xt7ngf0mtw3z https://exploreuk.uky.edu/dips/xt7ngf0mtw3z/data/mets.xml Lexington, Kentucky University of Kentucky 2013 minutes  English University of Kentucky Contact the Special Collections Research Center for information regarding rights and use of this collection. Minutes of the University of Kentucky Board of Trustees Minutes of the University of Kentucky Board of Trustees, 2013-03-19 text Minutes of the University of Kentucky Board of Trustees, 2013-03-19 2013 2014 true xt7ngf0mtw3z section xt7ngf0mtw3z Minutes of the Meeting of the Board of Trustees
University of Kentucky
Tuesday, March 19, 2013
The Board of Trustees of the University of Kentucky met at 1:00 p.m. (Lexington time)
on Tuesday, March 19, 2013 in the Board Room on the 18th floor of Patterson Office Tower.
A.

Meeting Opened

Dr. E. Britt Brockman, chair of the Board of Trustees, called the meeting to order at 1:00
p.m. Chair Brockman asked Trustee Sheila Brothers, secretary of the Board, to call the roll.
B.

Roll Call

The following members of the Board of Trustees answered the call of the roll: C.B.
Akins, Sr., Stephen Bilas, William C. Britton, E. Britt Brockman, Sheila Brothers, Jo Hern
Curris, Williams S. Farish, Jr., Oliver Keith Gannon, Carol Martin “Bill” Gatton, Kelly Sullivan
Holland, Pamela T. May, Terry Mobley, Charles Sachatello, C. Frank Shoop, James W. Stuckert,
Irina Voro, John Wilson, and Barbara Young. Mark Bryant and Billy Joe Miles were absent
from the meeting. Secretary Brothers announced that a quorum was present.
The University administration was represented by President Eli Capilouto, Interim
Provost Tim Tracy, Vice President for Health Affairs Michael Karpf, Vice President for Finance
and Administration Eric Monday and General Counsel William Thro.
The University faculty was represented by Chair of the University Senate Council Lee
Blonder, and the University staff was represented by Chair of the Staff Senate Mike Adams.
Guests and members of the news media were also in attendance.
C.

Consent Items

Chair Brockman began by reporting that there had been no requests since the last meeting
to speak or appear before the Board.
Chair Brockman called attention to the nine consent items on the agenda. The items
included the minutes, with a revision, for the Board of Trustees meeting on January 29, 2013, PR
2 which deals with personnel actions, AACR 1, candidates for degree December 2012, and six
FCR’s. The six FCR’s include FCR 1, Donald L. Jacobs, Sr., gift and pledge; FCR 2, Don L.
Jacobs, Sr., pledge to the Gatton College of Business and Economics Capital Campaign; FCR 3,
Geoffrey H. Rosenberger Pledge; FCR 4, Haymaker Foundation, Inc., Gift; FCR 5, Howard L.
Lewis Pledge; and FCR 6, William E. Seale Family Foundation Pledge.
Trustee Stuckert moved approval of the consent items. Trustee Akins seconded the
motion and it passed without dissent. (See consent items listed below on the Board of Trustees
website, www.uky.edu/Trustees, under agenda.)

* Minutes, January 29, 2013
PR 2 Personnel Actions
AACR 1 Candidate for Degree: December 2012
FCR 1 Don L. Jacobs, Sr. Gift and Pledge
FCR 2 Don L. Jacobs, Sr. Pledge to the Gatton College of Business and Economics
Capital Campaign
FCR 3 Geoffrey H. Rosenberger Pledge
FCR 4 Haymaker Foundation, Inc. Gift
FCR 5 Howard L. Lewis Pledge
FCR 6 William E. Seale Family Foundation Pledge
Trustee Brothers asked Trustee Stuckert to repeat for the entire Board his remarks made
during the Finance Committee meeting earlier that morning. Trustee Stuckert reiterated his
appreciation to the administration and staff for the outstanding preparation of the meeting
materials.
D.
Proposed Revision to Governing Regulation: Board of Trustees Committee
Structure (CR 1)
Chair Brockman reported that CR 1 is the proposed revision to the Governing
Regulations regarding the Board of Trustees committee structure. The recommendation was
received for preliminary consideration as CR 1 on January 29, 2013. The revision is intended to
streamline operations through consolidation, name change and new procedures. The revisions
will take effect on July 1, 2013. Reviewed and approved by the Executive Committee and vetted
by the proper channels, the revisions to the committees are as follows:
•
•
•
•
•

Consolidate Academic Affairs and Student Affairs;
Consolidate University Relations and Human Resources;
Change the name of the Audit Subcommittee to Audit and Compliance;
Committee reports shall be posted on line within 72 hours after the conclusion of
Committee meetings; and
Athletics and Health Care shall provide a brief update at each Board meeting if the
committee has met.

