Committee hears bill to shield growing colleges from funding ‘success penalty’ and reclassify wind and law‑enforcement courses

The Appropriations - Education and Environment Division heard testimony on Senate Bill 2034, a measure Representative Mark Sanford said is intended to prevent colleges from losing state funding when growth pushes them into a lower per‑credit rate. “This bill is really attempting to clean up a couple of issues that have come up over the years,” Representative Mark Sanford said.

The bill would change how the state’s higher education funding formula treats institutions that grow past a threshold in weighted student credits. Under the current model, institutions are paid on weighted credits multiplied by an institutional size rate; when an institution moves into a larger size category its multiplier can fall. Sanford and witnesses said that has led to an effective loss of revenue for some colleges when they succeed in growing enrollments.

Supporters described two main fixes in the bill. First, it would treat credits up to the previous category’s limit at the prior, higher multiplier so institutions keep the revenue on that portion and only the credits above the limit would be paid at the lower multiplier. Second, it would move two Lake Region programs — wind energy and law enforcement — into the state’s career and technical education classification and apply the CTE funding weight to those credits.

University system staff warned of immediate consequences if the statutory language is not changed. “There would be approximately a $1,500,000 penalty, if you will, for Dickinson if we don't correct the bill for this instance,” Dave Krebsbach of the North Dakota University System Office testified. Officials from Dickinson State University and other campuses described the local impacts: Dickinson officials said a move from the 1.5 to a 1.4 completion factor at the 60,000 weighted‑credit threshold would cut funding by roughly $695,000 based on current rates and could leave Dickinson roughly $1.5 million worse off over the next biennium if not addressed.

Lake Region State College’s online testimony described the cost structure of the programs being reclassified. “In the 2123 biennium, Lake Region produced 1,415 credits in the law enforcement classes and 532 in wind,” Joanne Kitchens said, and told the committee those courses incur higher per‑student costs because of equipment, lab space and required off‑site training. Kitchens said reclassifying the two programs to CTE would increase Lake Region’s funding by about $1.2 million this biennium and — after an adjustment to the minimum payable — result in a net $289,182 increase.

Committee members pressed witnesses on whether the protection would be permanent. Some members described it as a “forever” protection, and others asked whether the statute should instead create a smoothing or averaging mechanism so the funding formula’s incentives remain intact. “I think it's something that could be considered in an interim,” Krebsbach said when asked about alternatives such as averaging or a glide path between multipliers.

There was no vote during the hearing. Committee members closed the record after receiving testimony from campus representatives and system staff and said they would continue to review the bill language in committee work ahead of any floor action.