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The University of Tennessee Board of Trustees voted Thursday to approve a $1.9 billion system-wide budget that includes a pay increase for Knoxville campus faculty and staff and a boost in funds for student success and academic programs.

The board also voted to approve an 8 percent tuition increase for UT Knoxville students. Several student fees also were increased—all related to campus growth and expansion of student services.

Chancellor Jimmy G. Cheek said recommending a tuition increase is a difficult, but necessary deliberation.

“We’re committed to provide our students with the best education possible,” Cheek said. “Investing in programs, facilities, faculty, and staff makes a difference in their overall experience and in the university.”

This year, $3.1 million will be used for academic reinvestment to add courses and laboratories, advisors, and support to improve services and help students address obstacles to graduation. About $1.8 million will be used for new need-based scholarships to help Tennessee students address financial obstacles to enrolling.

UT remains a good value, Cheek said, noting that it is near bottom in cost comparisons with its state public university peers. He said the university is operating more efficiently even though it lost $64 million in recurring state funds.

It also has made progress in its goals for becoming a Top 25 university.

UT faculty and staff will receive a 2.5 percent or $1,000, which ever is greater, pay increase on July 1, a portion of which is funded by the state. The Knoxville campus, UT system, Institute of Agriculture, and Institute for Public Service are funding 2.5 percent pools to reward high performers and address market salary issues.

Cheek said investing in the people who carryout the university’s mission is critical to its goals. Fundraising has brought significant private funds for new endowments to retain and recruit top faculty.

The budget for fiscal year 2012-13 also includes $94 million in state capital funds for renovation and expansion of Strong Hall to add needed classrooms and laboratories. The campus will contribute $18.75 million for the project, which will begin in summer 2013. The state also funded $11 million for capital maintenance to upgrade the electrical system and repair roofs. It has been four years since the state has dedicated capital funds for university projects due to unprecedented revenue shortfalls associated with the recession.

The campus received additional state funds based on performance measures that are now part of its state funding formula through the Tennessee Complete College Act of 2010. The campus excelled in graduation rates, research funding, and student retention.

The board also approved a new tuition model that takes effect for new students entering in the fall of 2013. The new model will charge new full-time undergraduate students for 15 credit hours, instead 12 credit hours, as in the current structure. Cheek emphasized the need for students to graduate in four years and this new model will tie a financial incentive to that expectation.

The university will spend this next year communicating the change to prospective students who will soon apply to enter as freshmen in fall 2013.