Senator Tom Seymour Supports Minot State at June 22 North Dakota Legislative Budget Section Meeting

NORTH DAKOTA LEGISLATIVE MANAGEMENT
Minutes of the
BUDGET SECTION
Tuesday, June 22, 2010
Senate Chamber, State Capitol
Bismarck, North Dakota
Senator Ray Holmberg, Chairman, called the
meeting to order at 8:30 a.m.
Members present: Senators Ray Holmberg, Bill
Bowman, Randel Christmann, Tony S. Grindberg,
Ralph L. Kilzer, Karen K. Krebsbach, Elroy N.
Lindaas, Tim Mathern, Carolyn Nelson, David
O'Connell, Larry J. Robinson, Tom Seymour, Bob
Stenehjem, Rich Wardner, John Warner;
Representatives Larry Bellew, Rick Berg, Merle
Boucher, Al Carlson, Jeff Delzer, Mark A. Dosch, Eliot
Glassheim, Kathy Hawken, Lee Kaldor, Keith
Kempenich, James Kerzman, Matthew M. Klein, Gary
Kreidt, Joe Kroeber, Ralph Metcalf, Shirley Meyer,
Jon Nelson, Chet Pollert, Bob Skarphol, Ken Svedjan,
Blair Thoreson, Don Vigesaa, Alon C. Wieland, Clark
Williams
Members absent: Senator Tom Fischer;
Representatives Mary Ekstrom, Bob Martinson, David
Monson, Kenton Onstad, Francis J. Wald
Others present: John Bjornson, Legislative
Council, Bismarck
See Appendix A for additional persons present.
It was moved by Senator Robinson, seconded
by Senator Krebsbach, and carried on a voice vote
that the minutes of the March 11, 2010, meeting be
approved as distributed.
STATUS OF THE STATE GENERAL FUND
Chairman Holmberg called on Ms. Pam Sharp,
Director, Office of Management and Budget (OMB), to
present a report (Appendix B) on the status of the
general fund.
Ms. Sharp presented the following information on
the status of the state general fund for the 2009-11
biennium based on revenue collections through
May 2010:
Unobligated general fund
balance - July 1, 2009
$361,843,514
Add
General fund collections
through May 2010
$1,410,331,101
Forecasted general fund
revenue for
the remainder of the
2009-11 biennium
1,498,901,687
Total estimated general
fund revenue for the
2009-11 biennium
$2,909,232,788
Estimated general fund
turnback
0
Balance obligated for
authorized carryover from
the 2007-09 biennium
76,383,530
Estimated total available $3,347,459,832
Less
2009-11 biennium
general fund ongoing
appropriations
($2,970,380,754)
2009-11 biennium
general fund one-time
appropriations
(278,984,727)
Contingent appropriation
for centers of excellence
(2009 SB 2018)
(5,000,000)
Balance obligated for
authorized carryover
from the 2007-09
biennium
(76,383,530)
Estimated deficiency
requests
(1,391,000)
Total appropriations and
estimated deficiency
requests
($3,332,140,011)
Estimated general fund
balance - June 30, 2011
$15,319,821
Ms. Sharp presented the following information on
the status of the permanent oil tax trust fund for the
2009-11 biennium:
Beginning permanent oil tax trust fund balance -
July 1, 2009
$489,727,017
Add
Revenue collections through May 2010 222,612,246
Forecasted revenues for the 2009-11 biennium
(based on 2009 legislative forecast assumptions
for oil price and production)
288,901,133
Total estimated funds available for the
2009-11 biennium
$1,001,240,396
Less expenditures and transfers
Transfer to the general fund pursuant to
2009 HB 1015
($140,000,000)
Transfer to the general fund for the mill levy
reduction program pursuant to 2009 SB 2199
(295,000,000)
Transfer to the property tax relief sustainability
fund pursuant to 2009 SB 2199
(295,000,000)
Appropriations pursuant to 2009 HB 1015, 1305,
and 1394 and SB 2003 and 2020
(16,175,100)
Estimated permanent oil tax trust fund balance -
June 30, 2011
$255,065,296
Budget Section 2 June 22, 2010
Ms. Sharp said $71 million in oil and gas tax
revenue has been deposited in the general fund, and
currently all oil and gas tax collections allocated to the
state for the 2009-11 biennium are being deposited in
the permanent oil tax trust fund. Through May 2010,
oil tax collections totaling $222.6 million have been
transferred to the permanent oil tax trust fund. She
said deposits totaled $43.2 million for May 2010, and
if the deposits remain at this level for the remainder of
the biennium, the ending balance in the permanent oil
tax trust fund could be nearly $475 million.
Ms. Sharp presented information on general fund
revenue collections for May 2010 and the 2009-11
biennium to date. She said general fund revenues
collected, biennium to date, are 2.9 percent less than
the legislative forecast. She said sales tax collections
for May were $12.4 million less than projected. She
said the variance was likely due to the month ending
on the Memorial Day holiday, leaving businesses until
Tuesday to make their payments. She said biennium
to date sales tax collections were $24.2 million, or
4.7 percent less than the legislative forecast, but
exceeded 2007-09 biennium to date collections by
$54.4 million, or 12.3 percent. She said oil tax
collections through May have exceeded the biennium
to date legislative forecast, $71 million has been
deposited in the general fund, and $222.6 million has
been deposited in the permanent oil tax trust fund.
She said biennium to date motor vehicle excise tax
collections have also exceeded estimates by
$14.7 million, or 41.2 percent.
IRREGULARITIES IN THE FISCAL
PRACTICES OF THE STATE
Pursuant to North Dakota Century Code Section
54-14-03.1, Ms. Sharp presented information
(Appendix C) on irregularities in the fiscal practices of
the state. She said the state agency with a fiscal
irregularity is:
Agency Amount Reason
Department of
Commerce
$715.50 Settlement agreement due to reduction in
workforce, severance pay in March 2010
TOBACCO SETTLEMENT PROCEEDS
Ms. Sharp presented information (Appendix D) on
the status of tobacco settlement proceeds received by
North Dakota. She said total payments received to
date are $305.4 million, and the next payment is
anticipated to be received in April 2011. She said
funds are deposited into two accounts as directed in
the initiated measure adopted by voters in
November 2008. She said the April 2010 payment
totaled $33.1 million, of which $20.8 million was
deposited in the tobacco settlement trust fund and
$12.3 million was deposited in the tobacco prevention
and control trust fund. A summary of recent
collections is:
Tobacco
Settlement
Trust Fund
(Amounts
Shown In
Millions)
Tobacco
Prevention and
Control Trust
Fund
(Amounts
Shown In
Millions)
Total
(Amounts
Shown In
Millions)
April 2009 $25.0 $14.1 $39.1
April 2010 20.8 12.3 33.1
Total $45.8 $26.4 $72.2
AMERICAN RECOVERY AND
REINVESTMENT ACT OF 2009
Ms. Sheila Peterson, Director of Fiscal
Management, Office of Management and Budget,
presented information (Appendix E) regarding the
American Recovery and Reinvestment Act of 2009
(ARRA), including an update of funding information
and the number of state employees who have been
employed using federal stimulus funding.
ARRA Funding Update
Ms. Peterson provided a listing (Appendix F) of
ARRA funding to political subdivisions, including
airports, cities, counties, fire districts, housing
authorities, nonprofit organizations, private entities,
school districts, state agencies, tribes, and water
districts. She said awards total $631.1 million, of
which $213.6 million has been received through
March 2010. She said a total of 2,297.02 jobs were
reported as having been created or retained by the
recipients of the funding.
Representative Kaldor requested additional
information on the jobs reported as created. He said
some award recipients are not reporting any jobs
being created when it appears by the type of award,
some job creation is likely. Representative Berg
suggested the 2,297.02 jobs reported as having been
created be categorized as private sector or
government. He also asked whether information is
available on the number of private sector jobs created
from nonstate awards. Ms. Peterson said OMB would
review the information reported, and to the extent
available, provide additional information at the next
meeting. She said recipient information reported is
managed and reported by the federal government;
therefore, more detailed information may not be
available.
State Employees Employed
Using Federal Stimulus Funding
Ms. Peterson provided a listing (Appendix G) of the
number of state employees who have been employed
using federal stimulus funding. She said
approximately 45.59 full-time equivalent (FTE) state
employees were paid from ARRA funding.
Representative Skarphol expressed concern that
when ARRA funding is no longer available, funding for
these positions will be expected to be from the
general fund. Representative Skarphol requested
from OMB information identifying by agency requests
Budget Section 3 June 22, 2010
for continuation of new FTE positions and related
funding that originated with ARRA funding, requests
for funding for positions paid for with ARRA funds that
will revert back to their previous funding source when
ARRA funding is no longer available, and the number
of positions paid for with ARRA funds that are not
being requested to continue. Representative
Kempenich suggested information also be provided
on the programs that have been initiated with ARRA
funds and programs that have temporarily received
ARRA funding but which will revert to state funds
when ARRA funding is no longer available.
