Mont. Admin. R. tit. 2 | Mont. Admin. R. Title 2 — Administration

Chapter 2.1 Organizational Rule

Subchapter 2.1.1 Organizational Rule

Mont. Admin. R. 2.1.101 Organizational Rule

(1) The organization and functions of the Department of Administration and its attached agencies are described in this rule.

(a) History. The department was originally established under the Office of the State Controller by Chapter 271, Session Laws of 1963, and was reestablished under the Executive Reorganization Act of 1971.

(b) Director. The director of the Department of Administration is appointed by the Governor and is responsible for managing the department and its divisions. The director is supported by a deputy director, a chief program and information officer, a strategic business analyst, and the offices of Finance and Budget, Human Resources, Labor Relations, Legal Services, and State Continuity and Emergency Management.

(i) Architecture and Engineering Division;

(ii) Division of Banking and Financial Institutions;

(iii) General Services Division;

(iv) Health Care and Benefits Division;

(v) Risk Management and Tort Defense Division;

(vi) State Financial Services Division;

(vii) State Human Resources Division; and

(viii) State Information Technology Services Division.

(2) Functions of the Department Divisions.

(a) Architecture and Engineering Division. The Architecture and Engineering Division manages remodeling and construction of state buildings. Its functions include overseeing the architect/engineer interview and selection process; planning both new and remodel projects; administering and coordinating plan reviews; negotiating and administering contracts with architects and engineers; advertising, bidding, awarding, and administering construction contracts; disbursing building construction payments; providing design services for small projects; and formulating a long-range building plan for legislative consideration each session.

(b) Division of Banking and Financial Institutions Division. The Division of Banking and Financial Institutions is responsible for the supervision, regulation, and examination of state-chartered banks, trust companies, savings and loans, credit unions, consumer loan and sales finance companies, deferred deposit lenders, title loan companies, escrow companies, mortgage brokers and loan originators, and mortgage lenders. The purpose of the supervisory function of banks and credit unions is to investigate the methods of operation and determine whether these institutions are operating in a safe and sound manner. The nondepository financial institutions and licensees are examined for compliance with federal and state law. Supervision of financial institutions is accomplished through examinations conducted by division examiners.

(c) General Services Division. The General Services Division, composed of two bureaus and a business support services unit, is responsible for providing certain internal services to government agencies and the public.

The Facilities Management Bureau manages the following services for state agencies in the Capitol Complex and state-owned buildings in the Helena area, either directly or through the administration of service contracts: repair, maintenance, construction, energy consumption, emergency response, space allocation, lease negotiation, facility security, janitorial, pest control, grounds maintenance, and garbage collection.

The Print and Mail Services Bureau provides printing services to state agencies by operating a central facility for duplicating and binding, desktop publishing, layout and design, graphic illustration, and forms design. The bureau operates a quick copy center, administers the state photocopy pool, and manages procurement of all printing and printing-related purchases for state agencies. Mail services for state agencies in the Helena area are provided through a centralized facility that manages incoming, outgoing, and interagency mail. In addition, the bureau operates a full-service contract U.S. Post Office in the State Capitol.

The Surplus Property and Recycling Program promotes sustainable use of state-owned property by providing access to surplus property for state and local governments and nonprofits, and recycling common items and materials on the Capitol Complex.

(d) Health Care and Benefits Division. The Health Care and Benefits Division provides competitive, comprehensive benefits that provide financial protection for state employees, retirees, legislators, and their families. Benefit programs provided include group health, medical, long-term disability, vision, dental, life, long-term care, workers' compensation policy, safety, and return-to-work protection. In addition, the division provides wellness programs, sick leave fund, and medical case management for high-cost medical care, for all state employees.

(e) Risk Management and Tort Defense Division. The Risk Management and Tort Defense Division promotes the development of risk management and loss prevention principles and techniques through consultation and training with state agencies and universities; serves as a resource in resolving risk management and tort liability defense issues for the protection of state assets and resources; purchases and maintains a comprehensive insurance plan on behalf of state agencies; seeks timely and cost-effective resolution of all property and casualty claims filed against the state; and provides legal assistance to state defendants through the use of staff counsel, agency legal services counsel, or contract counsel.

The Risk Management Committee is composed of representatives from all state agencies. The committee is charged with assisting state agencies in managing their loss prevention, insurance, and claims activities.

The Risk Management Network, composed of state and private representatives, provides feedback and recommendations to the Risk Management and Tort Defense Division on the implementation and management of the state's loss prevention, insurance, and claims programs.

(f) State Financial Services Division. The State Financial Services Division is responsible for providing accounting and procurement services and guidance to all state agencies; serving as the central banking function for agencies; supporting the financial and budgeting modules of the Statewide Accounting, Budgeting, and Human Resource System (SABHRS); assisting local governments with financial reporting and audit review statutory compliance; and administering the Social Security Act Section 218 program for the state.

The State Accounting Bureau is the process owner of the SABHRS financial modules and provides technical assistance to agencies. The bureau prepares and publishes the state's comprehensive annual financial report (CAFR), develops the state's accounting policies and procedures, and provides technical accounting assistance to agencies. The Warrant Writer Unit manages the state payment processes, maintains the state vendor file, and issues 1099 miscellaneous forms. The Treasury Unit is responsible for maintaining accountability of all money and securities belonging to or held in trust by the state.

The Financial Services Technology Bureau is responsible for the operational support and maintenance of the enterprise financial and budget development information systems in SABHRS. The bureau works in partnership with the State Accounting Bureau, Office of Budget and Program Planning, Legislative Fiscal Division, and the State Human Resources Division. The CAFR, budget books, single audit reports, and agency financial schedules rely on the financial information housed in SABHRS.

The State Procurement Bureau procures or supervises the procurement of all supplies and services needed by the state, to ensure compliance with the Montana Procurement Act. The bureau maintains the Montana Acquisition and Contracting System (eMACS) and provides technical assistance to government agencies and the public. In addition, the bureau manages the state's vehicle fueling system, energy procurement, and all procurement card functions.

The Local Government Services Bureau is responsible for administering provisions of the Montana Single Audit Act and providing technical accounting, budgeting, financial reporting, and audit compliance assistance to local governments. The bureau maintains and publishes the local government Budgetary, Accounting, and Reporting System (BARS) chart of accounts as well as the county collection and accounting manuals. The bureau also receives and makes local government financial, budget, and audit reports available to the public.

The State Social Security Administrator is responsible for administering Section 218 of the Social Security Act, including interpreting its provisions, providing education and outreach, and ensuring proper application of Social Security coverage to all state and local government employees.

(g) State Human Resources Division. The State Human Resources Division provides state agencies with a variety of human resource management services including professional development, salary administration, policy development, workforce planning, payroll and benefit eligibility administration, and an employee assistance program. The State Human Resources Division is the process owner of the SABHRS human capital management modules. In addition, the division provides support for the following two groups.

The State Employees' Charitable Giving Campaign Advisory Council, (SECGC) appointed by the director, advises the department on the SECGC's activities and implements the annual campaign plan. The council consists of state employee representatives and representatives from a statewide federation, a local federation, and an independent nonprofit organization.

The Interagency Committee for Change by Women (ICCW) was created by executive order "to create positive change for all state employees by promoting the full participation of women in state government." State agency directors appoint representatives to the committee.

(h) State Information Technology Services Division. The State Information Technology Services Division, composed of eight bureaus and two offices, is responsible for the delivery of information technology (IT) services and the planning, coordination, implementation, operation, and control of information resources throughout state government. Information services and resources include computing and storage systems, telecommunication systems (including telephone systems, local area networks, wide area networks, high-speed voice, video, and data backbone network infrastructure, and interactive video systems), desktop office products and systems, Internet and application systems and capabilities, management of the statewide emergency 9-1-1 system, and enterprise security services. The division provides oversight for IT planning and policy development throughout the state, and coordination of agency information technology budget requests with the Office of Budget and Program Planning.

The Information Technology Managers Advisory Council consists of IT managers representing state agencies in the executive, legislative, and judicial branches, the university system, and local government. The council reviews enterprise IT issues; provides feedback regarding information management policies; reviews opportunities for the application of new information processing technology; and participates in statewide IT planning efforts.

(3) Attached Boards, Commissions, and Councils. The following boards, commissions, and councils are allocated to the department for administrative purposes:

(a) Board of County Printing. The Board of County Printing, established under 2-15-1026, MCA, consists of five members appointed by the Governor with the consent of the Montana Senate. The board's purpose is to adopt and publish a schedule of maximum prices to be charged for county legal advertising and to establish printing standards for county legal advertising. Rules regarding the board are set out in ARM Title 2, Chapter 67.

(b) Board of Examiners. The Board of Examiners (2-15-1007, MCA) consists of the Governor, Secretary of State, and Attorney General. The board is authorized to prescribe the form and terms of the sale of bonds for the state and take whatever actions are lawful and necessary for their issuance and payment. Board rules are set out in Chapter 53.

(c) Burial Preservation Board. The Burial Preservation Board, established under 22-3-804, MCA, consists of 13 members appointed by the Governor. The purpose of the board is to help protect from disturbance or destruction all human skeletal remains, burial sites, and burial material within the state of Montana. Rules regarding the board, including the board's organization, are set out in Chapter 65.

(d) Information Technology Board. The Information Technology Board, established by 2-15-1021, MCA, consists of 19 appointed members who help guide state agencies, the legislative branch, the judicial branch, and local governments in the development and deployment of intergovernmental information technology resources. The board also advises the department on statewide information technology standards and policies, the state strategic information technology plan, major information technology budget requests, and rates and other charges for services established by the department.

(e) Montana Tax Appeal Board. The Montana Tax Appeal Board (15-2-102, MCA) is composed of three members appointed by the Governor for staggered six-year terms, with the advice and consent of the Montana Senate. The board hears appeals on the decisions of local county tax appeal boards concerning property tax assessments made by the state Department of Revenue and takes original jurisdiction on appeals arising from decisions of the Department of Revenue concerning income, corporate, natural resource, centrally assessed property, and new industry taxes; from decisions of the Department of Transportation concerning motor fuels taxes; and from decisions of the Department of Justice concerning the valuation of motor vehicles. Board rules are set forth in Chapter 51.

(f) Public Employees' Retirement Board. The Public Employees' Retirement Board, established under 2-15-1009, MCA, is composed of seven members appointed by the Governor. The board establishes policies that provide employees of the state and its political subdivisions with quality retirement, disability, and death benefits. The board also conducts hearings and adjudicates contested cases. Board-administered retirement systems cover traditional public employees, judges, and public safety officers, but generally exclude teachers. The Montana Public Employee Retirement Administration, an agency of state government, is responsible for the day-to-day administration of the retirement systems. The board's rules are found in Chapter 43.

(g) State Banking Board. The State Banking Board, established under 2-15-1025, MCA, consists of six members appointed by the Governor to advise the Department of Administration regarding banking in Montana. Chapter 60 houses the board's rules.

(h) State Compensation Insurance Fund Board. The Board of Directors of State Compensation Insurance Fund consists of seven members appointed by the Governor to govern the State Fund, a workers' compensation insurer which is a nonprofit independent public corporation. The organization of the State Compensation Insurance Fund, established under 2-15-1019, MCA, and additional rules are set out in Chapter 55.

(i) Teachers' Retirement Board. The Teachers' Retirement Board (2-15-1010, MCA) is composed of six members appointed by the Governor. The board provides a comprehensive retirement plan for all members of the state Teachers' Retirement System. This includes offering the broadest and fairest possible range of disability, death, and retirement benefits to qualified members. The Teachers' Retirement Board maintains an office of state government entitled the "Teachers' Retirement System." Additional rules are set out in Chapter 44.

(j) State Lottery Commission. The State Lottery Commission (23-7-201, MCA) consists of five members appointed by the Governor to establish and operate a state lottery. The organizational structure and additional rules regarding the Montana Lottery are set out in Chapter 63.

(k) Capitol Complex Advisory Council. The council, made up of nine individuals representing various state agencies, the Legislature, and the public, advises the Legislature on the placement of commemorative objects and art in public areas of the Capitol Complex and grounds, including the executive residence and the Original Governor's Mansion; and advises the Department of Administration on interior decoration of the Capitol, grounds maintenance, and grounds displays.

(l) Montana Information Security Advisory Council. The Information Security Advisory Council, created by executive order, advises the Governor with respect to a statewide strategic information security program.

(m) State Employee Group Benefits Advisory Council. The State Employee Group Benefits Advisory Council members are selected by the department director from a diverse group representing state employees and retirees. The council, established by 2-15-1016, MCA, advises the department regarding state employee group benefit plans managed by the Health Care and Benefits Division.

(4) Information or Submissions. General inquiries regarding the department may be addressed to the director. Specific inquiries regarding the functions of each division or attached agency may be addressed to the head of that division and/or agency. All requests for hearings, declaratory rulings, and for participation in rulemaking may be addressed to the director unless the notice in the Montana Administrative Register makes specific provisions for submissions.

(5) Personnel Roster. Addresses of the director, each division, and attached agencies are as follows:

Director, Department of Administration, Room 155, Mitchell Building, 125 North Roberts Street, P.O. Box 200101, Helena, MT 59620-0101.

Architecture and Engineering Division, 1520 East Sixth Avenue, P.O. Box 200103, Helena, MT 59620-0103.

Division of Banking and Financial Institutions, 301 South Park Avenue, Suite 316, P.O. Box 200546, Helena, MT 59620-0546.

General Services Division, 1310 East Lockey Avenue, Old Livestock Building, P.O. Box 200110, Helena, MT 59620-0110.

Health Care and Benefits Division, 100 North Park Avenue, Suite 320, P.O. Box 200130, Helena, MT 59620-0130.

Risk Management and Tort Defense Division, 1625 Eleventh Avenue, Middle Floor, P.O. Box 200124, Helena, MT 59620-0124.

State Accounting Division, Room 255, Mitchell Building, 125 North Roberts Street, P.O. Box 200102, Helena, MT 59620-0102.

State Human Resources Division, Room 125, Mitchell Building, 125 North Roberts Street, P.O. Box 200127, Helena, MT 59620-0127.

State Information Technology Services Division, Room 229, Mitchell Building, 125 North Roberts Street, P.O. Box 200113, Helena, MT 59620-0113.

Montana Lottery, 2525 North Montana Avenue, Helena, MT 59601-0598.

Montana State Fund, 855 Front Street, Helena, MT 59601.

Office of the State Public Defender, 44 West Park Street, Butte, MT 59701.

Public Employee Retirement Administration, 100 North Park Avenue, Suite 200, P.O. Box 200131, Helena, MT 59620-0131.

Montana Tax Appeal Board, 600 North Park Avenue, P.O. Box 200138, Helena, MT 59620-0138.

Teachers' Retirement System, 1500 Sixth Avenue, P.O. Box 200139, Helena, MT 59620-0139.

(6) Charts of Agency Organization. Organizational charts of the Department of Administration are attached on the following pages and are incorporated into this rule.

Boards, commissions, and councils allocated to the department for administrative purposes: Boards Board of County Printing Board of Examiners Burial Preservation Board Information Technology Board Montana Tax Appeal Board Public Employees' Retirement Board State Banking Board State Compensation Insurance Fund Board Teachers' Retirement Board | Commissions State Lottery Commission Councils Capitol Complex Advisory Council Montana Information Security Advisory Council State Employee Group Benefits Advisory Council

History

Authorizing statute(s): 2-4-201, MCA
Implementing statute(s): 2-4-201, MCA
History: Eff. 12/31/72; AMD, Eff. 11/15/76; AMD, Eff. 8/7/79; AMD, Eff. 12/31/81; AMD, Eff. 9/30/88; AMD, Eff. 12/31/88; AMD, Eff. 9/30/90; AMD, Eff. 7/1/01; AMD, Eff. 11/1/01; AMD, Eff. 6/30/08; AMD, Eff. 6/30/09; AMD, Eff. 12/31/10; AMD, Eff. 5/1/13; AMD, Eff. 9/20/13; AMD, Eff. 9/1/15; AMD, Eff. 8/1/21.

Chapter 2.2 Procedural Rules

Subchapter 2.2.1 General Procedural Rules

Mont. Admin. R. 2.2.101 Model Procedural Rules

(1) The Department of Administration adopts and incorporates by reference the following model rules, which may be found at http://sos.mt.gov/ :

(a) the Attorney General's model procedural rules ARM 1.3.201, 1.3.202, 1.3.211 through 1.3.224, and 1.3.226 through 1.3.233, including the appendix of sample forms in effect January 2, 2018. These rules provide model rules of practice for contested case hearings and declaratory rulings; and

(b) the Secretary of State's model rules ARM 1.3.101, 1.3.102, 1.3.301, 1.3.302, 1.3.304, 1.3.305, 1.3.307 through 1.3.309, and 1.3.311 through 1.3.313 in effect January 2, 2018. These rules define model requirements for rulemaking under the Montana Administrative Procedure Act.

History

Authorizing statute(s): 2-4-201, MCA
Implementing statute(s): 2-4-201, MCA
History: Eff. 12/31/72; AMD, 1980 MAR p. 1481, Eff. 5/16/80; AMD, 2009 MAR p. 1777, Eff. 10/16/09; AMD, 2018 MAR p. 426, Eff. 2/24/18.

Mont. Admin. R. 2.2.102 Public Meetings

(1) Except as otherwise provided in 2-3-104, MCA, when the department holds a meeting as defined in 2-3-202, MCA, the department shall:

(a) use best efforts to post meeting or hearing notices, including advisory council and board meetings, a week or more ahead of time. Meetings shall be posted a minimum of 72 hours in advance;

(b) post the meeting or hearing notice on the state's electronic calendar and on other appropriate locations on the department's website;

(d) include adequate details of any proposed action;

(e) include a full agenda for any meeting or hearing with a time allotted for public comment;

(f) include a contact name, address, phone number, mailing, and email addresses for persons with disabilities who wish to participate in the public meeting; and

(g) incorporate public comment received at the meeting in the official minutes of the meeting.

(2) The department may hold meetings electronically or by other means of remote communication, so long as public participation is allowed as provided under Montana laws.

(3) The department may record meetings and use meeting recordings as official minutes as provided in 2-3-212, MCA.

History

Authorizing statute(s): 2-3-103, 2-4-201, MCA
Implementing statute(s): 2-3-103, MCA
History: NEW, 2022 MAR p. 1312, Eff. 7/23/22.

Chapter 2.3 EMERGENCY AND DISASTER RELIEF (Transferred to MILITARY AFFAIRS, TITLE 34)

Subchapter 2.3.2 State Participation in Federal Assistance Programs

Mont. Admin. R. 2.3.202 State and Federal Assistance--Expenditures

History

Authorizing statute(s): 10-3-311, MCA
Implementing statute(s): 10-3-311, MCA
History: NEW, 1983 MAR p. 1246, Eff. 9/16/85; TRANS, Dept. of Military Affairs, Ch. 111, L. 1985, Eff. 10/1/85.

Chapter 2.4 State Financial Services Division

Subchapter 2.4.3 Volume Cap

Mont. Admin. R. 2.4.301 Volume Cap Allocation

(1) The Department of Administration sets the state of Montana's volume cap as the maximum amount allowed by the Internal Revenue Service.

History

Authorizing statute(s): 17-5-1311, MCA
Implementing statute(s): 17-5-1311, MCA
History: NEW, 2001 MAR p. 2456, Eff. 12/21/01; AMD, 2008 MAR p. 35, Eff. 1/18/08.

Subchapter 2.4.4 Single Audit Act

Mont. Admin. R. 2.4.401 Accounting and Financial Reporting Standards

(1) Except as provided in (2), all local government entities, as defined by 2-7-501(7), MCA, shall adhere to the accounting and financial reporting standards applicable to the reporting period adopted by the Governmental Accounting Standards Board (see ARM 2.4.411).

(2) If approved by the department, a local government entity shall adhere to the provisions described in the Small Government Financial Reporting Framework instead of the provisions provided in (1). The department shall not approve an application to report in accordance with the Small Government Financial Reporting Framework if the following circumstances are known to the department:

(a) the local government entity is subject to a compliance requirement prescribing the use of the provisions of (1); or

(b) the local government entity has a population of 5,000 or more as reported in the most recent decennial survey issued by the United States Census Bureau.

