Published on September 12, 2011
Written by Kate Bommarito
BISMARCK, ND – New documents obtained directly from NDSU’s attorney, Special Assistant AG Daniel Hull, attest to the fact that NDSU is in a 10 year dollar-out lease agreement, paying $322,918.88 annually for the lease of President Dean Bresciani’s Beech B-200 King Air.
The lease, arranged through the NDSU Development Foundation, is a ten year, dollar-out lease, running from July 1, 2007 – June 30, 2017. Over the course of the ten years, the university makes quarterly payments of $80,729.72 directly to the current finance company, GE Capital Public Finance, Inc. At the end of the lease term, on July 1, 2017, NDSU will pay $1 and become the sole owner of the aircraft.
At the August 30, 2011 interim Higher Education Committee meeting, NDSU President Bresciani told committee members that NDSU has been in such a poor financial position that it has not been able to fill many of the university’s senior leadership positions, a point he also made at the May meeting of the State Board of Higher Education:
NDSU has not been luxuriating during this period…We have required consistent cuts across campus to the level of not filling senior leadership positions at the Vice President level on down. We have changed the process for approving new personnel at the University. I literally have to sign off on every new hire that takes place at NDSU…That’s how tight things have become.
Currently, the salaries for Vice Presidents at NDSU fall between $150,000 on the low end and $228,000 on the high end. Were it not for the leasing of the airplane, NDSU could afford to hire two, senior level administrators.
And that calculation does not take into account possible savings on the substantial operating costs for the King Air. One of the attorneys working on the transaction in June, 2007, informed the NDSU Development Foundation that: “As NDSU will be the equitable owner of the aircraft under the dollar-out lease, NDSU needs to be registered with the IR. In addition, NDSU needs to be the registered owner of the aircraft for FAA purposes.”
In the interim session, the ND Legislature’s Government Services Committee is conducting a review and analysis of state owned aircraft, looking for ways to make more efficient use of state owned resources. NDSU was at first dismissed from the study, on the grounds that the plane was owned by the private foundation. The Government Services Committee is chaired by Rep. Jeff Delzer (R-Underwood) and Sen. Lonnie Laffen (R-Grand Forks).
The first objective of the interim study, according to the background memo, is to “Receive and review information regarding which state agencies own or lease airplanes, the reasons why the agencies own or lease airplanes, and the frequency of use of the airplanes.”
In prior articles, PlainsDaily has covered President Dean Bresciani’s frequent use of the King Air B200 for his trips between Fargo and Bismarck. NDSU policy (section 1.2) dictates that “Employees must choose the most prudent and economical means of travel, considering such factors as: travel expenses, time away from the office, and the needs of the University.”
In addition to his annual salary, Bresciani also receives an annual car allowance of $11,000 and a housing allowance of $20,000.
Last week, PlainsDaily reported that NDSU told Legislative Council’s financial analyst Brady Larson that they did not own the King Air and were only leasing it from the NDSU Development Foundation. This article and the accompanying documents should provide more detail and any necessary corrections to that information.
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