State Board of Higher Education
Budget and Finance Committee
August 19, 2014
The State Board of Higher Education Budget and Finance Committee met by conference call
on Tuesday, August 19, 2014, at 2:00 p.m. CT. The call originated in the NDUS office, 10th
floor of the State Capitol, Bismarck, ND.
SBHE Budget and Finance Committee members participating:
Mr. Don Morton, Chairman
Dr. Kirsten Diederich
Mr. Grant Shaft
Ms. Janice Hoffarth, non-voting
Other NDUS participants:
Dr. Larry C. Skogen, Interim Chancellor
Bruce Bollinger, VP, Finance and Administration, NDSU
Alice Brekke, VP, Finance and Operations, UND
Dave Clark, Interim President, BSC
Linda Donlin, Director of Communications and Media Relations, NDUS
Dennis Gladen, VP, Administrative Affairs, NDSCS
Laura Glatt, Vice Chancellor for Administrative Affairs, NDUS
Cathy McDonald, Director of Finance, NDUS
Terry Meyer, Administrative Support Manager, NDUS
Murray Sagsveen, Chief of Staff, NDUS
Dr. Steve Shirley, President, MiSU
Rick Tonder, Director, Facility Planning, NDUS
Mr. Morton convened the meeting at 2:00 p.m.
June 17, 2014 Minutes
Mr. Shaft moved, seconded by Dr. Diederich, to approve the June 17, 2014, minutes. Shaft,
Diederich and Morton voted aye. The motion carried.
Review SBHE Policy 302.3 Budget and Finance Committee Policy:
Mr. Morton encouraged committee members to review SBHE Policy 302.3 Budget and
Finance Committee, which outlines the committee’s role and responsibilities.
2015-17 Capital Project Budget Request
Chancellor Skogen presented his 2015-17 capital project budget request recommendations.
The recommendations focus on protecting the state’s assets and meeting the educational
needs of 21st century. The North Dakota University System’s capital budget strategies focus
on (1) protection of the health and safety of students, faculty and staff; (2) managing our
deferred maintenance backlog; (3) addressing capital needs that ensure continuation of
accreditation; and (4) flood recovery and protection.
At the request of Chair Morton, Chancellor Skogen provided 2013 fall enrollment
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headcount and instructional type chart to the committee. Thereafter, the Chancellor
presented his recommendations as follows:
Chart A: 63rd Legislative Action
Project Cost
Rank
Campus
Priority
Campus
Project Title
N/A
1
UND
Medical School
Type of Project
Completion of
Medical School
State
Other
$ 62,000,000
State Running
Total
Reduction in
Deferred
Maint.
$ 62,000,000
N/A
Chancellor Skogen said the 2013 Legislature appropriated roughly half of the funding that
is required for the UND Medical School, with a commitment to appropriate the second half
of those funds, $62M, during the 2015 Legislative Session.
Chart B: Valley City Flood Mitigation
Project Cost
Rank
Campus
Priority
Campus
Project Title
Type of Project
State
N/A
2
VCSU
Fine Arts
Building
New Construction,
including demolition
$ 25,850,000
Other
State Running
Total
Reduction in
Deferred
Maint.
$ 25,850,000
$ 7,763,660
Chancellor Skogen said in Valley City’s flood mitigation plans for the Sheyenne River, a dike
is being built and one of the VCSU buildings, Foss Hall, would be inside the dike. The plan
would be to demolish Foss Hall, along with McCarthy Hall that has significant deferred
maintenance, and build a new Fine Arts Building. Interim President Dahlberg clarified that
the building is both for fine arts and communication. In response to a question, she
reported that there are no FEMA dollars involved; it is a State Water Commission and
Valley City project.
Chart 1: 2015-17 Major State General Fund Capital Project Priority Recommendations
Life-Safety Priorities
Projects listed below address a significant life safety condition, resulting in increased risk of personal injury
or other claim. In general, the projects also address a significant deferred maintenance liability. Total
deferred maintenance removed in this category: $15,971,504
Project Cost
Rank
Campus
Priority
Campus
1
1
2
1
3
3
State Running
Total
Reduction in
Deferred
Maint.
$14,289,000
$ 14,289,000
$12,426,504
VCSU
Project Title
Heating Plant
Replacement
Type of Project
New Construction,
including demolition
State
Other
NDSU
Dunbar Hall II
New Construction,
including demolition
$ 45,900,000
$ 60,189,000
$3,020,000
DCB
Nelson Science
Center
Renovation
$ 1,098,789
$ 61,287,789
$ 525,000
Chancellor Skogen said Chart 1 is for life-safety priorities, and three projects are
recommended. In the recent master plan, the consultant said that replacing the heating
plant at VCSU with new construction and demolition of the old plant is the number one
priority in the system. NDSU’s construction and demolition of Dunbar Hall (science labs) is
the campus’ number one priority, which addresses critical ventilation needs as well as
egress and life-safety concerns. DCB’s renovation of Nelson Science addresses deferred
maintenance and life-safety concerns with the existing teaching laboratory spaces.
Interim President Dahlberg said Valley City is in a situation where the campus may have to
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close occasionally because the existing heating plant can’t keep up with the cold weather.
Chart 2: 2015-17 Major State General Fund Capital Project Priority Recommendations Deferred
Maintenance Priorities
Projects listed below address, in the order of magnitude, the amount of deferred maintenance being
completed compared to overall project cost. The projects may also address negative life safety conditions,
improve functionality, or correct accreditation concerns which rank lower than the deferred maintenance
mitigation. Total deferred maintenance addressed in this category: $16,146,423
Project Cost
Rank
Campus
Priority
Campus
1
1
BSC
2
1
NDSCS
3
1
LRSC
Project Title
Major Campus
Infrastructure
Campus Water, Sewer
Infrastructure
Switchgear, Electrical
Service, Window
Replacement
Other
State Running
Total
Reduction in
Deferred
Maint.
Type of Project
State
Replacement
$ 1,575,000
$1,200,000
Replacement
$ 1,575,000
$
13,298,000
$ 14,873,000
$13,298,000
Replacement
$ 1,648,423
$ 16,521,423
$ 1,648,423
Chancellor Skogen said Chart 2 addresses deferred maintenance priorities, which are all
major campus infrastructure issues, and are the campuses number one priorities in this
area. The reduction in deferred maintenance is basically a dollar for dollar match or
$16.1M.
Interim President Clark said the emphasis of the BSC project is to address four areas:
boiler, primary electrical distribution line, irrigation system, and campus telephone system
replacements.
Mr. Gladen said NDSCS’s request is to replace the campus water and sewer lines, which
often fail during the winter months. The parking lot and roads would also have to be
reconstructed.
Chart 3: 2015-17 Major State General Fund Capital Project Priority Recommendations
Program/Accreditation Priorities
Projects listed below address, in the order of magnitude, the relative importance each has to a strategic or
corrective program need. Although projects may have scope components which reduce deferred
maintenance or consider life safety elements, the primary purpose of the project is to advance the mission of
the institution. Note that based on the ranking criteria approved by the master plan consultant, the
projects below are all lower in numerical ranking than any of the projects which address either safety
or deferred maintenance, above. Projects highlighted may not be a consideration for general fund
appropriations, and if so should be transferred to the non-state general fund appropriated category. Total
potential deferred maintenance addressed in this category: $9,000,000
Project Cost
Rank
1
Campus
Priority
1
Other
State Running
Total
Reduction in
Deferred
Maint.
Campus
Project Title
Type of Project
State
NDSU
Accreditation
Projects (Sudro
Hall Addition)
Addition/Renovatio
n
$ 32,000,000
$ 32,000,000
$ 4,000,000
Renovation/
replacement
$ 10,000,000
$42,000,000
$ 5,000,000
2
1
UND
Strategic
Renovation/Rene
wal
3
1
WSC
Allied Health
Facility
New Construction
$ 14,000,000
$56,000,000
N/A
4
2
NDSCS
Fargo Expansion
Phase 1
New Construction
$ 10,000,000
$66,000,000
N/A
3
5
1
MiSU
Career and
Technical
Education (CTE)
New Construction
$ 8,000,000
$ 74,000,000
NA
Chancellor Skogen presented five priorities in the program/accreditation area:
1) NDSU’s project will address accreditation issues with the Sudro Hall addition related
to the pharmacy and nursing programs;
2) UND’s project is a strategic renovation/renewal to specifically repurpose the old
medical school after the new medical school has been completed. Ms. Brekke said
the original request was for a $40M renovation and replacement pool. And, in the
original $40M request was the medical school repurposing and a number of other
pieces to address accreditation issues with some of the clinical space
(communication and speech disorders, counseling services, rural psychology and
integrated care, music therapy and clinical services) within arts and sciences. In
discussion regarding the medical school, there are also some potential demolition of
older buildings, which UND needs to ensure appropriate space for units that will be
moving out of these buildings. One of those being the Theatre Arts Department,
which UND is working with an architect to consider whether there is other space on
campus that could be better adapted for their needs, including looking at the
Chester Fritz Auditorium, which was all part of the original $40M request. She said
there hasn’t been specific discussion on campus yet on how $10M instead of $40
million would be distributed to make progress on multiple fronts;
3) WSC’s new construction of an Allied Health Facility will address critical needs in
western North Dakota. The Healthcare Workforce Initiative specifies that training
health care professionals within the State of North Dakota is the most practical and
most likely successful way to create and maintain an adequate health care work
force. Dr. Nadolny believes bringing allied health education and training to the
northwest quadrant of the State is vitally important;
4) NDSCS’s Fargo Expansion Phase I is a project that Dr. Richman has proposed to
construct a new facility in Fargo to meet the growing population needs for the subbaccalaureate degrees and training. NDSCS currently runs the Skills Center in Fargo,
which they are outgrowing. The estimated cost for the entire project is $65M;
however, for the 15-17 request, Phase 1 of the project is a $10M request to allow
NDSCS to purchase land and begin prepping it with the intent that the campus come
back to the board at a future date to request funds to construct the building; and
5) MiSU’s request for new construction for a Career and Technical Education building.
Dr. Shirley would like to see career and technical education offered on the MiSU
campus in collaboration with the Dakota College at Bottineau as well as other
providers of career and technical education across the system.
Chair Morton commended those collaborating to bring allied health to the western part of
the state. He said NDSCS expansion into Fargo will help with the outmigration of North
Dakota students to Minnesota, which is currently 1,400 students attending the two-year
school in Moorhead. Dr. Diederich said we are being responsive to the State’s needs. Mr.
Shaft said while is supports UND’s project, he raised a question about UND’s request asking
if additional guidance should be sought from OMB or Legislative Council about how best to
structure this request. Ms. Brekke replied that there are many moving parts to their
request and, as decisions are made, UND would fully expect to have to come back to the
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board, and/or appropriate legislative body seeking appropriate approvals. She said that
UND is working with an architectural firm on the repurposing of the medical school, which
should be completed by mid-December on definition of what will be moved into the
medical school and a gauge of what needs to be done to accomplish that. UND will also
consider what impact that will have on the other moving parts of the equation. UND has
also engaged an architectural firm to assist it with consideration of what are the special
needs relative to how they handle the displacement of the Theatre Department; the report
should be available mid-December.
Chancellor Skogen said clarification will be sought on UND’s request prior to the Sept. 3
SBHE meeting.
Mr. Bollinger reported that NDSU not only has accreditation concerns with the Sudro Hall
Addition, which is one of the chancellor’s recommendations, but there are also those same
concerns with the engineering building.
Chart 4: 2015-17 Major State General Fund Capital Project Priority Recommendations for NDSU
Related Entities
As per NDCC, the projects listed below are to be included in the 2015-17 general fund budget request without
alteration by the SBHE.
Affiliate
Location
Main Station
Main Station
CREC, LREC,
NCREC,
WREC
Forest
Service
Project Title
Type of Project
Project Cost
State
State - Running
Total
Reduction in
Deferred
Maintenance
Other
Veterinary Diagnostic
Lab
Meats Lab Facility
New construction
New construction
$18,000,000
$7,600,000
$ 18,000,000
$25,600,000
Seed Cleaning
Facilities
Replacement
$5,250,000
$30,850,000
No requests
Chancellor Skogen reported that these requests in Chart 4 are NDSU Related Entities
requests and considered pass through requests, so no decision on the board’s part is
needed.
Chart 5: 2015-17 Major Non-State General Fund Capital Project Priority
Reduction in
Deferred
Maintenance
Campus
UND
Project Title
Student Engagement
Type of Project
Misc. Renovations
Project Cost
$6,000,000
NDSU
Aquatic Center
Memorial Union Dining
Center Expansion &
Accessibility
Residence Dining Center
Kitchen Remodel & Roof
Replacement
Low Rise Lavatories-Phases
IV and V
Robertson Hall Restroom
Renovation
Health, Wellness, and
Expansion
$11,000,000
Funding
Source
Private
Revenue
bond/local
Addition/renovation
$1,000,000
Local
Renovation/Repair
$2,000,000
Local
$300,000
Remodel
$2,327,775
Local
$1,582,500
Renovation
New Construction
$1,500,000
$16,000,000
Private/local
Private/local
$1,000,000
N/A
NDSU
NDSU
NDSU
NDSCS
VCSU
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VCSU
Physical Education Facility
W.E. Osmon Fieldhouse
Addition-Phase 2
TOTAL
Addition
$3,647,750
$43,475,525
Private
N/A
Chancellor Skogen said projects in Chart 5 are non-state general fund capital projects,
which are funded either privately, bond, or local projects.
Chart 6: Projects Not Included in Recommendations
Campus
BSC
DCB
DCB
DSU
DSU
LRSC
MaSU
MaSU
MiSU
MiSU
NDSU
NDSU
UND
TOTAL
Project Title
Student Union LL
Renovation
Dorm Updates and
Remodeling
Health and Wellness
Facility
May Hall HVAC &
Window Replacement
Student Academic Center
Dakota Precision Ag Center
Facility
Classroom Building
Renovation
Old Main Renovation
Expand Geo Thermal
Purchase and Renovate
Augustana Church
Accreditation Projects
(Engineering Building)
Crop Quality Food Science
Facility (Harris Hall
replacement)
Infrastructure Pool
Type of Project
Project Cost
State
Renovation
$ 600,000
N/A
Renovation/Remodel
$ 3,784,076
N/A
New Construction
Renovation/
replacement
New Construction
$ 4,500,000
$ 4,032,960
$ 14,884,665
$ 4,032,960
$ 1,390,353
New construction
$ 12,405,968
N/A
Renovation
Renovation
Expansion
$ 9,632,060
$ 19,267,525
$ 4,500,000
$ 1,970,000
$ 7,836,000
N/A
Renovation/Purchase
$ 2,500,000
N/A
Addition/Renovation
$ 27,900,000
N/A
$ 32,000,000
$ 40,000,000
$ 176,007,254
$1,980,000
$ 6,037,000
$ 23,246,313
Replacement, including
demolition
Replacement
Other
$4,500,000
$ 4,500,000
Reduction in Deferred
Maint.
N/A
Chancellor Skogen said that Chart 6 is a listing of all other projects that weren’t included in
his recommendation, although he pointed out that they are all very good projects.
In response to Mr. Morton’s questions, Mr. Bollinger said Mr. Tonder and the consultant did
go through the NDSU engineering building and could verify that the facility is in dire need
of updating. It is not only too small, it is outdated and in need of repairs, and there are
accreditation concerns. Mr. Morton said there is a need for engineers, not only in the State
of North Dakota, but throughout the country, and that the NDSU program is highly
recognized. To address the accreditation concerns, Mr. Morton suggested that the
committee consider adding the request to the list of projects being considered for state
funding in the 15-17 biennium. After committee discussion, the NDSU Accreditation Project
(Engineering Building) at a cost of $27.9M will be added as the last priority project on
Chart 3.
Chancellor Skogen said there are three ways to address special assessment balances: (1) to do
nothing, (2) to make 15-17 biennium installment payments of $1.2M, and (3) to recommend
paying off the outstanding principal and interest balance of $4.2M. The chancellor recommends
paying the estimated $1.2M payment balance for the 15-17 biennium.
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Chancellor Skogen recommends increasing funding under the OMB extraordinary repair
formula to 50% of the OMB formula or $44M for the biennium, which is an increase to base
funding of $32.8M.
Chancellor Skogen provided a summary of his 15-17 biennium recommendations below:





A.) Request base funding of $32.8 million to bring all campuses to 50% of the OMB extra-ordinary
repairs formula Cost $32.8 million base funding
B.) Request one-time funding of $1,259,683 for 15-17 special assessment payments. Cost $1,259,683
one-time funding
C.) Request one-time funding for a system deferred maintenance pool. Cost $20 million one-time with
the following stipulations:
D.) Completion of a comprehensive deferred maintenance inspection and estimate (included in the
$750,000 budget request, below) of all general fund supported facilities similar to that undertaken by
VFA Inc. in the Paulien & Associates Master Plan. (See page 122 of the report for a sample of the
proposed inspection and estimate information, which can be updated with expenditures to re-calculate
the deferred maintenance values.
 No less than 80% of the total project cost must be attributable to the resolution of deferred
maintenance.
 Clear demonstration of corresponding reduction in deferred maintenance.
 Projects require prior approval by Chancellor.
E.) Request one-time funding of $750,000 to complete the space utilization, deferred maintenance and
space inventory evaluation at all campuses. Cost $750,000 one-time increase over 13-15 biennium
(Already included in SBHE approved operating budget request)
Recommended Motion – SBHE Capital Project Request
Motion to approve and request the following be included within the Governor’s 2015-2017 Budget Request to
the 64th Legislative Assembly:
1. Project listed on Chart A: 63rd Legislative Action
2. Project listed on Chart B: Valley City Flood Mitigation
3. All projects listed Chart 1: 2015-17 Major State General Fund Capital Project Priority Recommendations Life-Safety Priorities
4. All projects listed in Chart 2: 2015-17 Major State General Fund Capital Project Priority
Recommendations – Deferred Maintenance Priorities
5. All projects listed in Chart 3: 2015-17 Major State General Fund Capital Project Priority
Recommendations – Program/Accreditation Priorities w/addition of NDSU Engineering Project of
$27.9M.
6. All projects listed in Chart 4: 2015-17 Major State General Fund Capital Project Priority
Recommendations – NDSU Related Entities
7. All projects listed in Chart 5: Chart 5: 2015-17 Major Non-State General Fund Capital Project Priorities
8. All funding requests specified in the Summary Recommendations for 15-17 Biennium (above) with the
included stipulations and requirements, excluding those items already included in the SBHE approved
15-17 operating budget request
9. Amend 15-17 NDUS operational budget request to include $4 per SCH for a total increase of $29M.
Mr. Shaft moved, seconded by Dr. Diederich, to approve the Chancellor’s recommended
motion for SBHE Capital Project Requests, subject to the removal of paragraph nine and the
addition of NDSU’s engineering project to chart 3. Diederich, Shaft, and Morton voted aye.
The motion carried.
FY15 Presidential Salaries
Chancellor Skogen reported that the board, at its June meeting, approved the length of
presidents’ contracts, with salaries to be determined at a later date. He said he elected to
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recommend a range of 80 to 120 percent of the median, of CUPA-HR data consistent with
Carnegie classifications. He recommended the following:
 a two-year commitment to NDSU President Bresciani, FY15 4% and FY16 3.57% to
bring his salary to the minimum of the current range (80% of median);
 UND President Kelley, MaSU President Hagen, DSU President Coston, NDSCS
President Richman, BSC Interim President Clark, and LRSC President Darling 3%;
 WSC President Nadolny 5% to recognize higher cost of living in Williston.
In response to Mr. Shaft’s question asking if Carnegie classifications have always been used
to determine salaries, Ms. Glatt responded that they have been, but there have been years,
in which other qualifying factors have been considered within Carnegie classification such
as program type, enrollment, etc.
There was a question on how often Carnegie revisits reclassification of institutions. The
Chancellor said that based on their website, it looks like every five years and the next
review takes place in 2015.
Committee members expressed concerns about the board locking into a two-year salary
commitment for NDSU President Bresciani and suggested that he receive 3% in FY15 as
other presidents, with the exception of the WSC President with a 5% increase. And, as the
board looks into reviewing how salaries are set, including 360 degree performance
evaluations, this doesn’t lock the board into a two-year commitment. Further, it provides
flexibility for the next chancellor. By that time, the 2015 Carnegie classification should be
available to determine whether all NDUS campuses remain in their same classifications.
Mr. Shaft moved, seconded by Dr. Diederich, to approve and recommend the Chancellor’s
salary recommendations with the exception that the salary for NDSU President Bresciani
be a 3% one-year adjustment. Shaft, Diederich, and Morton voted aye. The motion carried.
Meeting adjourned at 3:30 p.m.
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