I wrote this chapter three years ago to be included in my book When Governance Worked: It’s Time to Chart a New Course but when I came up with the title this chapter didn’t fit into the theme I wanted to convey.
Obviously we never did get a handle on the higher education system or the State Board of Higher Education, so how could I say in this instance that governance worked? I was frustrated then with the way things were working and I don’t think a thing has improved in the last twenty years.
If anything it has gotten worse.
Twenty years ago the Fargo Forum and higher education supporters condemned those of us who were trying to make a difference just as they do today. Hopefully at sometime they will recognize that reconstituting and rethinking how post secondary education is delivered in North Dakota is critical to North Dakota’s future.
In 1985 as a newly elected legislator I had a lot to learn. The biggest challenge was determining what certain legislator’s hot buttons were and where their loyalties lied. The way higher education funding was handled was a real eye opener. As you read this I would like you to consider that it was a different time and people’s motivations were different then today. That is not to say that most legislators weren’t in Bismarck to do the best they could for the people of North Dakota. What it will describe is why certain legislators were motivated to espouse issues for reasons that may or may not be relevant today.
The Majority Leaders that session were Senator Dave Nething (R) Jamestown and Representative Earl Strinden of Grand Forks. Nething was an attorney and extremely protective of the Jamestown Hospital a state institution for the mentally ill and drug dependent. Strinden was executive director of the University of North Dakota Alumni Association. Chairing the Appropriation Comm. in the Senate was Senator Evan Lips(R) Bismarck a long time mayor of Bismarck and an extreme advocate for anything UND. You could say he wore his green and white on his sleeve. In the house the Chairman was Representative Jim Peterson(R) Minot whose favorite projects were the North Dakota State Fair and Minot State University.
As an illustration of how it worked back then I will describe how buildings and construction projects were handed out in those days. Keep in mind that this type of thinking not only effected capitol construction projects but how money was divided amongst the operating budgets of the institutions that are enshrined in the North Dakota Constitution.
The Bonding Bill or Christmas Tree Bill as it came to be called contained most of the appropriations for capitol construction or renovation of state owned public buildings. To facilitate the expenditures it had been deemed long before my time that the State Of North Dakota could issue bonds for these projects. There is a provision in the constitution that says the state cannot spend anymore in a Biennium then it collects another words we must have a balanced budget. To get around that the legislature years ago devised the bonding mechanism. Thus any major expenditure on buildings was bonded for and the proceeds appropriated in the Christmas tree bill.
There is a provision that says that the state cannot exceed a particular amount of total bonds outstanding. Because of the economic situation in the 1980’s the State of North Dakota was quickly approaching the limit of its bonding authority. We were also being warned by the bond brokers that if we added much more the ratings for State of North Dakota bonds could be downgraded which would have jacked up the interest rates being paid.
So here we have Senator Nething who to protect his voter base in Jamestown wants to keep the State Hospital a viable economic force in his community. The problem is that as community based treatment for the mentally ill and drug dependent becomes more popular the need for the hospital is on the wane. Maj. Ldr. Nething’s chair on Senate Approp. is long time Senator Lips who is a real tax and spend advocate. On top of that his close relationship with President Tom Clifford of UND goes back decades.
On the House side you have Strinden as director of the UND Alumni Foundation. He certainly has a relationship with Pres. Clifford although he is not as overtly an advocate for the UND as is Senator Lips. His chairman of Approp. is Rep. Jim Peterson another long time legislator who never saw a tax or spending bill he didn’t like.
The outgrowth of all of this is that each session the Christmas tree bill would contain authorization for spending at most of the institutions of higher learning and the other constitutional mandated facilities though out the state. To garner enough votes for the legislation the leadership would make sure that the largess was spread around guaranteeing enough votes.
The reader may ask how the other institutions fit into this picture. As an example let’s take NDSU. Laurel Loftsgard was President of NDSU and he had come up through the old Agriculture days of the school. NDSU had a presence though out the state because of its focus on agriculture and it was the home of the Agriculture Extension Service. Besides that it also had a number of agriculture experiment stations in places such as Hettinger, Carrington, Dickinson etc. If the Christmas tree bill had enough pork in it for those facilities you could guarantee the votes of legislators interested in ag or who had facilities in their district. If they weren’t convinced by the money in the Christmas tree bill they certainly understood they didn’t want to get crosswise with the two powerful chairmen of the appropriation committees.
There were also other players who exerted an influence. Rep. Brynhild Haugland(R) Minot was the longest serving legislator in the USA. Her favorite projects were the medical school at UND and the Peace Gardens. She did not serve on appropriations but she had a very close relationship with Chairman Peterson who made sure her priorities were met. Also serving on the appropriations committee was Rep. Roy Hauseur (R)Wahpeton who could be counted on to support the N.D. State College of Science as it is called today. He and Peterson were also close friends.
