program cuts is an area that
the administration would prefer not to have any reductions, but that is the only way they