Frequently Asked Questions
How many Members serve on the Board and how are they appointed?
The Board is comprised of nine Members appointed by the Governor.
The Governor selects one of the nine Members as the Chairperson.
Members must be confirmed by the State Senate.
And two non-voting Legislative Liaisons, from different political parties.
What is the length of Board Members terms and how often do they meet?
Members serve four year terms.
The term of five Members must run concurrent with the gubernatorial term.
The remaining four Members are appointed in the middle of the Governor’s term.
The Board currently meets quarterly or as determined by the Chairperson.
Do the Members serve at the pleasure of the Governor?
No, Members may only be removed by the Governor for cause.
Members serve until a successor is appointed.
Do Board Members represent certain areas of expertise?
One Member must also serve on the Public Employees’ Retirement Board.
One Member must also serve on the Teachers’ Retirement Board.
One Member must be an attorney.
Other Members represent:
The financial community;
Small Business;
Agriculture; and
Labor.
How many Members must be present to conduct business?
At least five Members must be present to conduct business.
At least five Members must approve any substantive action taken by the Board.
The Chairperson may make and second motions and vote.
How are Board Members compensated?
Members receive $50.00 per day when carrying out official duties.
Members are also reimbursed for travel expenses.
Are Board meetings open to the public?
Yes, all Board meetings must be open to the public.
The Chairperson may close the meeting under certain legally-prescribed conditions.
How are the meetings advertised to the public?
Notice of the meeting date, location and agenda are posted on the Board’s web site.
The agenda must set aside a time for public comment.
The Board may not make a substantive decision unless the item is on the agenda.
Board meeting minutes are also posted on the Board’s web site.
How are the Board’s operations funded?
The Investment Program charges a fee to the accounts it invests.
The Legislature sets the total fee the Board may charge these accounts.
The Bond Program charges a spread to borrowers over the bond interest rate.
The legislature reviews but does not set or approve the spread.
What are the primary duties of the Board?
The Board administers the Unified Investment Program.
The Board administers the “Build Montana” program.
What is the Unified Investment Program?
The Program includes all state funds and was created by the State Constitution.
Pension funds, Trust funds, and Workers’ Compensation Insurance are the largest components.
What types of investments may be made with these funds?
Pension funds may be invested in any type of prudent investment.
Workers’ Compensation Insurance may be invested in both bonds and stocks.
Most all other state funds can be invested in fixed income securities only.
The law requires that all investments be considered prudent.
What processes are used to invest these funds?
Most of the funds are invested in seven investment pools (86%).
Board staff invest 78% of the funds internally.
Contracted external managers invest the remainder.
What is the role of Board Members in these processes?
Members approve Investment Policies for each account.
Members approve asset allocations.
Members review the investment activity of Board staff.
Members approve investment strategy at each meeting.
How do Board Members measure success in investing these funds?
Members establish an appropriate performance benchmark for each asset class.
Performance of each asset class is calculated independently by the Custodial Bank.
Board Members review the performance at least quarterly.
What is the In-State Investment Program?
The Program was approved by Montana voters as the “Build Montana” Program.
It includes the In-State Loan Program funded from the Coal Tax Trust.
It includes the INTERCAP Program funded by the sale of tax-exempt bonds.
What types of loans are included in the In-State Loan Program?
The Commercial Loan Program is allocated up to 25.0 percent of the Trust.
The Infrastructure Loan Program (ILP) is allocated $80.0 million of the Trust.
The Value-Added Loan Program is allocated $70.0 million of the Trust.
Intermediary Re-lending Program (IRP) is allocated $5.0 million of the Trust
Who is eligible to participate in this Program?
Any Montana business/individual may apply for a Commercial Loan.
Businesses applying for a “Value-Added” loan must operate a value-added business
Local governments may borrow from the ILP to assist basic sector businesses.
Local Economic Development Organizations may borrow through the IRP.
All projects funded by these loans must be located in Montana.
Except for Infrastructure and IRP loans, financial institutions must participate.
Must a business create jobs to be eligible for these loans?
Job creation/retention is not required for all Commercial loans.
At least 15 basic sector jobs must be created to qualify for an Infrastructure loan.
At least 10 jobs must be created or retained to qualify for a Value-Added loan.
Is there a maximum loan size?
Value-Added loans are limited to 1.0% of the Coal Tax Trust (currently $7.0 million)
Commercial loans are limited to 10.0% of the Coal Tax Trust (currently $70.0 million).
Maximum Infrastructure loan = $16,666 times the number of qualifying jobs created.
Intermediary Re-lending loans may not exceed $500,000.
Is there a minimum loan size?
There is no minimum loan size for Commercial loans.
Infrastructure & Value-Added loans must be at least $250,000.
What is the maximum level of Board participation in a loan?
The Board participates 100% in the guaranteed portion of Commercial Federally-Guaranteed loans.
The Board may fund 100% of Infrastructure loans.
Participation in Commercial loans less than 6% of the Trust is 80% of the total loan.
Participation in Commercial loans more than 6% of the Trust is 70% of the total loan.
Board participation in Value-Added loans is set by law at 75% of the total loan.
The Board may participate at less than the maximum percentage for Commercial loans.
How are interest rates set?
Commercial\Infrastructure loan rates are set competitively to the market each week.
Commercial loans less than 0.05% of the Trust are reduced by 0.5% percent.
Value-Added loan rates are set by law based on the number of jobs created/retained.
Intermediary Re-lending loan rates are set by law at 2.0 percent.
Except for Value-Added loans rates are fixed through the term of the loan.
Lenders charge a fee to service the Board’s portion of the loan.
Does the Board charge a fee to make a loan?
Fees are required to lock interest rates for Commercial Loans.
Commercial loan fees are refundable under certain conditions.
Fees are not required for Value-Added, Infrastructure, & Intermediary Re-lending loans.
Are interest rate reductions available if jobs are created?
Interest rate reductions are not available for Value-Added loans.
Interest rate reductions are not available for Intermediary Re-lending loans.
Interest rate reductions up to 2.5% are available for Commercial & Infrastructure loans.
What are the maximum terms of these loans?
30 years for Federally-Guaranteed Commercial loans.
30 years for Intermediary Re-lending loans.
25 years for Commercial and Infrastructure loans.
15 years for Value-Added loans.
Must Board Members approve these loans?
Board staff approves all Federally-Guaranteed Commercial loans.
Board staff may approve all loans up to $1.0 million.
Board Loan Committee approves loans $1.0 - $5.0 million.
All loans exceeding $5.0 million require Board approval.
What is the INTERCAP Program and who is eligible to participate?
The Board issues tax-exempt bonds to fund the loans in this Program.
Borrowers must be eligible governmental agencies.
Governmental agency eligibility is established by state law.
Borrowers may apply for low interest loans for a variety of purposes.
What types of bonds are issued and who purchases them?
Bonds are tax-exempt with a one-year term.
Bonds are purchased by investors who will benefit from their tax-exempt status.
The bonds are remarketed annually in March.
How are interest rates set and how often?
The interest rates to the borrower are based on a spread over the interest paid on the bonds.
The rate will usually change each March when the bonds are remarketed.
What are the maximum terns of these loans?
Loan terms are limited to 15 years, useful life of the project, or borrower term limit per state statute, whichever is less.
Must Board Members approve these loans?
Board staff may approve all non-university loans up to $1.0 million.
Board staff may approve university loans up to $1.0 million.
Loan Committee approves loans between the amounts of $1.0 million and $5.0 million.
All loans exceeding $5.0 million require Board approval.