(3) The reporting provisions of the Small Government Financial Reporting Framework include:

(a) all aspects of accounting and reporting in accordance with generally accepted accounting principles, updated through June 30, 2019, as defined by the Governmental Accounting Standards Board, or its successor, excluding the following:

(i) the government-wide statement of net position and the government-wide statement of activities, which also excludes:

(A) reporting of discretely presented component units;

(B) reconciliations related to the government-wide statements; and

(ii) actuarially determined post-employment benefit information, which also excludes:

(A) recognition of non-employer contributions;

(B) related notes to the financial statements; and

(iii) the following supplementary information required by the Governmental Accounting Standards Board:

(A) the management's discussion and analysis;

(B) certain revenue and claims development information of public entity risk pools; and

(C) the schedules of assessed condition and estimated and actual maintenance and preservation costs for the modified approach for infrastructure assets;

(b) financial statements must include as basic financial statements:

(i) a statement of changes in governmental capital assets; and

(ii) a statement of changes in governmental long-term debt;

(c) financial statements must include major fund budgetary comparison information, including related required notes, as supplementary information, as defined by the Governmental Accounting Standards Board, when applicable; and

(d) financial statements must include the schedules of proportionate shares and required contributions, excluding related notes, prepared for the local government entity by the Montana Public Employee Retirement Administration and the Montana Teachers' Retirement System as other information, when applicable.

History

Authorizing statute(s): 2-7-504, 2-7-513, MCA
Implementing statute(s): 2-7-504, 2-7-513, MCA
History: NEW, 1992 MAR p. 1354, Eff. 6/26/92; AMD, 1997 MAR p. 1027, Eff. 6/24/97; TRANS, from Commerce, 2002 MAR p. 2649; AMD, 2007 MAR p. 964, Eff. 7/6/07; AMD, 2019 MAR p. 2217, Eff. 12/7/19.

Mont. Admin. R. 2.4.402 Report Filing Fee

(1) A local government filing fee is based on the following definitions:

(a) "Annual" means the fiscal year of the local government entity.

(b) "Revenues" means all receipts or inflows of resources from any source excluding the proceeds from bond issuances and other long-term debt not received from state or federal sources.

(i) Revenues must be based on the recognition criteria of the financial reporting framework presented in the audit report.

(ii) Revenues may be provisionally based on amounts presented in the financial report required by 2-7-503, MCA, until such time that the audit report for the same period is issued.

(iii) The department and the local government entity shall settle the balance of any resulting difference in the filing fee when the audited revenues are available.

(iv) When applicable, revenues do not include receipts or inflows of resources presented in the following types of financial statements:

(A) governmentwide;

(B) investment trust funds; or

(2) For school districts and associated cooperatives:

(a) revenues are based on the recognition criteria of the financial reporting framework presented in the annual financial report required by the Superintendent of Public Instruction;

(b) in the case of combined elementary and high school districts, the annual filing fee is based upon the combined annual revenue amounts of both districts; and

(c) in the case of school districts and associated cooperatives having an audit covering two fiscal years, the department shall calculate a separate fee based on the annual revenue amounts for each fiscal year covered by the audit.

(3) The annual filing fees for local government entities are:

Annual Revenues in Excess of: | Annual Revenues Equal to or Less Than: | Fee $1,000,000 | $1,500,000 | $800 $1,500,000 | $2,500,000 | $950 $2,500,000 | $5,000,000 | $1,300 $5,000,000 | $10,000,000 | $1,700 $10,000,000 | $50,000,000 | $2,500 $50,000,000 | | $3,000

History

Authorizing statute(s): 2-7-514, MCA
Implementing statute(s): 2-7-514, MCA
History: NEW, 1992 MAR p. 1354, Eff. 6/26/92; AMD, 1993 MAR p. 1328, Eff. 6/25/93; AMD, 1994 MAR p. 2430, Eff. 8/26/94; AMD, 1997 MAR p. 1027, Eff. 6/24/97; AMD, 1998 MAR p. 1917, Eff. 7/17/98; TRANS, from Commerce, 2002 MAR p. 2649; AMD, 2007 MAR p. 964, Eff. 7/6/07; AMD, 2015 MAR p. 1270, Eff. 8/28/15; AMD, 2019 MAR p. 2217, Eff. 12/7/19; AMD, 2025 MAR, Notice No. 2025-220, Eff. 8/23/25.

Mont. Admin. R. 2.4.403 Penalties for Failing to File Reports Within Prescribed Time

(1) The department shall assess a monthly penalty of 10 percent of the required filing fee established in ARM 2.4.402 when a local government entity does not submit by the due date the annual financial report required by 2-7-503, MCA.

(a) If the filing fee applicable to the reporting period is not known to the department, the department shall use the filing fee of the most recent reporting period available to calculate the late submission penalty.

(b) If the local government entity is not required to pay a filing fee, the late submission penalty must be calculated using the minimum filing fee.

(2) Rather than imposing the late submission penalty established in (1), the department may issue an order to withhold payment of any state financial assistance to the local government entity. The department shall notify state agencies of the order.

(a) Upon receipt of the required report, the department shall release any financial assistance withheld pursuant to the department's order to the local government entity.

(3) The department shall assess a $75 fine and provide public notice when a local government entity fails to file a report required by 2-7-503, MCA, within 180 days of the due date. Public notice means publishing in the local newspaper, if available, and posting on the department's website: https://sfsd.mt.gov/LGSB .

History

Authorizing statute(s): 2-7-517, MCA
Implementing statute(s): 2-7-503, 2-7-517, MCA
History: NEW, 1992 MAR p. 1354, Eff. 7/1/92; AMD, 1997 MAR p. 1027, Eff. 6/24/97; AMD, 1998 MAR p. 1917, Eff. 7/17/98; TRANS, from Commerce, 2002 MAR p. 2649; AMD, 2007 MAR p. 964, Eff. 7/6/07; AMD, 2011 MAR p. 2019, Eff. 9/23/11; AMD, 2019 MAR p. 2217, Eff. 12/7/19.

Mont. Admin. R. 2.4.404 Penalty for Failing to Pay Filing Fee Within 60 Days of Due Date

(1) The department shall assess a monthly penalty equal to 10 percent of the required filing fee in ARM 2.4.402 when a local government entity does not submit the filing fee required by 2-7-514, MCA, within 60 days of the due date.

(a) If the revenues and filing fee applicable to the reporting period have not been reported or are not known, the department shall use the filing fee of the most recent reporting period available to calculate the late filing fee penalty.

(2) Rather than imposing the late payment penalty established in (1), the department may issue an order to withhold payment of any state financial assistance to the local government entity.

(3) Upon receipt of the required filing fee, the department shall notify each state agency that any financial assistance withheld pursuant to the department's order has been released to the local government entity.

History

Authorizing statute(s): 2-7-514, 2-7-517, MCA
Implementing statute(s): 2-7-514, 2-7-517, MCA
History: NEW, 1992 MAR p. 1354, Eff. 7/1/92; AMD, 1997 MAR p. 1027, Eff. 6/24/97; TRANS, from Commerce & AMD, 2002 MAR p. 2649, Eff. 9/27/02; AMD, 2007 MAR p. 964, Eff. 7/6/07; AMD, 2011 MAR p. 2019, Eff. 9/23/11; AMD, 2019 MAR p. 2217, Eff. 12/7/19.

Mont. Admin. R. 2.4.405 Audit and Audit Reporting Standards

(1) When applicable, audits and audit reporting must conform to the requirements of the Federal Single Audit Act of 1984 as amended by the Single Audit Act Amendments of 1996 (P.L. 104-156) and the requirements of Title 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), as published in the Federal Register, Volume 78, No. 248 (see ARM 2.4.411).

(2) When approved by the department, audits and audit reporting of financial statements prepared in accordance with a small government financial reporting framework must apply the reporting requirements provided in ARM 2.4.401.

History

Authorizing statute(s): 2-7-505, 2-7-513, MCA
Implementing statute(s): 2-7-505, 2-7-513, MCA
History: NEW, 1992 MAR p. 1354, Eff. 7/1/92; AMD, 1997 MAR p. 1027, Eff. 6/24/97; TRANS, from Commerce & AMD, 2002 MAR p. 2649, Eff. 9/27/02; AMD, 2007 MAR p. 964, Eff. 7/6/07; AMD, 2019 MAR p. 2217, Eff. 12/7/19.

Mont. Admin. R. 2.4.406 Roster of Independent Auditors Authorized to Conduct Audits of Local Government Entities

(1) To conduct audits of local government entities, an independent auditor must be on the department’s roster of authorized independent auditors.

(2) To be placed on the roster, an auditor shall complete a department-prescribed application form and meet the criteria in this rule.

(3) Auditors with separate offices shall submit separate application forms for each office that is to be separately identified on the roster.

(4) To be eligible for inclusion on the roster, an auditor must:

(a) if an individual, hold a current license to practice public accounting under 37-50-314, MCA;

(b) if a firm that has established or maintained offices in this state for the practice of public accounting, register annually as provided under 37-50-335, MCA;

(d) meet the continuing education requirements specified in Government Auditing Standards, as established by the Comptroller General of the United States;

(e) have an external quality control review at least once every three years that meets the requirements specified in Government Auditing Standards, as established by the Comptroller General of the United States, and receive a peer review rating of "pass" or "pass with deficiencies" from the reviewing firm, team, or association;

(i) a firm that undergoes a board-sanctioned compliance or peer review process and receives a provisional pass with deficiencies rating must complete, or be in the process of completing, all required remediation required by the peer review program administrator;

(ii) upon request, firms with provisional pass with deficiencies ratings shall provide the department all interim and final communications with the peer review program administrator relating to the firm's remedial activities;

(f) not have been restricted in the conduct of governmental auditing by the Montana Board of Public Accountants;

(g) not have been debarred, suspended, proposed for debarment, declared ineligible, or otherwise excluded from performing audits by any state or federal department or agency; and

(h) not have been deemed ineligible to conduct local government entity audits by the department because of failure:

(i) to conduct local government entity audits under contract with the department during the previous two years in accordance with the audit standards described in 2-7-513, MCA, or ARM 2.4.405 or;

(ii) during the previous two years to adhere to the terms and conditions of an audit contract with the department.

(5) An auditor may be removed by the department from the roster for failure to continue to meet the eligibility requirements specified above.

(6) If an auditor is removed from the roster as provided in (5), the auditor must complete the application form prescribed by the department, meet the eligibility requirements set out in (4), and pay the fee specified in (9) to again be placed on the roster.

(7) To remain on the roster, an auditor shall complete and submit to the department on or before June 30 of each year a renewal form certifying that the individual or firm continues to meet the eligibility requirements specified above.

(8) To ensure that each auditor meets the eligibility requirements specified above, the department may, at any other time during the year, require the auditor to submit evidence that the auditor meets the above eligibility requirements, including, but not limited to, documentation of required continuing professional education and the required external quality control review.

(9) At the time of original application for placement on the roster and at the time the annual renewal form is submitted, each office separately identified on the roster shall pay to the department a fee of $100.

(10) If an auditor is removed from or does not renew to the roster, all contracts under the provisions of 2-7-506, MCA, to which the auditor is a party are terminated. If an auditor is removed from the roster, the department will not refund any portion of the roster application fee.

(11) Upon the department’s notification of the termination of a contract for a local government entity audit, the local government entity shall select another auditor from the roster and present a signed contract to the department for approval within 90 days of notification of the termination.

History

Authorizing statute(s): 2-7-506, MCA
Implementing statute(s): 2-7-506, MCA
History: NEW, 1992 MAR p. 1354, Eff. 7/1/92; AMD, 1997 MAR p. 1027, Eff. 6/24/97; TRANS, from Commerce & AMD, 2002 MAR p. 2649, Eff. 9/27/02; AMD, 2003 MAR p. 2076, Eff. 9/26/03; AMD, 2007 MAR p. 964, Eff. 7/6/07; AMD, 2011 MAR p. 2019, Eff. 9/23/11; AMD, 2019 MAR p. 2217, Eff. 12/7/19.

Mont. Admin. R. 2.4.407 Criteria for the Selection of the Independent Auditor

(1) In selecting an independent auditor to perform an audit under 2-7-503 , MCA, a local government entity shall consider the following criteria:

(a) listing on department's roster of independent auditors authorized to conduct local government audits;

(b) independence, as defined by applicable auditing standards;

(d) technical experience of the independent auditor in conducting similar types of local government entity audits;

(e) qualifications of staff to be assigned to the audit;

(f) work history of the independent auditor; and

(g) the proposed audit fee.

(2) The department may require the local government entity to demonstrate that the independent auditor selected is qualified to conduct the audit based on an evaluation of:

(a) the criteria established in (1);

(b) any additional information requested by and used by the local government entity in selecting the independent auditor; and

History

Authorizing statute(s): 2-7-506, MCA
Implementing statute(s): 2-7-506, MCA
History: NEW, 1992 MAR p. 1354, Eff. 7/1/92; TRANS, from Commerce, 2002 MAR p. 2649; AMD, 2007 MAR p. 964, Eff. 7/6/07.

Mont. Admin. R. 2.4.409 Actions by Governing Bodies to Resolve or Correct Audit Findings and Penalty for Failure to Do So

(1) If a local government entity does not submit its responses or planned corrective measures to findings reported in audit reports required by Title 2, chapter 7, part 5, MCA, to the department within 30 days of the report issuance date, the department shall notify the entity of the delinquency and publish notice of the delinquency on the department's website.

(2) The department shall determine acceptability of the local government entity's responses or planned corrective measures based on the risks, facts, and circumstances of the findings and of the entity.

(3) The planned corrective measures must be responsive to the findings identified and provide for a probable resolution of the findings within a reasonable period.

(4) If the department does not receive acceptable corrective measures for findings the department deems to be significant, the department may, in addition to its statutory remedies, request additional details, supporting information, or evidence of implementation of the corrective measures.

(5) The department shall determine the significance of findings based on the risks to the entity of a doubtful going concern, significantly distressed operations, or a failure to protect a substantial public interest.

(6) Any financial assistance withheld must be released to the local government entity once the department finds that the local government entity has initiated or taken corrective measures sufficient to provide for a probable resolution of the findings within a reasonable period.

(7) The department shall obtain the concurrence of the Superintendent of Public Instruction before accepting or rejecting any planned corrective measures or withholding or releasing any financial assistance of any school district or associated cooperative.

(8) If the subsequent audit report repeats a significant finding, the department shall withhold financial assistance from the entity.

(9) The financial assistance withholding process may be suspended if the entity demonstrates good cause for the failure to resolve the finding or implement corrective measures. Good cause may be demonstrated with sufficient evidence of:

(a) the entity's good faith effort to implement corrective measures;

(b) circumstances outside of the entity's control; or

(10) If the subsequent audit report is delinquent, the department may withhold financial assistance until the department receives the delinquent audit report that does not repeat a significant finding.

(11) For those local governments that are not required to have an audit for the subsequent fiscal year, the department may require the entity to have a financial review as defined in ARM 2.4.410. The department shall determine the requirement for a financial review on a case-by-case basis, based on the quality of supporting documentation received from the entity to confirm corrective measures have been taken.

(12) The department shall notify all state agencies any time the department issues an order to withhold or release financial assistance.

History

Authorizing statute(s): 2-7-515, MCA
Implementing statute(s): 2-7-515, MCA
History: NEW, 1992 MAR p. 1354, Eff. 7/1/92; AMD, 1997 MAR p. 1027, Eff. 6/24/97; TRANS, from Commerce, 2002 MAR p. 2649; AMD, 2007 MAR p. 964, Eff. 7/6/07; AMD, 2019 MAR p. 2217, Eff. 12/7/19.

Mont. Admin. R. 2.4.410 Financial Reviews

(1) A "financial review" is defined as an agreed-upon procedures engagement in which an independent auditor issues a report of findings based on specific procedures in accordance with standards established by the American Institute of Certified Public Accountants (see ARM 2.4.411). The procedures to be performed during the financial review of a local government entity are prescribed by the department and specified in the contract referred to in (3).

(2) Financial reviews of a local government entity conducted at the direction of the department must be performed either by an independent auditor who is on the department's roster of independent auditors authorized to conduct audits of local government entities or by the department.

(3) Financial reviews required by the department must be performed pursuant to a contract. Work may not commence under the contract until it is signed by the department. All contracts for conducting financial reviews must be in a form prescribed by the department.

(4) The compensation to the independent auditor for conducting a financial review must be agreed upon by the local government entity and the independent auditor and must be paid in the manner that other claims against the local government entity are paid. If performed by the department, the department shall charge the local government entity an hourly rate to cover the costs of performing the financial review.

(5) An administrative fee of $75 will be charged to each entity required to have a financial review. Entities required to have a financial review will be notified in writing. The administrative fee is due within six months of the entity’s fiscal year end.

(6) The independent auditor shall file copies of the financial review report with the department. In the case of school districts or associated cooperatives, the independent auditor shall also file a copy of the review report with the Superintendent of Public Instruction.

(7) The provisions of 2-7-515, MCA, and ARM 2.4.409, regarding the actions of local government governing bodies to resolve and correct audit findings and the penalty for failure to do so apply to financial review reports.

(8) The provisions of 2-7-522, MCA, regarding audit report reviews by the department apply to financial review reports.

History

Authorizing statute(s): 2-7-503, 2-7-514, MCA
Implementing statute(s): 2-7-503, 2-7-514, MCA
History: NEW, 1992 MAR p. 1354, Eff. 7/1/92; AMD, 1994 MAR p. 2717, Eff. 8/26/94; TRANS, from Commerce & AMD, 2002 MAR p. 2649, Eff. 9/27/02; AMD, 2007 MAR p. 964, Eff. 7/6/07; AMD, 2011 MAR p. 2019, Eff. 9/23/11; AMD, 2019 MAR p. 2217, Eff. 12/7/19.

Mont. Admin. R. 2.4.411 Incorporation by Reference of Various Standards, Accounting Policies, and Federal Laws and Regulations

(1) The department adopts and incorporates by reference the Codification of Governmental Accounting and Financial Reporting Standards, updated through June 30, 2019, adopted by the Governmental Accounting Standards Board as the required standards for counties, cities, and towns, as provided by ARM 2.4.401.

(a) The standards incorporated by reference in (1) contain the generally accepted accounting principles to be followed by state and local governments and the financial reporting requirements to be utilized by those governments.

(b) The Codification of Governmental Accounting and Financial Reporting Standards adopted by reference in (1) may be obtained from the Governmental Accounting Standards Board, P.O. Box 5116, Norwalk, CT 06856-5116.

(2) The department adopts and incorporates by reference the Government Auditing Standards, 2011 and 2018 revisions, established by the Comptroller General of the United States, as provided by ARM 2.4.406.

(a) Government Auditing Standards incorporated by reference in (2) contain standards to be followed by an independent auditor in conducting financial audits of local government entities, including general standards, field work standards, and reporting standards.

(3) The department adopts and incorporates by reference the Federal Single Audit Act of 1984 as amended by the Single Audit Act Amendments of 1996 (P.L. 104-156) and Title 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), as published in the Federal Register, Volume 78, No. 248, as provided by ARM 2.4.405.

(a) The Federal Single Audit Act of 1984, as amended by the Single Audit Act Amendments of 1996 and the Title 2 CFR Part 200 (Uniform Guidance), provide audit requirements for ensuring that federal funds are expended properly and are used in compliance with federal requirements.

(b) The Federal Single Audit Act of 1984 as amended by the Single Audit Act Amendments of 1996 is codified as Chapter 75 of Title 31 of the United States Code. The code can be accessed at http://uscode.house.gov/ .

(c) Title 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) can be accessed at https://www.gpo.gov/ .

(4) The department adopts and incorporates by reference the standards established by the American Institute of Certified Public Accountants for agreed-upon procedures engagements, updated through June 30, 2019, as provided by ARM 2.4.410, available at https://www.aicpa.org/ .

(a) These standards contain:

(i) conditions for engagement performance;

(ii) the subject matter and related assertions;

(iii) the nature, timing, and extent of procedures;

(iv) the presentation of the results of applying agreed-upon procedures to specific subject matter in the form of findings;

(v) reporting requirements; and

(vi) written representations.

History

Authorizing statute(s): 2-7-503, 2-7-504, 2-7-505, 2-7-506, MCA
Implementing statute(s): 2-7-503, 2-7-504, 2-7-505, 2-7-506, MCA
History: NEW, 1992 MAR p. 1354, Eff. 7/1/92; AMD, 1994 MAR p. 2430, Eff. 8/26/94; AMD, 1997 MAR p. 1027, Eff. 6/24/97; TRANS, from Commerce & AMD, 2002 MAR p. 2649, Eff. 9/27/02; AMD, 2007 MAR p. 964, Eff. 7/6/07; AMD, 2011 MAR p. 2019, Eff. 9/23/11; AMD, 2019 MAR p. 2217, Eff. 12/7/19.

Chapter 2.5 State Procurement

Subchapter 2.5.1 Special Purchasing Activities

Mont. Admin. R. 2.5.120 The State Employees' Charitable Giving Campaign

(1) The State Employees' Charitable Giving Campaign (SECGC) may procure supplies and services costing $25,000 or less using a purchase technique that best meets the campaign's needs.

