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may do in any one year.  This means that your University is big business.
It also means that if it is operated on a sound financial basis it must employ
sound financial practices as does any other solvent business, and this is the
theory on which we have operated throughout the years I have been President
of the University of Kentucky. To maintain that a university should end its
fiscal year on June 30 with no balance whatsoever is to endanger the orderly
financial operations of the institution and sooner or later to face a financial
crisis that might wreck the institution for several years. The older members
of the faculty of the University will never forget that in the depression in 1932
the University was operated on a "hand to mouth" financial basis, and that
state revenues fell off materially until the appropriations from the state did
not equal the estimated budget and there was no money for operation of the Uni-
versity from about the first of January until the next July. For two months
members of the faculty, staff and other employees received no salaries and
thereafter only $100. 00 per month until the opening of the new fiscal year,
July 1. The hardship and privation endured by the faculty during this time
in the great panic that swept across this country constitute a tale of woe that
has never been written.  It is to avoid just such a disaster again that we here
at the University have felt that a surplus at the end of the year less than four
or five hundred thousand dollars might some day prove disastrous.  As a
matter of fact, after our budget was made last April (1953) and approved by
the Board of Trustees, Governor Wetherby found that the state, s income from
taxes was lower than had previously been estimated and it became necessary
for him to cut the budgets of all state agencies, including the University.
The cut for the University was $279, 800, If the University had not operated
on the policy of having a surplus for just such emergencies, all salaries of
employees would have had to have been cut back so as to absorb this loss in
revenue.  As it was this institution was able to meet the reduction in income
without reducing salaries at a time when the cost of living was still rising.

      I refer anyone who has the slightest doubt about the wisdom of main-
taining a surplus at the end of a fiscal year to the financial statements of
business corporations that have similar capital investments and income and
expenditures of the magnitude of those of the University. What would any
business do at the end of the fiscal year, especially if it did not have authority
to borrow money as the University does not have, without a working balance
on which to operate?

     From what I know about sound business practices I believe that the Uni-
versity of Kentucky should at all times have a working capital of five to six
per cent of its budget that it may meet its financial obligations on time and
never be embarrassed in its ability to pay its bills promptly. What is a good
financial practice for business is likewise good for colleges and universities,
A state institution should not be penalized in its appropriation when it prac-
tises frugality and sound business methods. If it is required to spend all of
its surplus before getting any additional appropriation at the end of any budget
period, the public can expect frequently some reckless spending just before
the date for the lapsing of funds that have been appropriated for a state agency.
I believe anyone who has been connected with state government in any capacity
will recognize the truth of this assertion,

     From what source did our current unrestricted fund come?  The Con-
gress of the United States in 1945 enacted Public Law 346, known as the G. I.
Bill of Rights. This law provided that institutions could charge the cost of