REPORT

OF THE

NORTH DAKOTA LEGISLATIVE COUNCIL

Pursuant to Chapter 54-35 of the North Dakota Century Code

SIXTIETH LEGISLATIVE ASSEMBLY 2007

TABLE OF CONTENTS

Chairman's Letter ..................................................................................................................1 History and Functions of the North Dakota Legislative Council......................2-3 North Dakota Legislative Council Committee Membership and Staff..........4-10 Summary of Committee Reports ..............................................................................11-18 Report and Recommendations Administrative Rules Administrative Agency Rules Review................................................................................... 19 Current Rulemaking Statistics......................................................................................... 20 2005 Rules Review Changes.......................................................................................... 20 Voiding of Rules.............................................................................................................. 20 Obsolete Rule Repeal..................................................................................................... 21 Agency Rules Analysis ................................................................................................... 21 Committee Action on Rules Reviewed .................................................................................. 21 Obsolete Rules Repeal ................................................................................................... 21 Rules Amendments by Committee Approval .................................................................. 21 Committee Voiding of Agency Rules .............................................................................. 22 Conclusion............................................................................................................................. 23 Table A - Statistical Summary of Rulemaking ....................................................................... 24 Advisory Commission on Intergovernmental Relations Statutory Framework for Commission ................................................................................... 25 Legislative History ................................................................................................................. 25 Historical Areas of Study ....................................................................................................... 26 2005-06 Interim Areas of Study............................................................................................. 27 Charitable Organizations' Property Tax Exemptions............................................................. 27 Legal Framework ............................................................................................................ 27 Legislative History........................................................................................................... 28 Testimony and Discussion.............................................................................................. 28 Tax Levy Authority................................................................................................................. 28 Township Levy Limitation ......................................................................................................29 City Development Impact Fees ............................................................................................. 29 Legal Services for the Indigent.............................................................................................. 30 Uniform Environmental Covenants Act ................................................................................. 30 Extraterritorial Zoning Jurisdiction ......................................................................................... 30 Jail Administration ................................................................................................................ .30 Support and Coordination of Public and Private Efforts to Discourage Destructive Behavior Study ............................................................................................ 31 Legislative History........................................................................................................... 31 Other Coordinating Entities............................................................................................. 31 State Programs for Alcohol, Drug, Tobacco, and Risk-Associated Behaviors................ 32 Testimony and Discussion.............................................................................................. 33 Report on County Document Preservation Funds................................................................. 34 Table A - Alcohol, Drug, Tobacco, and Other Risk-Associated Behavior Programs............. 35 Agriculture and Natural Resources Energy-Intensive Economic Development Study .................................................................. 41 Background..................................................................................................................... 41 Oil and Gas Production ............................................................................................. 41 Coal Production......................................................................................................... 41 Wind Energy.............................................................................................................. 42 Primary Sector Economic Incentives .............................................................................. 43

Testimony and Committee Activities............................................................................... 46 Conclusion ...................................................................................................................... 47 Renewable Energy Initiatives ................................................................................................ 47 Railroad Fuel Surcharges Study ........................................................................................... 47 Background..................................................................................................................... 47 State Jurisdiction Over Railroads.................................................................................... 47 Economic Regulation ................................................................................................ 48 Safety Regulation...................................................................................................... 49 State Taxation ........................................................................................................... 50 Railroad Fuel Surcharges ............................................................................................... 50 Testimony and Committee Activities............................................................................... 50 Conclusion ...................................................................................................................... 51 Rail Rate Complaint Case ..................................................................................................... 51 Grain Quality Issues and Agricultural Research Activities..................................................... 51 Reserved Water Rights Study ............................................................................................... 52 Background..................................................................................................................... 52 Surface Water Appropriation .......................................................................................... 53 Ground Water Appropriation ..................................................................................... 53 Priority ....................................................................................................................... 53 Reserved Water Rights Doctrine .................................................................................... 54 Quantity of Reserved Water Rights - The Practicably Irrigable Acreage Standard... 54 Adjudication and Quantification of Reserved Water Rights....................................... 54 Testimony and Committee Activities............................................................................... 55 Committee Considerations.............................................................................................. 57 Recommendation............................................................................................................ 58 Noxious Weed Reports ......................................................................................................... 58 Endangered Species Act....................................................................................................... 59 Mountain Lion Assessment Report ....................................................................................... 59 Garrison Diversion Project and Red River Valley Water Supply Project Studies.................. 60 Budget Section Analysis of Budget Section Duties and Responsibilities ....................................................... 67 Background..................................................................................................................... 67 Recommendation............................................................................................................ 67 Office of Management and Budget........................................................................................ 67 Status of the General Fund............................................................................................. 67 Tobacco Settlement Proceeds........................................................................................ 68 Fiscal Irregularities.......................................................................................................... 68 Preliminary Planning Revolving Fund............................................................................. 68 2007-09 Biennium Budget Form Changes...................................................................... 68 Status of the Risk Management Workers' Compensation Program................................ 69 ConnectND Deficiency Appropriation - 2003-05 Biennium............................................. 69 2003-05 Biennium General Fund Turnback.................................................................... 69 Special Emergency Commission Meeting - Hurricane Katrina ....................................... 70 Higher Education................................................................................................................... 70 Centers of Excellence..................................................................................................... 70 Capital Projects............................................................................................................... 70 Local Funds - Higher Education Construction Projects .................................................. 70 Higher Education Equity Pool ......................................................................................... 71 Higher Education Review of Long-Term Finance Plan ................................................... 71 Status of Utilities Budget................................................................................................. 71 Status of the State Board of Agricultural Research and Education....................................... 71 Information Technology Department ..................................................................................... 71 Annual Reports ...............................................................................................................71 Department of Human Services ............................................................................................ 72 Transfers in Excess of $50,000 ...................................................................................... 72

