House State Administration members heard a broad briefing on Montana's public pension systems and the state's investment program, with presenters outlining the size of the funds, how they are funded and how investment returns affect taxpayers.

The briefing, led by legislative staffer Rebecca Power and followed by executives from the Teachers Retirement System, the Public Employee Retirement Administration and the Board of Investments, emphasized that Montana's public retirement systems together hold billions in assets and that investment returns play a central role in paying benefits and shortening unfunded liabilities. "Pensions is a very jargony area," Rebecca Power told the committee, and she urged members to use the green-sheet materials distributed at the hearing.

Why this matters: State law and the Montana Constitution protect retirement fund assets and require systems to be funded on an actuarially sound basis. Committee members were reminded that investment performance and contribution policy together determine whether taxpayers or investment earnings will cover retirement benefits going forward.

Presenters defined the two principal plan types used in Montana and summarized participation and funding. Power told the committee there are 11 statewide public employee retirement systems: nine defined-benefit plans and two defined-contribution plans. Across the systems she said there were roughly $17.1 billion in pooled assets and about $4.6 billion in unfunded liabilities (figures presented as fiscal year 2024 totals). She also noted the legislature sets benefit formulas and contribution rates and carries oversight responsibilities.

Teachers Retirement System data: Sean Graham, executive director of the Montana Teachers Retirement System (TRS), said TRS had about $5 billion in assets, roughly 20,000 active members, about 8,500 inactive members (accounts with money on deposit not yet eligible for retirement) and about 18,000 benefit recipients. As of July 1, 2024, he said TRS was 74.2% funded and amortized its unfunded liabilities in 21 years. Graham reported TRS received about $255 million in contributions and paid about $444 million in benefits in the most recent fiscal year; investment earnings on the TRS asset pool supply most of the difference.

Public Employees Retirement Administration (PERS): William Holahan, executive director of the agency that administers PERS, said PERS is Montana's largest plan by membership. Holahan gave system-level averages (active-member average salary roughly $51,000; average years of service about eight) and said PERS' defined-benefit assets were roughly $7.3 billion as of June 30, 2024, with a funded ratio near 76% and an amortization period of about 20.7 years. He described membership counts (roughly 53,000 active members across PERS plans, about 31,000 retirees/beneficiaries and over 566 reporting employers) and noted the PERS system receives a statutory supplemental state appropriation in addition to employer and employee contributions.

Board of Investments role and strategy: Dan Villa, executive director of the Montana Board of Investments (BOI), described the Unified Investment Program (UIP) that pools state, local and pension dollars for investment. Villa said the BOI managed roughly $28.67 billion in total assets as of December 31 and that about $15.3 billion of that is pension-related. He explained the BOI invests pension dollars through a consolidated asset pool (CAP) to achieve economies of scale and lower costs and described the nine broad asset classes the BOI uses (domestic and international equities, fixed income, private investments, real estate and real assets, cash, inflation-protected securities and similar allocations). "I hate costs," Villa said. "Every dollar I spend is a dollar that isn't invested and able to use for someone at something else." Villa told the committee BOI actively manages manager selection and due diligence and said UIP returns above the actuarial assumption reduce the need for taxpayer contributions.

Use of investment authority for state programs: Villa explained the BOI also deploys capital to state programs when directed by the legislature. He described last session's Homes Act deployment: the BOI placed state funds with Montana banks at subsidized terms to reduce construction financing costs and support production of 969 affordable housing units; those deposits are collateralized and will return principal and interest for reinvestment. He also said investments are constrained by federal sanctions (OFAC) and other statutory limits.

Metrics and legal context: Presenters noted the systems use several common performance metrics: funded ratio (assets divided by liabilities), amortization period (years to pay off unfunded actuarial accrued liability), and the assumed investment return (presently 7.3% for the systems discussed). Rebecca Power and board staff pointed committee members to the green-sheet materials, the TRS and MPERA websites, the SJ 4 interim report and the legislator's guide for further detail.

What the committee did not do: The session was informational. Committee members asked clarifying questions about plan design, portability and the cost of closing defined-benefit plans; presenters warned that closing DB plans without accounting for existing liabilities can increase long-term cost. Several members asked for additional numbers and staff follow-up; no formal committee action or vote occurred on pension legislation during the hearing.

Looking ahead: Presenters said the TRS and PERS boards will bring statutory housekeeping or conformity bills this session to preserve tax-qualified status and to implement administrative changes. Lawmakers were given references to the upcoming hearings and the committee's online committee explorer for bill schedules and handouts.