GRAND FORKS -- The North Dakota University System has faced deep budget cuts over the past few bienniums, resulting in cuts to hundreds of faculty and staff and putting at risk programs meant to help the state’s workforce.
That type of disruption is why the system proposes the North Dakota Legislature create a Higher Education Stabilization Fund.
“We should aspire to not have to live this way,” NDUS Chancellor Mark Hagerott said.
If it comes to fruition, the Higher Education Stabilization Fund would be similar to the stabilization fund that’s set up for the state's K-12 system, a mechanism that would be there if and when North Dakota’s economy hits another bump in the road. Hagerott said the fund could only be accessed to cover budget reductions and that those dollars would be used to support program resilience, faculty, staff and student success during state funding shortfalls.
The proposal, which would include using a certain percentage of the state's Legacy Fund earnings, was brought up during a Legacy Fund Committee meeting last month in Watford City.
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But the proposal isn’t exactly new.
Sen. Ray Holmberg, R-Grand Forks, and Hagerott met in 2015 to discuss the viability of a higher education stabilization fund, but the timing wasn’t quite right, Holmberg said.
“It was an intriguing idea,” he said, noting the proposal faced a challenge as it came in late during the session and the budget was mostly put together at that point.
An economic downturn prior to the next biennium in 2017 also left the proposal without a leg to stand on. During that period, from 2016 to 2017, the North Dakota University System -- and the state as a whole -- was dealing with massive budget disruptions that resulted in cuts or early retirement of around 600 faculty and staff across the system. Those cuts also had an effect on programs that were planned to begin across the system.
“We lost a lot of talented people,” Hagerott said. “Programs were delayed that we needed to roll out for responding to changes.”
The last legislative session also didn’t seem to be the right time. The university system was facing another potential 10% cut to its budget in spring 2018 -- though in the end that budget cut was reduced to around 5% and the system saw a slight bump in funding -- and the idea of stabilizing the budget still wasn’t there timing-wise, Hagerott said.
“But it was working in the background,” Hagerott noted, adding that the idea is still part of the system’s Envision 2030 plan.
Budget instability causes disruption on campuses, which in turn can disrupt student learning and impact students' ability to obtain a degree in the smoothest manner possible, Hagerott said.
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“We want to try and dampen out those swings,” he said.
Budget instability also can affect faculty and staff, who are much more mobile than they used to be, Hagerott said. When most colleges were established across the state, faculty and staff would often start and end at the same institution, but that’s not necessarily the case now, he said.
Hagerott often speaks about the “brain drain” the North Dakota University System has experienced in recent years, as many of its top faculty and researchers are “poached” from the system to schools on the coasts. Hagerott said that during a recent conference he attended, one person referred to the region as a “candy jar for faculty and researchers” for West Coast schools.
The West Coast schools can wait for the faculty to prove themselves in the Midwest, let them build tenure and collect grants and then swoop in and bring them west, Hagerott said, noting that also means loss of grant funding because the grant follows the faculty member.
“We've got to have a countervailing strategy to mitigate those swings and keep confidence high,” he said. “That's what this stabilization concept is about, we put away a little bit each year for a rainy day, which is very consistent with North Dakota culture. … That’s instead of asking for a larger payout of the Legacy Fund.”
The system is also proposing two other Legacy Fund projects on research and system innovation. Hagerott said the system would ask that some of that funding be set aside to begin building the stabilization fund.
The innovation fund would allow institutions to consider new models, such as what Dickinson State is doing now with a polytechnic model, or consider new fields of study.
The research proposal would use Legacy Fund dollars to go to primarily UND and North Dakota State University to fund research meant to drive the state’s economy. It’s a proposal that also was made in 2019.
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Holmberg said it’s right to have the full Legislature consider the proposal and what the Legacy Fund dollars will be used for, but a challenge remains: Has the Legislature already created too many rainy day funds?
“One of the criticisms of the Legislature that has come to the forefront is that we already have too much money stuck away in different funds, billions of dollars is the phrase they use,” Holmberg said, noting that there is more than $20 billion in rainy day funds. “So how does higher education convince the Legislature to create another cream can full of money?”
Would the Legislature want to create another cream can?
Holmberg says it could depend on what happens in the coming month or so, as talks of bringing back a constitutional amendment to abolish property taxes makes its way into discussions across the state.
Holmberg says it's important to consider what abolishing property taxes could mean for funds that are already set up across the state.
“Morally, does the Legislature want to say we’re going to eliminate property taxes by taking away the $3 billion that are in the Public Employees Retirement System that they paid for? Or Game and Fish and the license fees?” Holmberg said, noting some funds are under control of the Legislature while others are constitutionally bound.
How funds shake out will ultimately depend on how the economy is doing and what, if any, proposals will see money from the Legacy Fund in the future.
“It’ll depend on what the budget numbers are looking like next March and April at the end of the day,” he said.
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