Federal Medical Assistance Percentage......................................................................... 72 Medicaid Management Information System.................................................................... 72 Medicaid Medical Advisory Committee .......................................................................... 73 Department of Commerce ..................................................................................................... 73 Annual Audits of Renaissance Fund Organizations........................................................ 73 Annual Report on Job Web Site...................................................................................... 74 Common Accountability Measures Report...................................................................... 74 North Dakota Economic Goals and Associated Benchmarks ......................................... 74 Rural Development Council - Use of Grant Funds.......................................................... 74 Red River Valley Research Corridor - Use of Grant Funds ............................................ 74 North Dakota Center for Technology Program - Use of Grant Funds............................. 75 Partners in Marketing Program - Use of Grant Funds .................................................... 75 Highway Patrol Training Program ......................................................................................... 75 Mill and Elevator Annual Report............................................................................................ 76 2004-05 Annual Report................................................................................................... 76 2005-06 Annual Report................................................................................................... 76 Workforce Safety and Insurance ........................................................................................... 77 Building Maintenance Account........................................................................................ 77 Game and Fish Department .................................................................................................. 77 Land Acquisition Requests ............................................................................................. 77 Walsh and Pembina Counties......................................................................................... 77 Northwest McKenzie County........................................................................................... 77 Department of Emergency Services...................................................................................... 77 Reorganization................................................................................................................ 77 Use of Federal Homeland Security Funds...................................................................... 78 Job Service North Dakota ..................................................................................................... 78 Status of Job Insurance Trust Fund................................................................................ 78 Unemployment Insurance Computer System Modernization Procurement Planning ..... 78 Department of Transportation ............................................................................................... 79 State Water Commission....................................................................................................... 79 Status of the Devils Lake Outlet...................................................................................... 79 Performance Assurance Fund............................................................................................... 79 Transfers to State Tuition Fund............................................................................................. 80 Correspondence From Ethanol Plants .................................................................................. 80 State Agency Unclaimed Property ........................................................................................ 80 Legislative Hearings for Federal Block Grants ...................................................................... 80 Background..................................................................................................................... 80 Recommendation............................................................................................................ 80 Federal Funds ....................................................................................................................... 80 Legislative Council Staff Reports .......................................................................................... 80 Budget Tour Reports ............................................................................................................. 81 Agency Requests Authorized by the Emergency Commission ............................................. 81 Status of the State Contingency Fund ............................................................................ 81 Other Reports........................................................................................................................ 81 Appendix ............................................................................................................................... 83 Budget Committee on Government Services Department of Corrections and Rehabilitation Strategic Plan ............................................... 87 Department of Corrections and Rehabilitation................................................................ 87 Background ............................................................................................................... 87 Correctional Facilities ................................................................................................ 87 Community Services ................................................................................................. 88 2005-07 Biennium Appropriation............................................................................... 88 Other Background Information........................................................................................ 88 Missouri River Bank Stabilization .............................................................................. 88 Performance Audit..................................................................................................... 88

