The House Appropriations Committee spent nearly an hour Monday questioning leaders at the University of North Dakota and North Dakota State University on a bill that would dedicate a portion of Legacy Fund earnings for research at the two schools.
The bill, introduced by Sen. Ron Sorvaag, R-Fargo, would transfer 15 percent of Legacy Fund earnings to an economic diversification research fund that would support work by UND and NDSU. The fund would be capped at $45 million.
The bill has already passed the Senate with a 43-4 vote.
Legislators questioned the university presidents and supporters of the bill about the fund’s return on investment.
UND President Mark Kennedy said the universities want to be able to attract federal and private dollars through this state investment and attract faculty and staff who are “hunters” seeking out grant dollars at the federal level that would bring new talent to the state to drive workforce development.
“We understand that we’re going to have a gun to our heads in terms of making sure that we’ve delivered two years from now if you are giving us these resources and we’re committing to make sure we have a good story to tell two years from now,” Kennedy said.
While supporters of the bill testified that the state investment could bring new jobs, new tax base and new businesses to the state of North Dakota, Rep. Randy Schobinger, R-Minot, questioned how the presidents could ensure that those new jobs and new businesses would stay in North Dakota.
“Any time we try to diversify here, we know that there are other areas of the country where folks may want to locate,” Schobinger said.
Kennedy replied that there is always a risk of that happening with any kind of investment, but he said, the state’s investment would make North Dakota a more attractive place to stay.
“We’ve already got a great business climate in terms of tax rates and so many other things,” he said. “I don’t know that requiring (that jobs and businesses stay in North Dakota) is going to be effective, but having that research base here brings people here.”
Committee Chair Rep. Jeff Delzer, R-Underwood, said the state has previously invested a fair amount of money in research, but he added there has not been a good return on those dollars and wondered what made this proposal different from others.
Kennedy agreed with Delzer’s statement and said while a lot of money has been invested in research in the state, much of it has been invested in the “red zone,” which leads toward commercialization of technology. The state needs further investment in the “green zone” or the creation of new ideas and research leading up to commercialization, which this bill would provide, Kennedy said.
The bill includes the creation of an advisory committee for the fund, consisting of the president of the Bank of North Dakota, the commerce commissioner, the chair of the State Board of Higher Education and the two university presidents, as well as four others.
The bill would require the advisory committee to report back on the work that has been done by the schools for the funds to be re-evaluated.
Last year, Kennedy and NDSU President Dean Bresciani spent time traveling the state to speak about the value of research and its economic impact. The two had previously proposed splitting $100 million over the next biennium, with each school receiving $25 million a year. However, that number has since been changed to 15 percent of Legacy Fund earnings.
The money would not be available for use until after the biennium is concluded, so a loan function is worked into the bill that would allow the universities to access the money sooner.
Bresciani said North Dakota is one of the only states that doesn’t provide “focused funding” to encourage research work at universities. He added that he recognizes $45 million is a lot of money by North Dakota standards, but he believes the investment would be worth it for the state.