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Amid complaints of sluggishness, North Dakota board overseeing in-state Legacy Fund investment replaces chairman

Under Rep. Keith Kempenich's direction, the board drew criticism for perceived delays in the rollout of an in-state investment program using North Dakota's voter-approved Legacy Fund. On Wednesday, the panel elected Sen. Jerry Klein as chairman, demoting Kempenich to vice-chairman.

BISMARCK — A board tasked with forming a procedure for investing part of the state's oil tax savings account in local companies has picked a new chairman.

The Legacy and Budget Stabilization Fund Advisory Board elected Fessenden Republican Sen. Jerry Klein as chairman Wednesday, Dec. 8, demoting longtime chairman Rep. Keith Kempenich, R-Bowman, to second in command.

Under Kempenich's direction, the board and the state Retirement and Investment Office drew criticism for perceived delays in the rollout of an in-state investment program using the voter-approved Legacy Fund.

Bismarck Republican Rep. Mike Nathe sponsored popular legislation earlier this year to invest up to 10% of the $8.6 billion Legacy Fund in North Dakota firms. About 3% of the fund is earmarked for emerging local companies, and managers of that program have already made their first investment.

But Nathe and other supporters of in-state investment, including bankers and economic development agencies, expressed frustration that the remaining 7% of the fund meant for North Dakota companies hasn't been put to use more than six months after the legislation passed.

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Kempenich and Retirement and Investment Office Director Jan Murtha have urged patience and said the board and agency have taken positive steps in laying the program's foundation.

In response to the growing frustration, the Legislature last month reformed the makeup of the panel, increasing its membership from seven to 10 members. It now includes six lawmakers, the tax commissioner, insurance commissioner, state treasurer and president of the Bank of North Dakota.

The vote to replace the leader of the panel played out in an unusual way. Klein voted against himself and for Kempenich despite the majority of the board electing him as the new chairman.

Klein said Wednesday he doesn't believe the board under Kempenich has dawdled, noting it will take time to implement Nathe's complex legislation. The former grocer added that the panel will ramp up the number of meetings it holds early next year to get the in-state program off the ground.

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North Dakota Sen. Jerry Klein, R-Fessenden, speaks at a bill signing on Friday, April 23, 2021. Jeremy Turley / Forum News Service

Kempenich, who estimated he chaired the committee for the last eight years, said the panel has faced unreasonable expectations but he thinks the group can form guidelines for starting up the program next spring.

Fargo Sen. Kathy Hogan, the board's lone Democrat, commended Kempenich for his service as chairman but said switching up the board's leadership signals a good-faith effort to recognize the Legislature's desire for change.

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Nathe said Kempenich "has done a fine job, but I think a new voice is needed," adding that he has faith in Klein to lead the board.

The board's next step should be hiring an in-state equity consultant to help form procedures for investing state money in local firms, said Eric Chin, the interim chief investment officer for the Retirement and Investment Office. The panel still needs to answer questions like whether to set parameters for investing in certain business sectors and whether investments should have to create jobs in North Dakota, Chin added.

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