Chancellor and system staff outline budget priorities, AI and national security initiatives

Chancellor Mark Hagerott told the Appropriations - Education and Environment Division that the North Dakota University System (NDUS) has seen broad enrollment gains and that the board is prioritizing workforce‑focused initiatives, artificial intelligence and national security partnerships as part of its biennial budget request.

Hagerott said the system reported the highest overall enrollment in nine years and the highest graduation rate in a decade, and he credited system flexibility and shared services for helping smaller campuses run essential operations (payroll, procurement, financial controls). “The campuses are adapting. Some are growing impressively,” he told the committee.

Why it matters: System staff presented the board’s budget request and noted changes proposed in the Senate engrossment of the omnibus bill that affect the funding formula, capital tiers and one‑time innovation grants. The system’s request blends base funding for the funding formula with targeted investments in computing, workforce innovation, nursing simulation, and student financial aid programs.

Budget and program highlights: - The board’s overall budget request shown to the committee included roughly $810 million in general funds, $698 million in tuition and about $1.3 billion in other funds (total around $2.8 billion) across the system’s portfolio. System staff emphasized the funding‑formula inflator and market equity adjustments that underlie base allocations to campuses. - The Senate engrossed bill added or funded several system priorities (various amounts): high performance computing support for UND/NDSU, a $12 million workforce innovation grant, $1.1 million (one‑time) for a nursing education consortium, $2 million (partial) for AI/machine learning support, and capital tiers funded at higher levels than the previous biennium. - The board asked for a central shared‑services capacity (additional staff and OER/digital learning support), an enterprise resource planning (ERP) modernization roadmap, and sustained funding for student financial aid and challenge grants. Brenda Zastepolle, system financial‑aid director, told the committee that the student financial‑aid platform rollout simplified management of about 13,000 awards and that state need‑based grants fund roughly 6,300 awards per year.

Funding‑formula changes and technical items: Finance staff walked the committee through the formula’s mechanics, including how the system treats salary/inflation updates and the “minimum amount payable” adjustments that can blunt swings at individual campuses. Staff described a past practice of averaging rate tiers that could create winners and losers; the Senate engrossed bill contained language to smooth the transition when a campus’s credit production moves it into a new tier, preventing a sudden effective rate drop for successful campuses.

Other priorities discussed: Hagerott and staff described national security work led by UND (a Senate appropriation supports a UND‑led National Security Crossroads initiative) and noted a systemwide emphasis on AI, workforce retraining and shared high‑performance computing to support research and new degree offerings. The chancellor also told members the board is currently weighing timing and governance of a future chancellor search and that some governance questions (role name: commissioner vs chancellor) may require statutory or constitutional consideration.

Ending note: NDUS staff offered supplemental documentation to the committee, including detailed line items and capital lists, and asked appropriators to consider a mix of formula base funding plus targeted one‑time investments to meet systemwide priorities.