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With possible budget cuts for state, UND could face even larger shortfall

GRAND FORKS -- The University of North Dakota's budget shortfall may soon become even larger -- up from $5 million to $11 million. With oil prices tumbling and the state's revenue falling short of its projections, Gov. Jack Dalrymple said he may ...

GRAND FORKS -- The University of North Dakota’s budget shortfall may soon become even larger -- up from $5 million to $11 million.

With oil prices tumbling and the state's revenue falling short of its projections, Gov. Jack Dalrymple said he may be forced to make a 2.5 percent budget cut across nearly all state agencies.

In a meeting with the Grand Forks newspaper editorial board, Dalrymple said the latest forecast, which will be ready by early February, shows revenue is at least $400 million below its projections. If that holds, that would trigger a state law that requires automatic 2.5 percent cuts and allows the governor to dip into the Budget Stabilization Fund, which has nearly $600 million.

If 2.5 percent in cuts are made across all agencies, UND would need to trim about $6 million from its budget. That's on top of the $5 million shortfall the university is already facing.

"Thank goodness we achieved all of the things we did achieve because it looks now like it may be quite a while before we get to that kind of place," Dalrymple said. "So if you wanted a med school, congratulations, you were in the right time frame."

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Dalrymple said he knows budget cuts will be tough, but with a budget as big as UND's, it can sometimes be easier to find ways to make cuts.

The cuts would need to be made by the end of June 2017.

Interim President Ed Schafer said  last week that fixing UND's budget was his first priority. He said his experience managing the state's funds as governor and the U.S. Department of Agriculture's $90 billion budget as secretary of agriculture has prepared him for the university's challenges.

"I look at the budget issues here at UND as an opportunity," Schafer said. "I've been there. I know how we can shape this budget to strengthen the university during tough times."

With the budget falling below its projections, a 2.5 percent cut across the board is required by law. If there is still a shortfall after that, Dalrymple said the North Dakota Century Code is unclear whether the governor can choose to not dip into the Budget Stabilization Fund and instead make further budget cuts.

How far the budget cuts will go and how much money from the Budget Stabilization Fund will be needed won't be known until the February budget forecast is released.

"What I've said to people up until now is really we need to see the numbers themselves," Dalrymple said. "Possibly the numbers will turn out we need to do all of the above--that we may need to really hit the Budget Stabilization Fund really hard and then we may need budget adjustments. The numbers will tell us how far we have to go."

Dalrymple applauded the government for having the foresight to put hundreds of millions of dollars away in separate funds in case a situation like the state is facing now happened.

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"There's going to be a lot said after the first of February, and I think the good news is that we do have amazing cash reserves and we will be able to minimize the allotment as much as possible," Dalrymple said. "And once the allotment does happen, I do believe that the vast majority of our agencies are in a position to deal with it."

Oil prices have fallen steadily since June 2014, when prices hovered between $100 and $125 per barrel. Those prices have dropped to around $30 per barrel but spiked Friday, reflecting the biggest one-day percentage gain since Oct. 28 and closing at $32.25.

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