Dakota Women's Correctional and Rehabilitation Center............................................... 88 Background ............................................................................................................... 88 Female Inmate Housing Contract.............................................................................. 88 Facility Renovations .................................................................................................. 89 Prison Industries........................................................................................................ 89 Treatment Programs and Services............................................................................ 89 Medical Expenses ..................................................................................................... 90 Female Inmate Population ........................................................................................ 90 Dakota Women's Correctional and Rehabilitation Center Tour................................. 90 Inmate Populations ......................................................................................................... 90 Recidivism and Revocation Rates .................................................................................. 92 Male Treatment Programs and Services ........................................................................ 92 Tompkins Rehabilitation and Correction Center........................................................ 92 North Central Correctional and Rehabilitation Center ............................................... 92 Centre, Inc.................................................................................................................92 Teen Challenge......................................................................................................... 93 Bismarck Transition Center ....................................................................................... 93 Robinson Recovery Center ....................................................................................... 94 State Hospital - Sex Offender Unit.................................................................................. 94 Other Testimony ............................................................................................................. 94 Incarceration Guidelines............................................................................................ 94 Joint Exercise of Governmental Powers ................................................................... 95 Exemption From Nursing Requirements for Medication............................................ 95 Other Incarceration Options............................................................................................ 95 County Jails............................................................................................................... 95 Commission on Alternatives to Incarceration ............................................................ 96 Private Correctional Facility....................................................................................... 97 2007-09 Biennium Facility Needs ................................................................................... 97 Missouri River Correctional Center ........................................................................... 97 James River Correctional Center .............................................................................. 97 State Penitentiary ...................................................................................................... 98 Related Facility Debt....................................................................................................... 98 Other Considerations ............................................................................................................ 99 Recommendations.......................................................................................................... 99 Performance and Accountability System Pilot Project .......................................................... 99 Background..................................................................................................................... 99 Pilot Project Agencies................................................................................................... 100 Department of Transportation....................................................................................... 100 Highway Patrol.............................................................................................................. 100 Parks and Recreation Department................................................................................ 101 Information Technology Department............................................................................. 101 Department of Commerce............................................................................................. 101 Department of Veterans Affairs .................................................................................... 101 Recommendation.......................................................................................................... 101 State-Owned Real Estate.................................................................................................... 101 Recommendation.......................................................................................................... 102 Monitoring the Status of State Agency and Institution Appropriations ................................ 102 Reorganization of the Department of Emergency Services .......................................... 102 State Agency and Institution Appropriations................................................................. 102 Agreements Between North Dakota and South Dakota ...................................................... 102 Budget Tours....................................................................................................................... 103

Budget Committee on Health Care Comprehensive Study of North Dakota Health Care Needs ............................................... 104 North Dakota Health Care Issues ................................................................................. 104 Governor's Health Insurance Advisory Committee ....................................................... 105 Blue Cross Blue Shield of North Dakota ....................................................................... 105 University of North Dakota School of Medicine and Health Sciences........................... 105 Physician Loan Repayment Program ........................................................................... 106 Other Reports and Testimony....................................................................................... 106 Recommendation.......................................................................................................... 106 Allied Health Professions Board Study................................................................................ 106 North Dakota's Health-Related Boards and Commissions ........................................... 107 Consolidation Efforts in Other States............................................................................ 111 Autonomous Boards Versus Central Agencies - Comparison ...................................... 111 Recommendation.......................................................................................................... 111 Study of Establishing an Umbrella Licensing Organization for Counselors, Psychologists, Marriage and Family Therapists, and Social Workers .......................... 112 Recommendation.......................................................................................................... 112 Licensure and Regulation of Acupuncturists Study............................................................. 112 "Traditional" Acupuncturists .......................................................................................... 113 Chiropractors and Medical Doctors Practicing Acupuncture......................................... 113 Options for Regulating Acupuncture ............................................................................. 113 Recommendation.......................................................................................................... 114 Mandated Health Insurance Coverage................................................................................ 114 59th Legislative Assembly Cost-Benefit Analyses........................................................ 114 Insurance Commissioner Recommendations ............................................................... 114 Recommendations........................................................................................................ 114 Board of Nursing Report...................................................................................................... 114 Nursing Shortage Study................................................................................................ 115 Out-of-State Nursing Employment Agencies ................................................................ 115 Nursing Education Licensure Requirements................................................................. 115 Nursing Education Loan Program................................................................................. 115 Nursing Programs......................................................................................................... 115 Children's Health Insurance Program Report...................................................................... 115 Recommendations........................................................................................................ 116 Announced Basic Care Surveys Pilot Project ..................................................................... 116 State Department of Health Recommendation ............................................................. 116 North Dakota Long Term Care Association Response................................................. 117 Recommendation.......................................................................................................... 117 Budget Tours....................................................................................................................... 117 Other Reports...................................................................................................................... 117 Pharmacy Payment Policy and Medicaid...................................................................... 117 Children With Special Health Care Needs .................................................................... 117 Budget Committee on Human Services Public Health Unit Study......................................................................................................118 Current Public Health Structure .................................................................................... 119 Mill Levies for Public Health.......................................................................................... 119 State General Fund Support ......................................................................................... 119 Core Functions and Essential Services ........................................................................ 119 Survey of Public Health Units ....................................................................................... 120 Other States' Public Health Units.................................................................................. 121 North Dakota Public Health Assessment and Planning Process .................................. 121 Public Health Unit Comments and Suggestions ........................................................... 122 Grant Writing Assistance .............................................................................................. 122 Food and Lodging Investigation Services..................................................................... 122 Other Reports ............................................................................................................... 124

