Appropriations committee rejects bid to tap Common Schools Trust Fund for school construction; advances several related measures

The House Appropriations Committee voted to recommend a "do not pass" on House Concurrent Resolution 3,035, the proposal to place before voters a constitutional measure that would direct up to $300 million per year for 10 years from perpetual trust funds into a school construction program.

Representative Pat Heinert, who presented HCR 3,035 to the committee, said the resolution would “utilize $300,000,000 per year for 10 years totaling $3,000,000,000 from the perpetual trust funds established under Article 9 of the Constitution for School Construction Program.” He told members the resolution as drafted would divert distributions that currently benefit colleges and universities, schools for the blind and deaf, the state hospital, industrial schools and veterans homes as specified in Article 9, sections 12 and 13, and the Common Schools Trust Fund.

The committee heard extended testimony from Joseph Herringer, Commissioner of University and School Lands (the Land Commissioner), who presented projections showing long-term reductions to the Common Schools Trust Fund if the diversion occurred. “I do believe there are some major issues with this bill. I have some major concerns,” Herringer told the committee. Using an assumed annual return of roughly 6.72 percent, he testified the trust’s cumulative distributions could be reduced by about $4.4 billion over 30 years and the fund balance could be negatively affected by roughly $5.8 billion — a combined long-term impact he described as substantial.

Committee members pressed the sponsor and witnesses about implementation mechanics that are not specified in the resolution. Representative Kim Bosch asked how the program would determine which schools get money; Heinert said the resolution contains no distribution mechanics and that a separate bill on the Senate side was working toward a baseline assessment of school needs. When Representative Scott Richter asked whether the program would be loans or grants, Heinert corrected an earlier statement: “This is a grant program.”

Concern about long-term effects on per-pupil state aid and on the constitutional purpose of the Common Schools Trust Fund dominated remarks. Representative Matt Nelson noted that the trust’s distributions are currently used for per-pupil payments and warned the diversion could force the general fund to backfill aid if distributions decline. Representative Nathan and others echoed worries that opening the principal of the fund establishes a precedent for future withdrawals.

Representative Rod Murphy offered Amendment 25.3103.01001, which narrowed language so distributions would be taken from the Common Schools Trust Fund rather than “perpetual trust funds” broadly, limited the legislature to specifying up to $600 million per biennium (not to exceed $3 billion total), and included language that K–12 state aid payments “may not be reduced as a result” of the distributions. Murphy described the amendment as addressing several concerns but not resolving all long-term policy objections.

After debate and roll call, the committee adopted a motion for a do-not-pass recommendation on HCR 3,035; the motion carried 22–1. Representative Bosch agreed to carry the measure.

Other bills considered by the committee during the meeting:

- Senate Bill 2262 (K–12 Council studies): The bill would appropriate $120,000 to the K–12 Council to contract for research and studies on innovations, duplication of services and other topics the council identifies. Testimony described the funding as intended to contract outside expertise for multiple studies over the biennium. The committee initially failed to pass the bill (due-pass lost by roll call 9–13 with 1 absent), then later adopted a do-not-pass recommendation on a subsequent motion; the final do-not-pass motion carried 14–8. The committee discussion cited competing priorities and whether the work could be absorbed into the Department of Public Instruction budget.

- Senate Bill 2209 (forensic medical exams for domestic-violence victims): Rep. Steve Vetter presented the bill, which expands access to forensic medical examinations (commonly called evidence or “rape” kits for sexual assault) to include domestic-violence and certain child-abuse cases and aligns evidence collection timeframes with best practices by extending the window to 120 hours. Witnesses from Central Dakota Forensic Nurse Examiners said the $200,000 fiscal note is a reimbursement pool for programs that perform the exams (covering clinician time, photography, swabs, evidence collection and related services), not just the cost of kits. The committee recommended a due pass on SB 2209; the motion carried (recorded in the hearing as “Motion carries 21 with 2 not voting and absent”). Testimony noted a related attorney general appropriation already reimburses sexual-assault exams statewide and that the proposed expansion aims to make funding consistent for domestic-violence exams.