History

Authorizing statute(s): 18-4-221, MCA
Implementing statute(s): 18-4-222, MCA
History: NEW, 1999 MAR p. 1292, Eff. 6/18/99; AMD, 2002 MAR p. 2651, Eff. 9/27/02; AMD, 2007 MAR p. 1657, Eff. 10/26/07.

Subchapter 2.5.2 Regulation of Procurement Activities

Mont. Admin. R. 2.5.201 Definitions

In this chapter, words and terms shall have the same meaning as defined in Title 18, chapter 4, MCA, and, unless the context clearly requires otherwise or a different meaning is prescribed for a particular rule, the following definitions apply:

(1) "Agency" means an agency, bureau, commission, committee, council, department, governmental corporation, institution, legislative body, or other entity, instrumentality, or official of the executive, legislative, or judicial branch of state government, including the Board of Regents and the Montana University System.

(2) "Advantageous" means a judgmental assessment of what is in the state's best interest.

(3) "Alternate bid" means a bid submitted in knowing variance from the specifications, terms, conditions, or provisions of the solicitation. Such a bid is acceptable only when the variance is deemed immaterial.

(4) "Alternate procurement method" means a method of procuring supplies or services in a manner not specifically described in law, but instead authorized by the department under 18-4-302, MCA, following the requirements of 18-4-122, MCA.

(5) "Bid" means the executed document in response to an invitation for bid. "Bidder" means a person submitting a bid.

(6) "Brand name specification" means a specification that cites a brand name, model number, or some other designation that identifies a specific product as an example of the desired characteristics and/or quality of merchandise.

(7) "Commodity code" means a number designated to include a specific type of supply or service. The commodity codes provide a means for vendors registered with State Procurement Bureau to easily define the supplies and/or services they offer and for agencies to target specific vendors when issuing solicitations.

(8) "Controlled items" means those supplies and services an agency must purchase through the division, unless exempted via an agency delegation agreement. These include items from the "requisition time schedule," supplies and services available through exclusive term contracts, printing, and new vehicles.

(9) "Days" mean calendar days. In computing any period of time prescribed or allowed by these rules, the day of the event after which the designated period of time begins to run is not to be included, but the last day of the period so computed is to be included, unless it is a Saturday, Sunday, or a legal holiday, in which event the period runs until the end of the next business day.

(10) "Debar" or "debarment" means an action taken or decision made by the department, other than temporary determinations of nonresponsibility or suspension, that prohibits a vendor from proposing, bidding on, or receiving state contracts for a specific period of time or until certain conditions have been met.

(11) "Department" means the Department of Administration.

(12) "Descriptive literature" means information available in the ordinary course of business which shows the characteristics, construction, or operations of an item and enables the state to consider whether the item meets its needs.

(13) "Director" means the director of the Department of Administration.

(14) "Division" means the State Financial Services Division of the Department of Administration.

(15) "Exclusive contract" means that state agencies must obtain the specified supply or service from the contract holder(s), unless the contract allows otherwise.

(16) "Exigency" means a purchase made without following normal purchasing procedures due to a sudden and unexpected happening or unforeseen occurrence or condition which requires immediate action.

(17) "FOB" or "f.o.b." means free on board, a term used in conjunction with an identified physical location to determine:

(a) the responsibility and basis for payment of freight charges; and

(b) the point at which title for the shipment passes from seller to buyer. Deliveries are usually "FOB destination" which means a shipment is to be delivered to the destination designated by the buyers.

(18) "Hardware maintenance" means repairs, upgrades, or installation of hardware required for the hardware to continue to operate as originally specified in the contract or purchase order.

(19) "Highest scoring offeror" means the responsive and responsible offeror having the highest score at the completion of the procurement process for a request for proposals.

(20) "Lease-purchase agreement" means a lease contract containing a purchase option in which the lessee's periodic payments or parts thereof may be applied to serve both as the rental obligation and as installments for acquiring ownership of the property upon lessee exercising the purchasing option; a conditional sales contract.

(21) "Minor enhancements" means routine operations and maintenance support activities that include corrective, adaptive, and perfective changes, and that do not introduce new major functional capabilities.

(22) "Noncontrolled items" means all supplies and services that do not fall under the definition of "controlled items."

(23) "Nonexclusive contract" means that state agencies are not required to purchase this supply or service from the contract holder(s) and may obtain the necessary supply or service from a different source following the requirements of Title 18, MCA, and their agency procurement delegation agreement.

(24) "Offer" means proposal. "Offeror" means a person submitting a proposal when a procurement is made by a request for proposal process.

(25) "Office supply" means a consumable product or supply used on a recurring basis in general business and office operations. An office supply under this definition includes, but is not limited to, fax and copy paper, writing tools, erasers, toner, fasteners (paper clips, rubber bands, binding clips, etc.), calculators, staplers, adhesives (tape, glue, etc.), scissors, rulers, tape dispensers, pencil sharpeners, notepads and sticky notes, nonprinted envelopes, calendars and planners, rubber stamps, disposable batteries, clocks, portable shredders, desk accessories and organizational aids, data processing and storage media (CDs, USBs, etc.), minor computer peripherals (monitors, individual external hard drives, keyboards, etc.), document filing and organizers (binders, clipboards, dividers, file folders, file labels, storage boxes, etc.), bulletin boards, marker and chalk boards, office mats (chair, antifatigue, etc.), cleaning equipment and supplies, first aid supplies, individual hand sanitizer, dish soap, disposable gloves, coarse paper products, trash can liners, and disposable food service products. An office supply does not include office furniture, computer equipment (except as noted above), items available through State Print and Mail, facility and industrial supplies and tools, lab equipment, photocopiers, software, or food and beverage items.

(26) "Procurement" means acquisition with or without cost, buying, purchasing, renting, leasing, or otherwise acquiring any supplies or services. It includes all functions that pertain to the obtaining of any supply or service, including description of requirements, selection and solicitation of sources, preparation and award of contract, and all phases of contract administration. It does not include the acquiring of supplies or services by gift.

(27) "Purchase order" means a document used to formalize a purchase contract with a vendor.

(28) "Receiving" means inspecting the supply or service and checking it against the contract to ensure it is acceptable, complete, and complies with the contract terms.

(29) "Request for information" means a document used to informally solicit information about a market or type of available supply or service where there is not enough information readily available to write an adequate specification or work statement.

(30) "Requisition" means the document used to request that a contract be entered into for a specific need, and may include, but is not limited to, the description of the requested item, delivery schedule, transportation data, criteria for evaluation, suggested sources of supply, and information supplied for the making of any written determination required by Title 18, chapter 4, MCA, or these rules.

(31) "Requisition time schedule" means a schedule issued by the State Procurement Bureau each year which designates the dates by which certain categories of controlled items must be requested from the bureau.

(32) "Resident bidder" means a bidder that meets the requirements of 18-1-103, MCA.

(33) "Responsible bidder or offeror" means a person who has the capability in all respects to fully perform the contract requirements and the integrity and reliability that will ensure good faith performance.

(34) "Responsive bidder or offeror" means a person who has submitted a bid or offer that conforms in all material respects to the invitation for bids or request for proposals.

(35) "Restrictive specification" means specifications that unnecessarily limit competition by eliminating supplies and services that would be capable of satisfactorily meeting actual needs.

(36) "Software" means the collection of computer programs and related data that provide the instructions telling a computer what to do. Program software performs the function of the program it implements, either by directly providing instructions to the computer hardware or by serving as input to another piece of software.

(37) "Software maintenance" means patches, support, or upgrades and minor enhancements allowing the software to continue to perform its functional purposes as originally specified in the statement of work, contract, or other procurement agreements.

(38) "Solicitation" means an invitation for bid, a request for proposal, or any other document issued by the state for the purpose of soliciting bids or proposals to enter into a state contract.

(39) "Specifications" mean a detailed description of what the purchaser requires and what a bidder or offeror must offer to be considered for an award.

(40) "State Print and Mail" means the General Services Division bureau responsible for all public printing for state agencies, and handling and processing of state mail for the capitol complex.

(41) "State Procurement Bureau" means the division's bureau responsible for procuring or supervising the procurement of all supplies and services needed by the state, excluding those services procured by State Print and Mail.

(42) "Surplus Property Program" means the General Services Division program responsible for managing state and federal surplus property.

(43) "Surplus supplies" are supplies no longer needed by an agency for its use in the discharge of its duties and responsibilities, excluding books.

(44) "Suspension" means an action taken by the division that temporarily prohibits a vendor from proposing, bidding on, or receiving state contracts.

(45) "Term contract" means a contract in which supplies or services may be purchased through a list of prequalified vendors or at a predetermined unit price or discount for a specific period of time.

(46) "Total contract value" means the entire potential monetary worth of the project from beginning to completion, including the initial contract period and any options to renew.

(47) "Unit price" means the price of a selected unit of a supply or services; e.g., price per ton, foot, box.

(48) "Upgrade" means a replacement of hardware, software, or firmware with a newer version in order to bring the system up to date or to improve its characteristics.

(49) "Vendor" means a seller of supplies or services.

(50) "Vendors list" means a list maintained by the division listing the names and addresses of suppliers of various supplies and services from whom bids or proposals can be solicited.

History

Authorizing statute(s): 18-1-114, 18-4-221, MCA
Implementing statute(s): 18-4-221, MCA
History: NEW, 1983 MAR p. 1918, Eff. 12/30/83; AMD, 1985 MAR p. 244, Eff. 3/15/85; AMD, 1987 MAR p. 1961, Eff. 10/30/87; AMD, 1987 MAR p. 2144, Eff. 11/28/87; AMD, 1990 MAR p. 1770, Eff. 9/14/90; AMD, 1994 MAR p. 2814, Eff. 10/28/94; AMD, 1995 MAR p. 2241, Eff. 11/1/95; AMD, 1997 MAR p. 1816, Eff. 10/7/97; AMD, 2000 MAR p. 65, Eff. 2/1/00; AMD, 2001 MAR p. 2009, Eff. 10/12/01; AMD, 2002 MAR p. 2651, Eff. 9/27/02; AMD, 2005 MAR p. 1906, Eff. 10/7/05; AMD, 2008 MAR p. 36, Eff. 10/26/07; AMD, 2014 MAR p. 1077, Eff. 5/23/14; AMD, 2016 MAR p. 1160, Eff. 7/9/16.

Mont. Admin. R. 2.5.202 Department of Administration Responsibilities

(1) The department is responsible for all procurements of all state supplies and services. All activities, including procedures, manuals, and forms, which govern such procurements will be prepared by or under the supervision of the department.

(2) The division will establish a vendors list, determine eligibility for residence preference of vendors for purchases made under Title 18, chapter 4, MCA, investigate complaints against vendors, and remove vendors from the state list as described in ARM 2.5.401, 2.5.402, and 2.5.407.

(3) The division shall process requisitions for agencies for items not delegated in accordance with ARM 2.5.302.

(4) Except as indicated in ARM 2.5.301, the division will identify and purchase all controlled items.

(5) The department is responsible for the review and approval of the following equipment or service procurements regardless of delegated authority:

(a) all printing-related equipment involving duplicating, printing, bindery, and graphic arts for state agencies within a ten-mile radius of the capitol area–approval by Print and Mail Services is required;

(b) information technology resources, including hardware, software, and associated services and infrastructure used to store or transmit information in any form, including voice, video, and electronic data–approval by the Information Technology Services Division is required, except as provided in 2-17-516, MCA;

(d) mail equipment to be used within a ten-mile radius of the capitol area–approval by Print and Mail Services is required.

(6) The division delegates its procurement authority as follows:

(a) except for controlled items, or as specified in (5), authority is delegated to all agencies for the procurement of supplies and services with a total value of less than $10,000;

(b) authority to purchase supplies and services when the total contract value is expected to be $10,000 or more may be granted or revoked after consideration of the following factors:

(i) the expertise of the potential delegate in terms of procurement knowledge and any specialized knowledge pertinent to the authority to be delegated;

(ii) the past experience of the potential delegate in exercising similar authority;

(iii) the degree of economy and efficiency to be achieved in meeting the state's requirements if authority is delegated; and

(iv) the consistency of delegation under similar circumstances.

(c) delegation of $10,000 or more will be given through a written delegation agreement with the State Procurement Bureau. The written delegation shall specify:

(i) the activity or function authorized;

(ii) any limits or restrictions on the exercise of the delegated authority;

(iii) whether the authority may be further delegated; and

(iv) the duration of the delegation.

(7) The division will provide training to agencies on purchasing in accordance with delegated responsibilities.

(8) The division may perform reviews of agency purchasing procedures to ensure compliance with the delegation agreement, these rules, and Title 18, chapter 4, MCA.

(9) The department's Property and Supply Bureau will dispose of, or supervise the disposal of, all surplus supplies belonging to the state as provided in ARM 2.5.701 and 2.5.702.

History

Authorizing statute(s): 18-4-221, MCA
Implementing statute(s): 2-17-301, 2-17-512, 18-4-221, 18-4-222, MCA
History: NEW, 1983 MAR p. 1918, Eff. 12/30/83; AMD, 1985 MAR p. 244, Eff. 3/15/85; AMD, 1987 MAR p. 2144, Eff. 11/28/87; AMD, 1990 MAR p. 1770, Eff. 9/14/90; AMD, 1994 MAR p. 383, Eff. 2/25/94; AMD, 1995 MAR p. 1788, Eff. 9/15/95; AMD, 1995 MAR p. 2241, Eff. 11/1/95; AMD, 1997 MAR p. 1816, Eff. 10/7/97; AMD, 2000 MAR p. 65, Eff. 2/1/00; AMD, 2001 MAR p. 2009, Eff. 10/12/01; AMD, 2007 MAR p. 1657, Eff. 10/26/07; AMD, 2022 MAR p. 1789, Eff. 9/24/22.

Subchapter 2.5.3 Procedures for Using Agencies

Mont. Admin. R. 2.5.301 Delegation of Purchasing Authority

(1) Agencies may exercise authority to purchase noncontrolled items with a total contract value of less than $10,000. Agencies may exercise delegated purchasing authority of $10,000 or more and for exigency purchases in accordance with written delegation agreements described in ARM 2.5.202, with the Montana Procurement Act, and with these rules.

(2) Delegation and competitive procedures are not necessary for goods and services listed in 18-4-132(3), MCA. Additional exempted purchases include:

(a) salaries;

(b) fees for those professions exempted by statute;

(d) retirement and social security payments;

(e) freight;

(f) landfill charges;

(g) supplies or services whose prices are regulated by the Public Service Commission or other governmental authority;

(h) pastoral services;

(i) training;

(j) conference space rental and catering;

(k) fresh fruits and vegetables;

(l) fees for placing an advertisement in a publication or on radio, television, or other electronic media sources; fees for the development, design, and distribution of the advertisement are not included in this exception;

(m) educational instructors and guidance counselors for inmates under the supervision of the Department of Corrections; and

(n) books and periodicals.

History

Authorizing statute(s): 18-4-221, MCA
Implementing statute(s): 18-4-132, 18-4-221, 18-4-222, 18-4-302, MCA
History: NEW, 1983 MAR p. 1918, Eff. 12/30/83; AMD, 1985 MAR p. 244, Eff. 3/15/85; AMD, 1986 MAR p. 242, Eff. 2/28/86; AMD, 1987 MAR p. 1961, Eff. 10/30/87; AMD, 1987 MAR p. 2144, Eff. 11/28/87; AMD, 1990 MAR p. 1770, Eff. 9/14/90; AMD, 1994 MAR p. 383, Eff. 2/25/94; AMD, 1994 MAR p. 2814, Eff. 10/28/94; AMD, 1995 MAR p. 2241, Eff. 11/1/95; AMD, 1997 MAR p. 1816, Eff. 10/7/97; AMD, 2001 MAR p. 2009, Eff. 10/12/01; AMD, 2005 MAR p. 1906, Eff. 10/7/05; AMD, 2007 MAR p. 1657, Eff. 10/26/07; AMD, 2014 MAR p. 1077, Eff. 5/23/14; AMD, 2022 MAR p. 1789, Eff. 9/24/22.

Subchapter 2.5.4 Information for Vendors, Offerors, Bidders, and Contractors

Mont. Admin. R. 2.5.401 Vendors List

(1) The State Financial Services Division maintains an online vendors list for all supply and service commodities. Names and addresses on the vendors list are available for public inspection; however, this list may not be used for private promotional, commercial, or marketing purposes as described in 2-6-1017, MCA.

(2) To be placed on the vendors list, a vendor must register with the division online at http://vendorresources.mt.gov/ . Each vendor is responsible for keeping their information current, including selection of the commodity codes to identify the supplies or services the vendor provides.

History

Authorizing statute(s): 18-4-221, MCA
Implementing statute(s): 18-4-221, MCA
History: NEW, 1983 MAR p. 1918, Eff. 12/30/83; AMD, 1985 MAR p. 244, Eff. 3/15/85; AMD, 1990 MAR p. 1770, Eff. 9/14/90; AMD, 1995 MAR p. 2241, Eff. 11/1/95; AMD, 1997 MAR p. 193, Eff. 1/28/97; AMD, 2000 MAR p. 65, Eff. 2/1/00; AMD, 2007 MAR p. 1657, Eff. 10/26/07; AMD, 2016 MAR p. 1160, Eff. 7/9/16.

Mont. Admin. R. 2.5.402 Suspension or Debarment from Contract Eligibility

(1) The division has the authority to temporarily suspend a vendor from consideration for further contracts with the state if the division has probable cause to believe that the vendor has engaged in activities that could lead to debarment from contract eligibility. The causes for debarment include the following:

(a) submission of a false affidavit for Montana residency;

(b) vendor is not responsible or responsive as defined in 18-4-301, MCA, and ARM 2.5.201 and 2.5.407;

(c) deliberate failure, without good cause, to perform in accordance with the specifications or within the time limit provided in a contract;

(d) a recent record of failure to perform or of unsatisfactory performance in accordance with the terms of one or more contracts;

(e) failure to comply with the provisions of the Unemployment Insurance Law, Title 39, chapter 51, MCA;

(f) failure to comply with the provisions of the Workers' Compensation Act, Title 39, chapter 71, MCA; or

(g) any other cause that the division determines to be so serious and compelling as to affect responsibility as a state contractor, including debarment by another governmental entity.

(2) Debarment may apply to either a firm or an individual.

(a) In the case of a firm, it may be applied against any or all businesses in which a firm has involvement or over which it has ownership or control.

(b) In the case of an individual, debarment may be applied to and enforced against any and all businesses in which the individual has any level of interest, ownership, or control.

(3) If there is probable cause to believe that any of the situations in (1) exist, the division shall mail a notice of suspension to the affected vendor or individual. The notice must state that:

(a) the suspension is for the period it takes to complete an investigation into possible debarment;

(b) bids or proposals will not be accepted from the suspended vendor or contracts awarded to the suspended vendor during the period of suspension; and

(c) the suspension is effective upon the date of issuance of the notice of suspension and, unless the suspension is terminated by the division or a court, remains in effect for a period not to exceed 90 calendar days.

(4) If the division's investigation confirms a cause for debarment and the director agrees with the division's determination, a notice will be served upon the vendor by certified mail, return receipt requested. The notice will include:

(a) the pertinent facts supporting the alleged cause for debarment and the division's intent to remove the vendor from eligibility to contract with the state;

(b) notification of the vendor's right to a contested case hearing on the matter in accordance with the procedures set forth in Title 2, chapter 4, part 6, MCA; and

(c) the term of the debarment and to what extent affiliates are affected. The debarment will be for a specific period of time or until certain conditions are met, at the discretion of the division.

(5) A written request for hearing must be received by the director from the vendor within 20 calendar days after the date of the mailing of the notice of debarment. Failure to timely request a hearing will constitute a waiver by the vendor of the opportunity for a contested case hearing and appeal and will result in the director or director's designee entering an order supporting the vendor's debarment.

(6) Upon timely receipt of a written request for a contested case hearing, the director shall appoint a hearing examiner in accordance with the procedures set forth in Title 2, chapter 4, part 6, MCA, to hear evidence in the matter and come to a determination as to whether the facts support the decision to debar the vendor.

(7) The division shall maintain a list of debarred vendors on its web site at

https://emacs.mt.gov/DebarredSuspendedVendors

History

Authorizing statute(s): 18-4-221, MCA
Implementing statute(s): 18-4-241, 18-4-308, MCA
History: NEW, 1983 MAR p. 1918, Eff. 12/30/83; AMD, 1987 MAR p. 1961, Eff. 10/30/87; AMD, 1990 MAR p. 1770, Eff. 9/14/90; AMD, 1995 MAR p. 2241, Eff. 11/1/95; AMD, 1997 MAR p. 1816, Eff. 10/7/97; AMD, 2001 MAR p. 2009, Eff. 10/12/01; AMD, 2002 MAR p. 2651, Eff. 9/27/02; AMD, 2007 MAR p. 1657, Eff. 10/26/07.