DEPARTMENT OF HUMAN SERVICES
Status of Medicaid Management
Information System
Mr. Tom Burlin, Chief Operating Officer, Affiliated
Computer Services (ACS) Government Healthcare
Solutions, a Xerox Company, Dallas, Texas,
presented information (Appendix H) regarding the
status of the Medicaid management information
system (MMIS) project. He said the MMIS project
timeline has been revised from its previous estimated
completion date of April 2011. He said the first part of
the new MMIS--provider enrollment--will be
implemented on December 1, 2011, and the
remainder of the new MMIS will be implemented six
months later in June 2012.
Senator Mathern expressed concern that testing
will begin in July 2010, but the project will not be
completed until June 2012. Mr. Burlin said the initial
base enterprise system is a core system designed for
basic functionality and standard enough to be applied
to each state. He said the customization of the base
enterprise system to meet the individualized needs of
North Dakota will be occurring during this time. He
said to ensure specific needs of the state are
addressed, integration testing, state-performed user
acceptance testing, and a registration/testing period
will be conducted and completed by June 2012.
Representative Delzer expressed concern that the
project completion date has again been delayed. He
asked for assurance that June 2012 will be the "go
live" date. Mr. Burlin expressed his regret for the
delay. He said he has become more heavily involved
in the project and with project personnel. He
committed to meet the new timeline and milestones.
He said the June 1, 2010, milestone of completing
and testing specific base enterprise functions had
been met, and the project is on schedule to meet the
July 15, 2010, milestone of completing functional and
system testing of the remaining base enterprise
components.
Senator Wardner asked whether similar ACS
projects in other states were also delayed. Mr. Burlin
said other projects are also delayed.
Ms. Jennifer Witham, Director, Information
Technology Services, Department of Human Services,
presented information (Appendix I) regarding the
status of the MMIS project.
Ms. Witham provided the following project funding
summary through May 2010:
Description Budget
Spent
Through
May 2010 Remaining
General fund $3,643,133 $2,651,027 $992,106
Federal funds 55,218,418 32,760,780 22,457,638
Other funds 3,667,820 1,786,914 1,880,906
Total $62,529,371 $37,198,721 $25,330,650
AGENCY REQUESTS AUTHORIZED BY
THE EMERGENCY COMMISSION
Chairman Holmberg directed the committee to
consider agency requests, which have been
authorized by the Emergency Commission and
forwarded to the Budget Section pursuant to Section
54-16-04.1. The information relating to the requests
was provided to Budget Section members prior to the
meeting. Committee members chose to vote on
Emergency Commission Requests #1737 and #1741
separately.
It was moved by Senator Robinson, seconded
by Representative Wieland, and carried on a roll
call vote that pursuant to Section 54-16-04.1 the
Budget Section approve the following requests,
which have been approved by the Emergency
Commission:
• Adjutant General (Request #1731) - Request
to increase spending authority by
$20,859,375 of federal funds from the
Federal Emergency Management Agency
(FEMA) for costs relating to 2010 spring
flooding.
• Adjutant General (Request #1732) - Request
to increase spending authority by
$28,368,750 of federal funds from FEMA for
costs relating to damage caused by an
April 2010 spring storm.
• Racing Commission (Request #1733) -
Request to increase the Racing Commission
line item by $75,000 of special funds from
the Racing Commission administrative fund
for expenses associated with licensing of
account wagering companies.
• Council on the Arts (Request #1734) -
Request to increase the grants line item by
$209,029 of federal funds from the National
Endowment for the Arts to be distributed for
arts programming throughout the state.
• Game and Fish Department (Request
#1736) - Request to increase the salaries
and wages line item ($61,000), the capital
assets line item ($20,000), and the grants
line item ($1,062,500) for a total of
$1,143,500 of federal funds from the United
States Department of Agriculture and the
United States Department of the Interior for
various fishing-related projects, dam repairs
and retrofitting, boat ramps, shoreline
stabilization and fishing access projects,
Budget Section 4 June 22, 2010
and monitoring of avian influenza and
chronic wasting disease.
• Attorney General (Request #1738) - Request
to increase the capital assets line item by
$269,877 of federal funds from the
Department of Justice and the Office of
National Drug Control Policy to purchase
equipment for the State Crime Laboratory.
• Department of Corrections and
Rehabilitation (Request #1739) - Request to
increase the juvenile services line item by
$308,125 of federal funds available from the
Department of Commerce for implementing
energy conservation projects and improving
environmental conditions at the Youth
Correctional Center.
• Department of Corrections and
Rehabilitation (Request #1740) - Request to
increase the adult services line item by
$122,656 of federal funds from Job Service
North Dakota to implement a workforce
training project.
Senators Holmberg, Bowman, Christmann, Grindberg,
Kilzer, Krebsbach, Lindaas, Mathern, Nelson,
O'Connell, Robinson, Seymour, Stenehjem, Wardner,
and Warner and Representatives Bellew, Berg,
Boucher, Carlson, Delzer, Dosch, Glassheim,
Hawken, Kaldor, Kempenich, Kerzman, Klein,
Kroeber, Metcalf, Meyer, Nelson, Pollert, Skarphol,
Svedjan, Thoreson, Vigesaa, Wieland, and Williams
voted "aye." No negative votes were cast.
Regarding Emergency Commission Request
#1737, Representative Skarphol asked for more
information on the requested FTE position.
Ms. Peterson said the Emergency Commission did not
approve the request for one FTE position to manage
the Title I - School Improvement Grant program. The
salaries and wages funding will be used to hire a
temporary position for the remainder of this biennium.
She said the department may request an additional
FTE position from the 2011 Legislative Assembly to
assist with the grant program for the 2011-13
biennium.
It was moved by Senator Mathern, seconded by
Senator O'Connell, and carried on a roll call vote
that pursuant to Section 54-16-04.1 the Budget
Section approve the following request, which has
been approved by the Emergency Commission:
• Department of Public Instruction (Request
#1737) - Request to increase the salaries
and wages line item ($67,958) and the
operating expenses line item ($100,000) for
a total of $167,958 of federal funds available
from ARRA for the administration of the
Title I - School Improvement Grant program.
Senators Holmberg, Bowman, Christmann, Grindberg,
Kilzer, Krebsbach, Lindaas, Mathern, Nelson,
O'Connell, Robinson, Seymour, Stenehjem, Wardner,
and Warner and Representatives Bellew, Berg,
Boucher, Carlson, Delzer, Dosch, Glassheim,
Hawken, Kaldor, Kempenich, Kerzman, Klein, Kreidt,
Kroeber, Metcalf, Meyer, Nelson, Pollert, Skarphol,
Svedjan, Thoreson, Vigesaa, Wieland, and Williams
voted "aye." No negative votes were cast.
Regarding Emergency Commission Request
#1741, Representative Dosch requested more
information on the funding source of the $1.73 million
of special funds. Ms. Peterson said the prison
commissary has been managed under private
contract by a company in Missouri; however,
advances in technology have made it more feasible
for the program to be managed by Roughrider
Industries. She said the $1.73 million in special funds
is from the sale of items in the commissary and will be
used for inventory and to pay stipends to inmates
working there. She said the request is for spending
authority to operate the commissary.
It was moved by Senator O'Connell, seconded
by Senator Seymour, and carried on a roll call vote
that pursuant to Section 54-16-04.1 the Budget
Section approve the following request, which has
been approved by the Emergency Commission:
• Department of Corrections and
Rehabilitation (Request #1741) - Request to
increase the adult services line item by
$1.73 million of special funds from
Roughrider Industries to allow Roughrider
Industries to manage and operate the prison
commissary.
Senators Holmberg, Grindberg, Krebsbach, Lindaas,
Mathern, Nelson, O'Connell, Robinson, Seymour,
Stenehjem, Wardner, and Warner and
Representatives Boucher, Carlson, Glassheim,
Hawken, Kaldor, Kerzman, Kroeber, Metcalf, Meyer,
Nelson, Svedjan, Wieland, and Williams voted "aye."
Senators Bowman, Christmann, and Kilzer and
Representatives Bellew, Berg, Delzer, Dosch,
Kempenich, Klein, Kreidt, Pollert, Skarphol, Thoreson,
and Vigesaa voted "nay."
STATE DISASTER RELIEF FUND -
BUDGET SECTION AUTHORITY
Chairman Holmberg called on Mr. John Bjornson,
counsel, Legislative Council, to present a
memorandum entitled State Disaster Relief Fund
Expenditures - Budget Section Approval, as requested
by the Budget Section at its March 2010 meeting,
regarding the authority of the Budget Section to
approve Adjutant General requests to spend funding
from the state disaster relief fund. The following
Adjutant General requests to spend funding from the
state disaster relief fund were reviewed:
Funding Request Amount
Request for 97 percent of the cost of repairing a
parking lot damaged during staging for the 2009
flood event that did not qualify for FEMA
reimbursement
$21,909
Request for 97 percent of the cost of raising the
grade level of a county road to protect the road from
rising floodwaters and ensure continued public use.
