North Dakota

North Dakota’s most serious management issue is the difficulty it has building a quality workforce. It has used a variety of bonuses and other incentives to attract hard-to-find workers, and these have done some good, overcoming at least in part the built-in disadvantages of geographical isolation and cold weather. The problem is that the workers don’t stay very long once they are on the job.

More than a quarter of the state’s employees leave between their first and second years of service. “You can’t be replacing people that quickly and getting them up to speed without having a dramatic effect on your existing workforce,” says Ken Purdy, the director of classification and compensation.

For all workers, the state’s decent benefit package and competitive retirement benefits have held the turnover rate to a very reasonable 8.4 percent. But those aren’t much of an attraction for younger people, who are more likely to notice that North Dakota salaries lag market rates substantially, in some cases by more than 20 percent. According to a 2004 compensation study, 46 percent of the classified workforce earns less than $30,000 and about two-thirds of employees are in the lower half of their assigned salary ranges. This situation wasn’t helped by the legislature’s decision to withhold salary increases in 2003 and 2004 — even though North Dakota’s economy came through the recession in better shape than many others. “We were behind before and you add two years of zero increases, and that’s very significant,” says Purdy.

Money B- Long-Term Outlook Budget Process Structural Balance Contracting/Purchasing Financial Controls/Reporting People B- Strategic Workforce Planning Hiring Retaining Employees Training and Development Managing Employee Performance Infrastructure B- Capital Planning Project Monitoring Maintenance Internal Coordination Intergovernmental Coordination Information C Strategic Direction Budgeting for Performance Managing for Performance Program Evaluation Electronic Government • Population (rank): 642,200 (47) • Average per capita income (rank):    $29,204 (32) • Total state spending (rank):    $3,020,393,000 (48) • Spending per capita (rank):    $4,764 (21) • Governor: John Hoeven (R) • First elected:11/2000 • Senate: 47 members: 15 D, 32 R • Term Limits: None • House:94 members: 27 D, 67 R • Term Limits: None

The state has problems with its infrastructure, and these have similar origins in legislative stinginess. Maintenance has been underfunded for both buildings and roads. Increased federal funding for maintenance is helping to improve the situation somewhat, but it continues to be a weakness. The state has a maintenance backlog of $1.45 billion, according to transportation officials. They figure that funding is running $112 million behind what’s needed on an annual basis.

Although the state income tax pulls in relatively little money, the tax structure is generally well balanced and the revenue picture has been aided by recent increases in oil and gas prices. Employee pensions are almost fully funded. Budgeters did rely on transfers from the state-owned Bank of North Dakota, as well as the use of some trust fund money for operating expenses in recent years, but the amounts involved were not alarming. In fact, the most significant fiscal negative in North Dakota is the lack of an active rainy day fund. The state Office of Management and Budget has maintained that such a fund is unnecessary given the ability to draw money from the Bank of North Dakota, but the state auditor has been critical of this policy, saying it puts both the state and the bank at risk.

The legislature, which meets for a brief period only every other year, nearly always finds itself considering proposals to improve the state’s rather dismal efforts at measuring governmental performance. Usually it doesn’t do much about the problem. Serious performance measurement was last tried with meager results in the 1990s, when a pilot program was launched by the executive branch but ultimately discontinued by the legislature.

Optimists in the state believe that North Dakota may be ready to try again. In the 2001 legislative session, a bill was passed that required colleges and universities to prepare performance and accountability reports. In the following session, the legislature also required the state Department of Commerce to report on North Dakota’s economic goals and associated benchmarks. One of 24 interim committees that met over the past year focused on building a performance and accountability system for the whole state and has come out with a bill draft to put a new system in place. It’s a promising start.

For additional data and analysis, go to: http://results.gpponline.org/northdakota

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