Next UND President

[Cratter]

On 2/4/2016 at 7:35 PM, Cratter said:

for the University to continue to operate the way it was this (or last) year.

Tough times for the University and it just appears to be getting started. A lot of departments are struggling with ways to cut money. Lots of possibilities are being thrown out there: cutting programs, laying people off, not filling positions, giving everyone one week non paid vacation.

Food services alone at UND has to cut over $700,000. That's a lot of oatmeal in the taco meat.

[SWSiouxMN]

1 minute ago, Cratter said:

Tough times for the University and it just appears to be getting started. A lot of departments are struggling with ways to cut money. Lots of possibilities are being thrown out there: cutting programs, laying people off, not filling positions, giving everyone one week non paid vacation.

Food services alone at UND has to cut over $700,000. That's a lot of oatmeal in the taco meat.

its going to be a mess, especially with the massive fight that the MT students are going to put up on saving their program.

[Cratter]

Can't North Dakota try and live with cash in hand to set a budget and not "here's what we can spend based on guessing what we'll make?" going forward more?

[Cratter]

7 minutes ago, SWSiouxMN said:

its going to be a mess, especially with the massive fight that the MT students are going to put up on saving their program.

Cutting one third of the students in the Music Departments major doesn't seem like 4% of a "gazillion dollar UND budget is no biggie...just turn down the heat one degree."

[82SiouxGuy]

1 minute ago, Cratter said:

Can't North Dakota try and live with cash in hand to set a budget and not "here's what we can spend based on guessing what we'll make?" going forward more?

Every governmental body works on budgets based on estimated revenues and expenses. Most businesses, especially larger businesses, make plans based on estimated budgets. Then as you move through the budget period you make adjustments based on how close you came to actual revenues and expenses. It would be impossible for a government to wait until money comes in before making spending decisions. This is just an extreme case because of the large swings caused by oil over the past 6 or 8 years. And don't forget, North Dakota has to work on budgets almost 2 1/2 years out because they only meet every other year. Most governmental bodies meet every year or more frequently.

[Cratter]

Not impossible. Just hard to do and most people don't want to do it... but it would be better for the state and universities in the long run. 

Save extra state revenue over multiple years, use that money saved up for spending...

It's always better to prepay than post pay. 

SO the answer is North Dakota can but doesn't want to.

[Nodak78]

The state Gov't and Universities don't save money they spend money always.   the ND taxpayers voted to save some of the oil money in a legacy fund to keep politicians from spending the money as they brought it in.  Right now politicians are plotting way to get their hands on the legacy fund.

[82SiouxGuy]

10 hours ago, Cratter said:

Not impossible. Just hard to do and most people don't want to do it... but it would be better for the state and universities in the long run. 

Save extra state revenue over multiple years, use that money saved up for spending...

It's always better to prepay than post pay. 

SO the answer is North Dakota can but doesn't want to.

The state would have to stop all spending for multiple years to make your idea work. How do you build roads? How do you  build a $120 million medical school building? Wait until you have the money in the bank? As I said, all large organizations do it that way because your idea isn't practical.

[dakotadan]

On 3/19/2016 at 10:43 AM, 82SiouxGuy said:

Wait until you have the money in the bank? 

What a ridiculous idea. Having money saved up to pay for something before you buy it!!!! Crazy!!! 

[82SiouxGuy]

3 hours ago, dakotadan said:

What a ridiculous idea. Having money saved up to pay for something before you buy it!!!! Crazy!!! 

Is that a practical way to buy a house? Is it practical for most people or companies to buy a business with cash? Do you often pay for a whole life insurance policy with cash? How about a highway system? Or employee retirement programs?

[dakotadan]

Yes, I always have a majority of the price of something saved up before I buy it. I worked as a personal banker for many years. I have decided to be financially smart instead of financially in debt. 

[82SiouxGuy]

Do you have 2 years worth of living expenses saved up at all times? That's basically what Cratter is suggesting since North Dakota only holds Legislative sessions every 2 years, and makes their spending decisions during those sessions.

[Cratter]

Smart people that are fiscally responsible that can afford it do it. 

They realize its a better way to live than guessing and spending and returning. 

