Chancellor Warns North Dakota Universities To Be Prepared For Budget Cuts


The North Dakota University System is preparing for budget cuts as low oil prices cause state revenues to come in well under forecasts.

north dakota university system dean bresciani

North Dakota’s general fund revenues so far in the 2015-2017 biennium have come in well under projections thanks largely to slow oil and gas development amid low prices. According to the OMB’s most recent report, through October general fund revenues have come in 7.5 percent, or over $111 million, less than lawmakers forecasted.

It’s a gap that’s been growing. In September, actual general fund revenues were 5 percent behind the forecast, and in August the gap was 3.9 percent.

With that gap between actual revenues and forecasted revenues (which are what lawmakers used to budget) growing larger, North Dakota University System Chancellor Mark Hagerott is warning the university presidents to brace for budget cuts.

I wrote about it over at Watchdog today:

Falling oil prices have hit North Dakota’s state budgets so hard that the North Dakota University System’s chancellor sent an email warning presidents of the state’s 11 public universities that budget cuts could be forthcoming.

“Through October 31, 2015, the State’s general fund tax revenue collections are $112 million less than forecasted,” chancellor Mark Hagerott wrote in the Nov. 20 email. “OMB notified our office this week that they are planning on updating the revenue forecast. If the updated forecast indicates that the State will not have adequate revenues to cover its obligations, the first step to balance the books will be an across‐the‐board reduction in all state agency appropriations.”

Hagerott says the spending reductions “could be as high as 2.5% of total general fund appropriations” with any larger gaps between revenues and spending filled in by the state’s Budget Stabilization Fund.

That 2.5 percent figure is based on the law which governs that fund.

The Budget Stabilization Fund was created by the Legislature in 1987 to help offset revenue shortfalls. According to the statute creating it, if the director of the OMB finds that revenues for the biennium will be at least 2.5 percent less than estimated by the most recently adjourned Legislative Assembly, the governor is authorized to make transfers from the fund.

But those transfers are “limited to the difference between an amount 2.5 percent less than the original legislative General Fund revenue forecast and the revised forecast prepared by the Office of Management and Budget,” according to the Office of the Treasurer.

The most recent balance of the fund reported by the State Investment Board in September was over $575 million.

Here’s the full email:

ND Budget Update