Chair Brockman opened the floor for discussion. Trustee Voro requested that the Board
postpone the vote on the revision. She continued that she had presented a proposal to the
Executive Committee for the establishment of an additional standing committee on “good
governance, accountability and ethics.” She stated that there were some language revisions that
could be made and she was against the consolidation of the University Relations Committee and
the Human Resources Committee. Trustee Voro made a motion to table the revision.
Chair Brockman asked for a second. Hearing none, the motion died for lack of a second.
Trustee Stuckert moved the question regarding CR 1 and it passed with 17 affirmative votes and
-2-

* one no vote from Trustee Voro.
(See
website, www.uky.edu/Trustees, under agenda.)
F.

CR

1

on

the

Board

of

Trustees

President’s Report (PR 1)

President Capilouto began his report by recognizing the acceptance of the generous gifts
to support the renovation of the College of Business and Economics. In recent visits with these
donors, he learned about their passion for UK; the giving back and paying forward because of
what UK and the community gave to them. These donors want future generations to face the
challenges and have the experiences and opportunities for growth that were presented to them.
President Capilouto was pleased to report that the annual report released by the National
Merit Scholarship Corporation ranks the University of Kentucky 11th out of 123 public
universities. With 71 National Merit/National Achievement Scholars, UK ranked 30th among
public and private universities combined for the fall 2012 first year class. President Capilouto
complimented the Enrollment Management team, led by Associate Provost Don Witt, for their
outstanding efforts.
Other noteworthy accomplishments include the success of the revitalized and expanded
UK Honors Program. With a revised curriculum, the program experienced a record number of
applicants. With the opening of Central Hall I and II in August and 450 of the 601 beds
dedicated to the Honors Program, this provides yet another way for students to create friendships
and form a lasting community.
President Capilouto recognized the UK Cheerleading Squad for their runner-up finish in
their bid for a 20th national championship. Head Coach Jomo Thompson and senior member
Stephanie Johnson thanked President Capilouto and the Board of Trustees for their recognition
and support. President Capilouto also recognized the UK Dance Team for their excellent year.
The Dance Team placed eighth in the Pom competition and sixth in the Hip-Hop division. Head
Coach Dawn Walters and senior Brittany Fiel thanked President Capilouto and the Board of
Trustees for their recognition and support.
President Capilouto introduced Vice President for Research, Dr. Jim Tracy, to announce
and introduce the 2013-14 University Research Professors.
The University Research
Professorships were recommended by the University Senate in 1976, and the first awards were
given in March of 1977, awarded by the Board of Trustees. The University of Kentucky
Research Foundation provides a cash award, which currently is $40,000 per year. Since 1977,
the University has awarded over 130 professorships. The candidates are nominated by their
peers, with a peer review selection committee that reviews the nominations and selects the
nominees.
The first recipient was Professor Bernhard Hennig. He received his Ph.D. in nutrition
from Iowa State University and has been a UK faculty member since 1984. A professor of
Nutrition and Toxicology in the College of Agriculture, he also serves as the editor—in—chief
of the Journal of Nutritional Biochemistry and is the director of UK's National Institute for
-3-