Recommendations........................................................................................................ 125 Medicaid Study and Reports ............................................................................................... 125 Medicaid Study ............................................................................................................. 125 2005-07 Funding ..................................................................................................... 125 Federal Medical Assistance Percentage ................................................................. 125 Payment Methodology............................................................................................. 125 Medicaid Expenditures - Medical Services.............................................................. 126 Medicaid Provider Testimony........................................................................................ 126 Other Reports ............................................................................................................... 127 Five-Year Medicaid Analysis Report............................................................................. 127 Asset Disregard for Long-Term Care Insurance Report ............................................... 128 Prescription Drug Monitoring Report............................................................................. 128 Medicaid Management Initiatives Report...................................................................... 128 Medicare Prescription Drug Implementation Plan Report............................................. 130 Medicaid Management Information System Replacement Project ............................... 130 Other Medicaid-Related Reports .................................................................................. 131 Recommendations........................................................................................................ 131 Healthy North Dakota Study................................................................................................ 131 Background...................................................................................................................131 Funding......................................................................................................................... 131 Status of Focus Areas................................................................................................... 131 Strategic Assessment ................................................................................................... 132 Worksite Wellness ........................................................................................................ 132 Other Reports ............................................................................................................... 133 Recommendations........................................................................................................ 133 Foster Care Facility Payment System Study....................................................................... 133 Facilities and Funding................................................................................................... 133 Children in Foster Care................................................................................................. 134 Change in Federal Payment Procedures...................................................................... 134 Other States' Payment Systems ................................................................................... 134 Residential Treatment Center Tour............................................................................... 134 Provider Testimony....................................................................................................... 134 Recommendations........................................................................................................ 135 Children With Special Health Care Needs Study ................................................................ 135 2005 Legislative Action................................................................................................. 135 Children's Special Health Services Program ................................................................ 135 Waiver Request ............................................................................................................ 136 Other States' Programs ................................................................................................ 137 Anne Carlsen Center Tour ............................................................................................ 137 Other Comments and Suggestions............................................................................... 138 Recommendations........................................................................................................ 138 Other Responsibilities ......................................................................................................... 138 Department of Human Services' Budget Review Report .............................................. 138 Department of Human Services' Plan to Transfer Individuals From the Developmental Center to Community Placements.................................................. 139 Budget Tours....................................................................................................................... 139 Other Reports...................................................................................................................... 139 Commission on Alternatives to Incarceration Background ......................................................................................................................... 140 Department of Corrections and Rehabilitation............................................................... 140 Prisons Division....................................................................................................... 140 Division of Juvenile Services and Youth Correctional Center ................................. 141 Field Services Division ............................................................................................ 141 Dakota Women's Correctional and Rehabilitation Center ....................................... 141 Mandatory Sentences.................................................................................................... 141

Drug Courts ................................................................................................................... 142 Testimony and Commission Considerations ....................................................................... 142 Mandatory Sentences.................................................................................................... 142 Department of Corrections and Rehabilitation Programs .............................................. 142 Faith-Based Community Housing Initiative ............................................................. 142 Last Chance Program ............................................................................................. 142 Assessment Center Program .................................................................................. 142 Day Report Program ............................................................................................... 143 Three-Day Parole Hold............................................................................................ 143 Rapid Intervention Program .................................................................................... 143 Tompkins Rehabilitation and Correction Center...................................................... 143 Transition Programs................................................................................................ 143 Parole ......................................................................................................................143 Electronic Monitoring............................................................................................... 143 Juvenile Programs................................................................................................... 143 Judicial Branch Programs.............................................................................................. 144 Juvenile Drug Court................................................................................................. 144 Adult Drug Court...................................................................................................... 144 Department of Human Services' Programs ................................................................... 144 Superintendent of Public Instruction Programs ............................................................. 144 Local Government Programs......................................................................................... 145 Community Service Agencies ................................................................................. 145 CounterAct Program................................................................................................ 145 Cass County Jail Intervention Coordinating Committee Project.............................. 145 Nongovernmental Program............................................................................................ 145 Recommendations .............................................................................................................. 145 Electronic Monitoring Bill ............................................................................................... 145 Executive Budget and Funding Issues .......................................................................... 145 Other Recommendations and Statements..................................................................... 146 Economic Development Reports................................................................................................................................ 147 One-Time Status Reports ............................................................................................. 147 American Indian Business Development Office and International Trade and Business Office............................................................ 147 Local Economic Developer Certification Program................................................... 148 Image Information Program..................................................................................... 148 Business Hotline Program....................................................................................... 149 Dakota Manufacturing Initiative ............................................................................... 149 Investment in Alternative and Venture Capital Investments.................................... 149 Centers of Excellence Program............................................................................... 150 Procurement Web Site ............................................................................................ 152 Study Reports ............................................................................................................... 152 Procurement Assistance Center Study ................................................................... 152 Economic Development Incentives Study ............................................................... 153 Commercialization of New Technologies and Intellectual Property Studies ........... 154 Statutory Reports .......................................................................................................... 155 Renaissance Zone Progress ................................................................................... 155 Target Industries ..................................................................................................... 155 Recommendations........................................................................................................ 156 Business Climate Study ...................................................................................................... 156 North Dakota Legislative Background........................................................................... 156 2005 Legislation ...................................................................................................... 156 2005-06 Interim Studies .......................................................................................... 157 2003-04 Interim Studies .......................................................................................... 157 Focus Group Activities.................................................................................................. 158

