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Legislators press system office on $500,000 separation payment for BSC president and governance accountability
Summary
Committee questioned a $500,000 separation agreement charged to the system office/system institutions for a Bismarck State College presidential departure, asking who negotiated and who bears the cost and requesting documentation.
During the Appropriations - Education and Environment Division review of University System Office budget item 215, committee members raised sustained concerns about a $500,000 payment tied to a separation agreement for a departing president at Bismarck State College (BSC). Lawmakers pressed system office leaders about who negotiated the payment, whether the campus or the board should bear the cost, and whether documentation exists of the institution requesting early retirement.
Representative Martinson asked why a $500,000 payout was necessary if the president had reportedly asked for early retirement. Chancellor Hagerott responded that board leadership negotiated the separation and that the chair concluded it was "the best interest of BSC and for him personally not to compel him to serve out, you know, the full term, but instead buy out the contract and pay for his medical benefits. And that was a judgment call that the the chair made." The chancellor said he would "check to see" what documentation existed and provide retirement paperwork if available.
Legislators questioned the structure that allows the state board to make termination or separation decisions while individual campuses are required to cover the financial impact. David Kresbach told the committee the system office currently has limited carryover funds (roughly $90,000) and explained that "most of our funding is used for staffing" and that institutions are generally expected to use reserves for unanticipated costs. Committee members noted that state board policy requires institutions to keep 5–7% of appropriated funds in reserve; those reserves can be drawn down for unanticipated expenses but may not be sufficient for large separation payouts.
Representatives on the committee urged review of the existing governance and separation processes, including whether the board should maintain a central fund for presidential separations or involve campus leadership when decisions affect campus finances. The chancellor and staff said the board is reviewing contract and renewal timing and other governance steps to reduce future liabilities.
No formal action or vote on the separation payment was recorded in the transcript of this session. Committee members asked the system office to provide documentation and additional details at a later meeting.