* Environmental Health Sciences Superfund Research Program. His primary research focus is
studying the links between nutrition and cardiovascular disease.
The second recipient was Professor Mark Lovell. He received his Ph.D. from the
University of Kentucky and has been a faculty member in the Department of Chemistry and the
Sanders-Brown Center on Aging since 1994. He is currently the Jack and Linda Gill Professor
of Chemistry in the Sanders-Brown Center. Professor Lovell's research is directed toward
improving the understanding of the causes, progression and treatment of Alzheimer's disease.
The third recipient was Professor Zhongwei Shen. He received his Ph.D. from the
University of Chicago and has been a faculty member in the Department of Mathematics since
1995. He is an internationally recognized expert in several interrelated areas of mathematics,
primarily in the areas of partial differential equations, mathematical physics and harmonics
analysis.
The final recipient was Professor Wolfgang Korsch, who received his Ph.D. from the
University of Marburg in Germany. A faculty member in the Department of Physics and
Astronomy since 1996, Professor Korsch is an internationally recognized expert in the field of
fundamental experimental nuclear and particle physics.
Professors Hennig, Lovell, and Shen were grateful for their award and the opportunity to
share with the Board of Trustees the nature of their current research projects. Due to a previous
research presentation commitment, Professor Korsch was not in attendance.
G.

Honorary Degrees (PR 3)

President Capilouto introduced PR 3, the recommendation for Honorary Degree
Recipients. It asked that the Board of Trustees approved the awarding of the Honorary Doctor of
Humanities to Deborah A. P. Hersman, Honorary Doctor of Science to Robert Milton Huffaker,
and Honorary Doctor of Humanities to Jamal L. Mashburn.
Chair Brockman asked for a motion for approval of PR 3. Trustee May so moved and it
was seconded by Trustee Akins. The motion passed without dissent. (See PR 3 on the Board of
Trustees website, www.uky.edu/Trustees, under agenda.)
H.

University Research Professorships (PR 4)

President Capilouto stated that PR 4 approved the naming of the professors introduced
earlier as University Research Professors for 2013-2014.
Chair Brockman asked for a motion for approval of PR 4. Trustee Mobley so moved and
it was seconded by Trustee Curris. The motion passed without dissent. (See PR 4 on the Board
of Trustees website, www.uky.edu/Trustees, under agenda.)

-4-

* I.

Executive Committee Report

Chair Brockman stated that the Executive Committee met this morning and entertained
two items. The Executive Committee heard Trustee Voro give a presentation on her proposal for
good governance, accountability and ethics. She proposed this as a separate committee of the
Board of Trustees. She also proposed the creation of an office of faculty ombudsman to report to
the above-proposed committee. Chair Brockman continued that to accommodate and recognize
the validity of Trustee Voro's concerns, the Executive Committee is considering adding language
to GR II E.2.a., titled Duties of the Executive Committee. It would read that the Executive
Committee would serve in an advisory capacity to the President on issues of administrative
structure and process and institutional compliance and accountability.
Chair Brockman said that the Executive Committee will continue their discussion on this
proposal and will invite Trustee Voro to the May meeting.
J.

Presidential Evaluation (ECR1)

Chair Brockman stated that the Executive Committee approved a timeline for the
proposed presidential search and recommended approval of ECR 1. It states that the Board of
Trustees authorize the Chairman of the Board of Trustees to enter into a negotiation with Dr.
David Hardesty to serve as the facilitator for President Capilouto's 2012-2013 evaluation and
approve the attached preliminary list of interview survey questions as part of the 2012-2013
Presidential Evaluation.
Trustee Voro voiced some reservations regarding the questionnaire, hoping that the
questions would be more specific, with accompanying metrics. Chair Brockman explained the
proposed questions were preliminary and it would be vetted through the various constituency
groups, the University Senate Council, Staff Senate and Student Government Association. These
bodies would review and make recommendations to the Executive Committee by the May
meeting. At that time, after due consideration, it will be voted upon as the final list of questions.
Chair Brockman asked for the vote on ECR 1 and it passed with one abstention, Trustee
Voro. (See ECR 1 on the Board of Trustees website, www.uky.edu/Trustees, under agenda.)
K.

Academic Affairs Committee Report

Trustee Gannon, chair of the Academic Affairs Committee, reported that the committee
met this morning and had two business items. The committee also discussed the upcoming
consolidation of the Academic Affairs and the Student Affairs committees and began the
conversation of committee topics and meeting agendas for next year.
Trustee Gannon stated that AACR 1 was part of the Consent agenda, a Candidate for
Degree, December 2012.

