Board of Higher Education okays budget proposals for operations, buildings | Prairie Public Broadcasting

Board of Higher Education okays budget proposals for operations, buildings

Jul 1, 2020

The state Board of Higher Education has voted to submit a “needs based budget” to Governor Burgum for consideration, as he prepares his executive budget request for the 2021-2023 biennium.

When Burgum issued his budget guidelines, higher education was asked to reduce its general fund request by 10 percent. That would come in a reduction in higher-ed’s funding formula. That would drop the appropriation to $574.7 million.

University system vice chancellor for finance Tammy Dolan told the board – that amount would be lower than the appropriation higher ed received in the 2011-2013 biennium.

"That's a significant drop in funding," Dolan said. "It would be extremely difficult, not impossible, for the institutions to manage."

Chancellor Mark Hagerott agreed.

"The fat is gone," Hagerott said. "They've leaned out. And with this shock, they'll be taking some muscle away."

The board is proposing a 1.1 % increase in general fund spending.  The budget includes an average 3 percent pay raise per year for all University System employees. And it also allows for a 1.1 to 2 percent increase in tuition.

The Board also okayed a proposed capital budget for the state’s colleges and universities.

It’s an $80.7 million ask.

Board member Kathy Neset voted for the request, but sounded a cautionary note on both the capital request and the operational budget proposal.

"We must remember that we're in a downturn, in a state that is heavily supported by the oil industry," Neset said. "I just want to put a reminder of realism out there."

Board chair Nick Hacker said the Board might have to revisit things after the budget forecast comes out.

"I would suspect those priorities will lean towards operating budgets versus capital budgets, which is traditionally the case," Hacker said.

The new forecast could be out by late August.

NDSU Building

One of the included projects is the Ag Products Development Center at NDSU.

It’s a $61 million project.

The 2019 Legislature okayed $60 million for the project. $40 million would come from bonds, and NDSU would have to raise $20 million. Now, NDSU is asking the Legislature for $21.2 million in lieu of fundraising.

"Did NDSU attempt to raise the dollars?" Hacker asked. "Was there work that was done to try?"

NDSU President Dean Bresciani told the board a “market study” was done for the fundraising potential for the building. That study showed $6 million could be raised.

"There was a school of thought that the $20 million was put in to hold it off until the next Legislative session, recognizing that it was an unreasonable amount of money to raise," Bresciani said.

Board member Casey Ryan thought that should be taken into account.

"Legislators are aware we met the goal that we calculated was possible," Bresciani said. "There's no effort to hide that. It's well known in the appropriate circles already."

The Board voted to keep the project on the books, minus the $6 million NDSU has raised.

Chancellor pay

The state Board of Higher Education is giving University System Chancellor Mark Hagerott high marks.

Hacker said Hagerott has been accessible, and has been collaborative with the college presidents. And Hacker singled out the way Hagerott and the system office have handled the COVID-19 crisis.

"We greatly appreciated the Chancellor pulling the right people together at the right time, to launch task forces, and that allowed us to make what I believe were the right decisions with the available information, as COVID unwound," Hacker said.

The Board voted to give Hagerott a 2.5 percent raise. But Hagerott told the Board he would donate that amount – about $9,600 – to the University System Foundation.

"I'm just mindful I'm paid a lot here," Hagerott said. "Most of my staff are well below where they need to be."

Hagerott is paid $374,400.