The expenditure did not qualify for FEMA
reimbursement.
180,420
Budget Section 5 June 22, 2010
Funding Request Amount
Request for funding to repay the federal share of
home buyouts made through the hazard mitigation
grant program in 1998 that were later deemed
ineligible by FEMA inspectors
192,486
Request for funding to purchase flood materials in
anticipation of a 2010 flood event and a presidential
disaster declaration
500,000
Total $894,815
Mr. Bjornson said in 2009 Senate Bill No. 2012 the
Budget Section does not have authority to approve or
disapprove these four requests. Based on the
provisions of Senate Bill No. 2012, the Budget Section
does have authority to approve or disapprove
requests to spend money from the fund to match
federal disaster relief funds received for state
purposes and for requests to approve or disapprove
grants for state disaster relief that exceed $13 million
during the biennium. It appears the Adjutant General
may distribute funds for other disaster-related
purposes without Budget Section approval if the
Adjutant General concludes that the grants are eligible
for reimbursement under Section 37-17.1-27.
Representative Delzer said the legislative intent of
the money in the state disaster relief fund was to
provide funding for state matching requirements for
eligible FEMA-declared disasters. He expressed
concern that the department would consider using
these funds for other purposes.
Representative Berg said the state disaster relief
fund was established to provide a source of state
matching funds for disasters to avoid agency requests
for deficiency appropriations for disaster-related
expenses. He suggested the 2011 Legislative
Assembly address the allowable use of money in the
fund.
REQUESTS TO SPEND FUNDS FROM
THE STATE DISASTER RELIEF FUND
Chairman Holmberg called on Major General David
Sprynczynatyk, Adjutant General, to provide
information (Appendix J) regarding a request for
Budget Section approval to use funds from the state
disaster relief fund pursuant to provisions of 2009
Senate Bill No. 2012 for the state matching
requirements relating to the 2010 spring flooding
($2,781,250) and to the 2010 spring storm
($2 million).
Major General Sprynczynatyk reported that of the
$43 million available in the state disaster relief fund,
expenditures to date total $6.77 million. He said
expenditures to date include $5.38 million for
emergency snow removal grants ($20 million
appropriated) and $1.39 million for the 2009 flood
disaster, snow removal damage to roads, and other
disaster expenditures ($23 million appropriated). He
said projected expenditures for the remainder of the
2009-11 biennium include $5.4 million for the 2009
flood, $2.4 million for disasters prior to 2009,
$2.8 million for the 2010 flood, $2.3 million for the
January 2010 winter snowstorm, and $3.8 million for
the April 2010 ice storm. He said the estimated
June 30, 2011, balance in the state disaster relief fund
is $19.6 million.
Senator Grindberg suggested the committee
receive information on the total funding by funding
source for each disaster being paid for during the
2009-11 biennium. Major General Sprynczynatyk said
he would provide the information at the next meeting.
In response to a question from Representative
Carlson, Major General Sprynczynatyk said he
believes the state disaster relief fund is intended to
allow the agency a source of funds to use for costs of
state disasters rather than the agency borrowing
funds for these costs and repaying the loan and
accumulated interest at the end of the biennium after
receiving a deficiency appropriation from the
Legislative Assembly. Representative Carlson
suggested the 2011 Legislative Assembly review the
language establishing the purpose and uses of the
state disaster relief fund.
It was moved by Senator Mathern, seconded by
Senator Nelson, and carried on a roll call vote that
the Budget Section pursuant to 2009 Senate Bill
No. 2012 approve the Adjutant General request to
use $2,781,250 from the state disaster relief fund
to pay the state matching requirement relating to
the 2010 spring flooding and $2 million from the
state disaster relief fund to pay the state matching
requirement relating to the 2010 spring storm.
Senators Holmberg, Bowman, Christmann, Grindberg,
Kilzer, Krebsbach, Lindaas, Mathern, Nelson,
O'Connell, Robinson, Seymour, Stenehjem, Wardner,
and Warner and Representatives Bellew, Berg,
Boucher, Carlson, Delzer, Dosch, Glassheim,
Hawken, Kaldor, Kempenich, Kerzman, Klein, Kreidt,
Kroeber, Metcalf, Meyer, Nelson, Pollert, Skarphol,
Svedjan, Thoreson, Vigesaa, Wieland, and Williams
voted "aye." No negative votes were cast.
CENTERS OF EXCELLENCE
AUDIT REPORTS
Mr. Shane C. Goettle, Commissioner, Department
of Commerce, presented information (Appendix K) on
the centers of excellence monitoring report and
distributed the annual audit reports of 14 of the
17 centers of excellence under the jurisdiction of the
Centers of Excellence Commission pursuant to
Section 15-69-05(2). He said state statute requires
each center to conduct an annual audit and provide it
to the State Board of Higher Education, the Economic
Development Foundation, and the Legislative Council.
He said the audits are for the fiscal year ended
June 30, 2009. He said of the 14 centers audited,
there were nine findings. He said seven centers did
not have any findings. He said all findings have been
addressed and corrected, or will be addressed and
corrected if the items related to methodologies of the
annual functional performance report. He said most
findings were administrative in nature, and none of the
Budget Section 6 June 22, 2010
findings in his judgment impact the scope or purpose
of the project significantly.
Mr. Goettle said the following three centers of
excellence had not yet received funding as of
June 30, 2009, and, therefore, an audit has not yet
been conducted:
• North Dakota State University (NDSU) Center
for Integrated Electronic Systems.
• University of North Dakota (UND) Research
Foundation Center of Excellence for Passive
Therapeutics.
• North Dakota State University Center for
Biopharmaceutical Research and Production.
Mr. Goettle discussed the increased level of
accountability of centers of excellence. He said the
2007 Legislative Assembly provided for a mandatory
monitoring period. He said monitoring is
accomplished utilizing a functional review and site visit
conducted annually. He said the Legislative
Assembly has also established requirements
regarding the distribution of funds and matching funds
availability. Because of these accountability
requirements, he said, the Department of Commerce
has withheld funding on two approved centers of
excellence for their inability to acquire matching
funds--UND Biomedical Device Research,
Development, and Commercialization and Minot State
University Great Plains Knowledge and Data Center.
Mr. Goettle discussed the Centers of Excellence
Annual Report 2009 (Appendix L). He said the
estimated total economic impact to North Dakota's
economy of the centers of excellence program is
$329.4 million. He said the centers of excellence
have reported expenditures of $19.9 million as of
June 30, 2009. In addition, he said, the centers of
excellence program has led to the creation of
2,060 total jobs and partnerships with 135 companies.
2009-11 CENTERS OF
EXCELLENCE APPLICATIONS
Chairman Holmberg called on Mr. Mark Nisbet,
Chairman, Centers of Excellence Commission, Fargo,
to present the centers of excellence projects for
consideration by the Budget Section (Appendix M).
Mr. Nisbet said the Centers of Excellence
Commission is requesting Budget Section approval of
$7.2 million in total funding for three centers of
excellence projects.
NDSU - Center for Sensors,
Communications and Control
Dr. Phil Boudjouk, Vice President for Research,
Creative Activities and Technology Transfer, North
Dakota State University, Fargo, provided an overview
(Appendix N) of the NDSU centers of excellence
proposal for a Center for Sensors, Communications
and Control. Mr. Matt Noah, Senior Project Manager,
Center for Nanoscale Science and Engineering, North
Dakota State University, Fargo, provided additional
details regarding the operations of the Center for
Sensors, Communications and Control. Mr. Noah
said the center would conduct market-driven research
using the center's expertise in core areas of JAVA
computer programming, sensor integration, and
systems engineering. He said through this work, the
center would build upon and accelerate a cluster of
expertise in the functional disciplines of sensors,
communications, and controls. A goal of the center
through this technology cluster is to become a
geographic region known for expertise in sensors,
communications, and control. He said the center is
requesting $2.8 million and has $5.6 million of
matching funds through private sector partners
SNAPS Holding Company, Pedigree Technologies,
Intelligent InSites, and PureChoice. Dr. Raymond
Gruby, Chief Medical Officer, Intelligent InSites,
Fargo, expressed support for the proposed center of
excellence. A letter from Mr. Alex Warner, President,
Pedigree Technologies, was also read expressing
support for the center.
Representative Skarphol expressed concern that
the center of excellence proposal was focused more
on creating additional working capital for a private
company than creating a center of excellence with a
unique purpose.
