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KNOXVILLE, Tenn. — A $1 billion budget, increased student fees, a faculty tenure policy, and a step toward making the University of Tennessee Medical Center an independent corporation were approved Thursday by UT trustees.

The board also heard UT President Joe Johnson announce plans to retire June 30, 1999,or “whenever the board of trustees selects and has in place the next president of the University of Tennessee.”

Johnson was appointed president of UT in 1991 and will have 38 years in public higher education when he retires.

Gov. Don Sundquist, who is chairman of the UT board, said Johnson’s career in public higher education has made a profound difference in the lives of many people.

He asked Bill Sansom, vice chairman of the board, to appoint a search committee to begin the process of choosing the next president.

In other action, the board approved Johnson’s recommendation to appoint Dr. Jack Britt, vice president for the UT Institute of Agriculture.

Britt, succeeds Dr. D.M. “Pete” Gossett, who is retiring June 30 after 10 years in the position.

The board also:

— Increased fees 5 to 8 percent for most students starting fall semester. At UT-Chattanooga and UT Martin, the increase will be 5 percent for in-state students and at UT-Knoxville, 8 percent.

— Approved a $1 billion operating budget, largest in UT history.

— Adopted a broad statement on faculty tenure calling for annual performance reviews on the basis of procedures to be developed over the next year by UT campuses and institutes.

— Okayed a plan to make UT Medical Center an independent, not-for-profit corporation so it can compete more successfully in the health care market. Benefits for current employees would be protected and traditional levels of patient care, medical education and research would be continued.

Other student fee increases approved by the board included: law, 8 percent; medicine, 5 percent; dentistry, 5 percent; pharmacy, 10 percent; graduate nursing, 12 percent; and veterinary medicine, 5 percent.

UT Executive Vice President Emerson Fly said the fee increases would generate approximately $8 million in additional revenue.

At UT-Chattanooga, a 5 percent increase will raise total undergraduate fees for in-state students to $1,232 per semester. At UT-Martin the cost will be $1,171. An 8 percent increase at UT-Knoxville will raise fees to $1,372.

As much of the new revenue as possible will be used to give salary increases to deserving faculty, although some of the funds must be used to meet increased operating costs, Johnson said.