Senate approves bill letting dissolving school districts transfer up to $500,000 to local governments

The North Dakota Senate passed Senate Bill 21-58 on final passage, 38 ayes to 9 nays, approving a statutory change to allow a dissolving school district to transfer up to $500,000 of unobligated cash balance to a political subdivision located partly or wholly within the dissolving district.

The bill, carried to the floor by Senator Weber, was introduced as a technical fix to resolve a conflict that prevented a previously approved dissolution plan from proceeding. The measure amends subsection 1 of section 15.1-12-29 of the North Dakota Century Code to permit a specified transfer of unobligated funds following a district dissolution.

The bill’s sponsor, Senator Weber, described the measure as cleanup legislation that responds to a conflict in the code discovered after a prior session’s legislation. Weber said the earlier law had intended to allow a dissolving district to distribute up to $500,000 to a political subdivision for repurposing a school building, with any balance above that amount returned to property owners as a tax credit. The bill returned to the floor without a committee recommendation after members of the Senate finance and tax committee expressed differing views in committee.

Senator Scheible, who spoke in support of the bill, said local elected officials and school boards were best positioned to decide on reuse and disposition of facilities and funds. "By killing this bill, it takes control of what was wanted by the community and out of the hands of elected officials," Scheible said.

Senator Powers moved an amendment that would have reduced the allowable transfer from $500,000 to $49,500. Powers argued the lower amount would return most unobligated funds to property taxpayers and said the amendment should be adopted while the underlying bill should not. "This amendment will return most of the remaining unobligated cash balance to all the citizens... who have paid taxes to the Edmore school district over the years," Powers said. The amendment failed on a roll call, 12 ayes to 35 nays.

After debate, the Senate voted on final passage. The secretary’s tally showed 38 ayes and 9 nays; the bill passed.

The debate on the floor reflected two recurring themes: local control and taxpayer protection. Supporters said the bill restores the ability of a local school board and community to carry out an agreed dissolution plan that included repurposing a building and a limited transfer of funds. Opponents and amendment proponents pressed that most leftover unobligated funds should revert to taxpayers rather than be transferred to a political subdivision.

No further implementing steps or effective dates were specified on the floor during the final passage discussion.