There has been a lot of buzz around the subject of reserve balances at University of Wisconsin campuses lately, so I wanted to report on the situation here at UW-Barron County. We do have a reserve balance, and I believe that it represents a wise use of funds.
The first element of the reserve is a contingency fund. Our UW Colleges campuses operated for decades without contingency funds, and emergencies like broken down equipment or sudden increases in enrollment could not be addressed. We have dealt with both of those kinds of issues in my time here. Since 2007, the Colleges has required each campus to set aside funds to use when such problems arise. Since our enrollments have been strong, we have been able to create this contingency fund, which amounts to about five percent of our operating budget.
We have also set aside funds to replace technological equipment, primarily classroom aids like projectors, computers, document cameras, and distance education equipment. This is becoming acute as the equipment that was new when we opened our new addition in 2006 slowly ages and becomes obsolete or wears out. Our campus budget never included an equipment replacement fund and our supply and equipment budget barely covers current operating needs. It has not seen a significant increase in my time as dean. This applies to faculty and staff computers, as well, as there has been no replacement fund for them either. Using these funds, we will in fact be making purchases to update some of the equipment this summer.
A third component is set aside for new initiatives and to cover new uncertainties. We are launching the Bachelor of Applied Arts and Sciences degree program in collaboration with UW-Stout and UW-Superior this fall. We anticipate there will operational costs to cover as this moves forward. Akin to the situation in many businesses where a new product line is subsidized until it becomes profitable, it will take some time to build enrollments in this program to the point where it is self-sustaining. Additionally, enrollments in our traditional program have been fluctuating. This directly influences our budget, since we are now about 75% funded from student tuition and 25% from state allocations. This is nearly the reverse of the situation twenty years ago, when tuition funded about a third of the cost to run the institution and state allocations covered two-thirds.
I announced that I will retire in January. When I arrived as dean in 1997, enrollments were at low ebb, the budget was strained to cover day-to-day costs, and two auxiliary budgets were significantly in the red. I want to leave sufficient funds when so the campus, under the leadership of its new dean, can undertake innovative initiatives to move the campus forward in areas where it is strong, like classroom excellence and distance education, and to be in a position to respond to opportunities in the ever-changing world of higher education. This reserve balance will make that possible.