It was moved by Senator Grindberg, seconded
by Representative Klein, and carried on a roll call
vote that the Budget Section pursuant to Section
15-69-02 approve the funding award
recommendation for the NDSU Center for Sensors,
Communications and Control made by the Centers
of Excellence Commission which has been
recommended for approval by the Emergency
Commission. Senators Holmberg, Bowman,
Christmann, Grindberg, Kilzer, Krebsbach, Lindaas,
Mathern, Nelson, O'Connell, Robinson, Seymour,
Wardner, and Warner and Representatives Bellew,
Berg, Carlson, Delzer, Dosch, Glassheim, Hawken,
Kaldor, Kempenich, Kerzman, Klein, Kreidt, Kroeber,
Metcalf, Meyer, Nelson, Pollert, Svedjan, Thoreson,
Vigesaa, Wieland, and Williams voted "aye." Senator
Stenehjem and Representative Skarphol voted "nay."
NDSU - Center for Advanced Technology
Development and Commercialization
Dr. Boudjouk provided an overview (Appendix O)
of the NDSU centers of excellence proposal for a
Center for Advanced Technology Development and
Commercialization. Mr. Dennis K. Anderson,
Associate Vice President, Research, Creative
Activities and Technology Transfer, North Dakota
State University, Fargo, provided additional details
regarding the operations of the Center for Advanced
Technology Development and Commercialization.
Mr. Anderson said the proposed center of excellence
will focus on moving inventions and technologies to
the marketplace. He said initial work will focus on
advancing NDSU's liquid silicon technology to market
through private sector partnerships. He said the
center is requesting $3.9 million and has $7.8 million
of matching funds through private sector partner
Budget Section 7 June 22, 2010
Triton Systems, Inc. Mr. Ross Haghighat, President
and CEO, Triton Systems, Inc., Boston,
Massachusetts, expressed support for the proposed
center of excellence.
In response to a question from Senator Wardner,
Mr. Haghighat said at least six jobs would be created
through the center of excellence. He said the jobs will
complement the current staff structure and be filled by
experts in the subject matter of science and
engineering. He said additional jobs would likely be
created by future private sector partners.
It was moved by Senator Robinson, seconded
by Senator Nelson, and carried on a roll call vote
that the Budget Section pursuant to Section
15-69-02 approve the funding award
recommendation for the NDSU Center for
Advanced Technology Development and
Commercialization made by the Centers of
Excellence Commission and recommended for
approval by the Emergency Commission.
Senators Holmberg, Bowman, Christmann, Grindberg,
Kilzer, Krebsbach, Lindaas, Mathern, Nelson,
O'Connell, Robinson, Seymour, Wardner, and Warner
and Representatives Bellew, Berg, Boucher, Carlson,
Delzer, Dosch, Glassheim, Hawken, Kaldor,
Kempenich, Kerzman, Klein, Kreidt, Kroeber, Metcalf,
Meyer, Nelson, Pollert, Svedjan, Thoreson, Vigesaa,
Wieland, and Williams voted "aye." Senator
Stenehjem voted "nay."
Minot State University/Trinity Health -
Geriatric Research Center
Dr. David Fuller, President, Minot State University,
Minot, provided information (Appendix P) on the Minot
State University centers of excellence proposal for the
Minot State University/Trinity Health Geriatric
Research Center. He said the center of excellence
will investigate geriatric health-related issues, seek
solutions to problems, and identify best practices in
health care for the growing geriatric population in the
region. He said teams of Minot State University
faculty and students would work with Trinity Health
professionals in this research. He said the healthrelated
services provided through both Minot State
University and Trinity Health would serve as venues
for research projects. He said the center is requesting
$500,000 and has $1 million of matching funds
through private sector partner Trinity Health.
Mr. Kevin Seehafer, Chief Financial Officer, Trinity
Health, Minot, expressed support for the center of
excellence. Mr. Seehafer said more than 55 percent
of the patients of Trinity Health are categorized as
geriatric, indicating the market and need for this type
of research. Dr. Neil Nordquist, Dean, College of
Education and Health Sciences, Minot State
University, Minot, expressed support for the project.
Dr. Nordquist said Trinity Health and Minot State
University have an excellent working relationship.
Senator Seymour expressed support for the
project. He said Minot is the health center for
northwest North Dakota, and Trinity Health and Minot
State University will provide pertinent and needed
research to enhance the lives of the area's citizens.
Representative Pollert expressed concern that the
centers of excellence proposal is similar to existing
research and service programs of the state, including
those at the UND School of Medicine and Health
Sciences and the Department of Human Services.
Dr. Fuller said although similar programs may exist,
this center will provide a unique opportunity for Minot
State University to work with Trinity Health to address
needs in the northwest area of the state.
Representative Svedjan said he does not support
the centers of excellence proposal due to its
duplication of other state programs, including the UND
Center for Rural Health. He also expressed concern
that the proposed center was specific to only one
region of the state, and it did not include partnerships
with other research facilities in the state.
Senator Stenehjem said he does not support the
centers of excellence proposal because an estimated
$985,000 of the $1.5 million of funding for the center
of excellence will be used for funding employee
positions at the university.
Representative Glassheim expressed support for
the centers of excellence proposal. He said centers of
excellence should be located throughout the state.
He said although the proposal does not involve
traditional manufacturing, the proposal focuses on
geriatric research that will enhance North Dakota's
knowledge-based economy.
It was moved by Representative Klein and
seconded by Senator Warner that the Budget
Section pursuant to Section 15-69-02 approve the
funding award recommendation for the Minot
State University/Trinity Health Geriatric Research
Center made by the Centers of Excellence
Commission which was not recommended for
approval by the Emergency Commission.
Senators Holmberg, Christmann, Krebsbach, Lindaas,
Mathern, O'Connell, Robinson, Seymour, and Warner
and Representatives Bellew, Boucher, Glassheim,
Kaldor, Kerzman, Klein, Kroeber, Metcalf, Meyer, and
Williams voted "aye." Senators Bowman, Grindberg,
Kilzer, Stenehjem, and Wardner and Representatives
Berg, Carlson, Delzer, Dosch, Hawken, Kempenich,
Kreidt, Nelson, Pollert, Skarphol, Svedjan, Thoreson,
Vigesaa, and Wieland voted "nay." The motion
failed on a roll call vote.
The Budget Section recessed for lunch at
12:35 p.m. and reconvened at 1:00 p.m.
GAME AND FISH DEPARTMENT
LAND ACQUISITIONS
Mr. Roger Rostvet, Deputy Director, Game and
Fish Department, presented information regarding
land acquisitions in McKenzie and LaMoure Counties
that require Budget Section approval pursuant to
Section 20.1-02-05.1.
Mr. Rostvet provided background information and
a map of the proposed land acquisition in McKenzie
Budget Section 8 June 22, 2010
County (Appendix Q). He said the property consists
of 983 acres of land adjoining the Yellowstone River.
He said the $363,333 purchase will be paid for with
$113,333 from the game and fish fund and $250,000
from a United States Fish and Wildlife Service grant.
He said the Governor has approved the purchase.
Senator Bowman expressed concern that the
Game and Fish Department continues to purchase
and own land rather than focusing on the
management of wildlife in the state. He asked for the
authority of the agency to continue to purchase land.
Mr. Rostvet said the department by state statute has
the duty to identify certain types of wildlife habitats
and acquire those for future public use. He said the
acquisition process has a number of requirements
based on the type of acquisition. He said most
purchases require approval from the Governor and
the Budget Section and, at times, approval from
county commissions.
In response to a question from Representative
Wieland, Mr. Rostvet said the McKenzie County
Commission did not vote in favor of this project in the
natural areas acquisition hearing. He said that
40 percent of the land in McKenzie County is owned
by the federal government. As a matter of principle,
he said, the county prefers that no future lands be
government-held. He said this land acquisition did not
require county commission approval.
It was moved by Representative Nelson,
seconded by Senator Mathern, and carried on a
roll call vote that pursuant to Section 20.1-02-05.1
the Budget Section approve the Game and Fish
Department purchase of 983 acres in McKenzie
County. Senators Holmberg, Grindberg, Kilzer,
Krebsbach, Lindaas, Mathern, Nelson, Robinson,
Seymour, Stenehjem, Wardner, and Warner and
Representatives Bellew, Berg, Carlson, Dosch,
Glassheim, Hawken, Kaldor, Kroeber, Metcalf,
Nelson, Pollert, Svedjan, Thoreson, Vigesaa, and
Williams voted "aye." Senators Bowman and
Christmann and Representatives Delzer, Kempenich,
Kerzman, Klein, Kreidt, Meyer, Skarphol, and Wieland
voted "nay."
Mr. Rostvet provided background information and
a map of the proposed land acquisition in LaMoure
County (Appendix R). He said the property consists
of seven acres of land adjoining the James River on
the outskirts of the City of LaMoure. He said the
property provides a recreation area and fishing
access. He said the owners have offered to sell the
property to the Game and Fish Department for
$36,000 ($5,143 per acre). He said an appraisal
completed by Mr. Raymond Thielges of LaMoure
stated the value of the land at $30,000. Funding for
the $36,000 purchase will be from the game and fish
fund. He said the Governor has approved the
purchase.
