House committee hears bill to create higher-education revolving loan fund for dorms, auxiliaries

BISMARCK, N.D. — The House Education Committee on Oct. 12 heard testimony on House Bill 1128, which would create a revolving loan fund to help North Dakota colleges and universities finance auxiliary facilities such as residence halls and dining services.

Supporters said the proposal copies the successful K–12 revolving loan model and would start with a $25 million appropriation. Representative David Richter, R‑District 1, said the K–12 program has saved districts “a $1,000,000, $1,000,000 and a half dollars in interest” on typical 20‑year bonds and argued a similar fund would reduce borrowing costs for higher‑education auxiliaries.

The bill would allow institutions to borrow from a centralized fund rather than issue commercial bonds for some projects. Dave Grubbsbach, vice chancellor for administrative affairs and chief financial officer at the North Dakota University System (NDUS) Office, told the committee the bill contains a $10,000,000 per‑institution limit and said the draft sets a maximum loan interest rate of 3.5 percent per year.

Why it matters: Many residence halls across the North Dakota University System were built in the 1960s and 1970s and have deferred maintenance needs that state operating dollars may not cover because auxiliaries are typically funded with student fees, witnesses said. Christopher Scott, policy advocacy and research director for the North Dakota Student Association, said NDSA delegates reported recurring problems — plumbing failures, out‑of‑code electrical systems, failing elevators and inadequate security cameras — that affect student safety, recruitment and campus life.

Dickinson State University Vice President Les Whitstock described an unfinished renovation at one residence hall and said his school has requested authorization to bond about $7.5 million to complete work that would, among other items, add an elevator and replace an aging boiler. Whitstock said the university would “rather pay interest to the state of North Dakota than to some investor” and that a state loan program could lower total project costs.

Student testimony: Max Ehrichard, a University of North Dakota student and admissions ambassador, told the committee student recruitment and first impressions depend in part on residence‑hall quality. "One of the number one comments we always get asked is, what do the dorms look like?" he said.

Limits and concerns: Supporters and NDUS staff acknowledged the bill as drafted needs clarifying language. Representative Richter said the bill’s $25 million initial appropriation is based on projected needs in the coming biennium but recommended a narrower fund than the K–12 program’s target (the K–12 fund goal cited in testimony was about $600 million, with current balances around $450–500 million). Christopher Scott and other student witnesses asked the Legislature to consider increasing the overall loan cap to extend the program’s reach.

Committee action and next steps: The hearing ended without a committee vote. Committee members asked staff to verify bill language and fiscal impacts, including the correct maximum interest rate and per‑project limits; NDUS staff pointed to section references in the draft where the $10 million limit appears. No formal amendments were offered during the hearing.

Funding and fiscal detail: The bill proposes an initial $25,000,000 appropriation for the revolving fund. Witnesses said the K–12 program historically offered loans at lower than market costs (testimony referenced a 2 percent K–12 loan rate as the program’s low‑cost feature), but the HB1128 draft specifies a higher ceiling for higher education loans (the bill text as read sets a 3.5 percent maximum).