INTRODUCTION

President Sias and her Leadership Team submit for your consideration a proposed Fiscal Year 2013-14 General Fund operating budget totaling $54.5 million. This is a $7.3 million (11.8%) decrease over last year. The budget recommendation is balanced; the proposed revenue budget equals the proposed expenditure budget. Below are the key budget assumptions for the FY 14 operating budget.

BUDGET ASSUMPTIONS:

REVENUES

Based on the enacted budget as shown in HB 265, from the 2012 regular session of the Kentucky General Assembly, the University's state appropriation will remain at the FY 13 level of $23,537,400.

• A tuition increase of 2.95% applied to all levels of residency. The recommended tuition increase is consistent with the FY 2013-14 maximum 3% cap for resident undergraduate students approved by the Council on Postsecondary Education (CPE).
• Enrollment headcount is projected for Fall and Spring at 2,636 and 2,908 respectively with total student credit hours at 52,032.
• Board plans will increase by 3.4%.

Other Revenue

Other sources of revenue have increased over prior year due to new fees being recommended or due to a change in an existing fee (see below for fees). Also, an increase to the Facilities and Administrative rate for grants and new grants awarded has been projected.

Fund Balance funding of $2.5 million has not been carried forward for FY14.

EXPENDITURES

Fixed Costs

The overall benefit rate of 34.1% will increase to 34.69% due to the following:

Employer-paid Social Security Taxes — A total of $20,000 is budgeted to cover the projected increased cost of funding FICA taxes on a higher Social Security wage base (salary maximum). Wage base for 2013 is $113,700.

Employee Retirement Program — Employees meeting eligibility guidelines must participate in either the Kentucky Employees Retirement System (KERS) plan or the Kentucky Teacher Retirement System (KTRS) plan. The projected increase for the budget year is $130,000.

Worker's Compensation — This insurance premium is based on worker's compensation classifications, historical claims experience and the insurance market. These three factors, applied to the University's payroll, determine the cost. Due to an increase in worker's compensation claims and market changes over the previous few years, this budget is projected to increase modestly $8,500 for FY 2013-14.

Labor Cost

• The preliminary budget includes a 2% salary adjustment effective mid-year
• A review of all positions was completed and only filled positions and essential vacant positions are included in the budget.

Fee Schedule

The following fees are being proposed as either a new fee or a change to an existing fee: