North Dakota’s oil boom is over, and North Dakota State will be feeling the burn.
In an email to campus Monday, Provost Beth Ingram said NDSU will “use one-time savings to the greatest extent possible” to approach the $6.4 million in spending cuts ordered by North Dakota University System chancellor Mark Hagerott. A 4.05 percent budget reduction, or allotment, will affect all state agencies, Ingram said, a move that will save the state $245 million through the 2015-17 biennium, Gov. Jack Dalrymple ordered Monday.
“In broad strokes, the Chancellor has directed us to scrutinize spending in particular categories, including hiring, travel, and equipment purchases; to consider shared services that yield efficiencies; to evaluate efficiencies in course delivery, specifically annual faculty course loads; and to prioritize building repairs and maintenance based on safety and well-being,” Ingram wrote. “We cannot consider increasing tuition or fees to offset the budget allotment.”
Dropping oil prices over the last year are largely to blame for the $1 billion-plus shortfall, along with declining farm commodity prices. In late January, North Dakota sweet crude hit $17.25 a barrel, as Flint Hills Resources found. The state’s oil hit a high in July 2008 with $136.29 a barrel.
To manage its allotment, NDSU will delay and evaluate funding in a number of ways, Ingram said.
The university will delay funding for its Grand Challenge Initiative, a research program, until fall 2017.
“We will continue to evaluate the final proposals and to plan the activities associated with those proposals, but no money will be allocated to permanent expenses such as hiring faculty until (fall 2017),” Ingram wrote.
NDSU will also intensify its review process in hiring requests for faculty and staff, as well as evaluate “shared service” across campus.
The university will also reduce spending on some centrally funded professional development activities and follow all forthcoming “directives and stipulations” from Hagerott and the State Board of Higher Education.
“We will also be creating a study group comprised of faculty, staff and students to provide guidance in the event of more permanent budget adjustments,” Ingram wrote.
Ingram added she will work with campus vice presidents to review a budget plan to be submitted by Feb. 11 to NDUS.
“We plan to communicate regularly with campus about this evolving situation, and ask for both your patience and guidance as we move forward,” Ingram wrote.
Student body president Eric McDaniel declined to comment on the budget shortfall but said in email, “As Provost Ingram said in her email, all ND universities have until Feb. 11 to submit their new budget plan including the increase. Until then no one really knows how it will effect (sic) NDSU for the rest of this biennium.”
Despite North Dakota’s burgeoning oil revenue in recent years, the shortfall form the slump in the state’s energy sector was unseen.
The $14.4 billion budget set at the start of the new fiscal year July 1 was constructed around economic assumptions that have slumped, “much greater than anyone would have predicted,” Dalrymple told state officials Monday in Bismarck, the Bismarck Tribune reported.
“After 15 years of receiving almost entirely good news about the growth in revenues for North Dakota, it seems strange to hear that things have gone in the other direction,” the governor said.
Despite a $1 billion shortfall in its budget, North Dakota still has its $3.5 billion Legacy Fund, a reserve of capital derived from oil revenues and approved by voters in 2010.
The Legacy Fund cannot be touched until 2017.
However, Dalrymple will utilize near half a billion dollars from the state’s Budget Stabilization Fund, another reserve of funds generated from oil revenue.
Dalrymple’s tap will leave about $75 million in the fund, the Tribune reported.
North Dakota also has more reserve funds in $875 million in various other accounts, state budget director Pam Sharp told the Tribune.
Guidelines for the 2017-19 state budget will be likely be issued in April.