The North Dakota State Investment Board has proposed nearly $1.258 million in bonuses for twelve employees of the Retirement and Investment Office (RIO) in recognition of their exceptional management of the state’s $26 billion in assets, including the expanding $13 billion Legacy Fund. Executive Director Jodi Smith highlighted that these employees achieved more than $191 million in excess returns during the fiscal year 2025, equating to a return of approximately 0.66%.
This proposal has sparked a wave of criticism, with some questioning the allocation of state funds for bonuses rather than direct benefits to citizens. Critics have drawn comparisons to other state employee bonus programs, such as those awarded by the Commerce Department and the Legislative Council. However, it is essential to understand the unique role of RIO employees compared to other government sectors.
In most government agencies, employees represent an expense, relying on taxpayer funding without generating direct revenue. This ongoing challenge of balancing personnel costs with state budgets is a significant topic of discussion during legislative sessions. In contrast, RIO employees, particularly those receiving bonuses, contribute directly to the state’s financial health. Their expertise in managing substantial assets positions them as assets rather than liabilities for the state.
The state must offer competitive salaries to attract top talent to the public sector, especially in a challenging financial landscape characterized by regulatory uncertainties, political changes, and economic fluctuations. RIO employees have navigated these complexities, resulting in the impressive $191 million in excess returns, demonstrating their value to the state.
The performance of North Dakota’s RIO stands in stark contrast to that of South Dakota’s equivalent office, which reported a downturn of 7% against its benchmarks for the same fiscal year. If North Dakota had experienced a similar decline, it would have resulted in a loss of approximately $1.82 billion in managed assets. This comparison underscores the effectiveness of North Dakota’s investment strategy and the importance of supporting its skilled workforce.
Reed Johnson from Grand Forks articulated a strong defense of the proposed bonuses, emphasizing that attracting Wall Street talent to public service requires appropriate compensation. He noted, “You cannot expect Wall Street talent to work on Main Street unless you’re willing to reward them accordingly.” Johnson’s views reflect a broader sentiment that retaining talented investors is crucial for the ongoing strength of North Dakota’s financial management.
As the debate surrounding these bonuses continues, the state must weigh the value of competitive compensation against public expectations for fiscal responsibility. The discussion highlights the broader implications for attracting and retaining skilled professionals essential for the state’s economic growth and stability.
