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      CC. Operating Budget for 1991-92 (FCR 6)

      Mr. Ockerman asked President Wethington to make the presentation on
the 1991-92 Operating Budget.

      President Wethington reflected on the significant progress for the
University and indicated the $816.8 million proposed budget is a very good
budget. It represents an overall increase of $75.9 million (10.2%). He
expressed appreciation to Governor Wallace G. Wilkinson and the members of
the 1990 General Assembly who passed an Education Reform Act and raised
revenue to support higher education.

      Using a series of slides, he provided an overview of the proposed
budget and called attention to the following items:

         - The state appropriation increased by $33.3 million (14.5%) for
           the University System. Of the $33.3 million increase, $9.6
           million represents new debt service and $23.7 million represents
           the formula increase.

         - The state appropriation increased by $14.9 million (25.5%) for
           the Community College System. Of that $14.9 million increase,
           $4.9 million represents new debt service and $10.0 million
           (17.1%) represents the formula increase.

         - The percent of the budget supported by the state appropriation is
           increasing from 38.8% to 41.1%.

         - Tuition and fees have increased by $8.2 million (11%) -- 8% for
           the University System and slightly over 6% for the Conmunity
           College System.

         - Auxiliary and affiliate income has increased by $8.1 million.

         - Hospital income has increased by $11.5 million, primarily due to
           a 10% rate increase on ancillary service and room rates in
           addition to new programs, increased volume, and operating program
           modifications.

       President Wethington informed the Board that the budget will be spent
as follows:
                  People                              57%
                  Operating Expenses                  33%
                  Debt Service                         5%
                  Capital Items                        5%

       He provided information on the special state appropriations that are
earmarked: Debt Service Adjustment, New Debt Service, Kentucky Cancer
Registry, Omnibus Health Care, Groundwater Instruction and Research Program,
Commonwealth Scholars Program, Operating Funds for Animal Diagnostic Lab,
Community College Courses in Carrollton, Cost-of-living for the Extension
Salary Catch-up, and the Kentucky Geological Survey.