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Plain Talk: Former treasurer opposes legislative proposal to invest Legacy Fund in North Dakota

"It's never good to make an exemption to the prudent investor rule," former North Dakota Treasurer Kelly Schmidt says.

ND Legislature PHOTOS OF THE DECADE
State officials take time to meet between legislative meetings on Tuesday, Jan. 6, 2015, at the State Capitol in Bismarck, N.D. Grand Forks Herald photo by Logan Werlinger
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"This bill changes the legal guidelines."

That's what former North Dakota Treasurer Kelly Schmidt had to say of a proposal, currently before the Legislature in Bismarck, which would invest 20 percent of the billions in the state's Legacy Fund in North Dakota businesses and infrastructure.

Private entrepreneurs could access that capital to start up or expand their businesses. Local communities could also access the money to finance infrastructure projects cheaper and quicker than they are at present. The Legacy Fund is already invested in these sorts of things, just not in North Dakota.

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Currently, less than 2% of the Legacy Fund is invested in North Dakota.

Schmidt spent 16 years as treasurer before declining to run for another term last year, and that means she spent 16 years on the State Investment Board, which oversees the Legacy Fund's fiscal management. Her objection to the legislation — it's House Bill 1425 , introduced by Rep. Mike Nathe, R-Bismarck, and backed by Insurance Commissioner and SIB member Jon Godfread — is that it modifies what's called the prudent investor rule.

"It's never good to make an exemption to the prudent investor rule," she told me, arguing that the rule is more than North Dakota law but a standard in the investment world.

Nathe's legislation modifies that rule because his goal is to prioritize investment in North Dakota, even if there are better returns available through investments in other parts of the world.

Schmidt says she's not against investing in North Dakota and argues that the State Investment Board hasn't been against it either. Still, she worries about the Legislature mandating types of investment that might have a too dramatic impact on the Legacy Fund's earnings.

Some in political circles have suggested that Schmidt's opposition to this proposal may be born of a potential job waiting at one of the money management firms the state uses for Legacy Fund investments. Schmidt denied this with vehemence, calling it a "lie" and telling me there are no such offers "on the table" for her, though she didn't entirely close the door on that sort of gig in the future.

She said her plan now is to spend time with her family but added, "if God has a plan for me moving forward, I may be open to that, but there are no offers on the table."

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Rob Port, founder of SayAnythingBlog.com, is a Forum Communications commentator. Reach him on Twitter at @robport or via email at rport@forumcomm.com .

Opinion by Rob Port
Rob Port is a news reporter, columnist, and podcast host for the Forum News Service. He has an extensive background in investigations and public records. He has covered political events in North Dakota and the upper Midwest for two decades. Reach him at rport@forumcomm.com. Click here to subscribe to his Plain Talk podcast.
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