DOJ: News Release

McGrath: State Should Honor Research Contracts with University System

HELENA – The Montana Board of Investments may continue to make grant payments under existing research and development contracts with Montana’s universities, Attorney General Mike McGrath ruled in an opinion issued Tuesday.

The contracts initially were authorized by the 1997 Legislature, which allowed the now defunct Board of Science and Technology Development to “grant up to $2 million of interest and income from investments to research and development projects at Montana public universities.” Under this authority, the Board signed six separate grant agreements with the university system, which relied on this funding to qualify for matching federal funds for their research and development projects.

“These agreements constitute fully binding contracts,” McGrath said.

However, in 1999, the legislature dismantled the Science and Technology Board and transferred its duties to the Board of Investments.

That legislation required the Board of Investments to administer the various agreements and contracts funded with coal tax permanent trust funds. At the same time, it mandated that all repayments from investments made from the coal tax trust fund be deposited in the permanent fund, effectively eliminating the funding the Board needed to administer the existing contracts.

This apparent conflict led former Department of Commerce director Peter Blouke to request an attorney general’s opinion.

The opinion notes that the legislative histories of the 1997 and 1999 legislation gave no indication that the state’s economic, fiscal or political climate had changed so significantly in the two intervening years as to justify abandoning the contracts.

To reconcile the legislature’s intent to make the coal tax permanent trust fund whole, with funding the contracts it had expressly authorized two years earlier, the opinion concluded that the law should be interpreted “to allow the use of income from the MSTD (the Board of Science and Technology Development) investments to complete the grants to the Montana University System” and “to require all income in excess of that needed to fund the grants to be deposited in the coal tax permanent trust fund.”

An attorney general’s opinion carries the weight of law unless a court overturns it or the Legislature modifies the laws involved.

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