Montana State Fund Down About $26 Million in Market Tumble

The Montana State Fund lost about $26 million in late September when the stock market plummeted, a fund spokesman said.

At about the same time, Montana voters received a pamphlet describing Constitutional Amendment 44. Approved by the 2007 Legislature, it would allow up to 25 percent of all state trust fund assets to be invested in stocks.

“Talk about the worst time in the world to send that out,” said one of the proponents, state Sen. Dave Lewis, R-Helena. “Markets around the world are crumbling, and we’re arguing for increased investment banking.”

The Montana Constitution allows only the Teachers Retirement Fund and the Workers’ Compensation Fund to invest up to 25 percent of their assets in the stock market. CA44 would extend that policy to other state funds.

“The last runoff of the stock market has not been kind to us,” State Fund spokesman Carl Kochman told the Great Falls Tribune. “As of (Sept. 26), we were down about $26 million.”

The Montana State Fund has about $1 billion invested in corporate bonds, banks and with brokerage dealers. Kochman said only about $35 million, about 3.5 percent of the fund’s assets, is a concern.

“These companies are in bankruptcy or have been purchased by other entities and they do not know what the value will be as things proceed. There are other banks that are struggling, so the value of bonds held with them could be severely impacted,” he said.

But the fund continues to make money.

“Our target was to make $41 million, but we actually made $44 million,” Kochman said.

Meanwhile, the Teachers Retirement Fund saw the value of its investments drop, said Dave Senn, head of the Montana Teachers Retirement System.

“Our retirement funds have gone down, just like the rest of the market … but this will have no impact on the benefits actually paid to our members,” Senn said. “Their benefits are set and secure, and they will be paid.”

Lewis said that with the continuing financial crisis, proponents of CA44 won’t plan a campaign to try to persuade voters to vote for the measure.

“I’ve got to be honest with you; the timing on this is just atrocious.” Lewis said