Visioning Exercise................................................................................................... 158 Group Interview....................................................................................................... 159 Business Congress Activities........................................................................................ 160 Resulting Business Initiative ......................................................................................... 160 Workforce - Internships ........................................................................................... 161 Workforce - Career Education................................................................................. 161 Workforce - Services for and Recruitment of Workers ............................................ 162 Attracting and Retaining Young People and Young Families - Marketing and Incentives................................................................................... 164 Attracting and Retaining Young People and Young Families - Higher Education Recruitment and Responsiveness ........................................ 165 Image - Marketing, Message Training, and Tourism............................................... 166 Transportation ......................................................................................................... 166 Higher Education - Commercialization of New Technologies and Intellectual Property .................................................................................... 167 Higher Education - Centers of Excellence............................................................... 168 Trade and Other Items ............................................................................................ 168 Recommendation - Business Initiative Bill .................................................................... 168 Venture and Risk Capital Study .......................................................................................... 170 Legislative Background................................................................................................. 170 2005 Legislation ...................................................................................................... 170 2003-04 Interim Study............................................................................................. 171 2001-02 Interim Study............................................................................................. 171 1999-2000 Interim Study......................................................................................... 171 1997-98 Interim Study............................................................................................. 172 Testimony and Committee Considerations ................................................................... 172 Recommendations........................................................................................................ 172 Education Provision of Education Study .............................................................................................. 173 Background.................................................................................................................... 173 Constitution of North Dakota ................................................................................... 173 Bismarck Public School District No. 1 v. State of North Dakota .................................... 173 1993 Legislative Proposal by the Superintendent of Public Instruction - Legislative Response............................. 174 Bismarck Public School District No. 1 v. State of North Dakota - Appeal - North Dakota Supreme Court Decision ................................................................... 174 Legislative Response .............................................................................................. 174 Williston Public School District No. 1 v. State of North Dakota...................................... 174 Allegations............................................................................................................... 174 Claim for Relief........................................................................................................ 175 Agreement to Stay Litigation - Terms...................................................................... 175 North Dakota Commission on Education Improvement ................................................. 176 Report of the Commission....................................................................................... 176 Committee Consideration........................................................................................ 176 Current State of Education .................................................................................................. 176 Student Enrollment ........................................................................................................ 177 Number of School Districts ............................................................................................ 177 Statewide Average Levies - Ending Fund Balances...................................................... 177 School District Employee Compensation....................................................................... 177 Student Achievement..................................................................................................... 177 Challenges - Solutions................................................................................................... 177 P-16 Education Task Force..................................................................................... 177 Full-Day Kindergarten ............................................................................................. 177 Educational Associations Governed by Joint Powers Agreements......................... 177 Bill Drafts - Considerations and Recommendations ...................................................... 178

Miscellaneous Reports ........................................................................................................ 178 Statutory and Regulatory Waivers ................................................................................. 178 Teacher Compensation Notices .................................................................................... 178 English Communication Skills - Faculty Members and Teaching Assistants................. 178 State Board of Higher Education - Long-Term Finance Plan......................................... 179 Electric Industry Competition Electric Industry Restructuring ............................................................................................ 180 Background...................................................................................................................180 State Regulation ........................................................................................................... 181 Federal Actions............................................................................................................. 181 Other States.................................................................................................................. 181 Energy Act of 2005.............................................................................................................. 182 Previous Studies ................................................................................................................. 182 1967-68 Study .............................................................................................................. 182 1997-98 Study .............................................................................................................. 183 1999-2000 Study .......................................................................................................... 183 2001-02 Study .............................................................................................................. 184 2003-04 Study .............................................................................................................. 184 Taxation................................................................................................................... 184 Wind ........................................................................................................................186 Recent Legislation............................................................................................................... 186 1999 Legislation............................................................................................................ 186 2001 Legislation............................................................................................................ 186 2003 Legislation............................................................................................................ 187 2005 Legislation............................................................................................................ 187 Testimony and Discussion on Transmission Issues............................................................ 188 North Dakota Transmission Authority Report ............................................................... 188 Wyoming Infrastructure Authority.................................................................................. 188 Cost Allocation and Recovery....................................................................................... 189 Siting............................................................................................................................. 190 CapX 2020....................................................................................................................191 Wind Energy ................................................................................................................. 191 Financing ...................................................................................................................... 191 Recommendation.......................................................................................................... 192 Testimony and Discussion on Competition ......................................................................... 192 Testimony and Discussion on Committee Extension .......................................................... 193 Recommendation.......................................................................................................... 193 Testimony and Discussion on Taxation............................................................................... 193 Report on Emergency 911 Telephone Systems Standards and Guidelines ....................... 194 Report on City and County Fees on Telephone Service ..................................................... 194 Employee Benefits Programs Consideration of Retirement and Health Plan Proposals .................................................... 196 Teachers' Fund for Retirement............................................................................................ 196 History .......................................................................................................................... 196 Contribution Rates and Benefits ................................................................................... 197 Retired Teachers Returning to Work ............................................................................ 199 Actuarial Report ............................................................................................................ 200 Proposals Affecting Teachers' Fund for Retirement ..................................................... 200 Bill No. 73................................................................................................................ 200 Bill No. 68................................................................................................................ 201 Bill No. 67................................................................................................................ 202 Public Employees Retirement System ................................................................................ 202 Programs ...................................................................................................................... 202 Contribution Rates and Benefits ................................................................................... 202

