University of Kentucky's budget is growing by $1 billion. Here's where that money is going

The University of Kentucky’s board of trustees approved Tuesday a budget of over $9.6 billion, an increase of almost $1 billion, driven by its hospital system for the 2026-27 school year.

The budget includes around $6 billion for UK HealthCare, $3.3 billion for higher education and $219.2 million for athletics.

It’s UK’s third-largest budget increase in a decade, with the highest budget increases in 2023-24 and 2024-25.

The largest portion of the budget, 69.6%, pays for designated funds, or mostly healthcare purposes. The second-largest portion, 12.2%, pays for undesignated funds, or mostly higher education purposes.

The smallest percentage of the budget, 3.3%, goes toward auxiliary funds, which are self-operating entities such as athletics, dining and housing. These areas of UK generate their own money and don’t get funding from tuition or healthcare. Most athletics funds are raised through UK’s membership in the Southeastern Conference, and smaller amounts come from television, fundraising and philanthropy, Blanton said.

The budget comes with more money for employees, but more costs for students.

Employees with good individual performance evaluations will receive a 3% base salary increase, with a minimum raise of $1,500. The raise is 1.5% greater than raises in 2025-26. These raises exclude UK HealthCare workers.

The university’s growth is marked by its expansion in capital projects, which are usually large-scale construction and development.

The university will allocate $2 billion in bonds for capital projects.

1.9% of the overall budget is used to manage debt, which is mostly for capital projects, according to Blanton. The university’s debt was the same amount last year.

How students pay for academics

Student tuition and fees will pay for 86% of what UK can use for higher education purposes.

The university expects to enroll 38,383 total students, around 7% more than in fall 2025.

These numbers are similar to last fall, but could increase in future years with more housing options, Jay Blanton, a spokesperson for the university, told the Herald-Leader.

“We did not want to grow significantly from last year to this year,” Blanton said. “We wanted to have time for bringing some more housing, making sure we’ve got space to accommodate students.”

The university’s growth is seen by its investment in capital projects, which are usually considered large-scale construction and development. The university will allocate $2 billion in bonds for capital projects.

1.9% of the university’s overall budget will be used to manage its debt, which is mostly for capital projects, according to Blanton. The university had around the same amount of debt last fiscal year.

Of the total expected enrollment, 6,850 will be first-year students, including around 60% in-state and 40% out-of-state.

Tuition and fees for full-time in-state undergraduate students will increase by $135, totaling $7,088.50 per semester. Full-time out-of-state undergraduates will pay $341 more than they did previously, totaling $17,923 – more than double the cost of in-state tuition.

The university is trying to increase its number of non-Kentucky students as a way to make more revenue from tuition.

“As that out-of-state number has gone up, we always say that we open the doors widest and first to Kentuckians, but it has been an intentional strategy to have a larger out-of-state cohort of students,” Blanton said.

How UK is rewarded for success

The state of Kentucky is expected to allocate $21.1 million less to UK than it did in 2025-26, according to Angie Martin, UK’s chief budget officer.

The Kentucky General Assembly withdrew around $25 million from the Center for Applied Energy Research and the Markey Cancer Center, which were one-time allocations in 2025-26, Martin said.

“We knew that was coming. It’s not a budget stressor, if you will,” she said. “We were able to plan for it.”

The university made up the difference from the state mostly through performance funding, which awards universities for reaching certain goals.

The change comes amid attacks on higher education by President Donald Trump’s administration. Trump has significantly reduced federal funding in higher education, including cancelling over $1 billion in research grants, cutting staff at the Department of Education and restricting programs that promote diversity, equity and inclusion.

State government appropriations are expected to fund 9% of what can be used for academic purposes at UK. The university expects to receive $342.9 million from the state, which includes base funds, performance incentives, agricultural extension funds, certain research and special appropriations, which vary.

The university is expected to get $44.3 million from the state’s performance funding model, which gives high-performing universities more money. The model evaluates metrics such as numbers of degrees, credit hours and the size of an institution.

The metrics are complicated and could change by December, according to the Council on Postsecondary Education.

UK uses a model with similar metrics to decide how much money it gives to each college, according to Blanton and UK President Eli Capilouto.

“Specifically, we are allocating and reallocating dollars to units that perform in alignment with our strategic plan and with state policymaker goals and priorities,” Capilouto said in a statement.

It will also consider “enrollment growth and college productivity,” to decide how much money it gives to each college, Blanton said.

“So are we enrolling more students, graduating more students, teaching more students, meeting the workforce needs of the state?” Blanton said, noting some of the goals.

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