Senator Christmann expressed concern that
property values in this area may be less than the land
acquisition price of over $5,000 an acre. Mr. Rostvet
explained that an appraisal was done by a local
appraiser using comparable values of small acreage
types. Senator Christmann asked the Game and Fish
Department for a copy of the appraisal report.
It was moved by Senator Mathern, seconded by
Senator Lindaas, and carried on a roll call vote
that pursuant to Section 20.1-02-05.1 the Budget
Section approve the Game and Fish Department
purchase of seven acres in LaMoure County.
Senators Holmberg, Grindberg, Kilzer, Krebsbach,
Lindaas, Mathern, Nelson, Robinson, Seymour,
Stenehjem, Wardner, and Warner and
Representatives Bellew, Berg, Boucher, Carlson,
Delzer, Glassheim, Hawken, Kerzman, Klein, Kroeber,
Metcalf, Nelson, Pollert, Svedjan, Thoreson, Vigesaa,
Wieland, and Williams voted "aye." Senators
Bowman and Christmann and Representatives Dosch,
Kempenich, Kreidt, Meyer, and Skarphol voted "nay."
STATE AGENCY UNCLAIMED PROPERTY
Chairman Holmberg called on Ms. Linda Fisher,
Administrator, Unclaimed Property Division, Land
Department, to present a report (Appendix S)
regarding state agencies that have not submitted a
claim for unclaimed property belonging to those
agencies pursuant to Section 47-30.1-24.1.
Ms. Fisher said the 2003 Legislative Assembly
enacted Section 47-30.1-24.1 in an effort to resolve
the issue of state agency unclaimed property. She
said this section provides that within one year of
receipt of state agency property, the administrator of
unclaimed property is to notify the agency by certified
mail; the commissioner of University and School
Lands is to present a report to the Budget Section
identifying every state agency that has not submitted
a claim for property belonging to that agency within
one year of the receipt of the date of the certified mail
receipt; and upon approval of the Budget Section, the
agency relinquishes its right to recover its property.
She presented a list (Appendix T) of the four state
agencies that did not respond to the certified mailing--
Department of Transportation, NDSU, UND, and the
Developmental Center.
It was moved by Senator Mathern, seconded by
Senator Wardner, and carried on a roll call vote
that pursuant to Section 47-30.1-24.1 the Budget
Section approve the list provided by the Land
Department of the following state agencies
relinquishing their rights to recover unclaimed
property:
• Department of Transportation.
• NDSU.
• UND.
• Developmental Center.
Senators Holmberg, Bowman, Grindberg, Kilzer,
Krebsbach, Lindaas, Mathern, Nelson, Robinson,
Seymour, Stenehjem, Wardner, and Warner and
Representatives Bellew, Berg, Boucher, Carlson,
Delzer, Dosch, Glassheim, Hawken, Kempenich,
Kerzman, Klein, Kreidt, Kroeber, Metcalf, Meyer,
Pollert, Skarphol, Svedjan, Thoreson, Vigesaa,
Budget Section 9 June 22, 2010
Wieland, and Williams voted "aye." No negative votes
were cast.
NORTH DAKOTA UNIVERSITY SYSTEM -
CHANGE IN SCOPE OF PROJECTS
Chairman Holmberg called on representatives of
the North Dakota University System to present
information regarding requests for Budget Section
approval of changes to the following project
authorizations pursuant to Section 48-01.2-25.
Dakota College at Bottineau
Dr. Ken Grosz, Dean, Dakota College at Bottineau,
Bottineau, presented a request (Appendix U) for
Budget Section approval of a decrease in cost and
scope of the Dakota College at Bottineau
Entrepreneurial Center for Horticulture project from
$2 million to $700,000. He said funding for the project
is from federal and private grants. He said the cost
reduction is a reflection of the college's commitment to
bring cost-effective new techniques to small farmers
and producers across the state. The initial
Entrepreneurial Center for Horticulture project plan
developed in 2005 included full-scale year-round
growing facilities. He said these have been replaced
with high tunnels, which are less costly and
demonstrate season extension techniques, which are
not capital-intensive for small North Dakota farmers.
He said cost reductions also resulted through the use
of existing classrooms rather than constructing a new
facility as initially proposed.
It was moved by Representative Klein,
seconded by Representative Thoreson, and
carried on a roll call vote that the Budget Section
pursuant to Section 48-01.2-25 approve the
decrease in scope of the Dakota College at
Bottineau Entrepreneurial Center for Horticulture
project. Senators Holmberg, Bowman, Christmann,
Grindberg, Kilzer, Krebsbach, Lindaas, Mathern,
Nelson, O'Connell, Robinson, Seymour, Stenehjem,
Wardner, and Warner and Representatives Bellew,
Berg, Boucher, Carlson, Delzer, Dosch, Glassheim,
Hawken, Kempenich, Kerzman, Klein, Kreidt, Kroeber,
Metcalf, Meyer, Pollert, Skarphol, Svedjan, Thoreson,
Vigesaa, and Wieland voted "aye." No negative votes
were cast.
University of North Dakota
Ms. Alice Brekke, Vice President for Finance and
Operations, University of North Dakota, Grand Forks,
presented the request (Appendix V) for Budget
Section approval to increase the project authorization
and scope of the Northern Plains Center for
Behavioral Research project to include a skywalk,
card security system, and College of Nursing
classroom renovations. She said the skywalk was an
alternate item that was initially not constructed as part
of the project because project bids were more than
anticipated. She said the project cost is estimated at
$409,000, of which $169,326 is from the general fund
and tuition income and $239,674 is from local funds.
In response to a question from Senator
Christmann, Ms. Brekke said local funding for the
project is from a combination of funds currently
available to the university. She said she did not have
the specific source of the available funds but noted it
was likely to be a combination of student fee
collections and donated funds.
It was moved by Senator Grindberg, seconded
by Senator Mathern, and carried on a roll call vote
that the Budget Section pursuant to Section
48-01.2-25 approve the UND request to increase
the project authorization and amend the project
scope of the Northern Plains Center for Behavioral
Research project to include a skywalk at an
estimated cost of $409,000. Senators Holmberg,
Bowman, Christmann, Grindberg, Kilzer, Krebsbach,
Lindaas, Mathern, Nelson, Robinson, Seymour,
Stenehjem, Wardner, and Warner and
Representatives Bellew, Berg, Boucher, Glassheim,
Hawken, Kaldor, Kempenich, Kerzman, Klein, Kreidt,
Kroeber, Metcalf, Meyer, Pollert, Skarphol, Svedjan,
Thoreson, Vigesaa, and Wieland voted "aye."
Representatives Delzer and Dosch voted "nay."
North Dakota State University
Mr. Larry Kotchman, State Forester, North Dakota
Forest Service, Bottineau, presented a request
(Appendix W) for Budget Section approval to increase
the project authorization of the North Dakota Forest
Service greenhouse project at the Towner State
Nursery by $91,000, from $300,000 to $391,000. He
stated the $91,000 is from additional income carryover
from the 2007-09 biennium resulting from the sale of
nursery trees exceeding estimates. He said the
greenhouse project will house containerized seedlings
used for conservation purposes throughout North
Dakota.
It was moved by Senator Robinson, seconded
by Senator Seymour, and carried on a roll call vote
that the Budget Section pursuant to Section
48-01.2-25 approve the NDSU request to increase
the project authorization of the North Dakota
Forest Service greenhouse project at the Towner
State Nursery by $91,000, from $300,000 to
$391,000. Senators Holmberg, Bowman, Christmann,
Grindberg, Kilzer, Krebsbach, Lindaas, Mathern,
Nelson, O'Connell, Robinson, Seymour, Stenehjem,
Wardner, and Warner and Representatives Bellew,
Berg, Boucher, Carlson, Glassheim, Hawken, Kaldor,
Kempenich, Kerzman, Klein, Kreidt, Kroeber, Metcalf,
Meyer, Pollert, Skarphol, Svedjan, Thoreson, Vigesaa,
and Wieland voted "aye." Representatives Delzer and
Dosch voted "nay."
Mayville State University
Mr. Steven Bensen, Vice President for Business
Affairs, Mayville State University, Mayville, presented
a request (Appendix X) for Budget Section approval to
increase the project authorization of the
Budget Section 10 June 22, 2010
science/library renovation and education addition
project by $180,003, from $4,958,325 to $5,138,328.
He said the additional funding will be from deferred
maintenance funding and will be used to renovate
cabinets and countertops and for the removal and
replacement of floor tile, removal of shelving, repairing
of walls, painting, and installing new shelves in the
office and storage laboratory rooms.
In response to a question from Senator Christmann
regarding the use of deferred maintenance funding for
the increase in project costs, Mr. Bensen said the
updates address the purpose of deferred maintenance
funding. He said the updates include mechanical,
electrical, windows, flooring, and cabinetry. He said
these costs were not included in the initial project
plan, but because the building is closed for the
project, the university determined it would be
beneficial to also renovate the science laboratories.