Main System............................................................................................................ 202 Defined Contribution Plan ....................................................................................... 202 National Guard Retirement System......................................................................... 202 Law Enforcement Retirement Systems ................................................................... 203 Judges' Retirement System .................................................................................... 203 Highway Patrolmen's Retirement System ............................................................... 204 Job Service North Dakota Retirement Plan............................................................. 204 Employer "Pickup" Provision ................................................................................... 204 Portability Enhancement Provision.......................................................................... 204 Members Terminating Employment ........................................................................ 204 Multiplier and Retiree Adjustments ............................................................................... 205 Retiree Health Credit .................................................................................................... 205 Retiree Health Insurance .............................................................................................. 205 Retirements ..................................................................................................................205 Legal Issues of Retirement Benefit Changes................................................................ 205 Alaska Pension Plan..................................................................................................... 206 Actuarial Report ............................................................................................................ 206 Proposals Affecting Public Employees Retirement System.......................................... 207 Bill No. 75................................................................................................................ 207 Bill No. 76................................................................................................................ 207 Bill No. 80................................................................................................................ 207 Bill No. 77................................................................................................................ 207 Bill No. 79................................................................................................................ 207 Bill No. 71................................................................................................................ 207 Bill No. 78................................................................................................................ 208 Bill No. 62................................................................................................................ 208 Bill No. 30................................................................................................................ 208 Bill No. 31................................................................................................................ 208 Bill No. 32................................................................................................................ 208 Bill No. 100.............................................................................................................. 208 Proposal Affecting the State Investment Board ............................................................ 209 Bill No. 82................................................................................................................ 209 Additional Committee Responsibilities ................................................................................ 209 State Employee Compensation Study................................................................................. 209 Background...................................................................................................................209 Employees............................................................................................................... 209 Compensation ......................................................................................................... 209 Salary Increase History ........................................................................................... 210 Equity Adjustments.................................................................................................. 210 Retirement............................................................................................................... 211 Health Insurance ..................................................................................................... 211 Holiday Leave.......................................................................................................... 213 Annual Leave and Sick Leave................................................................................. 213 Family Leave - Family Sick Leave........................................................................... 214 Findings ........................................................................................................................ 214 Employee Class Evaluation System........................................................................ 214 Agency Pay Increase Systems................................................................................ 214 Health Insurance ..................................................................................................... 215 Fringe Benefits Comparison.................................................................................... 215 Employee Turnover Rates....................................................................................... 216 Compensation System Considerations......................................................................... 216 2007-09 Compensation Adjustment Suggestions......................................................... 217 Other Reports and Testimony....................................................................................... 217 Recommendations .............................................................................................................. 217

Finance and Taxation Education Funding and Property Tax Study........................................................................ 218 Background...................................................................................................................218 Concept Paper.............................................................................................................. 218 70-30 Elementary and Secondary Education Funding ................................................. 218 Property Tax Savings and Allocation............................................................................ 220 School Spending Growth Limits.................................................................................... 220 Hold Harmless Funding for School Districts ................................................................. 221 Methods of Generating Revenue to Provide Property Tax Relief ................................. 221 Future Monitoring of the State's Share of Education Funding ...................................... 221 City Sales Tax Transfer to School Districts................................................................... 221 Committee Consideration ............................................................................................. 221 Recommendations........................................................................................................ 222 Property Tax Levies in Mills Study ...................................................................................... 223 Committee Consideration ............................................................................................. 224 Recommendation.......................................................................................................... 224 Higher Education Background ......................................................................................................................... 225 Previous Legislative Higher Education Studies and Related Legislation...................... 225 1999-2000 Study..................................................................................................... 225 2001-02 Study......................................................................................................... 226 2003-04 Study......................................................................................................... 226 Long-Term Financing Plan and Resource Allocation Model......................................... 227 Base Operating Funding Component...................................................................... 227 Incentive Funding Component ................................................................................ 228 Capital Asset Funding Component.......................................................................... 228 Performance and Accountability Report ....................................................................... 228 Higher Education Funding and Accountability Study .......................................................... 229 Consultant Services and Methodology ......................................................................... 229 Study Findings and Recommendations ........................................................................ 230 State of Higher Education ....................................................................................... 230 Higher Education Roundtable ................................................................................. 230 Accountability Measures ......................................................................................... 231 Peer Institutions....................................................................................................... 231 Long-Term Financing Plan...................................................................................... 231 Clarification of Recommendations........................................................................... 232 Equity Funding Issues .................................................................................................. 233 2005-07 Equity Pool ................................................................................................ 233 North Dakota State University ................................................................................. 233 University of North Dakota ...................................................................................... 234 State Board of Higher Education - Review of Long-Term Financing Plan and Response to the MGT of America, Inc., Recommendations ............................ 234 Higher Education Roundtable ............................................................................................. 236 Operation: Intern.......................................................................................................... 236 "Soft Skills" Areas of Education and Training ............................................................... 236 Centers of Excellence................................................................................................... 236 Discussion Groups........................................................................................................ 237 Additional Comments.................................................................................................... 238 Faculty and Teaching Assistant English Communication Skills .......................................... 238 Statutory Provisions...................................................................................................... 238 State Board of Higher Education and Higher Education Institutions' Policies .............. 238 English Proficiency Complaints..................................................................................... 238 Other Reports...................................................................................................................... 238 Professional Student Exchange Program Study........................................................... 238

