Proposed $90M bump in North Dakota higher ed funding comes with another cut

North Dakota University System Chancellor Mark Hagerott is seen in Grand Forks in 2017. Jesse Trelstad / Forum News Service

GRAND FORKS — The North Dakota University System may see a bump in funding this biennium. However, that proposed $90 million in increased funding still comes at a cost, university officials warn.

North Dakota Gov. Doug Burgum also included a suggested 5 percent cut to the higher education baseline budget from last biennium in his budget proposal, which was released on Wednesday, Dec. 5. That equates to a $27 million cut before the $90 million kicks in.

According to the university system, state appropriations have been fluctuating over the past few bienniums. In the 2013-15 biennium, the university system received around $670 million in ongoing general fund appropriations. That number rose to $737 million in the 2015-17 budget cycle, but low commodity prices combined with low oil prices followed, forcing most state offices to cut.

The university system was cut heavily for the 2017-19 biennium, bringing its ongoing state appropriations down to $613 million.

Earlier this year, the university system was potentially facing another 13 percent cut to its budget, which would have put funding at its lowest in a decade. However, NDUS Chancellor Mark Hagerott said he appreciates that the governor scaled back the cuts.

“We need to reinvest more in higher ed, so there’s still daylight between what the governor’s saying and what we need,” he said, adding that NDUS has two community colleges ranked in the top 25 nationally.

Hagerott said it is important for Burgum and the Legislature to invest in higher education, especially as South Dakota makes investments into its universities.

South Dakota’s Board of Regents recently voted to allow out-of-state students from six states, including North Dakota, to pay in-state tuition rates, a move that will likely impact student enrollment at universities in North Dakota, Hagerott said.

“What we really need is adequate, stable funding because people are competing for students and faculty,” he said. “That’s the area where I think there’s still the greatest distance (between the university system and its appropriations).”

State appropriation cuts coupled with previous budget allotments resulted in a reduction of nearly 700 positions across the system since January 2016, according to university system spokeswoman Billie Jo Lorius. Reduction levels varied among the institutions, with most experiencing 18 percent to 19 percent cuts, she said.

Hagerott said those cuts, along with inflation, have hit universities across the state hard in different ways.

“We still are asking for what we asked for but I do appreciate the governor reinvested in several technology things, Research ND, the pay raises,” he said. “He did come quite a ways from minus 13 (percent) to minus 5 (percent).”

In Burgum’s proposed budget, there is a $90 million investment into higher education, money that would support increased staff compensation, Challenge Fund investment, targeted capital projects and applied research. That includes $40 million from Legacy Fund earnings for the North Dakota Higher Education Challenge Fund, which has a two-to-one match with private dollars and will enable a total influx of $120 million into the higher education system, according to a news release from the governor’s office.

The State Board of Higher Education was presented with Burgum’s proposed budget on Thursday afternoon. The board did not vote on whether to accept it as the university system is still studying the budget, Tammy Dolan, vice chancellor for administrative affairs/chief financial officer, said.

“We simply haven’t had time to fully analyze the entire governor's budget,” she said, adding the budget was “very comprehensive” and that different areas outside of the system could have an impact on higher education.

Salary increases would be spread out over two years, Dolan told the board. The first year of the biennium, there would be a 4 percent increase in salaries for NDUS employees, followed by another 2 percent increase the next year. Another 2 percent would also be possible if the state agency or institution can identify permanent salary savings in its budget.

Also included in Burgum’s recommended budget were several one-time funding options, including around $3 million in academic and career technical education scholarship funding and $900,000 in tribal college grants.

Additionally, the governor recommended $5 million for the system’s Online Curriculum Development Pool, which would be dispersed by NDUS to campuses, Dolan said.

The executive budget did not provide any direct general appropriation funds for the university system’s top 10 capital projects.

Overall, Dolan said she was “pleased” with the governor’s budget for higher education because Burgum “did prioritize salary increases and maintaining benefits” for state employees.

“My concerns really lie in the impact of that 5 percent reduction and that’s mostly because it comes on top of the 17 percent reduction that we took this biennium,” she said. “So, we need some time to evaluate how will we be able to continue to provide that quality education to students in our system, as well as to maintain and compensate and retain our employees. I think, overall, this budget is a really good starting point.”

Dolan said she looks forward to working with the Legislature over the next few months as a final budget is crafted.