- 5 -




       Q.    Agreement Between University of Kentucky and Kentucky Medical
Services Foundation (PR 6C)

       Chancellor Bosomworth explained that the terms in the document are
essentially the same as those in the agreement approved by the Board on
June 24, 1985. He added that the document has been updated to reflect
dates in the new contract period and to revise the dollar amounts due the
University under Section 5.C and Section 18.A. He explained that Section
18 on Professional Liability Insurance has been revised to reflect the
percentage KMSF will pay for liability insurance, and that the amount for
expenses attendant to the production of clinical income has been increased
from $2,204,241 to $2,237,352.

       Mr. Larry Jones moved approval of the agreement between the Board of
Trustees of the University of Kentucky and Kentucky Medical Services
Foundation, Incorporated as presented in PR 6C. Mr. Jones' motion was
seconded by Mr. Hershey and carried without dissent. (See PR 6C at the end
of the Minutes.)

       R.    Operating Budget for 1986-87  (PR 3C)

       President Singletary reviewed the processes involved in preparing
the Operating Budget and indicated the $488.4 million budget was in many
ways the finest budget during his tenure at the University.

       Using a series of charts, Mr. Edward Carter provided a general
overview of the proposed budget which includes:

       An average increase of 7 percent for faculty salaries and 6 percent
       for staff salaries.

       An allocation of $1,017,000 to enhance five UK Centers of Excellence
       identified in the Five Year Plan and Biennial Request: Center on
       Aging, $300,000; Center for Pharmaceutical Science and Technology,
       $283,00; Center for Cancer Prevention, Education, Research and
       Patient Care, $284,000; Center for Equine Health Care, $100,000; and
       the Graduate Center for Biomedical Engineering, $50,000. In
       addition Mr. Carter indicated that Governor Collins and the General
       Assembly had provided $300,000 to develop the Center of Public
       Administration into a Center of Excellence by expanding flexible
       graduate programs in public administration and maintaining quality.

       $780,000 to improve graduate student support.

       Special funding for equipment: $20,370,000 for academic equipment
       and $10,000,000 for a supercomputer.

       $170.9 million capital budget includes funding for new buildings at
       five community colleges and new campus facilities in Owensboro;
       three new buildings on the Lexington Campus--an agricultural
       engineering building, a regulatory services building, and a building
       and equipment for the University's new robotics center; $55.6
       million for equipment including the $20.3 million for academic
       equipment; $4.8 million for renovation; $1.2 million for deferred
       maintenance; $5.7 million for life safety projects; and $50 million
       to renovate University Hospital.