-5-

* L.
(AACR 2)

Change of Organizational Structure of the Center on Trauma and Children

Trustee Gannon stated AACR 2 was related to the change of organizational structure for
the Center on Trauma and Children. The recommendation is the Board of Trustees approve the
transfer of administrative oversight for the Center on Trauma and Children from the College of
Social Work to the College of Medicine effective immediately. Interim Provost Tim Tracy
briefed the committee in detail regarding the change.
On behalf of Academic Affairs Committee, Trustee Gannon asked for approval of
AACR 2 and it passed without dissent. (See AACR 2 on the Board of Trustees
website, www.uky.edu/Trustees, under agenda.)
M.

University Athletics Committee Report

Trustee Akins, chair of the University Athletics Committee, stated that the committee
began with a few words from President Capilouto, who shared a video featuring Kastine Evans,
the UK women's basketball player who was voted to the SEC Community Service Team. Her
nonprofit organization, Shooting at Success, which launched in January of 2013, provides
children from low-income families an outlet after school to help them create strong character and
inspire them to achieve academically, in extracurricular activities, and in life.
Director Barnhart updated the Committee on UK Athletics' accomplishments from
December 2012 to present day. Featured highlights include:
•
•
•
•

46 student athletes earned a place on the 2012 Fall Sports Southeastern
Conference Academic Honor Roll;
Women's basketball team has earned a number two seed in the NCAA Division I
Women's Basketball Championship;
First-year tennis coach Cedric Kauffmann is in a tie for the SEC lead with a fourto-one mark in conference play and a 16-6 overall record; and
April 13 marks the grand opening of the new softball stadium and the Spring
Blue/White football game in Commonwealth Stadium.

Trustee Akins stated the committee had two items of business. The committee reviewed
and endorsed FCR 9 to expand and renovate Commonwealth Stadium and Nutter Training
Center.
The committee then considered the financial statements of the Department of
Intercollegiate Athletics. Ms. Angie Martin, Treasurer, reviewed the interim financial statements
of the department for the six months that ended December 31, 2012. The statements included the
balance sheet, the statement on revenue and expenses, and the change in net assets. The
committee accepted the interim financial statements as presented. Ms. Martin also reviewed a
chart from the American Institutes of Research's 2012 Delta Cost Project. The organization
provides data and tools to assist higher education administrators and policy makers. The chart
-6-

* detailed athletic budget revenues from all sources, both generated revenues or subsidized. Based
on the size of the institution's athletic budget, the Division I universities (public universities)
were divided into quartiles. The University of Kentucky's data reflects zero support from the
state and the institution and very little support from mandatory student fees. The University
ranks as one of the lowest among public universities in student fees.
Trustee Akins stated that a report from UK Athletics on the treatment of concussions and
some of the duties of the medical staff will also be distributed via hard copy to members of the
committee and to the Board of Trustees.
N.

Financial Committee Report

Trustee Stuckert reviewed the consent item pledges and gifts (FCR 1 through FCR 6) and
offered additional thanks to Don Jacobs, Sr. Geoff Rosenberger, Tim Haymaker and the
Haymaker Foundation, Howard Lewis, and William E. Seale and the William E. Seale
Foundation, for their generous gifts to the UK HealthCare Patient Care Facility, the Markey
Cancer Center and the Gatton College of Business and Economics Capital Campaign.
O.

Renovate/Expand Gatton College (FCR 7)

Trustee Stuckert stated that FCR 7 recommends for approval the initiation of the
Renovate/Expand Gatton College capital project. Originally built in 1963, the building
underwent a three-story expansion in 1991. This project will renovate 146,000 gross square feet
and expand the facility by 72,000 gross square feet. The $65 million project, including design
and authorized by the 2013 Kentucky General Assembly, will be initially funded with $25
million of gifts and $40 million of agency bonds. The University’s Debt Committee has
determined that this project is consistent with the University’s Debt Policy.
On behalf of the Finance Committee, Trustee Stuckert moved approval of FCR 7. Chair
Brockman stated that although it was implicit that though FCR 7 came through a committee, a
second exists, he would like to take the liberty to second the motion on the Board’s behalf. The
motion passed without dissent.
(See FCR 7 on the Board of Trustees
website, www.uky.edu/Trustees, under agenda.)
P.