Mont. Admin. R. 2.5.404 Bid and Proposal Preparation

(1) Any exceptions to the specifications on the part of the bidder or offeror must be clearly identified and communicated to the procurement officer consistent with the instructions listed within the solicitation. Exceptions may be rejected.

(2) Each item on which a bidder or offeror submits a quotation must be new and unused and of the latest model or manufacture unless otherwise specified by the state. It shall be equal in quality and performance characteristics to that indicated in the invitation for bid or request for proposal.

(3) The price for each item must be stated and clearly listed in the bid. Only one unit price may be shown for each item unless a specific provision for an optional figure is provided. The price of each item must be extended to show the total price for the quantity requested. In case of error in extension, the unit price prevails.

(4) Alternate bids may be accepted if the bidder is the lowest responsive bidder on its primary bid and the bids are clearly marked "primary" or "alternate."

(5) Item-by-item unit price bids must be submitted and will receive primary consideration for award. All-or-none bids may be submitted as alternatives and will be considered if in the best interest of the state.

(6) Unless stated otherwise in the solicitation, payment will be due 30 calendar days from:

(a) the receipt of a properly executed claim; or

(b) upon satisfactory receipt of the merchandise or service, whichever is later.

(7) Vendors may quote a cash discount based on early payment. Such discounts may not be considered; however, in determination of low bid or contract award, payment terms will remain as stated in (6) unless the bid or proposal provided otherwise.

(8) Vendors shall guarantee their bid price for 30 calendar days after a bid opening or 120 calendar days after a proposal opening, pending award unless otherwise provided for in the solicitation.

(9) Unless otherwise specified in the solicitation, all bids and proposals must show the delivered price FOB destination to the agency, including all transportation and handling charges.

History

Authorizing statute(s): 18-4-221, MCA
Implementing statute(s): 18-4-221, 18-4-303, MCA
History: NEW, 1983 MAR p. 1918, Eff. 12/30/83; AMD, 1990 MAR p. 1770, Eff. 9/14/90; AMD, 1994 MAR p. 2814, Eff. 10/28/94; AMD, 1997 MAR p. 193, Eff. 1/28/97; AMD, 1997 MAR p. 1816, Eff. 10/7/97; AMD, 2000 MAR p. 65, Eff. 2/1/00; AMD, 2005 MAR p. 2446, Eff. 10/7/05; AMD, 2007 MAR p. 1657, Eff. 10/26/07; AMD, 2014 MAR p. 1077, Eff. 5/23/14.

Mont. Admin. R. 2.5.405 Blind Vendors' Bidding Preference

(1) A blind person wishing to claim the vending facility preference provided in 18-5-502, MCA, must complete the determination form provided by the State Procurement Bureau. The form must be completed by an ophthalmologist, physician skilled in diseases of the eye, or a Department of Public Health and Human Services visual services counselor.

(2) A determination form shall be submitted with each individual bid. The determination form shall be valid for six months. At the end of the six-month period, a new determination form will be required or submitted with bids. A new determination form will be required for renewal of a contract if the contract renewal date exceeds six months from the completion date of the original determination form.

History

Authorizing statute(s): 18-5-504, MCA
Implementing statute(s): 18-5-502, MCA
History: NEW, 1987 MAR p. 250, Eff. 3/31/87; AMD, 1990 MAR p. 1770, Eff. 9/14/90; AMD, 2000 MAR p. 65, Eff. 2/1/00; AMD, 2007 MAR p. 1657, Eff. 10/26/07.

Mont. Admin. R. 2.5.406 Bidder, Offeror, or Contractor Protest

(1) All protests must be in writing and state in detail all of the protestor's objections and allegations of violations of the Montana Procurement Act. The complete protest must be submitted to the State Financial Services Division, P.O. Box 200135, Helena, MT 59620-0135, and to the agency that issued the solicitation, if different, no later than the close of business 14 calendar days after the execution of the contract in question.

(2) The department may exercise its discretion in deciding what is in the best interest of the state.

(3) Any agency which exercises delegated authority from the department to engage in purchasing activities is responsible for responding to a protest or contested case hearing concerning the solicitation, award, or administration of a contract within their authority.

History

Authorizing statute(s): 18-4-221, 18-4-242, MCA
Implementing statute(s): 18-1-402, 18-4-242, MCA
History: NEW, 1994 MAR p. 2814, Eff. 10/28/94; AMD, 1997 MAR p. 193, Eff. 1/28/97; AMD, 1997 MAR p. 1816, Eff. 10/7/97; AMD, 2000 MAR p. 65, Eff. 2/1/00; AMD, 2001 MAR p. 2009, Eff. 10/12/01; AMD, 2005 MAR p. 1906, Eff. 10/7/05; AMD, 2007 MAR p. 1657, Eff. 10/26/07; AMD, 2014 MAR p. 1077, Eff. 5/23/14.

Mont. Admin. R. 2.5.407 Determination of Responsiveness/Standards of Responsibility

(1) The procurement officer will make the final determination of responsiveness for both bids and offers.

(2) A determination of responsiveness may be made at any time during the procurement process.

(3) If a determination of nonresponsiveness is made, nonresponsive bids or offers are disqualified and eliminated from further consideration.

(4) Factors that may be considered in determining whether the standard of responsibility has been met are whether a bidder or offeror:

(a) has available the appropriate financial, material, equipment, facility, and personnel resources and expertise, or the ability to obtain them, necessary to indicate capability to meet all contractual requirements;

(b) has a satisfactory record of integrity;

(d) has not failed to supply any necessary information in connection with the inquiry concerning the responsibility; and

(e) has a satisfactory record of past performance. Nothing shall prevent the procurement officer from establishing additional responsibility standards for a particular procurement, provided that these additional standards are set forth in the solicitation, or from using past performance with the state of Montana as a reference.

(5) If requested, a bidder or offeror must supply information concerning responsibility to the procurement officer in a timely and convincing manner. If the bidder or offeror fails to supply the requested information, the procurement officer may base a determination of responsibility upon any available information, or may find the bidder or offeror nonresponsible.

(6) The bidder or offeror may demonstrate the availability of necessary financing, equipment, facilities, expertise, and personnel by submitting upon request:

(a) evidence that the bidder or offeror possesses the necessary items;

(b) acceptable plans to subcontract for the necessary items; or

(7) For both bids and offers, a determination of nonresponsibility may be made at any time during the procurement process.

(8) If a bidder or offeror who otherwise would have been awarded a contract is found nonresponsible, a written determination of nonresponsibility setting forth the basis of the finding must be prepared by the procurement officer. The determination must be made part of the procurement file and a copy of the determination mailed to the affected bidder or offeror.

History

Authorizing statute(s): 18-4-221, MCA
Implementing statute(s): 18-4-303, 18-4-304, 18-4-308, MCA
History: NEW, 1995 MAR p. 1788, Eff. 9/15/95; AMD, 2000 MAR p. 65, Eff. 2/1/00; AMD, 2005 MAR p. 2446, Eff. 10/7/05; AMD, 2007 MAR p. 1657, Eff. 10/26/07.

Mont. Admin. R. 2.5.408 Reciprocal Preference

(1) Section 18-1-102, MCA, requires a state agency to apply a reciprocal preference to the bid of a nonresident bidder equal to the percent of the preference given to the bidder in the state or country in which the bidder is a resident.

(2) A reciprocal preference is applied only to an invitation for bids for supplies and printing, or an invitation for bids for nonconstruction services for public works as defined in 18-2-401, MCA, but only in the event that federal funds are not involved in the anticipated purchase. In addition, a reciprocal preference is only applied if it will benefit a Montana resident bidder as defined in 18-1-103, MCA.

(3) If it is determined that the lowest responsive and responsible bidder would receive a percent preference in its resident state, that percent is added to the bid of the nonresident bidder. If the nonresident bidder is still the lowest responsive and responsible bidder after the preference adjustment has been made, the contract price is the price bid, not the adjusted price.

(4) A resident bidder must complete a bidder affidavit to verify resident eligibility. This affidavit must be on file with the department before a bid award can be made.

(5) The business name and federal identification number on the Montana resident affidavit must match the business name and federal identification number on the submitted bid documents in order to be considered for the application of reciprocal preference.

(6) Reciprocal preferences do not apply to term contracts unless the term contract is applicable only to agencies that do not receive federal funding.

History

Authorizing statute(s): 18-1-114, 18-4-221, MCA
Implementing statute(s): 18-1-102, 18-7-107, MCA
History: NEW, 2001 MAR p. 2009, Eff. 10/12/01; AMD, 2002 MAR p. 2651, Eff. 9/27/02; AMD, 2005 MAR p. 1906, Eff. 10/7/05; AMD, 2007 MAR p. 1657, Eff. 10/26/07; AMD, 2014 MAR p. 1077, Eff. 5/23/14.

Subchapter 2.5.5 General Bid and Proposal Provisions

Mont. Admin. R. 2.5.501 Specifications

(1) Specifications shall clearly describe the state's requirements and allow for the procurement of a supply or service that is adequate, suitable, and cost-effective for the state. Specifications may take into account, to the extent practicable, the costs of ownership and operation as well as initial acquisition costs and shall permit maximum practicable competition consistent with this purpose.

(2) Specifications shall, to the extent practicable, emphasize functional or performance criteria and limit design or other detailed physical descriptions to those necessary to meet the needs of the state. An agency shall include, as a part of their requisition, the principal functional or performance needs to be met, and any compatibility requirements.

(3) In developing specifications, accepted commercial standards shall be used and unique requirements shall be avoided, to the extent practicable.

(4) Brand name items or descriptions may be used to indicate standards of quality, performance, and/or use desired.

(5) Restrictive specifications shall not be used unless no other manner of description will suffice. In that event, a written determination shall be made that it is not practicable to use a less restrictive specification.

(6) A specification for a specific brand of supplies or services may be used if the requesting agency has a documented need to maintain a standard of performance and compatibility with existing supplies, equipment, or staff experience.

(7) The suggested format for specifications is as follows:

(a) name of commodity;

(b) purpose/use for commodity;

(i) Each item of the description should fulfill a functional or physical requirement.

(ii) If brand names are necessary to indicate quality levels, list an acceptable brand name.

(iii) Justification shall be provided and attached if a single brand is necessary.

(iv) Justification shall be provided and attached if the commodity is to be a sole source purchase.

(d) description of other requirements, such as warranty, training, parts, manuals, service, etc.;

(e) description of any unusual conditions, such as installation, field tests, fiscal year funding source, etc.;

(f) date commodity is to be delivered;

(g) location where commodity is to be delivered;

(h) name, address, and phone number of agency contact person; and

(i) acceptance procedures (if testing, sampling, or other evaluation will be performed when commodity is delivered to determine acceptability) must be described.

History

Authorizing statute(s): 18-4-232, MCA
Implementing statute(s): 18-4-231, 18-4-232, 18-4-233, 18-4-234, MCA
History: NEW, 1983 MAR p. 1918, Eff. 12/30/83; AMD, 1985 MAR p. 244, Eff. 3/15/85; AMD, 1990 MAR p. 1770, Eff. 9/14/90; AMD, 1994 MAR p. 2814, Eff. 10/28/94; AMD, 2000 MAR p. 65, Eff. 2/1/00; AMD, 2007 MAR p. 1657, Eff. 10/26/07.

Mont. Admin. R. 2.5.503 Public Notice

(1) Invitation for bids and request for proposals shall be mailed, posted electronically, or otherwise furnished to a sufficient number of bidders or offerors required to secure competition.

(2) In the interest of economy, notices of availability of invitations for bids and requests for proposals may be mailed, faxed, or e-mailed to a selection of vendors obtained from the purchasing vendors list and/or provided by the purchasing agency.

(3) Where appropriate, the state may require payment of a fee or a deposit for supplying the invitation for bids or request for proposals.

(4) In the event that it is either not practicable or not advantageous to the state to furnish solicitations to all the vendors listed on the central vendors list for a specific supply or service, the purchasing agency may elect to shorten the list by selecting a sample of bidders or offerors.

History

Authorizing statute(s): 18-4-221, MCA
Implementing statute(s): 18-4-303, 18-4-304, MCA
History: NEW, 1983 MAR p. 1918, Eff. 12/30/83; AMD, 1985 MAR p. 244, Eff. 3/15/85; AMD, 1987 MAR p. 1961, Eff. 10/30/87; AMD, 1990 MAR p. 1770, Eff. 9/14/90; AMD, 1997 MAR p. 1816, Eff. 10/7/97; AMD, 2000 MAR p. 65, Eff. 2/1/00; AMD, 2005 MAR p. 1906, Eff. 10/7/05; AMD, 2007 MAR p. 1657, Eff. 10/26/07; AMD, 2024 MAR p. 1451, Eff. 6/22/24.

Mont. Admin. R. 2.5.505 Mistakes and Minor Variations in Bids and Offers

(1) The procurement officer may allow a bidder or offeror to correct minor mistakes in a bid or offer if the mistake is clearly not attributed to an error in judgment, and the mistake and the intended correct bid or offer is clearly evident on the form of the document. Examples of correctable mistakes include, but are not limited to:

(a) typographical errors;

(b) errors in extending unit prices;

(d) arithmetical errors;

(e) failure to sign and return an acknowledgment of addendum; or

(f) signature omitted.

(2) The procurement officer may permit a bidder or offeror to withdraw a low bid or proposal if:

(a) a mistake is clearly evident on the face of the document but the intended correct information is not similarly evident; or

(b) the bidder or offeror submits proof of evidentiary value which clearly and convincingly demonstrates that a mistake was made.

(3) The division administrator of the State Financial Services Division or designee may waive minor variations in a bid, offer, or solicitation.

History

Authorizing statute(s): 18-4-221, MCA
Implementing statute(s): 18-4-303, 18-4-304, MCA
History: NEW, 1983 MAR p. 1918, Eff. 12/30/83; AMD, 1988 MAR p. 1521, Eff. 7/15/88; AMD, 1995 MAR p. 1788, Eff. 9/15/95; AMD, 1997 MAR p. 1816, Eff. 10/7/97; AMD, 2000 MAR p. 65, Eff. 2/1/00; AMD, 2001 MAR p. 2009, Eff. 10/12/01; AMD, 2005 MAR p. 1906, Eff. 10/7/05.

Mont. Admin. R. 2.5.507 Prequalification of Vendors

(1) Vendors may be prequalified for particular types of supplies and services under the following conditions:

(a) a need exists to limit a solicitation to those vendors who meet statutory or licensing requirements applicable to the solicitation; or

(b) a need exists to minimize the time necessary to verify vendor qualifications which otherwise would jeopardize the timely award of contracts.

(2) The documentation for vendor prequalification must reflect the capability of the selected vendor(s) to adequately perform the contract. The criteria for prequalification include, but are not limited to, technical expertise, experience, quality of performance, location, availability, rates, prices, financial stability, past performance, catalogs, or other criteria relevant to a particular procurement.

(3) Prequalification must be approved by the division.

(4) Prequalification of a prospective vendor does not necessarily represent supply or service acceptability or a finding of responsibility.

History

Authorizing statute(s): 18-4-221, MCA
Implementing statute(s): 18-4-309, MCA
History: NEW, 1997 MAR p. 1816, Eff. 10/7/97.

Mont. Admin. R. 2.5.508 Requests for Information

(1) A request for information, as defined in ARM 2.5.201, may be used by an agency only to obtain preliminary information about a market or the type of available supply or service, where there is not enough information readily available to write an adequate specification or work statement. A request for information may not be used as a source selection method to procure a supply or service.

History

Authorizing statute(s): 18-4-221, MCA
Implementing statute(s): 18-4-221, MCA
History: NEW, 2000 MAR p. 65, Eff. 2/1/00.

Mont. Admin. R. 2.5.509 Late Bids or Proposals

(1) Regardless of cause, late bids and proposals will not be accepted and will automatically be disqualified from further consideration. It shall be solely the vendor's risk to assure delivery at the specified office by the specified time.

(2) Late bids and proposals will not be opened and may be returned to the vendor at the expense of the vendor or destroyed if requested.

History

Authorizing statute(s): 18-4-221, MCA
Implementing statute(s): 18-4-221, MCA
History: NEW, 2000 MAR p. 65, Eff. 2/1/00; AMD, 2001 MAR p. 2009, Eff. 10/12/01.

Mont. Admin. R. 2.5.510 Intent to Award

(1) For all invitations to bid and requests for proposals, the division or state agency shall electronically post an intent to award prior to awarding a contract.

(2) The intent to award shall be posted publicly for no less than seven days to allow for public review and comment. If no public comment is received, the division or state agency may award a contract to the successful bidder or offeror.

(3) If public comment is received, the division or state agency shall review the comments received and determine the impact, if any, on the decision to award a contract.

History

Authorizing statute(s): 18-4-221, MCA
Implementing statute(s): 18-4-303, 18-4-304, 18-4-307, MCA
History: NEW, 2024 MAR p. 1451, Eff. 6/22/24.

Subchapter 2.5.6 Types of Bids

Mont. Admin. R. 2.5.601 Competitive Sealed Bids and General Provisions Pertaining to Both Competitive Sealed Bids and Proposals

(1) "Sealed bid" is the preferred method of competitive procurement for state supply contracts and service contracts estimated to exceed the amount designated in ARM 2.5.603 as a small purchase or a limited solicitation. Sealed bids shall be solicited with an invitation for bid.

(2) The solicitation shall include the following:

(a) instructions and information to bidders or offerors concerning the bid or proposal submission requirements, including the time and date established for submission, the method by which bids or offers are to be delivered, and any other special information;

(b) the purchase description, delivery or performance schedule, and any inspection and acceptance requirements not included in the purchase description; and

(3) The invitation for bid or request for proposals may incorporate documents by reference if it specifies where such documents can be obtained.

(4) Where a brand name specification is used in a solicitation, the solicitation shall explain that the use of a brand name is for the purpose of describing the standard of quality, performance, and characteristics desired, and is not intended to limit or restrict competition. When bidding or proposing an "or equal" product, the burden of persuasion is on the bidder or offeror to convince the procurement officer that their product is, in fact, equal to the one specified. The procurement officer is given the responsibility and judgment for making a final determination of whether a proposed substitution is equal to the brand name specified.

(5) If the division or agency decides to amend an invitation for bids or request for proposals, the amendments will be provided to all vendors who received the solicitation, or notice of the solicitation amendment will be provided in the format designated in the solicitation for giving public notice.

(6) For all invitations for bid and requests for proposals, the division or state agency shall post an intent to award as described in ARM 2.5.510.

(7) Bids or proposals shall be submitted on or before the time and in the manner designated in the solicitation.

(8) The division may ask state agencies to perform tests or provide technical expertise to determine product or service acceptability.

(9) Following determination of product acceptability, bids will be reviewed to determine which bidder offers the lowest cost to the state in accordance with the specifications set forth in the invitation for bids, including the reciprocal preference provisions described in ARM 2.5.408.

(10) Nothing in this rule shall be deemed to permit contract award to a bidder submitting a higher quality item than that designated in the invitation for bid if such bidder is not also the lowest bidder as determined under (9).

(11) Multiple award contracts are allowable if determined to be in the best interest of the state.

(12) In the case of a tie bid, the discretion of the division or the head of a purchasing agency will be used to resolve such bids, except that a bidder offering American-made products or supplies must be given preference.

(13) A supplier's currently advertised or established catalog price, which is available to the public, may be accepted as a bid subject to the following conditions:

(a) The advertisement or established catalog price must be received and time-stamped by the procurement officer authorized to enter into contracts prior to or at the bid opening. In no event will catalog or advertised prices be accepted after a bid opening.

(i) a copy of the catalog or advertised price and specifications may be attached to the requisition received by the procurement official; or

(ii) the procurement official or the requesting agency may locate catalog or advertised prices; or

(iii) a vendor may submit catalog or advertised prices as a bid.

(b) The catalog or advertised price must meet or exceed the specifications, terms, and conditions and be the lowest acceptable bid.

(14) The currently advertised or established catalog price is tabulated and recorded as a bid from the supplier for the inspection of all bidders.

(15) Only the procurement official of the division or purchasing agency can make the final determination of acceptance or rejection of the bids or publicly advertised or established catalog prices.

(16) The state may create a roster of contractors to provide supplies or services on an "as needed, if needed" basis. In this situation, contractors have no guarantee that any supplies or services will be purchased by the state. The solicitation document will establish the method to be used to select contractors for the roster.

