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Looking up at the North Dakota State Capitol building in Bismarck. (Image: Timothy Vogel via Flickr)

State audit critical of North Dakota’s Land Department

BISMARCK, N.D. (AP) — An audit of North Dakota’s Land Department has found scores of discrepancies with the agency’s practices, including ethical violations that included employees getting free meals and booze from contractors who manage state assets.

The review, conducted by the state auditor’s office, criticized the agency for a “lack of an organizational culture of accountability” and found that “public funds were not used as efficiently and effectively as they could have been.”

The Legislature’s Audit and Fiscal Review Committee, which called for the audit in 2014, will review its findings Thursday at the state Capitol in Bismarck.

The audit also chastised the agency’s handling of unclaimed property and a program aimed at helping North Dakota communities deal with the effects of rapid energy development. The report said the agency operated the oil impact grant program “ineffectively” and cited questionable projects that included purchasing new heating and air conditioning for a public school and “relocation of baseball fields to a different side of a highway.”

Land Department Commissioner Lance Gaebe said Wednesday that the agency is working to correct the discrepancies. The audit pointed out that the “common practice of accepting free meals and drinks from investment entities changed when the audit was conducted.”

The agency leases rights to state-owned land that is used for grazing cattle and producing hay; it also leases rights to produce oil, coal, gravel and other minerals from state property. It also manages about 700,000 acres of agriculture land and 2.6 million acres of mineral rights.

The audit said that the agency “does not appear to be obtaining a fair market return for grazing leases of pastureland.”

The Land Department also manages a number of state funds, including the Common Schools Trust Fund, which has more than $3.4 billion in assets and is financed mostly by income from state land and mineral leases. The fund is expected to distribute $206 million to North Dakota’s public schools during the current budget period that ends June 30, 2017.

The state Board of University and School Lands oversees the Land Department and hires the commissioner for four-year terms. Gaebe’s term will end in 2017.

Gov. Jack Dalrymple is chairman of the board. Its other members are Kirsten Baesler, state superintendent of public instruction; state Treasurer Kelly Schmidt; Attorney General Wayne Stenehjem; and Secretary of State Al Jaeger. The board members are all Republicans.

Related: North Dakota oil output drops 4K barrels daily in February

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