Academic Science Building (FCR 8)

Trustee Stuckert stated that FCR 8 recommends for approval the initiation of the
Academic Science Building capital project. The existing Chemistry-Physics building,
constructed in 1963, is the one of the largest and most heavily utilized buildings (2nd highest
usage) on the University campus. Currently planned to be constructed at the Donovan Hall
location, the 263,000 gross square feet building will cost $100 million and will be funded with
agency bonds. The project was authorized by the 2013 Kentucky General Assembly. Through a
unique and collaborative partnership, the UK Department of Intercollegiate Athletics will fund
65 percent of the annual debt service. The University’s Debt Committee has determined that this
project is consistent with the University’s Debt Policy.
-7-

* On behalf of the Finance Committee, Trustee Stuckert moved approval of FCR 8. Chair
Brockman, in honor of the historical commitment and precedence that this item presents from the
UK Athletic Department, seconded the motion on behalf of the entire Board of Trustees. The
motion passed without dissent.
(See FCR 8 on the Board of Trustees
website, www.uky.edu/Trustees, under agenda.)
Q.
(FCR 9)

Expand and Renovate Commonwealth Stadium and Nutter Training Center

Trustee Stuckert stated that FCR 9 was the expansion and the renovation of the
Commonwealth Stadium and the Nutter Training Center in the amount of $110 million. This
expansion/renovation will involve new multipurpose recruiting rooms, 16 to 20 private suites,
new home team facilities, approximately 2,000 new club seats, new press facilities, new fullservice kitchen, and a new team store. It also includes upgrades to the Nutter Center. The $110
million project was authorized by the 2013 Kentucky General Assembly and will be funded with
agency bonds. The annual debt service will be paid from with new revenues from suites, club
seating, and expanded Southeastern Conference revenues. The University’s Debt Committee has
determined that this project is consistent with the University’s Debt Policy.
On behalf of the Finance Committee, Trustee Stuckert moved approval of FCR 9. Chair
Brockman opened the floor for discussion. Trustee Voro offered that she was concerned there
would be sufficient revenue to pay for all projects. In her opinion, Commonwealth Stadium was
the least necessary, but the most expensive. With no further discussion, Chair Brockman called
for the vote and it passed with 17 affirmative votes and one no vote from Trustee Voro. (See
FCR 9 on the Board of Trustees website, www.uky.edu/Trustees, under agenda.)
Trustee Shoop offered his appreciation for the leadership of President Capilouto and
Director Barnhart. The contributions of the UK Athletics Department might be unprecedented in
college sports. He also offered his appreciation to Governor Beshear and the Kentucky
legislators for their support. He was appreciative of the efforts by members of the Board of
Trustees and the collaborative work performed by UK and other Kentucky colleges and
universities during the 2013 Kentucky General Assembly.
R.

Upgrade/Relocated Pediatric Critical Care Unit (FCR 10)

Trustee Stuckert stated that FCR 10 was the upgrade/relocation of the Pediatric Critical
Care Unit. The FCR was reviewed and recommended for approval by the University Health
Care Committee. The estimated scope of $6 million will be paid by private funds.
On behalf of the Finance Committee, Trustee Stuckert moved adoption of FCR 10 and it
passed without dissent. (See FCR 10 on the Board of Trustees website, www.uky.edu/Trustees,
under agenda.)
-8-

* S.

Capital Construction Report (FCR 11)

Trustee Stuckert stated that FCR 11 was the Capital Construction Report. Vice President
for Facilities Bob Wiseman updated the committee on the details of the quarterly report.
On behalf of the Finance Committee, Trustee Stuckert moved adoption of FCR 11 and it
passed without dissent. (See FCR 11 on the Board of Trustees website, www.uky.edu/Trustees,
under agenda.)
T.
Approval of Collaboration Agreement for the Use and Management of Eden
Shale Farm (FCR 12)
Trustee Stuckert stated that FCR 12 authorizes the Executive Vice President for Finance
and Administration (EVPFA) to enter into a collaboration agreement for the use and
management of the Eden Shale Farm. EVPFA Eric Monday shared with the committee that the
cost of the operation has become cost prohibitive, in part due to the farm’s lack of proximity to
Lexington and the increasing cost associated with said farm's agricultural research projects. By
entering into a collaborative agreement with the nonprofit Kentucky Beef Network Association
(KBN), KBN assumes the majority of operational and financial responsibility and the College of
Agriculture and other University personnel will be allowed to continue collaborative activities.
On behalf of the Finance Committee, Trustee Stuckert moved adoption of FCR 12 and it
passed without dissent. (See FCR 12 on the Board of Trustees website, www.uky.edu/Trustees,
under agenda.)
U.