History

Authorizing statute(s): 18-4-221, MCA
Implementing statute(s): 18-4-303, 18-4-304, MCA
History: NEW, 1983 MAR p. 1918, Eff. 12/30/83; AMD, 1986 MAR p. 242, Eff. 2/28/86; AMD, 1987 MAR p. 1961, Eff. 10/30/87; AMD, 1987 MAR p. 2144, Eff. 11/28/87; AMD, 1990 MAR p. 1770, Eff. 9/14/90; AMD, 1994 MAR p. 383, Eff. 2/25/94; AMD, 1995 MAR p. 1788, Eff. 9/15/95; AMD, 1997 MAR p. 1816, Eff. 10/7/97; AMD, 2000 MAR p. 65, Eff. 2/1/00; AMD, 2001 MAR p. 2009, Eff. 10/12/01; AMD, 2006 MAR p. 79, Eff. 10/7/05; AMD, 2007 MAR p. 1657, Eff. 10/26/07; AMD, 2014 MAR p. 1077, Eff. 5/23/14; AMD, 2024 MAR p. 1451, Eff. 6/22/24.

Mont. Admin. R. 2.5.602 Competitive Sealed Proposals

(1) "Competitive sealed proposal" is a procurement option allowing the award to be based upon an evaluation process using stated criteria to arrive at a contract that will be the most advantageous to the state. Competitive sealed proposals shall be solicited through a request for proposals.

(2) Competitive sealed proposals may be practical when one or more of the following conditions exist:

(a) the contract needs to be other than a fixed-price type;

(b) oral or written discussions may need to be conducted with offerors concerning technical and price aspects of their proposal;

(d) award may need to be based upon a comparative evaluation as stated in the request for proposals of differing price, quality, and contractual factors in order to determine the most advantageous offering to the state. Quality factors include technical and performance capability and the content of the technical proposal; or

(e) price will only be one of the criteria considered in determining an award.

(3) The request for proposals must be prepared and conducted in accordance with ARM 2.5.601, except for provisions of ARM 2.5.601 that expressly apply only to invitations for bid. A request for proposals must include:

(a) a statement allowing for optional discussions with one or more offerors who submit proposals; and

(b) the criteria that will be used to evaluate the proposals.

(4) An evaluation committee may be utilized to evaluate the proposals.

(5) After the time established for receipt of proposals, a procurement officer shall open and inspect the proposals for material not available for public inspection pursuant to 18-4-304 and 18-4-308, MCA. The procurement officer shall remove this material and release the remainder of the proposal for public inspection. Offerors submitting a proposal containing a claim of confidentiality pursuant to 18-4-304, MCA, shall include a statement that attests to the offeror's acceptance of the legal and financial responsibility for defending the claim. A claim to shield trade secret material must be made by an offeror's legal counsel using the affidavit form prescribed by the division. The division or purchasing agency is not required to accept an offeror's trade secret claims. An offeror who claims material in its proposal is a trade secret shall provide two versions of all documents containing claimed trade secrets. In one version, all material shall be readable and unredacted. In the other version, all claimed trade secrets must be redacted by the offeror. After complying with 18-4-304(4) and (8), MCA, the division or purchasing agency may publish or provide to the public redacted documents and any proposal documents that do not contain claimed trade secrets.

(6) For the purpose of conducting discussions, proposals must be initially classified as responsive or nonresponsive.

(a) Proposals may be found nonresponsive at any time during the procurement process if:

(i) any of the required information is not provided;

(ii) the submitted price is found to be excessive or inadequate as measured by criteria stated in the request for proposals;

(iii) the proposal does not conform to the specifications described and required in the request for proposal;

(iv) the offeror claims all or significant portions of the offeror's proposal are trade secrets without a proper basis under law or the offeror and the division or purchasing agency are unable to resolve disagreements regarding the offeror's trade secrecy claims before the division or purchasing agency posts an intent to award;

(v) the offeror or proposal fails to comply with procurement laws or policies;

(vi) the offeror or proposal fails to comply with the request for proposal requirements;

(vii) the offeror does not agree to the state's contract requirements after negotiations;

(viii) the offeror fails to provide required financial, insurance, reference, or security information; or

(ix) the offeror fails to demonstrate financial responsibility or an ability to comply with contract requirements.

(b) Nonresponsive proposals will be eliminated from further consideration.

(7) Discussions including oral presentations, interviews, demonstrations, responses to specific questions, modifications, and contract refinement may be held with one or more offerors to:

(a) promote understanding of the state's requirements and the offerors' proposals; and

(b) facilitate arriving at a contract that will be most advantageous to the state taking into consideration all criteria set forth in the request for proposals.

(8) At the discretion of the procurement officer, one or more offerors may be provided an opportunity to submit a best and final offer if additional information is required in order to reach a final decision. Unless the request for proposals so states, a best and final offer may not be requested from the offeror(s) on price alone.

(9) References and the credit and financial responsibility of the offerors may be verified as appropriate.

(10) The evaluation must be based on the evaluation criteria set forth in the request for proposals. In assigning points or value to a proposal, the evaluation requires the exercise of the evaluators' discretion, involving a judgmental assessment of the evaluation criteria. If an award is made, it must be made to the responsive and responsible offeror whose proposal best meets the evaluation criteria.

(11) The department reserves the right to refine a contract before execution if doing so is advantageous to the state. The department reserves the right to reject any or all proposals.

(12) Interested parties are responsible for making their own arrangements to make copies of proposal materials.

(13) Multiple award contracts are allowable if determined to be in the best interest of the state.

History

Authorizing statute(s): 18-4-221, MCA
Implementing statute(s): 18-4-304, MCA
History: NEW, 1983 MAR p. 1918, Eff. 12/30/83; AMD, 1985 MAR p. 244, Eff. 3/15/85; AMD, 1987 MAR p. 1961, Eff. 10/30/87; AMD, 1987 MAR p. 2144, Eff. 11/28/87; AMD, 1990 MAR p. 1770, Eff. 9/14/90; AMD, 1995 MAR p. 1788, Eff. 9/15/95; AMD, 1997 MAR p. 193, Eff. 1/28/97; AMD, 1997 MAR p. 1816, Eff. 10/7/97; AMD, 2000 MAR p. 65, Eff. 2/1/00; AMD, 2006 MAR p. 79, Eff. 10/7/05; AMD, 2007 MAR p. 1657, Eff. 10/26/07; AMD, 2014 MAR p. 1077, Eff. 5/23/14; AMD, 2024 MAR p. 1451, Eff. 6/22/24.

Mont. Admin. R. 2.5.603 Small Purchases or Limited Solicitations of Supplies and Services

(1) The division or state agency may procure supplies or services when the total contract value will be less than $10,000 using a purchase technique that best meets the agency's needs, including the use of electronic online auctions.

(2) The payment method used for small purchases should be the state's purchasing card, except for interagency purchases.

(3) The division or state agency, if authorized in a written delegation agreement, may procure supplies or services with a total contract value of $10,000 or more and less than $100,000, using a limited solicitation procedure. This procedure requires a minimum of three viable written or oral quotations, if available. The limited solicitation procedure must be documented and, wherever practical, use the department's vendor list.

(4) This rule does not apply to controlled items purchased through exclusive term contracts, requisition time schedules, or State Print and Mail unless specifically delegated in a written delegation agreement to the agency.

(5) Procurements shall not be artificially divided or sequenced to avoid using the other source selection methods set forth in Title 18, chapter 4, MCA.

(6) If approved by the agency procurement officer, and except for new or used vehicles, a state agency may participate in electronic online auctions for limited solicitations under the following conditions:

(a) the procurement officer must review and approve the terms of the participation in the auction for compliance with state law;

(b) two quotes must first be obtained from viable sources and the lowest of the two quotes must be the amount that the auction price may not exceed;

(c) the auction price must include all fees associated with participating in the auction, including shipping and handling; and

(d) the terms of the purchase must include a right to return.

History

Authorizing statute(s): 18-4-221, MCA
Implementing statute(s): 18-4-305, MCA
History: NEW, 1983 MAR p. 1918, Eff. 12/30/83; AMD, 1985 MAR p. 244, Eff. 3/15/85; AMD, 1986 MAR p. 242, Eff. 2/28/86; AMD, 1987 MAR p. 1961, Eff. 10/30/87; AMD, 1987 MAR p. 2144, Eff. 11/28/87; AMD, 1990 MAR p. 1770, Eff. 9/14/90; AMD, 1994 MAR p. 383, Eff. 2/25/94; AMD, 1995 MAR p. 2241, Eff. 11/1/95; AMD, 1997 MAR p. 1816, Eff. 10/7/97; AMD, 2001 MAR p. 2009, Eff. 10/12/01; AMD, 2005 MAR p. 1906, Eff. 10/7/05; AMD, 2007 MAR p. 1657, Eff. 10/26/07; AMD, 2014 MAR p. 2442, Eff. 10/10/14; AMD, 2016 MAR p. 1160, Eff. 7/9/16; AMD, 2022 MAR p. 1789, Eff. 9/24/22.

Mont. Admin. R. 2.5.604 Sole Source Procurement

(1) This rule applies to all sole source procurements of $10,000 or more unless exigency procurements described in ARM 2.5.605 are necessary.

(2) Sole source procurement is permissible under the following circumstances:

(a) the compatibility of current services or equipment, accessories, or replacement parts is the paramount consideration;

(b) there is no existent equivalent product; or

(3) For purchases with a total contract value of $10,000 or more, the determination as to whether a procurement shall be made as a sole source shall be made by the division, unless specifically authorized in a written agency delegation agreement. In cases of reasonable doubt, competition should be solicited. A request by a state agency to the division that a procurement be restricted to one vendor must be accompanied by a written justification using the "Sole Source Procurement Justification" form referenced in (5).

(4) For any requested sole source procurement with a total contract value exceeding $100,000, the division or procuring agency must provide public notice of intent to sole source as provided in ARM 2.5.503. An intent to sole source shall be posted on the division or agency website for 10 business days to allow for public review and comment before the division may approve sole source procurement.

(5) For the purpose of complying with 18-4-306, MCA, a record of sole source procurements of $10,000 or more shall be maintained by the procuring agency using the "Sole Source Procurement Justification" form provided by the division.

(6) The following items do not require sole source justification and shall be purchased directly by the agency regardless of delegated authority:

(a) professional licenses;

(b) dues to associations;

(d) purchase or renewal of maintenance agreements for software or hardware. The purchase or renewal of a software subscription agreement or the addition of new major functional capabilities or services is not considered purchase or renewal of a maintenance agreement for software or hardware and such items cannot be purchased directly by an agency without sole source approval or another approved procurement method; and

(e) publications available only from a single supplier.

(7) Any modification, extension, or renewal to an existing sole source contract requires the agency to provide the division with a new justification form as provided in (5).

History

Authorizing statute(s): 18-4-221, MCA
Implementing statute(s): 18-4-306, MCA
History: NEW, 1983 MAR p. 1918, Eff. 12/30/83; AMD, 1987 MAR p. 1961, Eff. 10/30/87; AMD, 1990 MAR p. 1770, Eff. 9/14/90; AMD, 1994 MAR p. 383, Eff. 2/25/94; AMD, 1995 MAR p. 2241, Eff. 11/1/95; AMD, 1997 MAR p. 1816, Eff. 10/7/97; AMD, 2000 MAR p. 65, Eff. 2/1/00; AMD, 2001 MAR p. 2009, Eff. 10/12/01; AMD, 2002 MAR p. 2651, Eff. 9/27/02; AMD, 2007 MAR p. 1657, Eff. 10/26/07; AMD, 2014 MAR p. 1077, Eff. 5/23/14; AMD, 2022 MAR p. 1789, Eff. 9/24/22; AMD, 2024 MAR p. 1451, Eff. 6/22/24/.

Mont. Admin. R. 2.5.605 Exigency Procurements

(1) An exigency procurement of $10,000 or more shall be limited to those supplies or services necessary to meet the exigency, as defined in ARM 2.5.201. An exigency does not exist when:

(a) an agency failed to procure supplies or services before the time they were needed;

(b) an agency failed to timely renew an expiring contract; or

(2) An agency shall decide whether public exigencies require an exigency procurement. The determination must be in writing and must state the basis for an exigency procurement and for the selection of a particular vendor.

(3) The procedure used shall ensure the required supplies or services are procured in time to meet the exigency. However, such competition as is practicable shall be obtained.

(4) A record of each exigency procurement shall be made as soon as practicable and shall include:

(a) the vendor's name;

(b) the amount and type of the contract;

(d) the written documentation required in (2).

History

Authorizing statute(s): 18-4-221, MCA
Implementing statute(s): 18-4-133, MCA
History: NEW, 1983 MAR p. 1918, Eff. 12/30/83; AMD, 1985 MAR p. 244, Eff. 3/15/85; AMD, 1990 MAR p. 1770, Eff. 9/14/90; AMD, 1994 MAR p. 2481, Eff. 10/28/94; AMD, 1997 MAR p. 193, Eff. 1/28/97; AMD, 2022 MAR p. 1789, Eff. 9/24/22; AMD, 2024 MAR p. 1451, Eff. 6/22/24.

Mont. Admin. R. 2.5.606 Procurement of Used Equipment

(1) Purchase of used equipment is allowable if in the best interest of the state.

(2) Unless justified as sole source or exigency, the award of the contract will be made by identifying the requirements and proceeding with the competitive bidding or proposal process, pursuant to ARM 2.5.601.

(3) Criteria to consider in making this determination include:

(a) consideration of the type, use, and life expectancy of new versus used equipment;

(b) comparing the purchase price of new and used equipment;

(d) consideration of the freight charges and FOB point;

(e) investigation of manufacturer or brand and availability of warranty, maintenance, and parts; and

(f) clarification of payment terms.

History

Authorizing statute(s): 18-4-221, MCA
Implementing statute(s): 18-4-221, MCA
History: NEW, 1986 MAR p. 242, Eff. 2/28/86; AMD, 1990 MAR p. 1770, Eff. 9/14/90; AMD, 1994 MAR p. 2481, Eff. 10/28/94; AMD, 2007 MAR p. 1657, Eff. 10/26/07.

Mont. Admin. R. 2.5.607 Procurement from Sheltered Workshops or Work Activity Centers

(1) State agencies may purchase supplies and services from sheltered workshops as defined in 18-5-101, MCA. Such purchases are exempt from competitive bidding laws and rules and may be made directly.

(2) The division maintains a list of certified sheltered workshops or work activity centers, as defined in 18-5-101, MCA, located in the state. The list includes the supplies and services provided by each. The list is available on the division's web site at https://emacs.mt.gov/ShelteredWorkshops .

History

Authorizing statute(s): 18-5-102, MCA
Implementing statute(s): 18-5-102, 18-5-103, MCA
History: NEW, 1986 MAR p. 242, Eff. 2/28/86; AMD, 1990 MAR p. 1770, Eff. 9/14/90; AMD, 1995 MAR p. 1788, Eff. 9/15/95; AMD, 1997 MAR p. 1816, Eff. 10/7/97; AMD, 2007 MAR p. 1657, Eff. 10/26/07.

Mont. Admin. R. 2.5.608 Direct Negotiation

(1) When none of the responses to invitations for bids or requests for proposals received in response to a valid solicitation are from a responsible and responsive bidder or offeror, as defined in 18-4-301, MCA, the procurement officer may:

(a) cancel and reissue the solicitation. If the procurement officer reissues the solicitation, the procurement officer shall attempt to increase the number of potential vendors and may modify any specification in the original solicitation to enhance vendor participation; or

(b) if approved by the department, directly negotiate with a vendor or vendors if the procurement officer determines that a second or subsequent solicitation would also be unsuccessful. The procurement officer may conduct negotiations as appropriate, as to price, delivery, and terms.

(2) Subject to conditions in (1) and the intent of 18-4-122, MCA, the determination as to whether a procurement will be made by direct negotiation must:

(a) be in writing;

(b) state the basis for the direct negotiation and for the selection of a particular vendor; and

History

Authorizing statute(s): 18-4-133, 18-4-221, MCA
Implementing statute(s): 18-4-133, MCA
History: NEW, 2001 MAR p. 2009, Eff. 10/12/01; AMD, 2007 MAR p. 1657, Eff. 10/26/07.

Mont. Admin. R. 2.5.609 Alternative Procurement Methods

(1) An agency may request authorization from the division to pursue an alternative procurement method.

(2) If an alternative procurement method is approved, the division shall:

(a) conduct the procurement on behalf of the agency or delegate one-time authority to conduct the procurement on its own;

(b) notify potential vendors of the alternative procurement method being used for the supply or service; and

History

Authorizing statute(s): 18-4-221, 18-4-302, MCA
Implementing statute(s): 18-4-302, MCA
History: NEW, 2001 MAR p. 2009, Eff. 10/12/01; AMD, 2007 MAR p. 1657, Eff. 10/26/07; AMD, 2024 MAR p. 1451, Eff. 6/22/24.

Mont. Admin. R. 2.5.610 Cooperative Purchasing

(1) The department or using agency may use federal supply schedules as one source of a bid, provided the federal supply schedule supplier has agreed to extend the pricing to the department or using agency. The federal supply schedule item must meet or exceed the specifications, terms, and conditions of the invitation for bid and must be the lowest acceptable bid in order to be selected. The pertinent supply schedule must be recorded as a bid from the supplier for the inspection of all bidders.

(2) For the purposes of complying with 18-4-221, MCA, the following definitions apply:

(a) "public authority" means an entity of a political subdivision of the state that is authorized to spend or receive public funds to further public interests;

(b) "educational institution" means any school system operating within the state that expends public funds for the procurement of supplies and services;

(c) "health institution" means an entity of a political subdivision of the state organized for the purpose of providing health care and related services and that expends public funds for the procurement of supplies and services;

(d) "other institution" means an entity of a political subdivision of the state that operates for a particular public purpose and that expends public funds for the procurement of supplies and services; and

(e) "any other entity that expends public funds for the procurement of supplies and services" means an Internal Revenue Code 501(c)(3) organization, as that statute reads on May 23, 2014, that expends public funds for the procurement of supplies and services.

(3) Nonprofit corporations that wish to enter into an agreement with the state for the cooperative use of supplies or services shall provide the division with documentation that they are or will be lawfully authorized to spend public funds.

(4) An agency may participate in a cooperative contract if the following conditions are met:

(a) the division provided adequate public notice of the solicitation; and

(b) the contract or purchase order includes all statutorily required terms and conditions.

(5) If an agency wishes to participate in a cooperative contract, and (4)(a) has not been met, the division shall provide adequate opportunity for public participation by either:

(a) issuing a solicitation for the supply or service and including the cooperative contract as a response; or

(b) providing notice of the intent to purchase from the cooperative contract and allowing interested vendors a reasonable time to submit a response to the notice.

(6) The division may exempt an agency from the requirements of (4)(a) and (5) if it is shown to be in the best interests of the state.

History

Authorizing statute(s): 18-4-221, MCA
Implementing statute(s): 18-4-401, 18-4-402, MCA
History: NEW, 2005 MAR p. 2446, Eff. 10/7/05; AMD, 2014 MAR p. 1077, Eff. 5/23/14.

Chapter 2.6 Risk Management and Tort Defense Division

Subchapter 2.6.2 State Vehicle Use

Mont. Admin. R. 2.6.201 Introduction

(1) The following rules define acceptable uses for state-owned or leased motor pool vehicles as provided in 2-17-424, MCA. State employees or authorized individuals may be subject to additional guidelines, policies, insurance coverage exclusions, or regulations for vehicle/equipment fleet operations, provided that they do not conflict with these rules.

(2) Drivers and passengers must use installed seat belts at all times.

History

Authorizing statute(s): 2-17-424, MCA
Implementing statute(s): 2-9-201, 2-9-305, and 2-17-424, MCA
History: NEW, 2001 MAR p. 2013, Eff. 10/12/01.

Mont. Admin. R. 2.6.202 Definitions

As used in this subchapter, the following definitions apply:

(1) "State" as defined in 2-9-101, MCA.

(2) "State employee" as defined in 2-9-101, MCA.

(3) "State vehicle" means a motor vehicle, trailer, snowplow, or other vehicle designed for travel on public roads that is subject to motor vehicle registration, including any machinery or apparatus attached to the vehicle. The term includes the following:

(a) a "leased vehicle" obtained by the state through an open-ended lease or lease with an option to buy contract;

(b) a "loaned vehicle" provided to the state as a gratuity;

(d) a "rented vehicle" rented by the state for a fee, typically for short-term use in Montana or for out-of-state travel.

