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North Dakota state agencies eye lease savings in office footprints amid pandemic teleworking

North Dakota state agencies eye lease savings in office footprints amid pandemic teleworking

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North Dakota might save more than $1 million a year on rented office space if state agencies move to shrink their footprints.

More than 7,200 out of 8,500 state employees have been teleworking amid the coronavirus pandemic. About $6 million in federal CARES Act coronavirus aid money equipped them do to so. Some state agencies' employees now are "hoteling," or sharing office space on a reserved schedule.

State agencies also are considering ways to save costs on office space to meet Gov. Doug Burgum's guidelines for 2021-23 budget requests.

"We are not sure at this point what the impact will be in the governor’s budget," Office of Management and Budget Director Joe Morrissette said. "There could be some savings from agencies that expect to need a smaller amount of space, especially for those that rent space now."

Burgum presents his budget blueprint to the Legislature in December.

Finding savings

A conservative calculation puts lease savings at $1.2 million a year, or nearly 20% of the $6.6 million spent annually on the 438,000 square feet of office space state agencies rent in Bismarck outside of the Capitol complex, according to Facilities Management Division Director John Boyle.

Some moves already have occurred; the Department of Human Services was renting 25,000 square feet in north Bismarck for $300,000 a year. The department gave up the lease, which expired June 30.

"Because of teleworking, they gave up that lease, and the landlord actually wanted them to give it up because Sanford Health leases the other three-fourths of the building and they wanted our space," Boyle said.

And before the pandemic, the 2019 Legislature budgeted $970,000 for the Supreme Court to convert its Law Library into space for judicial information technology staff, who rent space in downtown Bismarck. The project can save the court about $394,000 every two years, about $253,000 of which is for the rental space. The project also will expand staff attorneys' offices.

'Like flipping a switch'

State Auditor Josh Gallion's office began teleworking in March when the pandemic emerged in North Dakota. His 58-person agency already had laptop technology for every employee, part of a continuing effort to "improve mobility of all staff," Gallion said. 

"For us it was like flipping a switch," he said. Nearly all his staff were teleworking, with some still in the Capitol for administrative duties.

There were some technology hurdles, but "we were still completing audits, producing reports through the entire pandemic like nothing changed," he said.

Auditor's staff returned to the office Sept. 1 but rolled out a hybrid telework policy, based on staff divisions' types of work. Employees who are in the office or teleworking vary day to day. Every employee still has an assigned workspace, too. 

If Gallion is reelected, his office in 2021 might let a rented space in Bismarck go, something eyed before the pandemic. Auditor's staff also work on the Capitol's third and 13th floors and rent space in Fargo.

"In the auditor's office we're always looking at ways to better use our resources, our space, the appropriations that we're authorized," Gallion said. His office's local government audit team was even able to add a couple of extra clients this year because of improvements to the audit process amid teleworking.

Flexible future?

A June survey of state agencies' preferences to implement teleworking and hoteling found that 58,000 square feet in the Capitol's tower and Judicial Wing would be available, Boyle said.

"Those are opportunities for us to relocate (agencies) back to the Capitol grounds," he said.

General-funded state agencies are not charged rent to be housed on the Capitol grounds, but special- and federal-funded agencies, such as the State Water Commission, are. The Office of Management and Budget collects more than $1.1 million a year in rent from state agencies.

But the Capitol couldn't house every state agency, Boyle said. The Information Technology Department alone would take up eight of the 19 floors.

And several state agencies work in state-owned buildings outside the Capitol Grounds, such as the Bank of North Dakota and the Game and Fish Department.

Discussions of state employees' continued teleworking could surface in the Legislature, which passes budgets and laws and could direct how and where state employees work.

All state leases have a clause that if the Legislature doesn't fund the rent, the lease becomes null and void or agencies can renegotiate with the landlord, Boyle said. 

Rep. Corey Mock, D-Grand Forks, who chairs the Legislature's Information Technology Committee, said discussions will depend on the status of the pandemic and probably would address other points such as a uniform teleworking policy, employees' equipment, and cybersecurity and related costs. Some telecommunication discussions already were underway when the pandemic hit, Mock said.

"I imagine the Legislature is going to be open to some workplace flexibility, but I really believe that the Legislature is going to see value in having a physical office where employees spend most if not all of their time while at work and that we adopt policy that allows some flexibility in some cases," Mock said. 

Governor's spokesman Mike Nowatzki said teleworking has been beneficial, with opportunities to save on lease costs as state agencies review their space needs. 

"The new workplace allows team members to work from home, on the road or in a satellite location for all or part of their work week," Nowatzki said. "This creates more flexibility and higher job satisfaction, as well as savings for the taxpayer."

Reach Jack Dura at 701-250-8225 or


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