North Dakota University System 2007-09 Budget Request .......................................... 239 Minnesota Proposed Free Tuition Program.................................................................. 240 Budget Tours....................................................................................................................... 240 Committee Recommendations ............................................................................................ 240 Industry, Business, and Labor Standard of Loss Ratio Study.............................................................................................. 242 Background...................................................................................................................242 Testimony and Committee Considerations ................................................................... 243 Conclusion .................................................................................................................... 243 Pharmacy Benefits Management Study .............................................................................. 243 Background...................................................................................................................243 North Dakota Law ......................................................................................................... 244 Testimony and Committee Considerations ................................................................... 244 Conclusion .................................................................................................................... 245 Shared Work Demonstration Project Study......................................................................... 245 Background...................................................................................................................245 Testimony and Committee Considerations ................................................................... 246 Conclusion .................................................................................................................... 246 Reemployment Processes Study ........................................................................................ 246 Background...................................................................................................................246 North Dakota Law ......................................................................................................... 246 Work First Demonstration Project ................................................................................. 247 Testimony and Committee Considerations ................................................................... 247 Recommendation.......................................................................................................... 248 Unemployment Insurance Tax Rate Structure Study .......................................................... 248 Background...................................................................................................................248 Testimony and Committee Considerations ................................................................... 251 Recommendation.......................................................................................................... 252 Professional Employer Organization Study......................................................................... 252 Background...................................................................................................................252 Testimony and Committee Considerations ................................................................... 252 Recommendation.......................................................................................................... 253 Public Improvement Contract Study.................................................................................... 253 Background...................................................................................................................253 Public Improvement Contracts ................................................................................ 253 Construction Management ...................................................................................... 254 Design-Build ............................................................................................................ 254 Professional Liability and Indemnification ............................................................... 254 Testimony and Committee Considerations ................................................................... 254 Recommendation.......................................................................................................... 255 State Board of Agricultural Research and Education Report .............................................. 255 Workforce Safety and Insurance Report ............................................................................. 255 Travel and Tourism Liability Insurance Report .................................................................... 255 Information Technology Prioritization of Proposed Major Computer Software Projects ............................................ 256 Information Technology Department Business Plan ........................................................... 257 Information Technology Department Annual Report ........................................................... 258 Policies, Standards, and Guidelines.................................................................................... 260 Information Technology Plans............................................................................................. 260 Major Information Technology Projects............................................................................... 261 Project Management Lifecycle Processes..................................................................... 261 Information Technology Project Budgeting.................................................................... 263 Review of Major Information Technology Projects ........................................................ 263 Enterprise Resource Planning System Initiative - ConnectND System................... 266

