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Proposed legislation seeks to pay off school construction debt

A long journey lies ahead for House Bill 1525, which came before the North Dakota House Education Committee Tuesday, where numerous voices from the Western Edge, including Dickinson Mayor Scott Decker, issued their support for the bill that would...

The North Dakota House Education Committee heard testimony on a proposed bill that would pay off school district debt, but critics warn it could hurt future school funding. (Iain Woessner / The Dickinson Press)
The North Dakota House Education Committee heard testimony on a proposed bill that would pay off school district debt, but critics warn it could hurt future school funding. (Iain Woessner / The Dickinson Press)

A long journey lies ahead for House Bill 1525, which came before the North Dakota House Education Committee Tuesday, where numerous voices from the Western Edge, including Dickinson Mayor Scott Decker, issued their support for the bill that would draw money from the Common Schools Trust Fund to pay off all the outstanding debt accrued by school districts around the state.

This would, if passed, avoid the need for voters to determine if they will pay for additional school construction through bonding or tax increases.

"This would fund all new or expanding common school and rural property facilities with the assets from the Common Schools Trust Fund," Rep. Larry Bellew, R-Minot, and one of the bill's sponsors, said to the committee during his testimony. "This would provide for facility maintenance and upkeep for all common school facilities used in the Common Schools Trust Fund. This would provide property tax relief to the people of North Dakota."

There were many voices of support for the bill, largely from the western portion of the state, including rural Williston, Garrison, Minot and Williston proper. Joanna Baltes, school board president for Williston Public School District No. 1, spoke to the mounting and critical need Williston has for more education space.

"Our gym space, cafeteria and kitchen are grossly inadequate for the students they serve. At Wilkinson Elementary our dedicated staff cooks lunch on the stage in the gym," Baltes said. "Our current school infrastructure does not paint a pretty picture. Our schools are overenrolled and aging and the new high school is already over capacity two years after opening."

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Williston's K-4 school building is 23 percent over capacity, Baltes said. Some schools have such limited space that physical education is conducted in modular classrooms and some students must eat lunch sitting on the floor for lack of seating space.

This issue, Baltes said, is a direct result of the oil and gas industry impact upon Williston, and she pointed out that a substantial amount of state revenue comes out of oil and gas revenue, to which Williston and its surrounding counties contributes a substantial amount. Yet failure to address the overcrowding issue, Baltes warned, could harm that oil activity as companies are dissuaded from coming into the city.

"No one in the state of North Dakota will benefit if oil and gas companies determine that other parts of the United States offer better infrastructure and more attractive options for their employees," Baltes said. "As a growing city, Williston needs to be able to attract professionals and those who provide specialty services. We are aware of at least two specialty health care providers who have decided that the current state of our overcrowded schools is the primary reason for declining employment in Williston, and we know there are many more."

Decker echoed the need for communities to sell themselves, and he described the "crippling" impact debt can have as well as the need for communities to entice workforce growth.

"Debt cripples individuals, debt cripples families, debt cripples communities and debt is starting to cripple some of our school districts," Decker said. "What this bill would do is provide for school districts across the state to alleviate some of this property tax burden and allow communities to focus on what I think is one of our largest issues that is coming to the state and that is our workforce."

He noted that public schools are a large selling point of any community.

"When we're trying to attract workforce, what are we selling? We're selling those communities. One of the primary factors is our public school system," Decker said. "We have to sell our community: health care, parks and rec, infrastructure, safety, our neighborhoods and our school districts. This is something you must consider and do pass."

Testimonies from Williston and Garrison spoke to the challenges they have had in bringing this issue to the voters, where successive bond issues have been voted down year after year.

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"Right now, because of the way our city and county and other taxing authorities are raising our taxes, if they put a bond issue on the ballot it'd probably go down with an 80 percent no vote," Bellew said.

Baltes described a "frustrated" population in Williston.

"Our taxpayers are very very frustrated by their property taxes and they're frustrated that the oil and gas production tax revenue that we generate in our part of the state together in Williams County and McKenzie County contributes a huge and significant portion across the state that every single county benefits from and yet none of that money really comes back to benefit our schools," she said. "Last year our allocation ... was $4.5 million; we sent 75 percent back and we received $1.2 million. It doesn't move the needle when we look at the impact our schools have faced ... we're continuing to see additional families move into our community and we don't have any place to put them."

