Created by the Montana legislature in 1972, the Board is administratively attached to the Department of Commerce but functions as an independent, quasi-judicial board with full and final authority over its two major responsibilities: the Unified Investment Program and the In-State Investment Program.
The Unified Investment Program was established by the legislature to create a single agency vested with the authority to invest and manage state funds in accordance with state law and the Montana constitution. The Board also invests local government funds at their discretion. The Unified Investment Program has grown from a book value of $321 million at year-end 1972 to a book value of $14.7 billion at year-end 2016 – an annual average increase of 9.4 percent. During the same period, the number of accounts invested by the Board increased from 40 accounts to 488 accounts. Both the Unified Investment Program and the In-State Investment Program are required by law to operate under the "prudent expert principle", defined as: 1) discharging its duties with the care, skill, prudence, and diligence that a prudent person acting in a like capacity with the same resources and familiar with like matters exercises in the conduct of an enterprise of like character and like aims; 2) diversifying the holdings of each fund to minimize the risk of loss and maximize the rate of return; and 3) discharging its duties solely in the interest of and for the benefit of the funds managed.
The In-State Investment Program objectives are to use the state’s Unified Investment Program to diversify, strengthen, and stabilize the Montana economy, and to increase Montana employment and business opportunities while maintaining and improving a clean and healthy environment. Montana statutes state that "the Board shall endeavor to invest 25 percent of the Coal Tax Trust Fund … in the Montana economy, with special emphasis on investments in new or expanding locally owned enterprises." To accomplish these goals, the Board has developed a series of loan programs that can be tailored to meet a variety of business needs. In recent years the legislature has created two new loan programs - the Infrastructure and Value-Added Loan Programs – and set aside $80.0 million and $70.0 million, respectively, of the Trust for each program. However, the Board is prohibited by law from making direct loans to businesses or individuals and requires a commercial financial institution to participate in all loan agreements.
A copy of the Montana Board of Investments Governing Laws and Constitution is available in PDF Format.