(KXNET) — A change to a bill related to our state’s legacy fund is in the works.
Senate Bill 2330 hopes to amend and reenact two sections of the North Dakota Century Code.
In regards to the bill, the North Dakota Retirement & Investment Office’s Chief Investment Officer Scott Anderson asked this hard-hitting question: “How can we create the maximum economic benefit for the state of North Dakota while still achieving the goals of in-state investment?”
Now, we’re looking to state and district representatives to provide answers.
“2330 is an attempt to create more income from what we did last time with 1425,” stated District 14 Representative Jerry Klein. “1425 was a great bill. We’ve had it in place for two years. We worked very hard to put the policy in place. In adopting that policy, we are moving forward with a number of in-state investments — but as we did so, we saw that there were some small glitches that we could fix to create more earnings and opportunities. The bill was crafted as an incentive to create more earnings, yet not change anything in the way we invest in North Dakota and the continued investment and improvement and investments in our state.”
If you aren’t familiar, House Bill 1425 set what Governor Doug Burgum would call a new era of investments for North Dakota. 1425 set targets for 10% of the Legacy Fund principal to be invested in equity investments as well as 10% into fixed-income investments, both within the state. In Senate Bill 2330, state equity would change from 10% to 3%, but what does that mean?
“There is a limit in the capacity of the state to absorb capital for those types of investments,” said Anderson, “and as a result, a portion of that 10% would take a while before it gets used. If it’s left unoccupied, it’s likely to be invested in assets that don’t have the same kind of return that is available otherwise. If we can have a bill like 2330, the changes will enable us to get more earnings out of the fund. “
But why only 3%?
“If you’re able to allocate within the fund to investments that are perhaps higher,” stated Anderson, “things would change for the better. A portion of that higher fund will grow the investment program allocation faster, so that 3% of the actual dollar number grows too, and will be felt accordingly over the next several years.”
And these changes would be felt everywhere.
“We are committed to trying to improve the earnings,” continued Representative Klein, “and create as many earnings for the state of North Dakota as we possibly can, and by doing the right thing. Looking at the legislation, we are doing that. We are accomplishing those goals by providing a better rate of return, but yet still, the heart of the bill is to invest in North Dakota.”
The financial director for the city of Minot was the only one to oppose the bill.
“Our concern is the striking of the funding source for the infrastructure loans,” said Minot Finance Director, David Lakefield.
But Representative Klein says this is something he, along with other supporters, plan to look into.
“We intend our earnings in the future to be much more than that one and a half percent that we might be getting,” Representative Klein continued. “It’s probably a smarter and more fiduciary responsibility for us, as legislators, to provide that money right upfront into those projects, rather than waiting to see if there’s going to be a project and then not getting the return that we could certainly have earned had we invested in the market.”
More information on our previous Legacy Fund coverage can be found here.