(4) "Under the influence" means that as a result of taking into the body alcohol, drugs, or any combination of alcohol and drugs, a person's ability to safely operate a state vehicle has been diminished.

History

Authorizing statute(s): 2-17-424, MCA
Implementing statute(s): 2-9-201, 2-9-305, 2-17-424, MCA
History: NEW, 2001 MAR p. 2013, Eff. 10/12/01; AMD, 2012 MAR p. 2595, Eff. 12/21/12.

Mont. Admin. R. 2.6.203 Authorized Drivers and Uses

(1) Except as otherwise provided in this rule, the following individuals may operate a state vehicle if the driver possesses a valid driver's license appropriate to the type of vehicle to be driven, meets driver requirements set out in ARM 2.6.205, and the uses are as provided below:

(a) a state employee to conduct business on behalf of the state;

(b) a state employee in travel status to obtain food and lodging and to respond to medical emergency situations;

(d) a state employee may park a state vehicle overnight at the employee's residence if the employee must begin travel the next day or if the employee is subject to emergency response, on-call, or other off-shift duty associated with state employment;

(e) a state employee required to stay overnight at a location other than the employee's established work location during nonwork time to drive to a cultural, recreational, or leisure activity or to conduct other personal business, if the activity is within 30 miles of the employee's lodging;

(f) a nonstate employee enrolled and registered as a student at a university of the state to conduct university business;

(g) a nonstate employee to aid or assist a disabled state employee if the aide has completed the Risk Management and Tort Defense Division's (RMTD) vehicle use agreement and obtained authorization from the agency head or designee prior to the use;

(h) a nonstate employee to assist a state employee or other individual during a medical emergency for transportation and related purposes. Prior approval is not required;

(i) a nonstate employee accompanying a state employee on official state business where the state employee becomes ill, fatigued, or is otherwise rendered physically or mentally incapable of driving and/or a compelling state interest is served by allowing the nonstate employee to drive. Prior approval is not required; and

(j) an inmate of a state prison who must operate a state vehicle to fulfill job duties for a position with Montana Correctional Enterprises or a state prison, and who is approved by the appropriate division as outlined in Montana State Prison/Montana Women's Prison/Montana Correctional Enterprises Procedure. If an inmate who is allowed to drive on Department of Corrections' property under this rule does not have a valid driver's license, the inmate may drive a state vehicle if:

(i) the inmate has a valid facility driving permit;

(ii) is timely paying fines, if any, associated with the inmate's loss of a driver's license; and

(iii) is working toward obtaining a valid state of Montana driver's license.

(2) Any exception to the authorized drivers and uses requires the prior written approval of the Risk Management and Tort Defense Division.

History

Authorizing statute(s): 2-17-424, MCA
Implementing statute(s): 2-9-201, 2-9-305, 2-17-424, MCA
History: NEW, 2001 MAR p. 2013, Eff. 10/12/01; AMD, 2012 MAR p. 2595, Eff. 12/21/12.

Mont. Admin. R. 2.6.204 Authorized Passengers and Uses

(1) Except as otherwise provided in this rule, the following individuals may ride as passengers in a state vehicle:

(a) a state employee conducting business on behalf of the state; or

(b) a non-state employee who is:

(i) an independent contractor conducting business on behalf of the state;

(ii) an aide rendering assistance to a disabled state employee;

(iii) a guest or client of the state, including a public employee, if conducting, participating in, or providing a benefit to the conduct of state business;

(iv) rendering assistance during an emergency situation; or

(v) a nursing infant if the parent is an authorized driver or passenger.

(2) Any exception to the authorized passengers and uses requires the prior written approval of the risk management and tort defense division.

History

Authorizing statute(s): 2-17-424, MCA
Implementing statute(s): 2-9-201, 2-9-305, and 2-17-424, MCA
History: NEW, 2001 MAR p. 2013, Eff. 10/12/01.

Mont. Admin. R. 2.6.205 Driver Requirements

(1) Nonprobationary employees required to drive as part of their job who have accumulated 12 or more conviction points according to the schedule specified in 61-11-203, MCA, over the most recent 36 months may not drive a state vehicle or personal vehicle for state business until having successfully completed a certified safe driver course approved by the RMTD and received authorization to drive from their agency head and RMTD. State employee drivers who have accumulated 15 or more conviction points according to the schedule specified in 61-11-203, MCA, may not drive a state vehicle or a personal vehicle for state business until the accumulated point total is less than 12 within the past 36 months.

(2) Nonprobationary employees who have accumulated 18 or more points in the immediately preceding 36 months may not drive a state vehicle or a personal vehicle for state business until two years have passed during which they have not accumulated any conviction points according to the schedule specified in 61-11-203, MCA, have successfully completed a certified safe driver course approved by RMTD, and received authorization to drive from their agency head and RMTD.

(3) A state employee required to drive as part of the employee's job shall report any single driving infraction of five or more conviction points according to the schedule in 61-11-203, MCA, accumulated while driving a state vehicle or a personal vehicle for state business to the employee's supervisor within ten days of conviction.

(4) A state employee required to drive as part of the employee's job shall report an accumulation of conviction points of 12 or more according to the schedule in 61-11-203, MCA, for the past 36 months immediately preceding the infraction, whether accumulated while driving a state vehicle, a personal vehicle for state business, or accumulated while driving a motor vehicle for any purpose within ten days of the accumulation of 12 or more points to the employee's supervisor.

(5) Authorized drivers are responsible for promptly paying all penalties following the court procedures established for contesting citations.

(6) The above requirements also apply to those individuals authorized to drive under the conditions listed in ARM 2.6.205.

(7) The requirements specified in this rule apply to conviction points received after October 12, 2001.

(8) An agency has the authority to restrict employees otherwise authorized as drivers from using state vehicles when it knows they are unsafe drivers from means other than the accumulation of conviction points.

History

Authorizing statute(s): 2-17-424, MCA
Implementing statute(s): 2-9-201, 2-9-305, 2-17-424, MCA
History: NEW, 2001 MAR p. 2013, Eff. 10/12/01; AMD, 2008 MAR p. 614, Eff. 4/11/08.

Mont. Admin. R. 2.6.209 Alcohol and Drugs

(1) No person may be under the influence while on state business.

(2) No person may have an alcoholic beverage container in the passenger compartment of a state-owned, leased, or loaned vehicle.

History

Authorizing statute(s): 2-17-424, MCA
Implementing statute(s): 2-9-201, 2-9-305, 2-17-424, MCA
History: NEW, 2001 MAR p. 2013, Eff. 10/12/01; AMD, 2012 MAR p. 2595, Eff. 12/21/12.

Mont. Admin. R. 2.6.210 Cell Phone Use

(1) State employees shall drive in a careful and prudent manner so as not to unduly or unreasonably endanger the life, limb, property, or rights of a person entitled to use a street or highway.

(2) State employees are strongly encouraged not to use handheld cell phones or other handheld electronic communications devices or objects while operating state vehicles or personal vehicles on state business. Exceptions to this rule are law enforcement and emergency response personnel.

History

Authorizing statute(s): 2-17-424, MCA
Implementing statute(s): 2-9-201, 2-9-305, and 2-17-424, MCA
History: NEW, 2001 MAR p. 2013, Eff. 10/12/01.

Mont. Admin. R. 2.6.214 Discipline

(1) Failure to comply with the requirements of these rules may result in disciplinary action, including suspension or termination. Any supervisor who becomes aware of any violation of these rules by an employee they supervise shall take appropriate disciplinary action, according to the state discipline policy set forth in ARM 2.21.6505 through 2.21.6509 and 2.21.6515.

History

Authorizing statute(s): 2-17-424, MCA
Implementing statute(s): 2-9-201, 2-9-305, 2-17-424, MCA
History: NEW, 2001 MAR p. 2013, Eff. 10/12/01; AMD, 2008 MAR p. 614, Eff. 4/11/08; AMD, 2008 MAR p. 614, Eff. 4/11/08.

Chapter 2.11 General Services Division

Subchapter 2.11.2 Surplus Property

Mont. Admin. R. 2.11.201 Authority to Dispose of Supplies

(1) State agencies may not transfer, sell, trade, or otherwise dispose of supplies owned by the state without written authorization of the Surplus Property Program. A department or legislative or judicial entity may transfer surplus supplies between the various units of that department or legislative or judicial entity.

(2) State agencies shall notify the division's Surplus Property Program of all surplus supplies. The entity may suggest a dollar value per item or per lot, but the suggestion does not constitute the minimum sale or transfer amount. The figures are not public information prior to transfer or sale.

History

Authorizing statute(s): 18-4-226, MCA
Implementing statute(s): 18-4-226, MCA
History: NEW, 1983 MAR p. 1918, Eff. 12/30/83; AMD, 1990 MAR p. 1770, Eff. 9/14/90; AMD, 2007 MAR p. 1657, Eff. 10/26/07; AMD, 2014 MAR p. 1077, Eff. 5/23/14; TRANS from ARM 2.5.701, 2016 MAR p. 719, Eff. 4/23/16.

Mont. Admin. R. 2.11.202 Disposition of Surplus Supplies

(1) The division may transfer surplus supplies to other state agencies and other units of government.

(2) The division may offer surplus supplies to the public through online and live public auctions, established markets, or posted prices. However, some types and classes of items may be sold or disposed of more readily and advantageously by other means, including barter. In such cases, and also where the nature of the supply or unusual circumstances call for its sale to be restricted or controlled, the division may employ such other means, including appraisal, if the division makes a written determination that such procedure is advantageous to the state.

(a) The department accepts cash, personal checks, United States postal money orders, certified checks, cashier's checks, and business checks.

(3) Supplies may be sold at auction, including electronic online auctions. When appropriate, an experienced auctioneer should be used to cry the sale and assist in preparation of the sale. The solicitation to bidders should stipulate all the terms and conditions of any sale.

(4) Established markets are places where supplies such as livestock and produce are regularly sold in wholesale lots, and prices are set by open competition. Surplus supplies may be sold in established markets for such supplies.

(5) Surplus supplies may be sold at posted prices, including by posting on online web sites, as determined by the division when such prices are based on fair market value and the sale is conducted pursuant to written procedures established by the division.

(6) Surplus supplies may be traded in only if the division determines the trade-in value is sufficient and in the state's best interest. Generally, trade-ins will not be approved for vehicles.

(7) The state may permit local governments, nonprofit organizations, or private businesses to participate in an auction or other appropriate marketing methods.

History

Authorizing statute(s): 18-4-226, MCA
Implementing statute(s): 18-4-226, MCA
History: NEW, 1983 MAR p. 1918, Eff. 12/30/83; AMD, 1990 MAR p. 1770, Eff. 9/14/90; AMD, 1997 MAR p. 193, Eff. 1/28/97; AMD, 2005 MAR p. 2446, Eff. 10/7/05; AMD, 2007 MAR p. 1657, Eff. 10/26/07; TRANS & AMD from ARM 2.5.702, 2016 MAR p. 719, Eff. 4/23/16.

Mont. Admin. R. 2.11.203 Adoption of State Plan of Operation - Federal Surplus Property

(1) As authorized by 18-5-202, MCA, the department adopts and incorporates by reference the "Federal Surplus Property Program Montana State Plan of Operation" in compliance with 41 CFR 102-37 and Public Law 94-519 (State Plan of Operation) promulgated by the department and filed with the General Services Administration of the United States government on July 1, 1977, and as revised February 23, 2021, pursuant to section 203(j)(4) of the Federal Property and Administrative Services Act of 1949 (40 USC 484) as amended.

(2) The State Plan of Operation establishes the operating procedure and practices to be followed by the department for the fair and equitable distribution of federal surplus personal property to all eligible participants within the state.

(3) Copies of the State Plan of Operation may be obtained from the Department of Administration, General Services Division, P.O. Box 200137, Helena, Montana 59620-0137.

History

Authorizing statute(s): 18-5-202, MCA
Implementing statute(s): 18-5-202, MCA
History: NEW, 1984 MAR p. 956, Eff. 6/29/84; AMD, 1995 MAR p. 2241, Eff. 11/1/95; AMD, 2007 MAR p. 1657, Eff. 10/26/07; TRANS from ARM 2.5.801, 2016 MAR p. 719, Eff. 4/23/16; AMD, 2021 MAR p. 990, Eff. 8/7/21.

Chapter 2.12 State Information Technology Services Division

Subchapter 2.12.2 Montana Information Technology Act

Mont. Admin. R. 2.12.204 Review and Approval Process for Procurement, Development, and Oversight of Information Technology Resources and Software and Management Systems

(1) State agencies shall submit on forms as required by the department a request for all information technology procurements or state agency development efforts in accordance with policies, standards, procedures, and guidelines.

(2) Agencies may request a preliminary project planning meeting with the department to identify important project issues, including project schedule, timeframes for review and approval, project management requirements, reporting and approval requirements, and any other issues identified by the agency or the department.

(3) In accordance with the policies and principles established in 2-17-505 , MCA, the department shall use the following process in reviewing the request:

(a) determine if the request is subject to approval as defined in 2-17-527 , MCA;

(b) determine if the request meets all applicable policies, standards, procedures, and guidelines;

(d) determine if the request is based upon state agency defined business requirements;

(e) verify the request supports the state agency's current information technology strategic plan;

(f) refer the request to subject matter experts as necessary;

(g) follow procedures for signature requirements;

(h) approve or deny the request and notify the state agency of the decision.

(4) For all formal agreements, a statement of work that complies with the format established by the department should accompany the request.

(a) Contracts shall use the standardized state information technology contract or note why it could not be used.

(b) The state chief information officer (CIO) or their designee shall review and approve all formal agreements.

(5) In the case of state agency procurement or development of software and management systems, the department will look at completeness, compliance with strategic direction of the state, policies, standards, procedures, guidelines, appropriateness, and duplication of functionality as general guidelines in the approval decision.

(a) Agencies shall report progress of software and management system procurement or development in accordance with policies, standards, procedures and guidelines.

(6) The department may delegate to agencies duties associated with the procurement and oversight of information technology so long as the duties are carried out in conformity with the requirements established in an information technology procurement delegation between the department and state agencies.

(7) The state agency director may appeal the department decision in regard to procurements to the CIO. If unsatisfied with the CIO's decision, the state agency director may appeal the department decision to the department director who will resolve the issue.

(8) The CIO will report all appeals and their resolution to the Information Technology Board.

History

Authorizing statute(s): 2-17-518, MCA
Implementing statute(s): 2-17-512, 2-17-524, MCA
History: NEW, 2003 MAR p. 2417, Eff. 10/31/03; AMD, 2022 MAR p. 796, Eff. 5/28/22.

Mont. Admin. R. 2.12.205 Granting Exceptions

(1) State agencies may make a written request for an exception from a rule, policy, standard or procedure in writing to the state chief information officer (CIO). The request must:

(a) clearly outline a compelling business case, which includes a cost benefit analysis for the state agency and whether there is an impact to the enterprise, including an analysis of the economic impact on private businesses in Montana, demonstrating why it is in the best interests of the state of Montana to grant the exception;

(b) provide a description why enterprise accepted solutions, current policies and standards will not meet the state agency business requirements;

(c) demonstrate that the proposed solution conforms with the state strategic plan for information technology, other policies, standards, procedures and guidelines; and

(d) demonstrate that the proposed solution does not interfere with the ongoing conduct of business in other agencies or create other costs to the enterprise or other agencies.

(2) The department shall apply the following process in reviewing the request:

(a) determine the policies, standards, procedures, and guidelines which apply and the effect of granting the exception;

(b) compare the business case against the components of the business case model such as business requirements, cost/benefit analysis, return on investment, proposed technology environment, risk assessment and outcome measures;

(d) determine the effect upon the enterprise of granting the exception.

(3) Exception requests shall be reported to the Information Technology Board, the Information Technology Managers Council, the Office of Budget and Program Planning, and the Legislative Finance Committee following the CIO's decision.

(4) The state agency director may appeal the department decision in regard to exception requests to the CIO. If unsatisfied with the CIO's decision, the state agency director may appeal the department decision to the department director who will resolve the issue.

(5) The CIO will report all appeals and their resolution to the Information Technology Board.

History

Authorizing statute(s): 2-17-518, MCA
Implementing statute(s): 2-17-512, 2-17-515, MCA
History: NEW, 2003 MAR p. 2417, Eff. 10/31/03; AMD, 2022 MAR p. 796, Eff. 5/28/22.

Mont. Admin. R. 2.12.208 Local Government Public Meeting Recordings

(1) This rule implements 2-3-214, MCA, by providing guidance for creating, storing, and publishing audio and video recordings of local government public meetings.

(2) This rule provides technical advice but is not binding on local government entities. It is not legal advice. Whether meetings should be public meetings or should be recorded are considerations beyond the scope of this rule. Local government entities should consult 2-3-214, MCA, for more information about how and when meetings should be recorded.

(3) How should we record video during a meeting?

(a) To record video, you will need cameras. Ensure the camera setup adequately covers the governing body and persons communicating with the body. Cameras should have a minimum resolution of 720 pixels (HD) and a minimum frame rate of 30 frames per second (fps) for smooth video.

(4) What about recording content or presentations from a computer during a meeting?

(a) You can record content from a computer by using an application or process that records what is displayed on the computer screen. The recommended minimum resolution for this content is 720 pixels, and the frame rate should be at least 15 fps.

(5) What format should we use for recording and video-on-demand?

(a) When recording meetings, save video in MP4 format and audio in MP3 format. This will make it easier to share and view the recordings.

(6) What should we consider regarding a room's acoustics?

(a) Think about how sound behaves in the room. Here are some considerations:

(i) The ambient or background noise level in the room should be less than 30 decibels (dB) to avoid interference.

(ii) Common issues in noisy rooms are echoes and hollow-sounding audio caused by solid surfaces, high ceilings, HVAC (heating, ventilation, and air conditioning) noise, and electronic noise.

(iii) To improve acoustics, you can use acoustic-absorbing soundboards, curtains, ceiling tiles, and unidirectional microphones.

(7) Where should we store recordings?

(a) The official copy of the recordings should be saved in a cloud environment maintained by your organization and accessible by more than one person.

History

Authorizing statute(s): 2-17-518, MCA
Implementing statute(s): 2-3-214, MCA
History: NEW, 2024 MAR p. 1574, Eff. 7/6/24.

Chapter 2.13 Telecommunications Bureau

Subchapter 2.13.1 Regulation of Communications Facilities

Mont. Admin. R. 2.13.101 Approval of Installations, Modifications, or Removal Required

(1) The Department of Administration must approve the installation, modification, or removal of all telecommunication systems. In approving installations, modifications, and removals the department shall consult with and consider the needs of the various state agencies and the overall implications to all state telecommunication systems.

History

Authorizing statute(s): 2-17-302, MCA
Implementing statute(s): 2-17-302, MCA
History: Eff. 12/31/72; AMD, 1987 MAR p. 2086, Eff. 11/13/87.

Mont. Admin. R. 2.13.102 Use of the State's Telecommunication Systems

(1) The facilities of the state's telecommunications systems are provided principally for the conduct of state business. In addition to state business, the state's telecommunications systems may be used by:

(a) local political subdivisions of the state, for the conduct of their business;

(b) residents in housing of the Montana University System, for their calls originating on the university system campuses; and

(c) state employees and officials for local and long distance calls to latch-key children, teachers, doctors, day-care centers and baby sitters, to family members to inform them of unexpected schedule changes, and for other essential personal business. The use of the state's telecommunication systems for essential personal business must be kept to a minimum, and not interfere with the conduct of state business. Essential personal long distance calls must be either collect, charged to a third party nonstate number, or charged to a personal credit card.

History

Authorizing statute(s): 2-17-302, MCA
Implementing statute(s): 2-17-302, MCA
History: Eff. 12/31/72; AMD, 1987 MAR p. 2086, Eff. 11/13/87; AMD, 1990 MAR p. 928, Eff. 5/18/90.

Mont. Admin. R. 2.13.103 State Agencies Responsible for the Enforcement of Regulations Relating to the Use of the State's Telecommunication Systems

(1) All state agencies are individually responsible for enforcing rules relating to the use of the state's telecommunication systems.

(2) All state agencies are individually responsible for all costs incurred in the operation of the telecommunications systems utilized by each agency.

History

Authorizing statute(s): 2-17-302, MCA
Implementing statute(s): 2-17-302, MCA
History: NEW, 1987 MAR p. 2086, Eff. 11/13/87.

Mont. Admin. R. 2.13.104 State Telecommunication Systems Defined

(1) The state's telecommunication systems include any state owned, leased, contracted for, operated or maintained telecommunications equipment, services or facilities including: private branch exchanges; telephone key systems; teleconferencing systems; local and long distance telecommunications circuits; data communications equipment; video capabilities; land mobile radio equipment; telephone credit cards, or facsimile equipment.

