Dale Wetzel / Associated Press, Published January 12 2011
Proposal taps fund for scholarshipsBISMARCK – Investment earnings from a seldom-used education reserve fund could finance college scholarships for North Dakota’s best students if voters agree to change the state’s constitution, two Fargo senators said.
“Imagine what our state would look like with a solid approach and a guarantee, if you will, of a scholarship program for our students,” Sen. Tony Grindberg, R-Fargo, told the North Dakota Senate’s Education Committee during a hearing Tuesday.
The panel is reviewing a proposed constitutional amendment that would reserve earnings from the state’s “foundation aid stabilization fund” for $1,500 to $2,000 annual scholarships for top students who attend North Dakota colleges.
For it to take effect, the amendment needs to win approval of the Senate and House and prevail in a statewide vote. The amendment’s supporters want to put it on the ballot in November 2012.
Grindberg was chairman of an interim legislative committee that drafted the amendment. He and Sen. Tim Flakoll, R-Fargo, said Tuesday the scholarships would go to students who had scores of 24 or better on the ACT college entrance exam. Nationally, the score would rank a student in roughly the top one-fourth of high school test takers, according to ACT data.
Flakoll said the scholarships would be awarded on academic merit only. The state has other scholarship initiatives, including programs that are based on a student’s ability to pay and his or her willingness to study certain subjects.
“This program is blind to what community you live in, it’s blind to how much your parents make, what they do, everything,” Flakoll said. “It just says, if you study and work hard and perform well, we will promise you that we will help you out.”
The “foundation aid stabilization fund” is a financial backstop to North Dakota’s primary state program for supporting local elementary and high schools.
Established in 1994 by a voter-approved constitutional amendment, the fund may be tapped by the governor to make up an education aid shortfall if tax collections fall short of expectations.
It was used most recently in July 2002, when Gov. John Hoeven used $5.5 million to cancel the effect of a small, across-the-board budget reduction on local schools.
The fund is financed by a share of North Dakota’s oil extraction tax, and its balance has been rising along with western North Dakota’s oil production. It had $29 million in July 2007; budget documents say it is expected to have $234 million by July 2013.
The proposed constitutional amendment would reserve any of the fund’s investment earnings for scholarships, while keeping its principal for the fund’s intended use. Normally, the fund’s interest earnings are transferred to the state’s general treasury.
The amendment’s supporters say the fund could generate $4 million to $6 million in earnings every two years.
“We’re wanting to reward those that do a little more, work a little harder, and give something that anyone can qualify for,” Flakoll said.
The amendment is SCR4004.