The State Board of Investment was created by the legislature in 1885 by passing an act proposing an amendment to Article Eight of the of the Constitution of the State of Minnesota concerning disposition of permanent school funds. (Laws 1885 c1). The amendment was adopted in 1886 (see: State Constitutional Amendments Considered). Originally composed of the governor, the state auditor, and the state treasurer, the board was set up to authorize loans of permanent school funds to counties or school districts for the purpose of erecting county or school buildings.
In 1895 the board was enlarged to include the president of the board of regents of the state university and the chief justice of the state supreme court (Laws 1895 c163 s10). Its duties were also expanded to include investing funds from the sale of state school lands, timber, or timber property in Minnesota bonds or federal bonds. It was authorized to make loans to counties, school districts, cities, towns, and villages, but it was not allowed to make loans for railroad construction. After 1895, the board was sometimes referred to as the Board of Commissioners.
In 1913 the state attorney general replaced the chief justice on the board (Laws 1913 c50). The position of investment secretary was created by the legislature in 1917 (Laws 1917 c271). The secretary had general supervision of the investigation of applications for loans, the negotiation of new investments, the examination of securities, and the investigation of records of municipalities applying for loans. Prior to 1917 the state treasurer had acted as secretary.
In 1919 the legislature redefined the functions of the board (Laws 1919 c516). The membership remained the same, but the board was given jurisdiction over all permanent trust funds of the state. It was to invest them in bonds of the federal government, the state, school districts, counties, cities, towns, and villages. As before, it was not to invest in bonds issued to aid in the construction of railroads. It also had the power to fix and change rates of interest on loans to municipalities.
The office of investment secretary was abolished in 1925 (Laws 1925 c426 a18 s2) and all of its powers and duties transferred to the executive secretary of the Executive Council. Under the same law the board was given the additional power of investing the teachers' insurance and retirement fund.
In 1931 the membership of the board was changed to include any one member of the board of regents instead of its president (Laws 1931 c346). In 1939 the board was authorized to invest money in corporate stocks and Canadian bonds (Laws 1963 c567). Under the same law the board of regents of the state university was given control of the permanent university fund and the Board of Investment's membership reverted to that prescribed by the state constitution: the governor, state auditor, state treasurer, secretary of state, and attorney general.
The investment laws of the state were recodified in 1980 (Laws 1980 c607 art 14). The board's membership remained the same and they select a qualified executive director. The board manages retirement funds for state employees, the investment treasurer's cash fund, transportation funds, and proceeds from bond sales. Through external money managers and the internal investment staff, the board invests in a diversified portfolio of stocks, securities, real estate funds, resource programs, and venture capital.
The board is advised on general investment policy by an Investment Advisory Council composed of 17 members (see: related record field).