2017 Special Session Recap

In November 2017, Governor Bullock called a special session of the Montana legislature to address a large budget shortfall caused by declining revenues and a historic fire season. In his proclamation, the Governor outlined several proposals to address those budget issues.

One of those proposals became Senate Bill 4 (SB4), an act providing for a 3% management rate on certain portfolios managed by the Board of Investments (BOI). The criteria applied only to accounts with an average asset balance in excess of $1B and the average asset balance must have contained sufficient funds to offset all liabilities as determined by the most recent actuarial study. Montana State Fund’s (MSF) asset portfolio is the only portfolio managed by BOI that met the required criteria, resulting in a $30M fee being assessed on MSF’s policyholder equity. That fee will be payable in two payments—approximately $15M in 2018 and $15M in 2019.

MSF initially challenged the legality of SB4, filing a complaint in District Court the day after passage. The MSF Board of Directors later reconsidered the action and withdrew the complaint citing concern of the optics surrounding the challenge and expressing a desire to work with the legislature and elected officials.

Following the dismissal of the MSF complaint, a group of policyholders filed a complaint for declaratory judgment in the 20th Judicial District Court in Polson. The policyholder complaint seeks to invalidate SB4 based primarily on constitutional grounds.

SB4 mandates that MSF cannot consider the assessed management fees when determining the rates charged to policyholders or in declaring a dividend. By law, dividends cannot be guaranteed. They are the result of strong financial performance, the board of directors’ discretion, and each policyholder’s safety record. Dividends may still fluctuate based on other factors, such as the safety experience of a specific organization but cannot consider the impact of SB4.

Since 1999, MSF has returned more than $216M to policyholders through our dividend program. Doing so allows MSF to incentivize safety in the workplace. The $40 million dividend declared and paid in 2017 was a 28% return of premium to those 23,000 policies receiving the dividend. MSF’s dividend program remains unchanged and MSF remains a financially strong organization despite the passage of SB4.

If you or any of your policyholders have questions regarding this matter, please do not hesitate to contact the MSF legal department at (406) 495-5201 or

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