Senator Bowman expressed concern that the
Budget Section is continually requested to approve
changes in the scope of projects that should be
considered by the entire Legislative Assembly.
Representative Hawken said that because the
Legislative Assembly meets only every other year, it is
important to have a process to address changes and
issues that occur in major construction projects.
It was moved by Senator Lindaas, seconded by
Senator Nelson, and carried on a roll call vote that
the Budget Section pursuant to Section 48-01.2-25
approve the Mayville State University request to
increase the project authorization of the
science/library renovation and education addition
project by $180,003, from $4,958,325 to $5,138,328.
Senators Holmberg, Christmann, Grindberg, Kilzer,
Krebsbach, Lindaas, Mathern, Nelson, Robinson,
Seymour, Stenehjem, Wardner, and Warner and
Representatives Bellew, Berg, Boucher, Carlson,
Glassheim, Hawken, Kaldor, Kerzman, Klein, Kreidt,
Kroeber, Metcalf, Meyer, Skarphol, Thoreson, and
Wieland voted "aye." Senator Bowman and
Representatives Delzer, Dosch, Kempenich, Pollert,
Svedjan, and Vigesaa voted "nay."
UNIVERSITY SYSTEM -
NEW PROJECT PROPOSALS
Chairman Holmberg called on representatives of
the University System to present information
regarding requests for Budget Section approval of the
following projects pursuant to Chapter 15-10.
University of North Dakota
Ms. Brekke presented a request (Appendix Y) for
Budget Section approval to use $220,000 of asbestos
settlement funds as local matching funds for the
O'Kelly Hall renovation project pursuant to Section
15-10-12.3. She said the 2007-09 biennium
appropriation for the O'Kelly Hall renovation project
included a $1.9 million general fund appropriation and
required a $220,000 special funds match to be
provided from the university. She said the North
Dakota Century Code requires the local match to be
raised and designated for the project or for legislative
or Budget Section approval for use of funds that did
not meet that requirement. In September 2009 the
university reported to the Budget Section that the local
funds match was from asbestos settlement funds, but
authorization to use these funds was not requested.
She said because there was asbestos mitigation
associated with the renovation project, the university
believed use of the asbestos settlement funds was
appropriate.
Representative Carlson expressed concern that
asbestos settlement funds were used for the local
matching requirement. He said using the asbestos
settlement funds for the special funds match may
result in future general fund requests for asbestos
mitigation in other campus buildings which could have
been paid for with the asbestos settlement funds.
Representative Skarphol asked the Legislative
Council staff for the consequences of the request not
being approved. The legislative budget analyst and
auditor said because the university did not receive
legislative or Budget Section approval for the use of
asbestos settlement funds, if the university does not
use an allowable source of funds for the local
matching requirement and return the asbestos
settlement funds for their intended purpose, the issue
will likely be reported by the auditor as a finding in a
followup audit report.
It was moved by Representative Glassheim and
seconded by Senator Nelson that the Budget
Section pursuant to Section 15-10-12.3 approve
the UND request to use $220,000 of asbestos
settlement funds as local matching funds for the
O'Kelly Hall renovation project. Senators
Krebsbach, Lindaas, Mathern, Nelson, Robinson, and
Seymour and Representative Glassheim voted "aye."
Senators Holmberg, Christmann, Grindberg, Kilzer,
Stenehjem, Wardner, and Warner and
Representatives Bellew, Berg, Boucher, Carlson,
Delzer, Dosch, Hawken, Kaldor, Kempenich,
Kerzman, Klein, Kreidt, Kroeber, Metcalf, Meyer,
Pollert, Skarphol, Svedjan, Thoreson, Vigesaa, and
Wieland voted "nay." The motion failed on a roll
call vote.
North Dakota State University
Dr. Boudjouk presented a request (Appendix Z) for
Budget Section approval of a $29,361,750 addition to
the Research I facility, including $15,661,750 of grant
and contract funds and $13.7 million of equipment
from the Research II facility at NDSU pursuant to
Section 15-10-12.1. He said the building is used for
the commercialization of technologies developed at
NDSU or NDSU's private sector partners. He said
funding for the project is primarily from the United
States Department of Commerce and the state
centers of excellence enhancement program grant.
He noted the United States Department of Commerce
has not yet approved the proposed site for the
Research I facility.
Budget Section 11 June 22, 2010
In response to a question from Senator
Christmann, Dr. Boudjouk said the $13.7 million of
equipment is being moved out of the Research II
facility because of limitations on the commercial use
of the Research II facility required because the source
of funding used to construct the Research II facility
was from tax-exempt bonds.
In response to a question from Representative
Carlson, Dr. Boudjouk said the long-term maintenance
of the facility is paid for from federal grants and
contracts that NDSU obtains. Representative Carlson
said maintenance funding for the Research I facility
should not appear in the University System budget
request.
It was moved by Senator Nelson, seconded by
Representative Hawken, and carried on a roll call
vote that the Budget Section pursuant to Section
15-10-12.1 approve the NDSU request of a
$29,361,750 addition to the Research I facility,
including $15,661,750 of grant and contract funds
and $13.7 million of equipment from the
Research II facility. Senators Holmberg, Bowman,
Christmann, Grindberg, Kilzer, Krebsbach, Lindaas,
Mathern, Nelson, Robinson, Seymour, Stenehjem,
Wardner, and Warner and Representatives Berg,
Boucher, Carlson, Dosch, Glassheim, Hawken,
Kaldor, Kempenich, Kerzman, Klein, Kreidt, Kroeber,
Metcalf, Meyer, Pollert, Skarphol, Svedjan, Thoreson,
Vigesaa, and Wieland voted "aye." Representatives
Bellew and Delzer voted "nay."
University of North Dakota
Ms. Brekke presented a request (Appendix AA) for
Budget Section approval to accept and spend
$1.9 million for renovations to the Energy and
Environmental Research Center, Building 184,
pursuant to Section 15-10-12.1. She said funding
consists of a private sector contract, federal funds,
and local contract-generated facilities and
administrative funds.
It was moved by Senator Seymour, seconded
by Senator Krebsbach, and carried on a roll call
vote that the Budget Section pursuant to Section
15-10-12.1 approve the UND request to accept and
spend $1.9 million for renovations to the Energy
and Environmental Research Center, Building 184,
with funding to consist of a private sector
contract, federal funds, and local contractgenerated
facilities and administrative funds.
Senators Holmberg, Bowman, Christmann, Grindberg,
Kilzer, Krebsbach, Lindaas, Mathern, Nelson,
Robinson, Seymour, Wardner, and Warner and
Representatives Bellew, Boucher, Carlson, Dosch,
Glassheim, Hawken, Kaldor, Kempenich, Kerzman,
Klein, Kreidt, Kroeber, Metcalf, Meyer, Pollert,
Skarphol, Svedjan, Thoreson, Vigesaa, and Wieland
voted "aye." No negative votes were cast.
Valley City State University
Ms. Trudy Collins, Vice President of Business
Affairs, Valley City State University, Valley City,
presented a request (Appendix BB) for Budget
Section approval to change funding sources for the
renovation of Snoeyenbos Hall from $3.5 million of
revenue bond funds to $3.43 million of recovery zone
economic development bonds and $70,000 of
institutional funds pursuant to Section 15-10-12.3.
It was moved by Senator Robinson, seconded
by Senator Mathern, and carried on a roll call vote
that the Budget Section pursuant to Section
15-10-12.3 approve the Valley City State University
request to change funding sources for the
renovation of Snoeyenbos Hall from $3.5 million of
revenue bond funds to $3.43 million of recovery
zone economic development bonds and $70,000 of
institutional funds. Senators Holmberg, Bowman,
Christmann, Kilzer, Krebsbach, Lindaas, Mathern,
Nelson, Robinson, Seymour, Wardner, and Warner
and Representatives Boucher, Carlson, Dosch,
Glassheim, Hawken, Kaldor, Kempenich, Kerzman,
Klein, Kreidt, Kroeber, Metcalf, Meyer, Pollert,
Skarphol, Svedjan, Thoreson, Vigesaa, and Wieland
voted "aye." Representative Bellew voted "nay."
Dickinson State University
Dr. Richard McCallum, President, Dickinson State
University, Dickinson, presented a request
(Appendix CC) for Budget Section approval to change
funding sources for the Badlands Activities Center
from donations and gifts to donations, gifts, and
student fee revenues pursuant to Section 15-10-12.3.
It was moved by Senator Wardner, seconded
by Representative Meyer, and carried on a roll call
vote that the Budget Section pursuant to Section
15-10-12.3 approve the Dickinson State University
request to change funding sources for the
Badlands Activities Center from donations and
gifts to donations, gifts, and student fee revenues.