 

[dakotadan]

32 minutes ago, 82SiouxGuy said:

Do you have 2 years worth of living expenses saved up at all times? That's basically what Cratter is suggesting since North Dakota only holds Legislative sessions every 2 years, and makes their spending decisions during those sessions.

Yes.

I started working in the oil fields in 2011. I lost my job 6 months ago and am still unemployed. I have lived off of my savings account for half a year already. 

I purchased a new truck two years ago and paid over 3/4 of it in cash.

And I have a second savings account that I have a very large amount saved up to eventually use as a large down payment on a house.  

I try to always pay at least 50% in cash before financing any major purchases. 

It's calld being financially responsible. 

[82SiouxGuy]

Is that possible for the majority of people? Are people working in retail stores, or as labor on farms or in most normal industries going to be able to save up funds like that? Or is that something you can do when making large sums of money in a normally unstable industry like oil?

Do people realize that the State of North Dakota can't run a deficit? The only time they normally borrow money is for long term projects like buildings and roads. Otherwise they aren't allowed to borrow money for everyday expenses. They have to pay for everything in cash, and have a limited time to pay those bills. They make spending decisions almost 2 1/2 years out because the Legislature only meets every 2 years, but have to decide how much to spend during those sessions. The choices are to save up 2 1/2 years worth of expenses to have on hand when those spending decisions are made, or use budgets to plan money coming in and going out. Then they have to adjust the budgets throughout the spending period to react to actual money coming in.

And would it really be practical to have more than $17 Billion sitting in the bank at all times? That is a rough estimate of what it would cost to cover 2 1/2 years of spending by the state.

[dakotadan]

7 minutes ago, 82SiouxGuy said:

Is that possible for the majority of people?

The original point wasn't about personal finances. It was about state/civic finances and budgets. 

[Cratter]

Its only a one time savings. If the state of North Dakota saved 5% by either reducing expenses or gaining revenue, in 20 years they'll have saved one years worth of budget/expenses.

Do that again and they'll have two years of expenses saved up....then for eternity they could "live within their means." 

But I guess its better to cut programs and lay people off with very short notice instead.

[82SiouxGuy]

1 hour ago, Cratter said:

Its only a one time savings. If the state of North Dakota saved 5% by either reducing expenses or gaining revenue, in 20 years they'll have saved one years worth of budget/expenses.

Do that again and they'll have two years of expenses saved up....then for eternity they could "live within their means." 

But I guess its better to cut programs and lay people off with very short notice instead.

You want the state to cut spending an extra 5% for at least 40 years to set up this cash basis scenario. That sounds practical.

There is no guarantee that they wouldn't have to cut programs or lay off people in your scenario. They would just do it at the end of the current biennium rather than in the middle when they found out that they had collected $5.5 Billion this biennium rather than $6.5 Billion. Spending is always going to have to be adjusted based on the dollars coming in. The only difference is when you make the adjustments.

[Cratter]

15 minutes ago, 82SiouxGuy said:

You want the state to cut spending an extra 5% for at least 40 years to set up this cash basis scenario. That sounds practical.

 

It's equivalent to a person making $40,000 pre tax saving $30 a week.

Sounds practical.

The money would already have been there if they saved even more of the oil money instead of just increasing the budget/spending it instead. 

[jdub27]

10 minutes ago, Cratter said:

It's equivalent to a person making $40,000 pre tax saving $30 a week.

Sounds practical.

Except the extra money comes from the taxpayers in this situation. You think that people would be happy to pay an extra 5% for 20 years to come up with the money and you also have to assume that the government doesn't spend it irresponsibly and stops collecting it. Two unlikely scenarios. 

This is a strange discussion. There is basically no business that run's their operations that way, they run on cash flow using their balance sheet as protection and leverage when necessary. Doing what you proposed would actually be a terrible way to operate a business. This is all said knowing that governments/universities aren't the exact equivalent of private businesses nor an individual's finances. 

[Cratter]

3 minutes ago, jdub27 said:

Except the extra money comes from the taxpayers in this situation.

Not sure what this means...is the current 4% budget cuts coming from the taxpayers?

In the example it was "savings." Never said anything about making people pay more money. 

[82SiouxGuy]

1 minute ago, Cratter said:

Not sure what this means...is the current 4% budget cuts coming from the taxpayers?