Opposition, questions and the road forward

There were a couple voices of opposition, including Alexis Baxley of the North Dakota School Boards Association.

"It's never a fun day for me when I have to get up on the opposite side of some of my members. Unfortunately we are concerned about the significant potential impact to the Common Schools Trust Fund," Baxley said. "If only half of the Common Schools Trust Fund were to be expended for the purpose of this bill then distributions (into perpetuity) would be half of the 2019-21 biennium. That's scary for us. We are opposed to damaging the fund that provides ...funding so significantly. Additionally we are opposed to the handing over of maintenance of real property to the state, we believe that is best kept in control of local districts."

She acknowledged that a solution must be found, and said she appreciates that this conversation has been started.

Dickinson Public Schools Superintendent Shon Hocker also attended the meeting, and voiced neither support or opposition to the bill. Speaking to the Press afterward, Hocker said that he thinks the bill needs more finetuning.

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"In my personal opinion, I think 1525 needs some modification," he said. "I think there's too many questions right now and too many things ... that we're a little apprehensive about."

Hocker said he had seen a similar bill passed in his previous home of Wyoming, and he thought it worked pretty well.

"I know North Dakota wants to be North Dakota. I'm always sensitive bringing up my experiences in past states and districts but I also know ... that when (Wyoming) did this, they did not recapture existing debt, they just moved forward so school (districts) wouldn't have to bond for new schools," Hocker said. "They're so close and they're such a mineral-heavy state like we are, I think it would behoove our state to visit with them and talk with them and see exact details. I do know they did not buy off all existing debt; they still required districts to pay off those existing bonds, but it was much more palatable to a community like Dickinson to know that we're going to build a new high school and the state will pay for that, but we already had committed to build a new middle school, you already voted on that and you already had your $65 million in debt so you still got to pay that off."

Hocker said that this could ease stresses felt by the taxpayers.

"I would think as a taxpayer it would make more sense to recognize that I'm still responsible for this old debt ... I'm gonna go ahead and pay my bills knowing moving forward that the state could potentially build the schools, that would relieve a lot of stress," he said. "You wouldn't be looking at additional mill increases."

Still, Hocker has also seen changes to school funding go in the opposite direction.

"I certainly don't want to jeopardize funding for schools. I've been in states that have changed from property tax state to a sales tax state to run schools (and) in my opinion it was a disaster," Hocker said. "I think there's an inequity across the state and something's got to happen."

He said HB1525 could serve as a good starting point but may have years to go before it becomes law. Meanwhile, he said the school district has a lot of work to do in the coming weeks as the question of how to fund constructing a new high school-and elementary school-grows more pressing.

"The school board has a lot of work to do between now and Feb. 11 to even just set the bar on the mount, set the date for the measure," He said. "I anticipate that'll be sometime in the first week or two of May so it'll be this year and that has to be that way so we know ... that we can potentially occupy a building in 2021."

Hocker said he's optimistic that Dickinson's community will support the need for a new building.

"I'm going to always remain optimistic. I think our patrons want to do what's right for our kids ... we're not asking for a Taj Mahal; we're asking for the essentials to address the inevitable," Hocker said. "Those kids are coming. It takes a couple years to build a school right off the bat, and we're already over capacity. It's just evident something's got to happen."

According to the North Dakota treasurer's website, the balance for the Common Schools Trust Fund was over $4 billion as of October of 2018. Bellew said in his testimony that the debt value the fund would pay off, were it to pass, ranged from about $850 million to $1.2 billion.

This was the first committee meeting on the bill. If it passes the House, it will still need the approval of the Senate before it can be signed into law.

Dickinson Mayor Scott Decker spoke in favor of House Bill 1525, which would seek to pay off outstanding school district debt through the Common Schools Trust Fund. (Iain Woessner / The Dickinson Press)
Dickinson Mayor Scott Decker spoke in favor of House Bill 1525, which would seek to pay off outstanding school district debt through the Common Schools Trust Fund. (Iain Woessner / The Dickinson Press)

Related Topics: EDUCATION
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