History

Authorizing statute(s): 2-17-302, MCA
Implementing statute(s): 2-17-302, MCA
History: NEW, 1987 MAR p. 2086, Eff. 11/13/87.

Mont. Admin. R. 2.13.105 Political Subdivision Use of State Telecommunication Systems Allowed

(1) The state telecommunication systems are available for use by political subdivisions of the state. A subdivision must make a written request to the Department of Administration for access to its systems. Such use shall be authorized by the department based upon the technical requirements of the political subdivision's needs as indicated by the request and the potential impact on state agency use of the systems. The department will approve or disapprove requests for access within 180 days of receipt of written requests. Political subdivisions will be billed for use of the state's telecommunication systems under procedures and at rates developed by the department.

(2) For purposes of this rule "political subdivision" means any county, city, municipal corporation, school district, special improvement district or taxing jurisdiction, or any other political subdivision or public corporation.

History

Authorizing statute(s): 2-17-302, MCA
Implementing statute(s): 2-17-302, MCA
History: NEW, 1987 MAR p. 2086, Eff. 11/13/87.

Mont. Admin. R. 2.13.106 Nonprofit Organization Use of the State Telecommunication Systems Allowed

(1) The state telecommunication systems are available for use by in-state nonprofit organizations that meet one of the following three criteria:

(a) there is a close connection between the organization and the state;

(b) the state is significantly involved in the activities of the organization;

(2) Nonprofit organizations must make written requests to the Department of Administration for access to its systems. These written requests must provide adequate detailed information for the department to determine if the nonprofit organization meets any of the criteria defined above. Use of the state's telecommunication systems shall be authorized for organizations meeting the criteria based upon the technical requirements of the nonprofit organizations needs as indicated by the request and the potential impact on state agency use of the systems. In consultation with the appropriate agency, the department will approve or disapprove requests for access by nonprofit organizations within 180 days of receipt of written requests. Nonprofit organizations will be billed for use of the state's telecommunication systems under procedures and at rates developed by the department.

History

Authorizing statute(s): 2-17-302, MCA
Implementing statute(s): 2-17-302, MCA
History: NEW, 1987 MAR p. 2086, Eff. 11/13/87.

Mont. Admin. R. 2.13.107 All Telecommunications Records Are Public Documents

(1) All records of use of the telecommunication systems created, maintained and managed by the department are public documents and subject to review by the public, unless protected by statute.

History

Authorizing statute(s): 2-17-302, MCA
Implementing statute(s): 2-17-302, MCA
History: NEW, 1987 MAR p. 2086, Eff. 11/13/87.

Chapter 2.21 State Human Resources Division

Subchapter 2.21.14 Persons With Disabilities Employment Preference Policy

Mont. Admin. R. 2.21.1412 Short Title

(1) This policy may be cited as the Persons with Disabilities Employment Preference Policy.

History

Authorizing statute(s): 39-30-106, MCA
Implementing statute(s): 39-30-101 et seq. , MCA
History: NEW, 1984 MAR p. 425, Eff. 3/16/84; AMD, 1990 MAR p. 485, Eff. 3/16/90; AMD, 1997 MAR p. 2277, Eff. 12/16/97.

Mont. Admin. R. 2.21.1413 Policy and Objectives

(1) It is the policy of the state of Montana, executive, legislative and judicial branches, and covered local governments to provide preference in employment to eligible persons with disabilities and certain spouses, when they are substantially equal in qualifications to others applying for initial appointments to positions.

(2) It is the objective of this policy to establish uniform practices and procedures for the administration of the preference by public employers covered by the Persons with Disabilities Employment Preference Act, 39-30-101, et seq., MCA.

History

Authorizing statute(s): 39-30-106, MCA
Implementing statute(s): 39-30-101 et seq. , MCA
History: NEW, 1984 MAR p. 425, Eff. 3/16/84; AMD, 1990 MAR p. 485, Eff. 3/16/90; AMD, 1997 MAR p. 2277, Eff. 12/16/97.

Mont. Admin. R. 2.21.1414 Eligibility

(1) As provided in 39-30-202, MCA, "No person with a disability or eligible spouse is entitled to receive employment preference as provided in 39-30-201, MCA, unless:

(a) the individual is a United States citizen;

(b) the individual has resided continuously in the state for at least 1 year immediately before applying for employment;

(c) if applying for municipal or county employment, the individual has resided for at least 30 days immediately before applying for employment in the city, town, or county in which employment is sought; and

(d) the individual meets those requirements considered necessary by a public employer to successfully perform the essential duties of the position for which the individual is applying."

(2) A person with a disability must be an individual whose disability is certified by the department of public health and human services, as provided in ARM 2.21.1427.

(3) As provided in 39-30-103, MCA, an eligible spouse is "the spouse of a person with a disability determined by the department of public health and human services to have a 100% disability and who is unable to use the employment preference because of the person's disability."

(4) The marital relationship will be verified by the department of public health and human services in accordance with Montana law.

History

Authorizing statute(s): 39-30-106, MCA
Implementing statute(s): 39-30-101 et seq. , MCA
History: NEW, 1984 MAR p. 425, Eff. 3/16/84; AMD, 1990 MAR p. 485, Eff. 3/16/90; AMD, 1997 MAR p. 2277, Eff. 12/16/97.

Mont. Admin. R. 2.21.1422 Employment Covered

(1) Public employers covered by the Persons with Disabilities Employment Preference Act, 39-30-101 et seq., MCA, include:

(a) "any department, office, board, bureau, commission, agency, or other instrumentality of the executive, judicial, or legislative branch of the government of the state of Montana; and

(b) any county, city, or town.

(2) The term does not include a school district, a college of technology, a community college, the board of regents of higher education, the Montana university system, a special purpose district, an authority, or any political subdivision of the state other than a county, city, or town."

(3) All permanent and seasonal employment is covered by the employment preference.

(4) Temporary and short-term employment is excluded from the employment preference. Temporary employment is established for a definite period of time not to exceed 12 months. Shortterm employment is established for a definite period not to exceed 90 days in one year.

(5) As provided in 39-30-103, MCA, position means "a position occupied by a permanent or seasonal employee as defined in 2-18-101, MCA, for the state or a position occupied by a similar permanent or seasonal employee with a public employer other than the state. However, the term does not include:

(a) a position occupied by a temporary employee as defined in 2-18-101, MCA, for the state or similar temporary employee with a public employer other than the state;

(b) a state or local elected official;

(c) employment as an elected official's immediate secretary, legal adviser, court reporter, or administrative, legislative, or other immediate or first-line aide;

(d) appointment by an elected official to a body such as a board, commission, committee, or council;

(e) appointment by an elected official to a public office if the appointment is provided for by law;

(f) a department head appointment by the governor or an executive department head appointment by a mayor, city manager, county commissioner, or other chief administrative or executive officer or a local government; or

(g) engagement as an independent contractor or employment by an independent contractor."

(6) Also excluded is appointment by lawful authority to fill an unexpired term in an elected office.

(7) A temporary employee shall not be considered a current employee for purposes of ARM 2.21.1423. If a temporary employee is considered in the applicant pool for permanent or seasonal employment, the selection is considered an initial hire and the employment preference must be applied.

History

Authorizing statute(s): 39-30-106, MCA
Implementing statute(s): 39-30-101 et seq. , MCA
History: NEW, 1984 MAR p. 425, Eff. 3/16/84; AMD, 1990 MAR p. 485, Eff. 3/16/90; AMD, 1998 MAR p. 157, Eff. 12/16/97.

Mont. Admin. R. 2.21.1423 Applying Preference

(1) As provided in 39-30-201, MCA, an applicant who is eligible for preference under these rules shall be hired over any other applicant with substantially equal qualifications who is not a preference-eligible applicant, when:

(a) the applicant has claimed a preference as required in ARM 2.21.1414, and

(b) the hiring is an initial hiring to employment covered in ARM 2.21.1422.

(2) A preference-eligible applicant who is a person with a disability shall be hired over any other preference-eligible applicant with substantially equal qualifications when the applicant also meets the requirements of this rule.

(3) As provided in 39-30-103, MCA, an initial hire means "a personnel action for which applications are solicited from outside the ranks of the current employee of:

(a) a department, as defined in 2-15-102, MCA, for a position within the executive branch;

(b) a legislative agency for a position within the legislative branch;

(c) a judicial agency, such as the office of supreme court administrator, office of supreme court clerk, state law library, or similar office in a state district court for a position within the judicial branch;

(d) a city or town for a municipal position, including a city or municipal court position; and

(e) a county for a county position, including a justice's court position.

(4) A personnel action limited to current employees of a specific public entity identified in [this rule], current employees in a reduction-in-force pool who have been laid off from a specific public entity identified in [this rule], or current participants in a federally-authorized employment program is not an initial hiring."

(5) A current employee of an agency who meets eligibility requirements may claim and shall receive the persons with disabilities preference when the employee is considered an applicant for a position which is an initial hire as that term is defined in this policy, whether or not the agency originally limited recruitment for the position to current employees.

(6) As provided in 39-30-103, MCA, substantially equal qualifications means "the qualifications of two or more persons among whom the public employer cannot make a reasonable determination that the qualifications held by one person are significantly better suited for the position than the qualifications held by the other persons."

(7) Substantially equal qualifications does not mean a situation in which two or more applicants are exactly equally qualified. It means a range within which two applicants must be considered to be substantially equal in view of the qualifications set for the job. Qualifications shall include job-related competencies, which are knowledge, skill, and behaviors.

(8) The public employer covered by the Persons with Disabilities Employment Preference Act, 39-30-101 et seq., MCA, has the burden of proving by a preponderance of the evidence that the employer made a reasonable determination of the applicant's qualifications for the position and that substantially equally qualified applicants were afforded preference.

(9) The public employer shall retain a record of the hiring decision for at least 90 calendar days after the notice of the hiring decision. Depending on the selection procedures used, the record may include, but is not limited to, the following:

(a) a copy of the vacancy announcement or external recruitment announcement;

(b) a record of the selection procedure used to screen job applicants;

(d) a copy of applications that were considered for the specific vacancy; and

(e) a record of the notice of the hiring decision, the written request for an employer's explanation of the hiring decision by an applicant, and the employer's written explanation.

History

Authorizing statute(s): 39-30-106, MCA
Implementing statute(s): 39-30-101 et seq. , MCA
History: NEW, 1984 MAR p. 425, Eff. 3/16/84; AMD, 1990 MAR p. 485, Eff. 3/16/90; AMD, 1997 MAR p. 2277, Eff. 12/16/97; AMD, 2000 MAR p. 448, Eff. 2/11/00.

Mont. Admin. R. 2.21.1424 Claiming Preference - Documentation and Verification

(1) As provided in 39-30-206, MCA, "a public employer shall, by posting or on the application form, give notice of the preferences that [the Persons with Disabilities Employment Preference Act] provides in public employment." The notice shall appear at the place where applications are received.

(2) As provided in 39-30-206, MCA, "a job applicant who believes he has an employment preference shall claim the preference in writing before the time for filing applications for the position involved has passed." An employer may provide a standard form for claiming employment preference. However, failure to complete such a form does not negate an applicant's claim for preference, as long as a reasonable and timely claim is made as required by this rule. As provided in 39-30-206, MCA, "failure to make a timely employment preference claim for a position is a complete defense to an action in regard to that position under 39-30-207, MCA."

(3) At the place where applications are received, the hiring authority or other agency receiving applications shall inform applicants of requirements for documentation of eligibility for preference which the applicant may be required to provide to the hiring authority.

(4) The person claiming eligibility for employment preference is responsible for providing all information necessary to document the claim.

(5) The hiring authority must obtain documentation of eligibility for employment preference at least from the applicant who is selected for the vacancy.

(6) The hiring authority shall determine when in the selection process submission of documentation of eligibility for the preference shall be provided by the applicant. This may be at the time an offer of employment is made or at an earlier time specified by the hiring authority.

(7) Where appropriate, documentation will include the following or an acceptable substitute:

(a) from a person with a disability, a document from the department of public health and human services certifying that the applicant is eligible for preference as a person with a disability;

(b) from an eligible spouse of a person with a disability, a document from the department of public health and human services certifying the person with a disability has a total disability, is unable to use the preference because of the disability, and is married to the eligible spouse in accordance with Montana law.

(c) a statement signed by the applicant attesting to U.S. citizenship, and Montana or local residency. Where the hiring authority has reason to question the validity of such statement, further evidence may be requested. For U.S. citizenship such evidence may include, but is not limited to, a birth certificate, voter registration card, U.S. passport, or naturalization papers. For Montana residency, evidence may include, but is not limited to, payment of state of Montana income tax, Montana driver's license, vehicle registration, or hunting and fishing license.

(8) All documentation submitted to a public employer, an entity designated to receive applications for a public employer, or to the department of public health and human services in support of a claim of employment preference shall be considered confidential.

(9) A public employer may release general information relating to a successful applicant's eligibility for preference upon request. The information provided should not be specific to the nature of the disability or other personally identifying information.

(10) Applicants shall be notified that intentional misrepresentation of the claim for preference is cause for immediate discharge.

History

Authorizing statute(s): 39-30-106, MCA
Implementing statute(s): 39-30-101 et seq. , MCA
History: NEW, 1984 MAR p. 425, Eff. 3/16/84; AMD, 1990 MAR p. 485, Eff. 3/16/90; AMD, 1997 MAR p. 2277, Eff. 12/16/97; AMD, 2000 MAR p. 448, Eff. 2/11/00.

Mont. Admin. R. 2.21.1425 Duration of Preference

(1) Subject to provisions of 39-30-203, MCA, a person with a disability qualifies for employment preference as long as the disabling condition persists.

(2) The spouse of a person who is totally disabled qualifies for employment preference as long as:

(a) the person who is totally disabled is unable to use the preference due to the severity of the disabling condition; and

(b) the spousal relationship continues.

History

Authorizing statute(s): 39-30-106, MCA
Implementing statute(s): 39-30-101 et seq. , MCA
History: NEW, 1984 MAR p. 425, Eff. 3/16/84; AMD, 1990 MAR p. 485, Eff. 3/16/90; AMD, 1997 MAR p. 2277, Eff. 12/16/97.

Mont. Admin. R. 2.21.1427 Certification of Persons with Disabilities

(1) As provided in 39-30-107, MCA, "the department of public health and human services shall certify persons with disabilities for the purpose of employment preference."

(2) In order to be eligible for employment preference, a person with a disability must be certified by the department of public health and human services to have, as provided in 39-30-103, MCA, a "physical or mental impairment that substantially limits one or more major life activities, such as writing, seeing, hearing, speaking, or mobility, and which limits the individual's ability to obtain, retain, or advance in employment." The certification process may also consider impairments which limit an individual's ability to know or reason; or an individual's ability to make a choice or decision. The person with a disability shall have a professional diagnosis establishing the disabling condition. Medical evidence shall be provided by a licensed physician or a licensed practitioner competent to treat and diagnose the particular disabling condition.

(3) Each disabling condition will be individually evaluated on a case-by-case basis to determine eligibility for employment preference with the exception of those persons specifically excluded in this rule.

(4) As provided in 39-30-103, MCA, "the term mental impairment does not include alcoholism or drug addiction and does not include any mental impairment, disease, or defect that has been asserted by the individual claiming the preference as a defense to any criminal charge."

(5) The department of public health and human services will establish a process and standards for certifying persons with disabilities for employment preference. The process shall include, but is not limited to:

(a) a determination established by a professional medical diagnosis that the person has a physical or mental impairment as defined by these rules; and

(b) a determination that the physical or mental impairment substantially limits one or more major life activities and as a consequence of the disability, the person's ability to obtain, retain, or advance in employment is substantially limited; or

(c) a determination by the counselor and medical consultant designated by the department of public health and human services that the disability is so severe or apparent that it has lead to or could lead to employment discrimination which would substantially limit the person's ability to obtain, retain, or advance in employment; or

(d) a determination that the person with a disability is totally disabled, is unable to use the preference because of the disability and therefore the person's spouse is eligible for preference.

(6) Each determination will be provided in writing in a standard form as established by the department of public health and human services. The written notice shall include a statement regarding the duration of the certification. The written notice shall be provided to the person with a disability within 30 days of the receipt of all information necessary to make the certification decision.

(7) The process shall allow for permanent certification of those impairments (in the judgment of the counselor and medical consultant designated by the department of public health and human services) considered to be permanent and shall allow for loss of certification for those impairments which may be considered temporary.

(8) The person requesting certification by the department of public health and human services is responsible for providing all information necessary to document the claim to be certified for employment preference. All costs of obtaining the necessary information, including medical evidence to substantiate the claim, are the responsibility of the person requesting the certification.

(9) The written notice of certification for an eligible spouse must clearly state the preference-eligible person is an eligible spouse.

(10) The department of public health and human services shall ensure the confidentiality of information gathered when making employment preference determination in accordance with federal and state law and as provided in ARM 2.21.1424.

(11) Any person with a disability, as provided in 39-30-103, MCA, who is dissatisfied with the department of public health and human services' certification decision regarding eligibility for employment preference, shall be advised of the right to file a request for an administrative review of that action and right to a fair hearing if dissatisfied with the outcome of the administrative review. The administrative review shall be conducted by the administrator of vocational rehabilitative services division or a designee. The fair hearing shall be conducted in accordance with the fair hearing rules of the department of public health and human services as provided for in ARM 46.2.201 et seq.

History

Authorizing statute(s): 39-30-106, MCA
Implementing statute(s): 39-30-103 and 39-30-107, MCA
History: NEW, 1984 MAR p. 425, Eff. 3/16/84; AMD, 1997 MAR p. 2277, Eff. 12/16/97.

Mont. Admin. R. 2.21.1428 Hiring Decisions

(1) As provided in 39-30-206, MCA, "If an applicant for a position makes a timely written employment preference claim, the public employer shall give written notice of its hiring decision to each applicant claiming preference."

(2) Written notice must be given to each applicant claiming preference who is actually considered by the public employer as an applicant for a specific vacancy.

(3) Public employers who maintain active application files or conduct continuous recruitment must give written notice to each person claiming preference whose application is active in accordance with the employer's selection procedures and who is actually considered for a specific vacancy. Notice must be given at the time a vacancy is filled or by the end of each month in which a vacancy is filled.

(4) The public employer must maintain a record of which applicants were notified and the date the notification was sent for at least 90 days after notification of the hiring decision.

History

Authorizing statute(s): 39-30-106, MCA
Implementing statute(s): 39-30-101 et seq. , MCA
History: NEW, 1984 MAR p. 425, Eff. 3/16/84; AMD, 1990 MAR p. 485, Eff. 3/16/90; AMD, 1997 MAR p. 2277, Eff. 12/16/97.

Mont. Admin. R. 2.21.1429 Internal Procedures - Enforcement of Preference

(1) As provided in 39-30-207, MCA, "an applicant who believes he has not been accorded his rights under [the Persons with Disabilities Employment Preference Act, 39-30-101, et seq., MCA], may, within 30 days of receipt of the notice of the hiring decision, submit to the public employer a written request for an explanation of the public employer's hiring decision."

(2) The written request for an explanation shall contain, but is not limited to, such information as is necessary to determine:

(a) the applicant's name and address;

(b) that the applicant is requesting an explanation from the hiring authority regarding the hiring decision; and

(3) As provided in 39-30-207, MCA, "Within 15 days of receipt of the request, the public employer shall give the applicant a written explanation." The written explanation shall contain specific job-related reasons why the person claiming preference was not hired. The explanation should be dated and identify the specific vacancy in question. The employer shall safeguard the confidentiality of information the employer has considered in accordance with state and federal law and as provided in ARM 2.21.1424.

(4) All days are calendar days.

History

Authorizing statute(s): 39-30-106, MCA
Implementing statute(s): 39-30-101 et seq. , MCA
History: NEW, 1984 MAR p. 425, Eff. 3/16/84; AMD, 1990 MAR p. 485, Eff. 3/16/90; AMD, 1997 MAR p. 2277, Eff. 12/16/97.

Mont. Admin. R. 2.21.1430 External Procedures - Enforcement of Preference

(1) "An applicant may, within 90 days after receipt of notice of the hiring decision, file a petition in district court in the county in which his application was received by the public employer," as provided in 39-30-207, MCA.

(2) All days are calendar days.

History

Authorizing statute(s): 39-30-106, MCA
Implementing statute(s): 39-30-101 et seq. , MCA
History: NEW, 1984 MAR p. 425, Eff. 3/16/84; AMD, 1990 MAR p. 485, Eff. 3/16/90.