Information Technology Department - Mainframe Migration Project....................... 267 Department of Human Services - Medicaid Management Information System Rewrite Project .................................................................................................. 268 Elementary and Secondary Education - Data Warehouse Project.......................... 268 Tax Department - Integrated Tax System ............................................................... 269 Workforce Safety and Insurance - Information Technology Transformation Program System Replacement Project .................................... 269 Legislative Assembly - Legislative Applications Replacement System Project....... 270 Information Technology Department Coordination of Services........................................... 270 Elementary and Secondary Education Information Technology Initiatives.................... 270 Higher Education Information Technology Initiatives..................................................... 271 Political Subdivisions ..................................................................................................... 271 Status of the Recommendations From Previous Information Technology Studies ............. 271 Background.................................................................................................................... 271 Status of the Recommendations.................................................................................... 273 Other Information ................................................................................................................ 274 Statewide Information Technology Network .................................................................. 274 Information Technology Department 2007-09 Budget Request .................................... 274 Information Technology Department Information System Audit Report......................... 275 Internet2......................................................................................................................... 275 Northern Tier Network ................................................................................................... 275 Schools and Libraries Universal Services Program....................................................... 275 Information Technology Council of North Dakota .......................................................... 276 Committee Recommendations ............................................................................................ 276 Judicial Process Eminent Domain Study........................................................................................................ 278 Kelo v. City of New London........................................................................................... 278 Appeal to the United States Supreme Court ............................................................ 278 Majority and Concurring Opinions............................................................................ 279 Dissenting Opinions ................................................................................................. 279 State and Federal Reaction to Kelo ......................................................................... 279 Congressional Reaction ........................................................................................... 279 North Dakota Constitutional and Statutory Provisions .................................................. 280 North Dakota Case Law................................................................................................ 280 Testimony and Committee Considerations ................................................................... 280 Bismarck Hearings ................................................................................................... 280 Fargo Hearing .......................................................................................................... 282 Minot Hearing........................................................................................................... 283 Dickinson Hearing .................................................................................................... 283 Committee Considerations....................................................................................... 284 Recommendation.......................................................................................................... 284 Judicial Elections Study....................................................................................................... 284 North Dakota Judicial System....................................................................................... 285 Judicial Conduct....................................................................................................... 285 Court Decisions ............................................................................................................ 285 Republican Party of Minnesota v. White .................................................................. 285 North Dakota Family Alliance, Inc. v. Bader............................................................. 286 Testimony and Committee Considerations ................................................................... 287 North Dakota Code of Judicial Conduct ................................................................... 287 Election Statutes Affecting Judicial Elections........................................................... 288 Method of Selecting Judges in North Dakota........................................................... 288 Task Force Conclusions and Recommendations..................................................... 288 Recommendation.......................................................................................................... 288 Identity Theft Study ............................................................................................................. 288 Background...................................................................................................................289

Prevalence of Identity Theft ..................................................................................... 289 North Dakota Law .................................................................................................... 289 2005 Changes to Identity Theft Laws....................................................................... 289 Identity Theft Laws of Other States............................................................................... 290 Federal Identity Theft Laws........................................................................................... 290 Identity Theft and Assumption Deterrence Act of 1998............................................ 290 Identity Theft Penalty Enhancement Act of 2003 ..................................................... 290 Fair Credit Reporting Act.......................................................................................... 290 Other Federal Laws.................................................................................................. 290 Testimony and Committee Considerations ................................................................... 291 State Efforts and Legislation to Combat Identity Theft ............................................. 291 Federal Efforts and Legislation to Combat Identity Theft ......................................... 292 Identity Theft Victim Testimonial .............................................................................. 292 Impact of Credit Scores on Insurance Premiums..................................................... 292 Security Freeze Legislation...................................................................................... 293 Recommendation.......................................................................................................... 293 Definition of Dementia-Related Conditions Study ............................................................... 293 Dementia ...................................................................................................................... 293 Alzheimer's Disease and Related Dementias .......................................................... 294 2005 Legislation ....................................................................................................... 294 Testimony and Committee Considerations ................................................................... 295 Alzheimer's Disease Demonstration Grants to States Program............................... 295 Real Choice Systems Change Grant Program ........................................................ 295 Definition of Terminal Condition ............................................................................... 296 Conclusion .................................................................................................................... 296 Drug Use and Abuse Report of the Attorney General ......................................................... 296 Report of Commission on Legal Counsel for Indigents ....................................................... 297 North Dakota Lottery Report ............................................................................................... 298 Judiciary Marriage Laws Study.......................................................................................................... 300 Background...................................................................................................................300 North Dakota Domestic Relations Law and Caseloads........................................... 300 North Dakota Marriage Laws................................................................................... 301 Testimony and Committee Considerations ................................................................... 301 Importance of Marriage to Society .......................................................................... 301 Government Efforts to Encourage Healthy Marriages............................................. 302 Domestic Violence Prevention Fund ....................................................................... 302 Marriage License Fees............................................................................................ 303 Recommendation.......................................................................................................... 304 Uniform Trust Code ............................................................................................................304 Background...................................................................................................................304 North Dakota Statutory Provisions .......................................................................... 304 Uniform Trust Code (2000)...................................................................................... 304 Testimony and Committee Considerations ................................................................... 305 National Conference of Commissioners on Uniform State Laws ............................ 305 Uniform Trust Code Task Force .............................................................................. 306 Recommendation.......................................................................................................... 306 Uniform Commercial Code Revised Article 1 - General Provisions Study ......................... 306 Background...................................................................................................................306 North Dakota Statutory Provisions .......................................................................... 306 Revised Article 1 of the Uniform Commercial Code ................................................ 306 Previous Studies and Legislation ............................................................................ 307 Testimony and Committee Considerations ................................................................... 307 National Conference of Commissioners on Uniform State Laws ............................ 307 Uniform Commercial Code Revised Article 1 Task Force ....................................... 308

Recommendation.......................................................................................................... 308 Uniform Laws Review......................................................................................................... 309 Reports of the Department of Human Services.................................................................. 309 Legislative Audit and Fiscal Review Guidelines for Audits of State Agencies .............................................................................. 310 Previous Audit Guidelines.............................................................................................. 310 New Audit Guidelines - Beginning With Audit Periods Ending June 30, 2006............... 311 Audit of the State Auditor's Office.............................................