Proposed 2013-14 Tuition and Mandatory Fee Schedule (FCR 13)

Trustee Stuckert stated that FCR 13 recommends that the Board approve the proposed
2013-14 tuition and mandatory fees schedule and authorize the President to submit the schedule
to the Council on Postsecondary Education. The tuition and mandatory fees schedule reflects a
three percent increase for resident students and a six percent increase for most non-resident
students.
On behalf of the Finance Committee, Trustee Stuckert moved adoption of FCR 13. Chair
Brockman opened the floor for discussion. Trustee Gatton inquired about the ratio of applicants
to acceptances and comparison tuition costs for some of the professional schools. Interim
Provost Tracy reported that applicant pools for the College of Pharmacy were strong and UK’s
out-of-state tuition was near the top of range. Law school applications are down across the
country.
With no further discussion, Chair Brockman posed the question and the motion passed
with 17 affirmative votes and one abstention from Trustee Voro. (See FCR 13 on the Board of
Trustees website, www.uky.edu/Trustees, under agenda.)
-9-

* V.

Proposed 2013-14 Room and Board Rates (FCR 14)

Trustee Stuckert stated that FCR 14 was the recommendation that the Board of Trustees
adopt the proposed 2013-14 room and board rates. The proposed housing rates reflect a three
percent increase for traditional residence halls and for graduate and family apartments. The
proposed housing rates for the premium residence halls and Greek housing reflect increases of
four percent and no increase, respectively.
Trustee Stuckert continued that the proposed dining rates reflect a three percent increase
for four of the five optional plans. No increase is proposed for the optional 21-meal plan. For the
minimum plan, a new seven-meal per week plan will replace the five-meal per week plan. The
increase in the number of meals is considered to be a better value for our students and more
comparable to other universities. All students living in the residence halls are required to
purchase a dining plan.
On behalf of the Finance Committee, Trustee Stuckert moved adoption of FCR 14. Chair
Brockman opened the floor for discussion. Trustee Gatton inquired if the rates were based on
semesters and Trustee Stuckert confirmed the rates were per semester.
With no further discussion, Chair Brockman posed the question and the motion passed
with 17 affirmative votes and one abstention from Trustee Voro. (See FCR 14 on the Board of
Trustees website, www.uky.edu/Trustees, under agenda.)
W.
Acceptance of the Interim Financial Report for the University of Kentucky for
the Six Months ended December 31, 2012 (FCR 15)
Trustee Stuckert stated that FCR 15 concerns itself with the acceptance of the Interim
Financial Report for the University of Kentucky for the six months ended December 31, 2012.
On behalf of the Finance Committee, Trustee Stuckert moved adoption of FCR 15 and it
passed without dissent. (See FCR 15 on the Board of Trustees website, www.uky.edu/Trustees,
under agenda.)
X.

Patent Assignment Report (FCR 16)

Trustee Stuckert stated that FCR 16 concerns itself with the Patent Assignment Report.
Vice President for Research Jim Tracy detailed the report for the Finance committee earlier in
the day.
On behalf of the Finance Committee, Trustee Stuckert moved adoption of FCR 16. Chair
Brockman opened the floor for discussion. Trustee Gatton inquired about the allocation of patent
revenues. Dr. Jim Tracy stated that forty percent goes to the inventors, twenty percent to the
inventors' department or departments, twenty percent to the colleges or college of the inventors,
- 10 -

* and twenty percent remains with the University Research Foundation. This allocation is fairly
standard across universities.
With no further discussion, Chair Brockman posed the question and the motion passed
without dissent. (See FCR 16 on the Board of Trustees website, www.uky.edu/Trustees, under
agenda.)
Y.