Senators Holmberg, Bowman, Kilzer, Krebsbach,
Lindaas, Mathern, Nelson, Robinson, Seymour,
Stenehjem, Wardner, and Warner and
Representatives Boucher, Carlson, Delzer, Dosch,
Glassheim, Hawken, Kempenich, Kerzman, Klein,
Kreidt, Kroeber, Metcalf, Meyer, Pollert, Skarphol,
Svedjan, Vigesaa, and Wieland voted "aye." Senator
Christmann and Representative Bellew voted "nay."
Minot State University - Funding
Source and Scope Change for Health
and Wellness Center Project
Dr. Fuller presented a request (Appendix DD) for
Budget Section approval to change the source of
funding for the Health and Wellness Center project
under Section 15-10-12.3 to include institutional funds
and to change the scope of the project under Section
48-01.2-25 to include a skywalk, climbing wall, and
additional fitness and office equipment.
Budget Section 12 June 22, 2010
Representative Skarphol expressed concern that
reference is made to a potential legislative request for
additional state funding for Phase II of the Health and
Wellness Center project. Dr. Fuller said Phase II is
related to the Minot State University nursing program,
geriatrics research, and other health-related
curriculum, not a health and wellness center for
students. He said Minot State University has
requested the State Board of Higher Education to
include Phase II in the board's capital project list for
the 2011-13 biennium.
Senator Christmann expressed concern regarding
the number of capital project requests that the
University System seeks Budget Section approval for
rather than approval from the Legislative Assembly
when in session.
In response to a question from Representative
Pollert regarding institutional funds, Dr. Fuller said
institutional funds include reserves that are held in
certificates of deposit at the Bank of North Dakota and
may consist of funds from interest, grants, or other
contracts that are placed in reserve. He said the
reference to institutional funds represents local funds
available from various sources, including indirect
costs associated with grants.
Senator Seymour expressed his support for the
project. He said Minot State University students
should have access to the same opportunities
available throughout the University System.
It was moved by Senator Krebsbach, seconded
by Representative Klein, and carried on a roll call
vote that the Budget Section pursuant to Sections
15-10-12.3 and 48-01.2-25 approve the Minot State
University request to change the source of
funding for the Health and Wellness Center project
under Section 15-10-12.3 to include institutional
funds and to change the scope of the project
under Section 48-01.2-25 to include a skywalk,
climbing wall, and additional fitness and office
equipment. Senators Holmberg, Bowman,
Krebsbach, Lindaas, Mathern, Nelson, Robinson,
Seymour, Wardner, and Warner and Representatives
Bellew, Boucher, Glassheim, Hawken, Kaldor,
Kerzman, Klein, Kreidt, Kroeber, Metcalf, and Meyer
voted "aye." Senators Christmann, Kilzer, and
Stenehjem and Representatives Carlson, Delzer,
Dosch, Kempenich, Pollert, Skarphol, Svedjan,
Thoreson, Vigesaa, and Wieland voted "nay."
UNIVERSITY OF NORTH DAKOTA
SCHOOL OF MEDICINE AND
HEALTH SCIENCES BISMARCK
CENTER FOR FAMILY MEDICINE -
CAPITAL PROJECT UPDATE
Ms. Brekke provided an update (Appendix EE) of
the status of the UND School of Medicine and Health
Sciences Bismarck Center for Family Medicine capital
project. She said a location has been selected for the
UND School of Medicine and Health Sciences
residency program. She said the facility will be
located on the corner of Seventh Street and Rosser
Avenue in Bismarck. She said the property is owned
by Medcenter One, and a land lease agreement has
been negotiated for use of the property. She said site
development plans and corresponding cost estimates
are not yet complete, but the university is aware the
current authorization is $5.4 million and will obtain
approval if any variance is anticipated.
INFORMATION TECHNOLOGY
DEPARTMENT - REQUEST
FOR APPROVAL TO USE
CONTINGENT FUNDS
Ms. Lisa Feldner, Chief Information Officer,
Information Technology Department, presented a
request (Appendix FF) for Budget Section approval to
spend the agency's contingent general fund
appropriation of $2,263,883 for a statewide
longitudinal data system. She said the department
applied for an ARRA grant in December 2009, and in
May 2010 the department was notified that its
application was not approved.
It was moved by Senator Wardner, seconded
by Representative Pollert, and carried on a roll call
vote that pursuant to Section 3 of 2009 Senate Bill
No. 2021 the Budget Section approve the
Information Technology Department request to
spend the agency's contingent general fund
appropriation of $2,263,883 for a statewide
longitudinal data system. Senators Holmberg,
Bowman, Christmann, Kilzer, Krebsbach, Lindaas,
Mathern, Nelson, Robinson, Seymour, Stenehjem,
Wardner, and Warner and Representatives Bellew,
Boucher, Carlson, Delzer, Dosch, Glassheim,
Hawken, Kaldor, Kerzman, Klein, Kreidt, Kroeber,
Metcalf, Meyer, Pollert, Skarphol, Svedjan, Thoreson,
Vigesaa, and Wieland voted "aye." No negative votes
were cast.
NORTH DAKOTA STATE UNIVERSITY
DEVELOPMENT FOUNDATION
Chairman Holmberg called on Mr. Jim Miller,
Executive Director, North Dakota State University
Development Foundation, Fargo, to present a report
(Appendix GG) on the foundation's use of funds.
Mr. Miller said the NDSU Development Foundation is
organized as a not-for-profit entity that exists solely for
the benefit of NDSU. In fiscal year 2009, he said, the
NDSU Development Foundation provided $8.2 million
in direct support to NDSU, including $4.7 million for
scholarships and fellowships, $366,000 for
professorships and salary support, $424,000 for
equipment, $1.1 million for colleges and department
development grants, and $1.6 million in discretionary
spending.
In response to a question from Representative
Boucher, Mr. Miller said discretionary spending items
may consist of student-faculty exchanges; support for
student groups; conference registration and travel for
faculty; guest lecturers; relocation packages for
Budget Section 13 June 22, 2010
faculty; or special events of scholarship receptions,
graduation receptions, and celebrations of faculty
excellence to recognize outstanding teachers and
instructors.
VETERANS' HOME REPORT
Chairman Holmberg called on Mr. Russ
Handegard, Construction Project Manager, Veterans'
Home, Lisbon, to present a summary report
(Appendix HH) regarding the status of the Veterans'
Home construction project pursuant to 2009 Senate
Bill No. 2007. Mr. Handegard said problems
associated with backfill failures have been remedied,
and construction is no longer delayed as a result.
However, he said, the backfill failure did affect the
project schedule, and there is an ongoing dispute over
responsibility. He said the project is now expected to
be completed by December 24, 2010, rather than
October 1, 2010, due to North Dakota health
requirements, weather-related events in the fall of
2009, delays in the original contract from the backfill
failure, and weather-related events in the spring of
2010. Although the Veterans' Home construction
project is scheduled for completion on December 24,
2010, he explained, the expected occupancy date is
unknown as weather conditions may not permit
residents to move at that time. He said the project is
approximately 65 percent complete as of May 2010.
In response to a question from Representative
Kreidt, Mr. Mark Johnson, Director, Veterans' Home,
Lisbon, said the Veterans' Home does not anticipate
any significant increase in project costs. Mr. Johnson
said $35,267,053 was appropriated for the project,
and approximately $15.4 million has been spent
through May 2010.
In response to a question from Representative
Pollert, Mr. Handegard said backfill failures caused
mechanical piping placed in building foundations to
become flooded and damaged from fall and spring
rains.
Representative Kreidt asked if the State
Department of Health is actively involved in monitoring
the project. Mr. Johnson said the Veterans' Home is
working with the department. He said department
representatives conduct onsite inspections
approximately every three weeks.
SALES TAX COLLECTIONS RESULTING
FROM OIL-RELATED ACTIVITIES
Mr. Ryan Rauschenberger, Deputy Tax
Commissioner, Tax Department, presented
information (Appendix II) regarding current revenues
distributed to political subdivisions as a result of the
tribal oil agreement and provided an estimate of
distributions to political subdivisions under the tribal oil
agreement if the payments were computed based on
total revenues rather than revenues allocated to the
state. He said revenues to political subdivisions as a
result of the tribal oil agreement resulted in a $35,936
revenue reduction to counties for fiscal year 2009 and
a $440,584 revenue reduction to counties for the first
eight months of fiscal year 2010. Using April 2010
distributions, he said, estimated biennial loss to
counties would be $1.97 million. He said the
production on the reservation that may not have
occurred without the tribal agreement results in an
estimated potential gain to counties of $4.63 million
per biennium, based on April 2010 distributions.
2009-11 BIENNIUM REPORT
ON COMPLIANCE WITH
LEGISLATIVE INTENT
Chairman Holmberg called on the legislative
budget analyst and auditor to present the 2009-11
Biennium Report on Compliance With Legislative
Intent and the analyses of major state trust funds
(Appendix JJ).
