Approved       Revised
                                            Budget         Budget         Change

A. GENERAL FUND (continued)
   2. Expenditures (continued)

         Provost
            College of Engineering
               Administration             $  1,818,700    $  1,844,000   $     25,300
               Civil Engineering             2,378,300      2,478,300         100,000
               Mechanical Engineering        2,345,400       2,445,400        100,000
            Lexington Community College
               College-Wide Administration   2,337,700      2,286,400         (51,300)
               General Instruction          11,252,800      11,652,800        400,000
            University-Wide                 22,900,700      17,393,000     (5,507,700)
            Hospital                       314,480,900    332,017,900      17,537,000
                                                                         $  9,593,100

   3. Comments - The University of Kentucky state appropriation is being reduced in
      the current year as described below:

      a. A reduction in State Appropriation in the amount of $6,008,400 (University
         System) is being handled in the current year by utilization of prior year
         balances. The amount of $51,300 (Lexington Community College) is being
         addressed through a reduction in the college reserves for general
         instruction.

      b. The amount of $2,507,700 is funding that was originally appropriated for
         facilities planned to come on line in 2001-02. Since the facilities are
         opening later then expected, the funds are not needed for that purpose
         during the current year.

      c. A reduction in State Appropriation in the amount of $9,730,000 is being
         offset in part by an intergovernmental transfer (IGT). The State of
         Kentucky has obtained approval from the Federal government for additional
         funding for increased costs associated with providing medical services to
         Medicaid recipients in a teaching setting. The amount of $6,730,000
         increase in gifts, grants and contracts from the Medical Center Fund will
         provide the offset for the reduction in state funds. The remaining
         $3,000,000 will require a reduction in University-wide reserves.

      The increase in regular student fees is due to enrollment growth in Spring
      2002 in Lexington Community College and will support general instruction. The
      decrease in noncredit fees reflects the closing of the Emergency Medical
      Service Center, and an unanticipated reduction in The Medical Center
      Expectations Training Program. The increase in other fees will support
      programs in the College of Dentistry.

      The increase in gifts, grants, and contracts reflects the IGT offset for the
      reduction in state funds ($6,730,000) and will also support the joint
      engineering programs between the University of Kentucky and Western Kentucky
      University.

      Programs to be supported by increased departmental sales and services
      include new contract agreements in the College of Medicine. Decreases in
      departmental sales and services are due to the dissolution of the Health
      Associates of Kentucky; decreased demand for Medical Center Inter-Library
      loan services and the closing of the Emergency Medical Service Education
      Center.



The increase in the hospital will support hospital operations and facility
renovations.