In the example it was "savings."

The current budget cuts aren't coming from anyone, they are dollars that the state thought they would be getting but instead won't have available to spend. So they are making plans to lower spending. In your example, the extra 5% would be extra dollars coming out of taxpayers pockets now that wouldn't be spent for up to 40 years. Do you want the state to take extra tax dollars out of your pocket for the next 40 years just to change the accounting system?

[Oxbow6]

31 minutes ago, 82SiouxGuy said:

The current budget cuts aren't coming from anyone, they are dollars that the state thought they would be getting but instead won't have available to spend. 

"thought they would be getting"......read what you typed again slowly. 

 

This is the fiscal problem for most individuals, families, entities, and for all things government. Fiscal accountability and responsibility has been kicked to the curb in lieu of "thought they/we/I would be getting".  Live, budget, operate within the means you have........shouldn't be a mind blowing concept.

 

Kudos to dakotadan for making it work and surviving on his own during his tough stretch.

[Cratter]

1 hour ago, 82SiouxGuy said:

The current budget cuts aren't coming from anyone, they are dollars that the state thought they would be getting but instead won't have available to spend. So they are making plans to lower spending.

That's what I was pointing out. Lowering spending is a good way to save money and wouldn't be coming from anyone.

Quote

In your example, the extra 5% would be extra dollars coming out of taxpayers pockets now that wouldn't be spent for up to 40 years. 

Again why is it all of a sudden coming out of taxpayers dollars? 

4% actual cuts not coming from taxpayers but 5% hypothetical cuts (or revenue) when times are good = comes from taxpayers?

The 5% is a hypothetical that wouldn't actually happen when this year when the budget is already being cut by 4% because they screwed up their guessing. It just has to happen by either reducing expenses 5% or saving those increased revenues 5% for 40 years...one time any 40, doesn't have to be consecutive (equivalent to saving $30 a week for a person making $19 an hour.).....at which time the State of North Dakota would never in the history of its life have to ever guess again what revenue would be. It would have an actual dollar amount it can use on a rotating two year basis.

It would reduce the peaks and valleys in the budget,

So this would happen less as one ND legislator put it: 

Quote

“No matter how they cut, it’s going to hurt families and children,”

North Dakota General and Special Fund in 2009: $5.6 Billion

Six years later: $12 Billion. 

 

......I refuse to believe there wasn't an easier way to "soften the blow" so "less families and children" are hurt....North Dakota did some good things with the "Rainy Day fund"....but they could have done more. 

Expenses and revenue would still be the same over a two to three year rolling average. But it gives time to adjust (months and years) vs (days and weeks). 

[82SiouxGuy]

You are now trying to compare apples and oranges. Under the current situation, the state projected that they would collect X number of dollars from all sources. They are now projecting that they are going to collect 96% of X, thanks in large part to less oil tax revenue. Under your savings plan, the state would have to tax at the same rate to take care of what will be the new 96%X spending level, plus take an extra 5% in taxes to build your savings account. Either that or they would have to cut the current 4% from the budget, plus cut another 5% that would go into the savings account. Either way, extra dollars would be going from taxpayer dollars into a savings account. But there are no taxpayer dollars involved in funding the tax deficit, the deficit exists because of a lack of taxpayer funds.

The Rainy Day Fund, or Legacy Fund, has very strict rules. They were approved by the voters of the state. The money can't be touched at all until next year. Only a limited portion (15%) can be spent in a single year. The spending has to be approved by 2/3 of each house. The state has a couple of other funds that also can help smooth these gaps, but they aren't going to cover large gaps.

"Thought they were getting" refers to the process of estimating the number of dollars that the current taxes will bring in based on the expected economic conditions. It isn't some nefarious plot to take more money from taxpayers. They either decide how much they are going to spend, then figure out a tax structure that will bring in those dollars based on the expected economic conditions, or they set up the tax structure and then spend the money (more likely somewhere in the middle). Either way, the results are going to be the same. As I said before, the results happening now, budget cuts, would be a necessity whether the state had the money in the bank or if they are working the budget process and planning for dollars coming in through June 2017. The only thing that changes is the timing of the cuts, not the facts that cuts would have to be made. This isn't the Federal government, this isn't deficit spending.