- Senate Bill 2057 (court fees and court-cost increases): The bill, as reported to appropriations, had criminal-fee increases removed by the House Judiciary committee, leaving adjustments to filing and court-cost fees that fund court operations. Sally Lovett, State Court Administrator, said the House’s changes removed the criminal-fee increases and that the revised bill no longer affects the indigent defense budget. The committee recommended a due pass on SB 2057; the motion carried on roll call (recorded as 21–0 with 2 absent).

- Senate Bill 2352 (department policy allowing children to reside with incarcerated mothers): The bill directs the Department of Corrections and Rehabilitation to establish policy and procedures allowing children 18 or younger to reside with incarcerated mothers when appropriate. DOCR described plans for a nursery or family-unit area, noted the children will be covered by Medicaid, and said the department expects the staffing changes for care are covered under current facility staffing plans; the fiscal note attached to the bill was limited to supplies (cribs, car seats and similar items) and was estimated at $100,000. The committee recommended a due pass on SB 2352; the hearing record lists the motion as carried, and DOCR representatives said no immediate appropriation would be required in the coming biennium for staffing because the new facility’s staffing plan anticipates family units.

- Senate Bill 2292 (change funding source for forensic exam reimbursements): The bill moves funding for forensic medical examination reimbursements from the Insurance Regulatory Trust Fund to the general fund. Insurance department testimony explained that insurers generally did not cover evidence-focused forensic exams (denials were based on lack of medical-necessity coverage), that the regulatory trust fund has supported the AG’s current reimbursements, and that recent statutory changes and other appropriations have diminished the trust fund balance. The committee recommended a due pass on SB 2292; members heard from the attorney general’s finance director that moving the line to the general fund would require the AG’s budget to request the appropriation in conference if it is not provided.

Why this matters: HCR 3,035 would have asked voters to amend the constitution to let the legislature redirect income from state perpetual trusts into a one-time school-construction program; opponents said the long-term loss of earnings and principal would reduce stable funding for K–12 and other beneficiaries. The committee’s do-not-pass recommendation ends the measure’s path out of this panel and signals strong resistance among appropriators to using trust principal for one-time construction funding without clear distribution mechanics or long-term protections.

What’s next: The committee did not appropriate money for the prison-nursery policy in the current biennium and several items flagged for additional work (for example, the K–12 council funding question and which funds will carry forensic exam reimbursements) may reappear in agency budgets or on the floor as lawmakers negotiate final funding. Representative Bosch agreed to carry HCR 3,035. Several bills that received due-pass recommendations will proceed to the full House appropriations process.

Votes at a glance

- HCR 3,035 (constitutional measure to redirect up to $300M/yr for 10 years to school construction): Committee recommendation — Do Not Pass (motion carried 22–1). - SB 2262 (K–12 Council studies, $120,000): Committee recommendation — Do Not Pass (final motion carried 14–8 after an earlier failed due-pass roll call). - SB 2209 (forensic medical exams: expand to domestic violence/child abuse, 120-hour alignment; $200,000 reimbursement pot): Committee recommendation — Due Pass (motion recorded as "Motion carries 21 with 2 not voting and absent"). - SB 2057 (court cost adjustments): Committee recommendation — Due Pass (motion recorded 21–0 with 2 absent). - SB 2352 (policy to permit children to reside with incarcerated mothers): Committee recommendation — Due Pass (fiscal note limited to $100,000 for supplies; committee carried the motion; no immediate staffing appropriation expected). - SB 2292 (move forensic exam reimbursement funding from Insurance Regulatory Trust Fund to General Fund): Committee recommendation — Due Pass (motion carried; AG finance director noted general fund appropriation would need to be provided in the AG budget).

Speakers quoted in this report spoke during the Appropriations Committee hearing and are identified by full name and role when they first appear. All direct quotations come from the hearing transcript.