BACKGROUND

For more than 10 years, the MHA Nation has invested available revenue earned from our successful energy program. Year by year, most of the funds targeted for investment have been placed in the People’s Fund, with a smaller portion placed in private investment firms such as Vanguard, Payden & Rygel, and Goldman Sachs. The Peoples Fund account is managed by the Bureau of Trust Funds Administration (BTFA), a federal agency formerly known as OTFM, with a beginning balance of $100 million. Going back to September of 2014, that fund balance was approximately $290 million. Since its inception, the interest earned by the People’s Fund has been used to fund a singular purpose: one annual distribution amount to membership (approximate cost of $17.5 million).  The principal amount, including annual deposits, is not used for any other tribal operating expenditure.

The revenues the MHA Nation first placed in commercial investments were deposited with two separate firms prior to 2014, with a total amount at or near $100 million. Those private investment funds were later consolidated under one firm, Goldman Sachs, and have remained that way to present.

Since November of 2014, with the support of the Tribal Business Council, my administration steadily built these two investment accounts to more than $1.1 billion; with over $860 million in the Peoples Fund and over $250 million invested with Goldman Sachs.  By managing our annual budgets year after year, we have been able to provide additional revenue to increase our investment portfolio.  But accomplishing this has also been very challenging in light of our tribal nation’s tremendous reservation-wide infrastructure, new programs, and business development for the past nine years. These include new schools, community centers, healthcare facilities, housing, road construction, drug treatment programs/centers, and health insurance coverage for membership; just to name a few. Furthermore, we had to contend with a world-wide pandemic and a very volatile oil market. 

DILEMMA 

Although our Nation has done a good job of placing and building our investment funds and portfolios, relying on BTFA management of our funds has serious issues.  By policy, the federal government may only invest tribal funds in very limited investment options such as government treasury bills, etc. This has caused low returns and interest gains on our People’s Fund. Historically and presently, BTFA has earned our nation’s investment funds an annual income yield of about 3% (2.89% recently). Combining this low return with a national inflation rate of 2% or higher, means the value of our investment funds has had very poor and insignificant growth with BTFA!  BTFA-managed returns also lack in comparison to the average gain of 7.5% on our private placement with Goldman Sachs.  Plain and simple, when invested with the federal government, we struggle to “make our money work for us!”

STRATEGY

In the investment world, it is extremely important to have a balanced portfolio for effective wealth management. Although investment strategy as well as returns may vary for investment firms who are successful, an optimal balance of risk and return is usually the preferred means in achieving significant gains. With expert management, it is not uncommon for some to achieve annual returns of 20% or greater. But high returns usually include higher risks, so it would not be prudent or wise to invest 100% of an investment portfolio in a high risk/high return portfolio either, even if the prospect of gains can be very substantial.  

The best strategy for investment lies with a balanced portfolio of investment options; combining low, medium, and high prospective risk and return. In layman’s terms, spread the money strategically, to achieve greater return while not overstepping the boundaries of reasonable risk. 

It must be clearly understood that without the TBC placing new deposits year after year in the People’s Fund, the fund would have had significantly less growth, earning an average of 3% per year by BTFA.  The time has now come to strategize for a greater return on our investment funds by taking proactive steps to increase the funds by choice of more prudent management options.  Leaving more than 80% of the People’s Fund with BTFA at a net gain of 1% over inflation is NOT IN THE BEST INTEREST of our MHA Nation and its membership.  It is time to fix the lingering problem of dismal returns by reducing that 80% portion to something more reasonable and conducive to reasonable returns.

NEW INVESTMENT AND PARTNERSHIP

Our investment is in a diversified and well-managed company with a long track record and holdings in financial services, insurance, corporate finance and private investment businesses.  A portion of the investment has a guaranteed 8% return (which is in and of itself higher than the investments with the BTFA) and has the potential to realize returns of 15% to 20% or more.  We believe this is a sound opportunity for our Nation to increase the value of our People’s Fund as well as improve the financial capacity for continued economic development by our MHA Nation.     Simply put, we think our investment and partnership represents an opportunity to enhance and significantly grow our portfolio so as to profoundly benefit the MHA Nation and its people.  In fact, it is our belief that the People’s Fund will grow faster and stronger because the investment is expected to provide much higher returns than the low returns provided by BTFA and its restrictive policies that are plaguing tribal nations who invest with them! We believe that this opportunity represents the strongest investment opportunity to properly meet our strategy of improving the balance of our investment funds.

Our own financial analysts have shown that moving $250 million of the $860 million in the People’s Fund to this investment position can dramatically increase returns and if the investment goals are realized, provide an additional $700 million to the People’s Fund and our Nation over the next 10  years, in comparison to leaving the entire $860 million at BTFA and its diminutive returns.  

FINAL SUMMARY

After serving nearly 10  years as Chairman of our Nation and with the support of the majority of our TBC and people, it has always been my administration’s objective to continuously build the balance of the People’s Fund to what it is today, evidenced by our frequent contributions to the fund, year after year! Without that objective, the People’s Fund balance would be less than half of what it is today, due to the severely low returns that the BTFA provides annually. In addition to the significant infrastructure and program development that our Nation has accomplished and enjoyed, just as important is the need to build for the future of our great Nation, and the generations to come! 

Placement of our hard-earned tribal revenue in investment options outside of BTFA is not a new idea or proposal.  It actually began prior to my administration, e.g. with private investment firms such as Vanguard and Payden & Rygel. In these partnerships and with our current investment strategy, we are now taking a bold position to increase investment returns to the People’s Fund so that we can better provide better subsequent benefits to the people of our membership and MHA Nation! 

I am providing this overview and statement to reassure our membership that the TBC is making sound and sometimes difficult decisions to continue to enhance our Nation’s investment and financial capabilities. This is necessary to counter the typical and deliberate dissemination of misinformation by some groups and individuals who are perpetuating their own personal agendas for their own benefit, political or otherwise.  

For those of the majority of our membership who are reasonably minded, I strongly encourage you to keep the faith in an administration that continues to accomplish dependable and significant development for our communities and reservation. We have come a long way, and it is best to encourage each other to figure out ways to unite for our best interest, and not be swayed by those who only commit to divisiveness, negativity, and empty rhetoric.