FARGO - Tucked into the North Dakota University System's proposed $780 million budget is a two-year salary freeze for five people who make more than $100,000 annually - the state university system's chancellor, three vice chancellors and its top lawyer.

Legislators say the financial spanking is meant to show lawmakers' unhappiness with budget juggling two years ago, which led to what they considered to be overly generous pay raises to top administrators.

During the 2007 Legislature, House and Senate negotiators agreed during the session's last days to remove $200,000 from the budget for the university system's administrative office. After lawmakers adjourned, the Board of Higher Education voted to take money from other board projects to make up the difference.

"The university system needs to know who's in charge. Either it's going to be the university system, or it's going to be the Legislature," said Sen. Bob Stenehjem, R-Bismarck, the Senate majority leader. "We're the policymaking branch of government; we should be setting the policy."

Budget documents show the freeze would apply to five people: William Goetz, the university system's chancellor, who is being paid $200,000 annually; vice chancellors Michel Hillman ($159,888), Laura Glatt ($153,938) and Marsha Krotseng ($143,303); and Pat Seaworth, the university system's attorney, who is paid $116,962 a year.

The three vice chancellors and Seaworth declined comment. Goetz said he was pleased with the university system's budget overall, but unhappy about the pay provision, which he said has damaged morale.

"This has been very difficult for me to work through. Obviously there are staff who are upset," Goetz said. "I hope we can work through this and still stay above it all."

The Legislature's decision two years ago to remove $200,000 from the state university system's office budget was meant to convey lawmakers' unhappiness with the Board of Higher Education's treatment of former chancellor Robert Potts. He resigned after disagreements with some board members over the extent of his authority. The disagreements were rooted in tensions with Joseph Chapman, the president of North Dakota State University.

As part of Potts' resignation agreement, the board agreed to pay him $200,000 for consulting work. The settlement later was criticized by the state auditor, who said Potts was paid to do nothing.

Sen. Raymon Holmberg, R-Grand Forks, the chairman of the Senate Appropriations Committee, said the two-year salary freeze for top administrators was motivated by unhappiness about the board's budget gymnastics, not by lingering resentment about the Potts matter.

"I think the Potts thing is behind us," Holmberg said.

When the 2007 Legislature finished its work, lawmakers believed the university system's office would be frugal with salary decisions, Holmberg said.

"Then, they transferred money from an account that was going out to schools to give themselves raises," Holmberg said. In some cases, the pay raises were "higher than what other state employees were given," he said.

On average, North Dakota university system employees got a 6 percent pay raise last year. Glatt, Hillman and Seaworth received 5 percent raises last year and 6.5 percent increases this year, documents say.

The Board of Higher Education's president, Richie Smith, said the freeze would save $138,000 in salary expenses.

Smith said the university system's top staffers were not overpaid, a judgment that Holmberg and Stenehjem said some lawmakers do not share.

"For my money, they work very hard," Smith said. "They put in hours, especially during the legislative session. I'm sure they're north of 80 hours a week. The demands are immense, and they try to answer the call."

Holmberg said it was the magnitude of the raises and the transfer of the money that angered lawmakers. Legislators must be clear about their expectations, and state agencies need to stay within legislative guidelines on pay raises, he said.

"There's always collateral damage when the Legislature sends messages," Holmberg said. "But, what are we to do, punish everyone by not giving them enough salary money? I don't think so."