Appropriations committee debates large school‑construction loan proposals and a $25 million higher‑education auxiliary loan request

Committee members opened a long policy discussion about capital funding for K–12 schools and for higher‑education auxiliary projects.

K–12: House Bill 1163 (Legacy Fund stream for school construction) Representative Pat Heinert presented House Bill 1163 as a request to create a $1 billion loan stream from the Legacy Fund for K–12 construction loans. Under the bill’s language the fund would make loans of up to $10 million per district (scaled by enrollment), for projects with at least $1 million cost and an expected useful life of 30 years. Heinert said the proposal is intended to increase available low‑interest financing for school construction and to allow school districts to refinance existing debt at a lower rate; under the bill the interest rate would not exceed 1% per year and loan terms would be up to 20 years.

Members raised multiple concerns: the fiscal impact on the Legacy Fund principal and earnings over a 20‑year horizon; whether the Common Schools Trust Fund or Bank of North Dakota programs (which already make school loans) were better sources; and the long‑range cost of moving a large amount of Legacy principal into loans. Representative Kevin C. (committee floor discussion) estimated a long‑term gross cost if principal were borrowed; Representative Kevin argued the bill would more than double nominal cost over 20 years when compared with lost earnings on the Legacy corpus. Other members urged deeper study and cross‑agency analysis rather than an immediate large principal transfer.

Higher‑education auxiliary loan request: House Bill 1128 Representative Heinert also outlined House Bill 1128, a $25 million one‑time general‑fund appropriation to create a revolving loan fund for auxiliary enterprise infrastructure projects on university campuses (student housing, dining facilities, and centralized campus heating). The proposed program would limit loans to $10 million per campus at an interest rate of 3.5% and a 20‑year term.

Testimony and debate focused on who would benefit and whether the one‑time infusion would be effective. Supporters said the program would lower borrowing costs on dorm and dining projects and help campuses keep pace with student expectations; opponents and several members said the fund’s size would cover only a handful of projects and would likely not help smaller institutions that are already stretched. Members also asked whether the Bank of North Dakota or existing higher‑education budgeting could better address the need. Representative Calvin Hullitt of the Bank of North Dakota offered to return with a presentation on the existing school construction revolving loan fund and how projects in the queue compare with available cash.

Why it matters Lawmakers noted that capital financing affects long‑term property tax burdens in local communities, and that the sources used (Legacy Fund principal vs. Common Schools Trust Fund or other state resources) have very different fiscal profiles and constitutional implications. Members repeatedly urged a broader policy discussion tying the bills to a statewide construction strategy and to the existing revolving programs that are already funded but under strain.

Next steps Committee members signaled they would carry the questions into the budget and higher‑education deliberations in the second half of the session; sponsors and fiscal staff agreed to follow up with more detailed fiscal modeling and with Bank of North Dakota and Department of Public Instruction data about projects in the current pipeline.