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       G.    Report on Budget

       Interim President Wethington stated that he was completely in
agreement with Mr. Sturgill's recommendation that a Resolution be
adopted for Governor Wallace Wilkinson and the General Assembly. He
indicated his pleasure in the Board's action to go on record in
support of Governor Wilkinson's and the General Assembly's actions.

       He gave a brief review of the proposed biennial budget. He
stated that in the University System (all of the University except the
Community College System) the proposed budget includes an increase of
about $55 million or a 27% increase over the two-year period. He
noted that the proposed budget provides the following:

       $411 million for progr   increa-se
       This amount will be enough to provide for a number of
       priorities included in the biennial request approved by the
       Board in the fall -- the statutory and contractual obligations
       for staff benefits and operating funds for new buildings; 5%
       salary increase per year for faculty and staff; inflationary
       increases on operating expenses; and some significant progress
       in catch up dollars for faculty and staff.

       $7.7 million for new debt service
       This amount is for the Civil Engineering Building; Cooling
       Plant Repairs and Replacement; Chemistry Physics Building
       Renovation; Life/Safety Projects; Animal Diagnostic Facility;
       Medical Research Space Expansion; and land acquisition for
       agricultural research.

       Funding for the Kentucky Cancer -egistry
       The amount next year is $330,000 and will be reduced to
       $190,000 the following year. This funding is to provide a
       cancer patient data management system to be administered by the
       University of Kentucky Markey Cancer Center.

       $2.9 million for a Rural Health Care Initiative
       This amount gives emphasis to the University of Kentucky in
       delivering Medical Center and related programs to East Kentucky.

       $620.000 for a groundwater instruction and research program
       The amount for this program will be managed by the College of

       $1.9 million for catch-up salary increases for agriculture
       This amount is designated for salary catch-up for the county
       extension agents to help them be competitive with benchmark

       $54$.500 for a Commonwealth Scholars Program
       This program is designed to help the University of Kentucky
       recruit qualified, academically talented high school students
       in Kentucky.