PUBLIC SERVICE COMMISSION STATUS
OF THE METROLOGY PROGRAM
Mr. Darrell Nitschke, Executive Secretary, Public
Service Commission, presented information
(Appendix KK) regarding a report on the status of the
metrology program transition from a public to a private
service pursuant to Section 3 of 2009 House Bill
No. 1008. He said the metrology laboratory
discontinued providing metrology services to the
public on March 14, 2010. He said the commission
continues to seek an alternative metrology provider.
He said Minnesota Valley Testing Laboratories, Inc.,
may be interested in operating the metrology program.
The Public Service Commission is planning to
organize a meeting to discuss this possibility with
Mr. Tom Berg, CEO, Minnesota Valley Testing
Laboratories, Inc.; Mr. Goettle; and Mr. Russ Staiger,
President/CEO, Bismarck-Mandan Development
Association. He said Minnesota Valley Testing
Laboratories, Inc., is currently in the process of
constructing new laboratory facilities in Bismarck.
DEPARTMENT OF COMMERCE
GRANTS AND LOANS TO EARLY
CHILDHOOD FACILITIES
Mr. Gordon La France, Division of Community
Services, Department of Commerce, presented
information (Appendix LL) regarding grants and loans
for child care providers for technical assistance,
infrastructure, or business planning as provided in
2009 Senate Bill No. 2225. He said funding for grants
and loans for child care providers was provided to the
Division of Community Services ($520,300) and the
North Dakota Development Fund, Inc. ($1,299,700).
Mr. La France said the Division of Community
Services has completed first round grant distributions
of $243,096 to 92 child care facilities and second
round grant distributions of $209,459 to 65 child care
facilities. Total funding for both grant rounds is
$452,555, leaving $47,445 available for the remainder
Budget Section 14 June 22, 2010
of the biennium. He said this amount is available for
technical assistance and business plans.
Mr. La France said the Development Fund has
approved six loan requests for a total of $293,041 to
entities in Bismarck (2), Fargo (1), Minot (1), West
Fargo (1), and Williston (1).
DEPARTMENT OF TRANSPORTATION
USE OF HIGHWAY FUNDING
Mr. Francis Ziegler, Director, Department of
Transportation, presented information (Appendix MM)
regarding the anticipated use of federal, emergency,
state, and other highway funding during the
2010 construction season pursuant to 2009 Senate
Bill No. 2012.
Mr. Ziegler provided the following estimate of 2010
Department of Transportation highway projects:
Funding
Source Projects
Estimated
Project
Costs
(Amounts
Shown in
Millions)
ARRA State $63.9
Urban 6.9
County 4.75
Transportation enhancement 5.1
Emergency relief Devils Lake Basin 150.2
Various cities and counties 4.0
State Preventative maintenance projects
(2009 SB 2012)
34.0
Federal Bid openings - May, June, and July 217.2
Oil patch state highways 25.0
Estimated 2010 Department of Transportation
construction projects
$511.05
HIGHWAY PATROL COMMERCIAL
VEHICLE INFORMATION
SYSTEMS AND NETWORKS
Colonel James J. Prochniak, Superintendent,
Highway Patrol, presented information (Appendix NN)
regarding the status of implementation of the
commercial vehicle information systems and networks
pursuant to 2009 Senate Bill No. 2011. He said the
commercial vehicle information systems and networks
is a collection of information systems and
communication networks that support commercial
vehicle operations and is managed by the Federal
Motor Carrier Safety Administration. He said the
commercial vehicle information systems and networks
program provides a framework that enables state and
federal government agencies, the motor carrier
industry, and other parties engaged in commercial
vehicle operations safety assurance and regulation to
exchange and use information to improve safety and
security and to conduct business transactions
electronically. He said the 2009 Legislative Assembly
directed the Highway Patrol to proceed with the
implementation of the commercial vehicle information
exchange window system, including preparations
necessary to allow for the automated issuance of
highway permits, and provided $100,000 from the
general fund to complete the initial implementation
process. He said a request for proposal was issued,
and McFarland Management of Boise, Idaho, in
association with Iteris, Inc., was awarded the contract
for the commercial vehicle information systems and
networks study. He said the contract was awarded for
$80,595, $6,092 was spent on advertising the project,
and the remaining $11,655 will not be spent.
INDUSTRIAL COMMISSION STATUS OF
MILL AND ELEVATOR STUDY
Chairman Holmberg called on Mr. Vance Taylor,
Executive Director, Mill and Elevator, Grand Forks, to
present information regarding the status of the Mill
and Elevator study pursuant to Section 11 of 2009
Senate Bill No. 2014. Mr. Taylor called on Mr. Mark
Martens, Eide Bailly LLP, Fargo, to discuss a report
prepared by his firm entitled North Dakota Mill and
Elevator Association Industry Comparison
(Appendix OO). Mr. Martens said the industry
comparison evaluation of the Mill and Elevator
indicates, with the exception of the 2008 fiscal year,
that overall the mill compares favorably to peer milling
companies, especially in terms of better gross profit
and operating expense efficiency ratios. He said
fiscal year 2008 was negatively affected by the
increase in hard red spring wheat and durum
commodity prices and hedging roll costs. He also
said his firm's analysis indicated turnover and liquidity
ratios differed negatively from industry comparatives
due to competitive management practices
implemented and more recent fixed asset investments
by the mill.
BANK OF NORTH DAKOTA
FEDERAL STUDENT LOANS
Mr. Eric Hardmeyer, President, Bank of North
Dakota, presented information (Appendix PP)
regarding the estimated fiscal impact of discontinuing
the issuance of federal student loans as required by
federal law. He said the federal health care reform bill
approved by Congress requires the Bank to eliminate
its federal family education loan program as of July 1,
2010. He said this program has been the hallmark of
the Bank's student loan program for over 40 years
with a total student loan portfolio of approximately
$1 billion. He said the student loan portfolio balance
is comprised of $800 million (80 percent) in federal
family education loan program loans and $200 million
(20 percent) in Dakota education alternative loan
program loans. He indicated the impact to earnings is
minimal in the first year but becomes more significant
in years 2011 through 2013. He provided charts
illustrating that in 2013 the Bank's federal student loan
average balances with the federal family education
loan program were projected at $1.173 billion and
without the federal family education loan program will
be an estimated $627 million. He said projected Bank
income with the federal family education loan program
Budget Section 15 June 22, 2010
was $20.52 million for 2013 and without the federal
family education loan program will be an estimated
$10.98 million. He said without the federal family
education loan program, the Bank will continue to
seek new ways to use its assets to promote and
encourage industry, commerce, and agriculture in
North Dakota.
Mr. Hardmeyer said that 55 of the Bank's 170 FTE
positions are involved in student loan programs. He
said when the Bank will no longer be issuing new
federal loans beginning in July 2010, he anticipates
these employees will still be necessary for
administering existing loans, for implementing the new
student loan computer system, and administering the
Dakota education alternative loan program. He stated
the Bank is still pursuing the possibility of being
authorized to service direct loans on behalf of the
federal government and, if approved, these
employees would be needed.
TOBACCO PREVENTION
AND CONTROL COMMITTEE
Chairman Holmberg called on Ms. Jeanne Prom,
Executive Director, Center for Tobacco Prevention
and Control Policy, to present information
(Appendix QQ) regarding the implementation of the
comprehensive tobacco prevention and control plan
pursuant to 2009 House Bill No. 1015. Ms. Prom said
the 2009-11 biennium appropriation for the Tobacco
Prevention and Control Committee is $12.9 million.
She said through May 2010, the Tobacco Prevention
and Control Committee spent $2.4 million of its
appropriation, including $2.2 million for grants to local
public health units.
Representative Kempenich asked if the Tobacco
Prevention and Control Committee would be
monitoring usage rates to determine if the committee's
efforts are lowering rates of tobacco use. Ms. Prom
said the Tobacco Prevention and Control Committee
efforts to create tobacco-free campuses and
establishments, as well as raising the tobacco tax, all
help to reduce the usage rate.
COMMITTEE DISCUSSION
AND STAFF DIRECTIVES
Chairman Holmberg announced the next meeting
of the Budget Section is tentatively scheduled for
Wednesday, September 22, 2010.
Representative Kreidt requested additional
information on the Veterans' Home construction
project, specifically a comparison of actual costs to
budget to date by major category of expenditure, and
current projections of total project costs.
Senator Nelson suggested the University System
provide information on the definition of terms relating
to institutional and local funds and whether the
definition of these terms is consistent across the
University System.
It was moved by Senator Robinson, seconded
by Representative Kempenich, and carried on a
voice vote that the Budget Section meeting be
adjourned subject to the call of the chair.
Chairman Holmberg adjourned the meeting at
5:26 p.m.
___________________________________________
Sara E. Chamberlin
Fiscal Analyst
___________________________________________
Sheila M. Sandness
Fiscal Analyst
___________________________________________
Allen H. Knudson
Legislative Budget Analyst and Auditor
ATTACH:43