In those years seats on the different standing committees were handed out on a seniority basis. The longest serving members usually were given their choice of assignments. Any member who had an institution named in the constitution relished a seat on the appropriations Comm. as they then could influence how much of the largess would accrue to their community. In the case of Minot, Rep. Haugland had no need to sit on Appropriations as her friend Peterson was chair. In other communities the legislature who got the seat was chosen first because they had seniority, second because they belonged to the party of the majority. If no one from the majority party wanted the seat or there were no majority party representatives or senators on one of the committees a minority member with seniority would get the nod to serve on Appropriations.
As you can see it was an arrangement that benefited the communities that had institutions. Legislators on the Appropriation Committees were expected to protect or enhance the moneys appropriated to their institutions. This was especially true of the institutions of higher learning.
The operating budgets for the separate college institutions were set in the following manner. The college presidents would make presentations to the State Board of Higher Education based on numbers they had their chief financial officers put together. Those numbers were based on a formula whose main factor was student enrollment. To this was added any enhancements the college presidents thought they could sell to the board. Capitol construction or renovation deemed worthy was presented at the same time but wasn’t included in the operating budget as everyone knew it was a wish list that would be weighed against other projects though out the state.
The board then presented their numbers to the Office of Management and Budget whose director was a governor’s appointee. It was the job of OMB to fit the numbers requested into the overall state budget that the governor presented to the legislature in December. OMB would generally cut the request down to whatever the governor had requested everyone use as a percentage increase to their past budget. Usually the SBHE just like today had a much bigger number then OMB or the governor would approve and they along with the administrators of the colleges would bemoan the cuts made and start a campaign to convince legislators of the need for additional funding. There was no such thing as zero based budgets or justification of the millions spent in previous bienniums.
As an illustration of that I’ll point to two construction projects at NDSU. The first that struck me after a number of sessions was money appropriated to refurbish the smoke stack at the power station on the NDSU campus. A sufficient amount had been appropriated in one session but in the next session’s Christmas tree bill it was there again. Second there was the question of the windows in Menards Hall one of the oldest buildings on campus. Again the money had been appropriated but when I visited the campus the windows hadn’t been replaced. Subsequently window replacement was included in another bi-annual budget. After I found out I began my own investigation into similar projects on other campuses. It was common to request the money in an operating budget or the capitol budget but then delay the project. The college administrators could accomplish this by getting approval from SBHE then going to the Budget Section during the interim where the members of that committee were all too eager to give approval. You see the Interim Budget Section which operates as an oversight committee can approve transfers from line items of the legislatively adopted budgets if they feel there is a great need. With Sen. Lips and Rep. Peterson chairing the committee which was made up of the members of the two Standing Committees the burden of proof was fairly insignificant.
Adding to this cozy affair was the way the SBHE members were selected. The Governor selected people from a list of candidates who were generally of his political party. Most members were graduates of one of the institutions named in the constitution. It was even better if they actually lived in the community where the facility was located. Seldom were the budgets of the individual institutions questioned by SBHE as it was considered inappropriate if you hoped to have the other member’s rubber stamp your institutions budget when it was presented. The reasoning also went that the Commissioner (we hadn’t transitioned into a Chancellor yet) and staff would look the numbers over and if they approved them who was the board to quibble over a few million? Bottom line the SBHE roll was reduced to advocating for a budget that the college presidents could convince the Board office to present to OMB.
It was always interesting that the board chairman and one or two other board members would show up at the beginning of the session when either the House or Senate Appropriation committee took up the higher ed bill and plead for a restoration of the funds OMB had cut from their request. Remember if an Appropriation bill is first heard in the Senate it starts its journey the next session in the opposite house.
There was no doubt that every legislator who had a college in or near their district would get a call to come out and have dinner or a lunch with the president of the institution. There was also no doubt that the college presidents would show up individually at the Appropriation hearings to plead the case for their institution. The bigger schools would have staff hanging around almost every day of a legislative session as we were talking about hundreds of millions in state dollars.
I remember distinctly members of Appropriations committees comparing the effectiveness of the presentations of the college presidents. Tom Clifford was probably the best salesman well Laurel Loftsgaard wasn’t considered very effective so NDSU would usually have its CFO make the presentation while the president sat through the ordeal. Of course all of this was just window dressing as the real decisions were made behind the scenes by the chairman of the Appropriation committees who met privately with the college presidents. You might at this point ask what about the commissioner? Actually he would be kept in the loop but his opinion meant very little in the scheme of things.