Help Stop The Measure #2 Bailout
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Measure #2 is a legislatively-passed effort to place an upper limit on how much oil tax revenue can be placed in the Foundation Aid Stabilization Fund (15% of General Fund Spending on Education).
The exact language of the new text reads: Whenever the principal balance of the foundation aid stabilization fund exceeds fifteen percent of the general fund appropriation for state aid to school districts, for the most recently completed biennium, as determined by the office of management and budget, the legislative assembly may appropriate or transfer any excess principal balance. Such amount may be used for education - related purposes, as provided by law.
During committee testimony, the North Dakota Watchdog Network testified on behalf of using this fund as a means to financing local school construction projects to save local schools money on bonding costs. We specifically warned against including the phrase: “Such amount may be used for education - related purposes, as provided by law” due to the concerned that this would allow dollars from this fund to be used to bail-out the Teachers’ Fund for Retirement (TFFR – or the teachers; pension fund).
The TFFR is currently funded at barely above 60%, and if investment returns do not average at least 6.75% in a consistent on-going manner, the state will be required at some point to prop it up.
Furthermore, by allowing the transfer of principal in excess of 15% of general fund education spending, this proposal actually INCREASES the state’s reliance on oil tax revenue and since education is a more critical area, increasing reliance on oil tax revenue is not a fiscally sound prescription.
Another reason to oppose this measure is the need to protect the Legacy Fund. A public vote giving the governor access to the Foundation Aid Stabilization Fund would give the legislature a false-feedback that it's ok to start raiding the various trust funds when they over-spend on budgeting.
Due to the vagueness of the “education - related purposes” term, this measure falls short of providing taxpayers with savings and actually perpetuates the false security of funding government with oil tax revenue.
The exact language of the new text reads: Whenever the principal balance of the foundation aid stabilization fund exceeds fifteen percent of the general fund appropriation for state aid to school districts, for the most recently completed biennium, as determined by the office of management and budget, the legislative assembly may appropriate or transfer any excess principal balance. Such amount may be used for education - related purposes, as provided by law.
During committee testimony, the North Dakota Watchdog Network testified on behalf of using this fund as a means to financing local school construction projects to save local schools money on bonding costs. We specifically warned against including the phrase: “Such amount may be used for education - related purposes, as provided by law” due to the concerned that this would allow dollars from this fund to be used to bail-out the Teachers’ Fund for Retirement (TFFR – or the teachers; pension fund).
The TFFR is currently funded at barely above 60%, and if investment returns do not average at least 6.75% in a consistent on-going manner, the state will be required at some point to prop it up.
Furthermore, by allowing the transfer of principal in excess of 15% of general fund education spending, this proposal actually INCREASES the state’s reliance on oil tax revenue and since education is a more critical area, increasing reliance on oil tax revenue is not a fiscally sound prescription.
Another reason to oppose this measure is the need to protect the Legacy Fund. A public vote giving the governor access to the Foundation Aid Stabilization Fund would give the legislature a false-feedback that it's ok to start raiding the various trust funds when they over-spend on budgeting.
Due to the vagueness of the “education - related purposes” term, this measure falls short of providing taxpayers with savings and actually perpetuates the false security of funding government with oil tax revenue.
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One Radio Ad During Scott Hennen's Show
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