Chair Sorvaugh, chair of the Appropriations - Education and Environment Division, opened a committee session focused on how the higher‑education funding formula operates and how recent changes shifted money between campuses.

The panel heard a technical overview from Alex Kronquist, fiscal analyst with the Legislative Council, who summarized how the formula calculates campus funding from weighted student credit hours, a campus-specific credit completion factor and a per‑credit base rate. Kronquist explained the law enacting the formula dates to 2013 and described a series of legislative adjustments that have changed weights and protections over time.

Nut graf: The central question before the committee is how to keep a performance‑based formula that rewards campus decisions without allowing policy choices elsewhere to change an institution’s base unexpectedly. Committee members focused on an averaging step used in recent biennia that, they said, moved substantial dollars among campuses. Chair Sorvaugh urged a fix: "averaging is wrong in my opinion," he said during the session.

Kronquist told members the formula begins with weighted credits (lower division, upper division, professional, graduate and MD credits carry different weights). Those weighted credits are adjusted by a campus credit‑completion factor that acknowledges economies of scale; the adjusted credit total is multiplied by a per‑credit base rate. He noted several historical changes: medical and law school weights were changed in 2019, career and technical education weights were increased in 2021 and again in 2023, and a credit‑growth provision was added to protect campuses with rising enrollment from sudden funding drops.

Committee discussion emphasized three problems the members want the formula to solve: (1) the averaging step that equalizes base rates across institution groups (two‑year, four‑year regional, and UND/NDSU) can move millions of dollars between campuses even when those campuses did not change policy or performance; (2) timing — the formula uses completed credits from prior biennia (the 2025–27 calculation uses 2021–23 credits), so recent enrollment shifts are lagged; and (3) online enrollment growth has changed where credits are produced and how quickly campuses can expand, and members wondered whether the formula adequately reflects those differences.

Several technical points were raised: the formula includes a 96% minimum payable (a hold‑harmless) so institutions do not fall below 96% of current biennium funding; the base per‑credit rates are recalculated by dividing legislative dollar adjustments by adjusted credits and then equalized within institution groups; and targeted market equity and retirement contributions appropriated in the current biennium were added into agency bases, which affected the arithmetic of this cycle. Kronquist flagged Senate Bill 2034 as a pending bill intended to correct an unintended funding change affecting Dickinson State University.

Chair Sorvaugh said the committee will produce a proposal that removes the averaging step and substitutes a replacement that preserves predictability and fairness; he suggested using a percentage‑based approach and preserving hold‑harmless protections during transition. He told members a short, public study of the formula is warranted and that the committee would consider a draft proposal at its next meeting.

Ending: The committee set a timetable for further work and asked staff for additional data (square footage, online vs. in‑seat credit breakdowns, and one‑page summaries of each institution’s optional requests) so members could test alternative formula fixes before producing final recommendations. No formal motion or vote was recorded during the discussion.