State appropriations represent approximately 40.5% of all operating and non-operating revenues. The level of state support is a key factor influencing the University's overall financial condition. State appropriation is unrestricted to revenue and is included as non-operating revenue. State appropriations are used to support payroll and benefits for University employees.
The following details the net Commonwealth appropriations received by the University for fiscal years ending June 30, 2017 and 2016.
Commonwealth appropriations $ 26,729,600 $ 23,429,600
2017 2016
The University faces financial challenges to maintain and upgrade its capital assets including its infrastructure, buildings and grounds. A combination of revenue sources funds the University's investment in capital improvements, including appropriations provided by the Commonwealth of Kentucky. In fiscal year 2017, the Commonwealth provided capital appropriations of $4.9 million to the University. State capital appropriations plus federal sources play an important role in the University's efforts to address deferred maintenance projects.
The following table details the University's grant and contract revenue for fiscal years ended June 30, 2017 and 2016.
| 2017 | 2016 | |
| Federal grants and contracts, operating | $ 16,408,586 | $ 15,260,406 |
| Federal grants and contracts, non-operating | 3,776,772 | 3,785,004 |
| State grants and contracts | 2,783,697 | 2,554,046 |
| Total grants and contracts | $ 22,969,055 | $ 21,599,456 |
The University continues to face financial challenges to maintain and upgrade its capital assets including its infrastructure, buildings and grounds. A combination of revenue sources fund the University's investment in capital improvements. Those include appropriations provided by the Commonwealth of Kentucky. In fiscal year 2015-16, the Commonwealth funded one capital project, appropriating state bond funds toward Repair Boilers and Aging Distribution Lines. As of June 30, 2017, $4.7 million has been expended on this project. State capital appropriations for deferred maintenance were not appropriated. Federal funds are the primary source for the University's College of Agriculture and Land Grant departments.
11.