Audit Subcommittee Report

Trustee Britton, chair of the Audit Subcommittee, reported that committee met and had
no action items. The committee had a discussion with Ms. Mary McKinley, a partner in BKD.
The committee discussed the scope and timing of the June 30, 2013 audits. The completed audit
is expected by October 1st for presentation at our October meeting.
The Committee discussed the charter revision for the Audit Subcommittee and hoped to
have a reading at the next meeting. There was a report from Joe Reed, Director of Internal
Audit, with an update on current and ongoing audits and staffing needs.
Z.

Investment Committee Report

Trustee Gatton, chair of the Investment Committee, stated that the Investment Committee
met yesterday to review performance results and conduct other business. The Endowment had a
net market value of $955.9 million as of February 28, 2013. For the eight months ended February
28th, the Endowment pool has returned 10.0% due to strong equity market returns during the
period. The Endowment pool outperformed the policy benchmark during the eight month period
by 124 basis points. This was due to strong performance by the fixed income, absolute return and
real return managers.
Trustee Gatton continued that the investment consultant, R.V. Kuhns & Associates,
provided an update on the University’s fixed income allocation to review the potential impact of
rising interest rates on the portfolio. The University’s fixed income managers, PIMCO and
Reams, have reduced the duration of their portfolios in order to mitigate interest rate risk. The
effective duration of UK’s fixed income portfolio at January 31, 2013 was 3.2 years versus the
benchmark duration of 5.2 years. The lower duration indicates UK’s portfolio’s value is less
sensitive to interest rate changes relative to the benchmark. The benchmark for the fixed income
asset class is the Barclays US Aggregate Bond Index, which is a common intermediate-term
fixed income strategy used by institutional investors. Approximately 60% of UK’s fixed income
allocation is managed using a core-plus strategy indexed to the Barclays Aggregate, and the
remaining 40% is managed in unconstrained and low duration strategies in order to enhance
fixed income returns and manage interest rate risk. R.V. Kuhns and investment staff are currently
considering decreasing the overall fixed income allocation due to the extremely low return
environment. Additionally being considered is an increase to the unconstrained strategy, with a
corresponding decrease to the core-plus strategy, which would allow the managers to maximize
returns relative to the benchmark and shorten duration further if necessary to protect the portfolio
from a possible rise in interest rates.
- 11 -

* The Investment Committee reviewed results of the 2012 NACUBO-Commonfund Study
of Endowments released in late January. UK’s endowment value of $900.2 million ranked 83rd,
or in the top ten percent, of the 843 public and private institutions that reported endowment
values as of June 30, 2012. The average return of participating institutions in the survey was
-0.3% for the year ended June 30, 2012, however UK earned -0.8% during the period mainly due
to a higher than average allocation to the non-US equity asset class, which performed poorly
during the fiscal year due to the European debt crisis. The non-US equity markets significantly
rebounded during the last half of 2012, contributing to the strong 2013 fiscal year-to-date
performance previously noted.
AA.

Student Affairs Committee Report

Trustee May, chair of the Student Affairs Committee, stated the committee welcomed
Logan Sparks, the chair of the DanceBlue Public Relations Group. Ms. Sparks shared a video of
DanceBlue in motion, from set-up to the final presentation of the numbers. Trustee May shared
that the final scene of the children in front, some who are apparently in ongoing cancer
treatment, holding up signs saying "For the Kids." was incredibly touching. DanceBlue raised
over $1.1 million this year, and with an additional $500,000 endowment from a member of the
previous year’s audience. The benefactor had been so moved by the effort, she felt compelled to
give. There are also DanceBlue events held across the country by UK Alumni. From game
watches and fund raisers, these alumni are funneling money back into DanceBlue.
Trustee May next introduced SACR 1, a recommendation that the Board of Trustees
accept the University of Kentucky Creed. She continued that nine months ago President
Capilouto challenged the Student Government President to explore the development of either a
student creed or university creed. President Bilas accepted the responsibility and a 17-member
committee was formed and the creed was written.
On behalf of the Student Affairs Committee, Trustee May moved approval of SACR 1.
She also asked as a point of personal privilege that for at the conclusion of the Board of Trustees
meeting, as a group, the Board of Trustees read the creed in unison for the first time.
Chair Brockman opened the floor for discussi