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      Mr. Carter also reviewed the major sources of income and
expenditures by categories, indicating the state's appropriation to the
budget is $205.1 million (42 percent); University Hospital funds contribute
16.3 percent ($79.8 million), student fees 9.5 percent, and auxiliary
enterprise operations another 5.1 percent.  The balance of the budget comes
from federal appropriations, endowment income, investments, gifts and
grants, sales and services, fund balances, restricted funds, and affiliated
corporations.

       Mr. McCowan voiced his satisfaction with the budget and expressed
appreciation and thanks to President Singletary and his staff.  He said
that even though the budget does not do all the things he would like, it is
a great step forward and represents the fruits of hard work by a number of
dedicated people in the University throughout the years.

       Mr. Clay then moved that the 1986-87 Operating Budget, as presented,
be approved and that the Chairman of the Board be authorized to negotiate
and execute contracts with the administrative officers providing for the
terms and conditions of their employment and benefits.  Mr. Clay's motion
was seconded by Mr. Cain and unanimously carried.  (See PR 3C at the end of
the Minutes.)

       S.    Executive Session Called

       The Board members, President Singletary, and Mr. Darsie went into
Executive Session to discuss impending litigation.  Following the Executive
Session, the Board reconvened at 3:20 p.m.

       T.    Interim Financial Report  (FCR 1)

       Mr. Clay, Chairman of the Finance Committee, reported that the
Committee had met on the morning of June 25 and reviewed a large number of
agenda items to be presented for action, the first of which was the interim
financial report.  He said the Committee found the University to be "on
target," and then moved that the Board accept the financial report for the
ten months ended April 30, 1986.  The motion was seconded by Mr. Griffin,
and it was so ordered.  (See FCR 1 at the end of the Minutes.)

       U.    Acceptance of Audit for the University of Kentucky Federal
Credit Union (FCU a)

       Mr. Clay then moved that the Board accept the audited financial
statement of the University of Kentucky Federal Credit Union for the
twelve-month period ended December 31, 1985.  The motion was seconded by
Mr. Lassetter, and it was so ordered.  (See FCR 2 at the end of the
Minutes.)

       V.    Disposal of Personal Property  (FCR 3)

       Mr. Clay next moved, and Mrs. Hayes seconded, that the Board approve
the disposal of personal property as presented in FCR 3.  The motion
carried without dissent. (See FCR 3 at the end of the Minutes.)