A study was conducted to generate an estimate of total expenditures and employment in the Kentucky economy in fiscal year (FY) 1985-86 due to the existence of public higher education. The direct economic impact attributable to public higher education includes expenditures generated by public institutions of higher education and affiliated corporations or foundations, by students attending these public institutions, and by visitors to the public institutions and affiliated corporations or foundations. An additional indirect expenditure impact is generated by the spending and re-spending by those receiving the funds. The spending also results in the creation of new jobs in the state. Data were collected by means of a mail survey of all public institutions of higher education in Kentucky. The colleges were asked to provide information about sources and uses of funds and the number of faculty, staff and students in FY 1985-86. Results included the following: (1) Kentucky's investment produced an expenditure impact of 2.4 times the initial investment; and (2) direct instate expenditures by institutions, students, and visitors due to the presence of public higher education in Kentucky created approximately 61,800 new jobs in the state. (KM)