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North Dakota Land Board, GOP lawmakers disagree over fund repayment

North Dakota Land Commissioner Jodi Smith listens during a Land Board meeting Monday, March 11, 2019. John Hageman / Forum News Service

BISMARCK — A panel chaired by North Dakota Gov. Doug Burgum voted Monday, March 11, to pursue a legislative fix that would pay back state funds that the state's land commissioner says have been shorted, putting it at odds with top Republican lawmakers.

A Senate committee will consider a delayed bill addressing the issue Wednesday morning. Land Commissioner Jodi Smith has said that two constitutional funds meant to benefit North Dakota's public schools were shorted $137 million over roughly the past decade, meaning money flowed to other state buckets.

State officials have blamed the discrepancy on an "ambiguous" state law.

During a special meeting at the state Capitol Monday, Land Board members said they had a constitutional and fiduciary responsibility to pay back the money. Burgum, a Republican, said there are "many ways to achieve" repayment without constraining other budget priorities.

"I don't think anybody did anything wrong," said Republican Attorney General Wayne Stenehjem, a member of the Land Board. "But I don't think we can fulfill our constitutional responsibility without looking back."

At issue is the state's share of oil extraction taxes generated by activity on the Fort Berthold Indian Reservation. The two educational funds cited by Smith are the Common Schools Trust Fund and the Foundation Aid Stabilization Fund, which supplement state aid to schools and provide a safety net for education funding, respectively.

But GOP leaders in the Legislature expressed little interest in making retroactive payments.

"I don't agree with them," House Majority Leader Chet Pollert, R-Carrington, said of the Land Board, known formally as the Board of University and School Lands. He said state Treasurer Kelly Schmidt was moving money per guidance from Stenehjem's office.

Schmidt, a Republican whose office is responsible for distributing state funds, has cited a 2012 email from an assistant attorney general stating the treasurer's office "should continue making distributions as they had" and pursue a legislative fix to the uncertain statutes. She said past efforts to clear up the issue through the Legislature have failed and the state auditing process has produced "no findings."

Schmidt was the lone vote against the motion to seek repayment Monday. She warned that could sink legislative efforts to seek clarity on oil tax allocations.

"This would be setting a new precedent," Schmidt said.

North Dakota United President Nick Archuleta, whose organization represents educators in the state, said they weren't eyeing litigation over the apparent misallocation but were keeping their options open.

"The Legislature has the ability to fix this thing now," he said. "It doesn't have to go to litigation."

John Hageman

John Hageman covers North Dakota politics from the Forum News Service bureau in Bismarck. He attended the University of Minnesota in the Twin Cities, where he studied journalism and political science, and he previously worked at the Grand Forks Herald and Bemidji Pioneer.  

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