Mont. Admin. R. 2.21.1431 Reopening the Selection Process

(1) If a court orders a public employer covered by these rules to reopen the selection process for the position involved, the public employer shall repeat the selection process including any job announcement and solicitation of applications. In addition, the public employer shall notify all persons who were previously considered applicants for the position that the position has been reopened. Employment preference shall be applied as specified in these rules.

History

Authorizing statute(s): 39-30-106, MCA
Implementing statute(s): 39-30-101 et seq. , MCA
History: NEW, 1984 MAR p. 425, Eff. 3/16/84; AMD, 1990 MAR p. 485, Eff. 3/16/90.

Mont. Admin. R. 2.21.1432 Conflict with Federal Law

(1) As provided in 39-30-108, MCA, employment preference does "not apply to work or positions subject to federal laws or regulations, if application of the employment preference conflicts with those laws or regulations."

(2) An agency that believes such a conflict exists shall submit the position and documentation of the laws or regulations in conflict for review by the State Personnel Division, Department of Administration, P.O. Box 200127, Helena, Montana 59620-0127. The division shall determine if the position is excluded from application of the preference.

History

Authorizing statute(s): 39-30-106, MCA
Implementing statute(s): 39-30-108, MCA
History: NEW, 1984 MAR p. 425, Eff. 3/16/84; AMD, 1997 MAR p. 2277, Eff. 12/16/97.

Subchapter 2.21.19 Montana VEBA HRA

Mont. Admin. R. 2.21.1931 Objectives

(1) The Department of Administration administers a Voluntary Employees Beneficiary Association (VEBA) that allows Montana public employees to access health reimbursement accounts for themselves, their spouses, and other tax-qualified dependents to pay qualified health care expenses. The VEBA is funded by employer contributions and earnings from investment of the contributions. This program is called the Montana VEBA Health Reimbursement Account (Montana VEBA HRA), and is the plan established under Title 2, chapter 18, part 13, MCA.

(2) The objective of these rules is to establish uniform and cost-effective procedures for plan administration.

History

Authorizing statute(s): 2-18-1305, MCA
Implementing statute(s): 2-18-1302, MCA
History: NEW, 2005 MAR p. 911, Eff. 4/29/05; AMD, 2013 MAR p. 1083, Eff. 6/21/13; AMD, 2019 MAR p. 2011, Eff. 11/9/19.

Mont. Admin. R. 2.21.1932 Definitions

In addition to the definitions found in 2-18-1303, MCA, the following definitions apply to this subchapter:

(1) "Dependent" means the tax-qualified dependent of the participant as determined under section 105(b) of the Internal Revenue Code, 26 USC 105(b). A tax-qualified dependent includes the participant's spouse recognized under the laws of the state in which the marriage was first established, and any child who has not, as of the end of the taxable year, attained age 27.

(2) "Eligible to retire" means eligible for benefits from the employer's given retirement system.

(3) "Employee" means a person employed in a pay status of at least 1040 hours each year. An employee is not an independent contractor or person hired by the employer under a personal services contract, a student intern, an employee employed in a seasonal position, or certain nonresident aliens.

(4) "Group" means a minimum of five employees employed by the same employer and formed pursuant to ARM 2.21.1937.

(5) "HRA" means a health reimbursement account to pay qualified health care expenses through employer contributions and investment earnings. The funds must be used for qualified health care expenses until funds are exhausted.

(6) "Member" means an employee whose work unit voted to establish a group.

(7) "Participant" means a member who separates from service, and for whom an account is established in the Montana VEBA HRA.

(8) "Qualified health care expenses" means expenses for a participant or the participant's dependent for medical care, as defined by section 213(d) of the Internal Revenue Code, 26 USC 213(d). Examples of qualified health care expenses are prescription drug costs, hospital and physician charges, and health insurance premiums.

(9) "Separation from service" or "Separate from service" means the employee retires or otherwise terminates employment and includes a voluntary or involuntary separation from service. The separation from service must be a separation from the employer. If the separation is a transfer within the same public entity, plan eligibility is based on the employee's position in the new group and the group criteria. If the separation is a transfer to another public entity without a Montana VEBA HRA group, the employee receives any remaining leave as provided by the employer's leave policy.

History

Authorizing statute(s): 2-18-1305, MCA
Implementing statute(s): 2-18-1303, MCA
History: NEW, 2005 MAR p. 911, Eff. 4/29/05; AMD, 2013 MAR p. 1083, Eff. 6/21/13; AMD, 2019 MAR p. 2011, Eff. 11/9/19.

Mont. Admin. R. 2.21.1933 Montana Veba Hra Administration

(1) The department shall:

(a) provide educational presentations about the Montana VEBA HRA upon request;

(b) review and approve requests to become a contracting employer;

(d) develop a plan for administration of the Montana VEBA HRA;

(e) enforce group participation requirements in ARM 2.21.1937 and applicable nondiscrimination requirements in section 105(h) of the Internal Revenue Code, 26 USC 105(h) by not allowing discriminatory groups to form or to continue to exist;

(f) establish a procedure to receive and deposit employer contributions consistent with this subchapter and applicable federal laws;

(g) establish claims adjudication procedures consistent with applicable laws;

(h) provide accounting and recordkeeping of all participant accounts;

(i) ensure the Montana VEBA HRA operates to preserve its tax-exempt status and that no part of the net earnings or trust assets inure to the benefit of any one participant, other than by payment of qualified health care expenses and reasonable administrative expenses; and

(j) determine investment vehicles available for participant account funds in the Montana VEBA HRA.

(2) Contracting employers shall:

(a) allow educational presentations;

(b) define groups and enroll eligible members;

(c) determine the sources of employer contributions available to a group. Allowable sources may include sick leave cash-outs, annual vacation leave cash-outs to the extent permitted by state statute, and other sources not prohibited by state statute;

(d) determine whether current employees are members of an existing group and notify employees of any change in status;

(e) notify an employee hired into a plan-eligible position of the employee's change in status to a member;

(f) notify the department when an employee becomes a member; and

(g) notify existing members 30 days before the group's anniversary date to vote.

(3) An employer shall provide to the department, or the appropriate administering entity, the information necessary to operate the plan and establish the employer as a contracting employer. The department, in partnership with a contracting employer, shall provide to the employees the information to actively participate in a Montana VEBA HRA group.

(4) The department may delegate all or a portion of its administrative duties in this rule to an administrator.

(5) The department shall exercise its administrative duties in a uniform, nondiscriminatory manner, having all necessary power and discretion to accomplish those purposes.

History

Authorizing statute(s): 2-18-1305, MCA
Implementing statute(s): 2-18-1309, MCA
History: NEW, 2005 MAR p. 911, Eff. 4/29/05; AMD, 2013 MAR p. 1083, Eff. 6/21/13; AMD, 2019 MAR p. 2011, Eff. 11/9/19.

Mont. Admin. R. 2.21.1934 Fees

(1) Contracting employers may not be charged a fee by the department to establish one or more groups.

(2) Participants may be required to pay monthly administration fees and shall pay a percentage of the monthly Montana VEBA HRA administration expenses as determined by the department. The fee begins when the contracting employer contribution is deposited into the participant account, and continues until the account has a zero balance.

History

Authorizing statute(s): 2-18-1305, MCA
Implementing statute(s): 2-18-1304, MCA
History: NEW, 2005 MAR p. 911, Eff. 4/29/05; AMD, 2013 MAR p. 1083, Eff. 6/21/13; AMD, 2019 MAR p. 2011, Eff. 11/9/19.

Mont. Admin. R. 2.21.1937 Eligibility

(1) A group may be formed by:

(a) employees in an office, department, board, commission, attached agency, county, incorporated city or town, school district, unit of the university system, and the judicial and legislative branches of state government;

(b) employees in an organizational subdivision of an employer, such as a division, bureau, work unit, institution, etc.;

(d) other groups of employees defined by an employer that are not designed to provide individual decision-making regarding participation.

(2) A group may consist of employees who are:

(a) all currently eligible to retire;

(b) all currently ineligible to retire; or

(3) No group may be formed with fewer than five employees.

(4) No group may be formed to benefit a select group of the highest paid employees. "Highest paid" means an annual compensation in the top 25% of employees ranked on the basis of total compensation paid during the year.

(5) Members in a group must be:

(a) eligible for sick leave;

(b) eligible for benefits with the employer;

(c) receiving an employer contribution for group benefits under 2-18-703, MCA, or other employer contribution to benefits; and

(d) active in the employer's retirement system.

(6) When a group is formed:

(a) members may not opt out of the group;

(b) current employees of the same employer not already in the group may not opt into the group;

(c) a participant may return to work but does not become a new member of a group unless hired into a job position eligible for the Montana VEBA HRA and meets all requirements in (5); and

(d) if an employee's circumstances change such that the employee becomes eligible to be a member of an existing group, the employee automatically becomes a member of this group.

History

Authorizing statute(s): 2-18-1305, MCA
Implementing statute(s): 2-18-1310, MCA
History: NEW, 2005 MAR p. 911, Eff. 4/29/05; AMD, 2013 MAR p. 1083, Eff. 6/21/13; AMD, 2019 MAR p. 2011, Eff. 11/9/19.

Mont. Admin. R. 2.21.1938 Elections

(1) An employer may initiate or facilitate an election for employees to vote to form a new group in the Montana VEBA HRA. However, if at least 25% of employees request an election, an employer shall facilitate the election within 60 calendar days from the date of the request. Employers shall notify employees of a vote at least 15 days prior to the first day of the voting period.

(2) Employees shall determine the contribution sources before a vote is conducted. If the employees cannot decide on the contribution sources, the employer may conduct a straw poll to determine contribution sources. The employer shall allow all employees eligible to vote a reasonable amount of time to submit their choice for contribution sources. Once a majority agrees upon the contribution source, the contribution source must be listed on the ballot. If a majority cannot agree on contribution sources for an existing group, the existing group structure and contribution sources remain in place. If a majority cannot agree on proposed contribution sources for a new group, the group does not form.

(3) Employees who are members of a collective bargaining unit may decide to either participate with other employees in the formation of a group or to initiate the election through the bargaining unit. If the employees of a collective bargaining unit decide to participate with noncollectively bargained employees, the employer shall obtain written agreement from the union representing the bargaining unit employees.

(4) Employers shall make a reasonable effort to maintain the privacy of each individual ballot. Employers shall permit absentee voting for employees not present during an election.

(5) If the majority of employees vote to establish a group or change an existing group, then all employees eligible to vote, any employees who later become eligible, and any eligible employees subsequently hired into positions eligible for the Montana VEBA HRA become members of the group. If the majority of the employees vote to become members, employees who voted not to establish a group or change an existing group, and any eligible employees who did not return a ballot, become members of the group and may not opt out.

(6) If at least 25% of the members of the group request an annual election, members of a group may hold a vote to:

(a) continue as an active group with the same contribution sources;

(b) continue as an active group with different contribution sources; or

(7) If members vote to disband the group, employees are not required to wait 12 months to form another group.

(8) If members vote to continue as an active group with the same or different contribution sources, an employer may not conduct another election for that group until 12 months from the date of the election.

(9) The effective date of the vote is the first day of the pay period/cycle immediately following the closing day of the voting period. The voting period for an existing group must conclude no later than the day before the anniversary date of the group. The employer shall announce the results of the vote to the employees or members of the group, as applicable, at the completion of the vote.

(10) If no group members or less than 25% of group members request an annual election by the end of the 30-day notice period immediately prior to the anniversary date of the group, the group's existing structure and contribution sources continue without modification for 12 months.

History

Authorizing statute(s): 2-18-1305, MCA
Implementing statute(s): 2-18-1310, MCA
History: NEW, 2005 MAR p. 911, Eff. 4/29/05; AMD, 2013 MAR p. 1083, Eff. 6/21/13; AMD, 2019 MAR p. 2011, Eff. 11/9/19.

Mont. Admin. R. 2.21.1939 Participation

(1) A member is a participant of the Montana VEBA HRA at the time the member separates from service, submits a signed and completed enrollment form to the department or administrator, as applicable, and the contracting employer makes a contribution to the participant's account.

(2) If a member dies as an active employee, all accrued leave benefits must be paid as taxable income. The member is not a participant.

(3) Each participant may direct the investment of funds in the participant's account among the investment vehicles offered. The department shall identify a default investment vehicle for a participant who fails to select an investment vehicle.

(4) Participants may make investment changes on a monthly basis.

(5) A participant account closes when the balance of the account is zero.

History

Authorizing statute(s): 2-18-1305, MCA
Implementing statute(s): 2-18-1304, MCA
History: NEW, 2005 MAR p. 911, Eff. 4/29/05; AMD, 2013 MAR p. 1083, Eff. 6/21/13; AMD, 2019 MAR p. 2011, Eff. 11/9/19.

Mont. Admin. R. 2.21.1940 Contributions

(1) Employer contributions into an account, the accumulation of interest or other earnings in an account, and payments from an account for qualified health care expenses are tax-exempt, as provided in 15-30-2110, MCA, and under applicable federal laws to the extent that the plan meets requirements under applicable sections of the Internal Revenue Code.

(2) Each contracting employer shall make contributions to the Montana VEBA HRA for participants. The department or its administrator, as applicable, shall establish an account for each participant.

(3) Sick leave is a contribution source, if approved by a vote of the group, and may convert tax-free as a contribution. The sick leave contribution rate is 25% of the member's balance at time of separation from service. As agreed upon by the group, the sick leave balance of 25% may be divided as defined by the department between a Montana VEBA HRA contribution and taxable cash.

(4) Annual vacation leave is a contribution source, if approved by a vote of the group, and may convert tax-free as a contribution. The annual vacation leave rate is 100% of the member's balance at the time of separation from service.

(5) Other contributions may be allowed as permitted by statute and federal law, but may not be discriminatory in favoring highly compensated employees. All members of a group must participate in any form of approved contributions.

History

Authorizing statute(s): 2-18-1305, MCA
Implementing statute(s): 2-18-1311, MCA
History: NEW, 2005 MAR p. 911, Eff. 4/29/05; AMD, 2013 MAR p. 1083, Eff. 6/21/13; AMD, 2019 MAR p. 2011, Eff. 11/9/19.

Mont. Admin. R. 2.21.1941 Benefits in the Event of Death

(1) If a deceased participant's account has a positive account balance, the participant's surviving spouse, if any, may file claims for qualified health care expenses incurred by the participant up until death, the surviving spouse, and other tax-qualified dependents.

(2) If a deceased participant's account has a positive account balance and the participant dies without a surviving spouse but with other tax-qualified dependents, the dependents (or guardian) may file claims for qualified health care expenses of those dependents.

(3) If the participant dies with no surviving spouse or other tax-qualified dependents, or if the last surviving tax-qualified dependent of the deceased participant dies, or when all surviving dependents of the deceased participant lose tax-qualified status, then the executor or administrator of the deceased participant's estate may file claims for qualified health care expenses incurred by the deceased participant or tax-qualified dependent up to date of death or loss of tax-qualified status. If there are no qualified health care expenses to reimburse, the remaining account balance must be allocated on a per capita basis to all participant accounts (e.g., remaining account balance of $2,500 for 1,000 participants equals $2.50 per participant on a per capita basis).

(4) If any participant account is unclaimed for at least 35 months since the whereabouts of the person entitled to the account were last known to the administrator, the participant's account becomes the property of the Montana VEBA HRA. Unclaimed account funds must be allocated on a per capita basis to all participant accounts (e.g., remaining account balance of $2,500 for 1,000 participants equals $2.50 per participant on a per capita basis).

History

Authorizing statute(s): 2-18-1305, MCA
Implementing statute(s): 2-18-1313, MCA
History: NEW, 2005 MAR p. 911, Eff. 4/29/05; AMD, 2013 MAR p. 1083, Eff. 6/21/13; AMD, 2019 MAR p. 2011, Eff. 11/9/19.

Subchapter 2.21.31 Payroll Rules

Mont. Admin. R. 2.21.3101 Short Title

(1) This sub-chapter may be cited as the state central payroll policy.

History

Authorizing statute(s): 2-18-401, MCA
Implementing statute(s): 2-18-401 et seq. , MCA
History: NEW, 1997 MAR p. 2278, Eff. 12/16/97.

Mont. Admin. R. 2.21.3102 Definitions

As used in this sub-chapter, the following definitions apply:

(1) "Assignee" means the financial institution or non-profit organization that receives the assigned portion of the employee's wages.

(2) "Assignor" means the state employee who assigns a portion of the employee's wages to a financial institution or a non-profit organization.

(3) "Central payroll" means the work unit located in the department of administration that is responsible for final payroll processing.

(4) "Financial institution" means any commercial bank, savings and loan association, or credit union.

(5) "Insurance" means the products offered by insurance companies authorized to conduct business in this state and that have been approved by the insurance commissioner pursuant to the applicable provisions of the laws governing the filing of insurance rates and forms.

(6) "Investment programs" mean annuities, bonds, retirement programs, and other legitimate investment opportunities.

(7) "Mandatory payroll deduction" means a deduction that is withheld from the employee's pay as required by law, a court, a collective bargaining agreement, or any other legal instrument.

(8) "Non-profit organization" means any charitable, educational or scientific organization which qualifies under federal tax law as an organization able to receive tax deductible contributions.

(9) "Voluntary payroll deduction" means an automatic deduction requested by a state employee to be withheld from the employee's state payroll warrant which is not otherwise provided for by federal or state law, rule, regulation, or collective bargaining agreement.

History

Authorizing statute(s): 2-18-401, MCA
Implementing statute(s): 2-18-401 et seq. , MCA
History: NEW, 1997 MAR p. 2278, Eff. 12/16/97.

Mont. Admin. R. 2.21.3103 Time, Travel, and Relocation Expense Reporting

(1) An employee shall submit time records after the close of each biweekly pay period and in the manner prescribed by the employing agency.

(2) An employee shall submit claims for reimbursement of travel and relocation expenses in the manner and within timelines prescribed by the agency, but no later than three months after incurring the expense. The employee shall attach all necessary receipts and documentation to the claim. In accordance with the Employee Travel Policy found at https://montana.policytech.com/docview/?docid=154&public=true under the travel category, an employee who fails to turn in travel and relocation claims within three months of incurring the expense waives the right to reimbursement. The agency shall process all employee travel and relocation reimbursement claims through the state's central payroll system.

(3) If an employee fails to submit a time record as required in this rule, the employee's supervisor shall submit a time record based on the supervisor's knowledge of hours worked, including overtime or compensatory time, and leave used. The employee is responsible for documenting and notifying the agency of any necessary corrections after the fact.

(4) If an employee fails to submit time records and travel claims as provided in this rule, the employee is subject to disciplinary action as provided in the Discipline Handling Policy, ARM 2.21.6505 et seq.

History

Authorizing statute(s): 2-18-401, MCA
Implementing statute(s): 2-18-405, MCA
History: NEW, 1997 MAR p. 2278, Eff. 12/16/97; AMD, 2013 MAR p. 2233, Eff. 11/28/13

Mont. Admin. R. 2.21.3104 Final Pay Warrant for Employees Terminated for Cause or Laid Off

(1) Pursuant to 39-3-205, MCA, when an employee is terminated for cause or laid off, the employing agency may pay the employee's final wages on the next regularly occurring pay day for the pay period that includes the last day the employee worked.

(2) In accordance with 39-3-205, MCA, if an employee is discharged by reason of an allegation of theft of property or funds connected to the employee's work, the agency may withhold from the employee's final paycheck an amount sufficient to cover the value of the theft.

History

Authorizing statute(s): 2-18-401, MCA
Implementing statute(s): 2-18-405 and 39-3-205, MCA
History: NEW, 1997 MAR p. 2278, Eff. 12/16/97.

Mont. Admin. R. 2.21.3105 Decedent's Warrant

(1) A decedent's warrant is a legally binding form which permits a state employee to designate a person to receive the employee's pay, benefits, and/or travel allowances due at the time of the employee's death. Anyone, including a minor, may be designated as the person to receive a decedent's warrant.

(2) Warrants for money due the employee or the estate will be reissued in the name of the designated person and will be delivered to that person without recourse to estate administration procedures if the properly completed form is on file with the employing agency at the time of the employee's death.

(3) Only one warrant will be issued by the department of administration as a replacement for each warrant the decedent would have received.

(4) The employee is required to complete the electronic "designation of person authorized to receive decedent's warrants" form.

(5) An employee may change a designation at any time by submitting a new designation form. Upon termination and after all salary, benefits, and travel warrants made payable to the employee have been delivered to the employee’s designee and paid, the designation will be canceled.

(6) Upon the death of an employee, the employing agency notifies the Department of Administration with the employee's name and date of death. The Department of Administration will use the most current designation form to complete the final decedent warrant.

(7) When an employee paid through electronic fund transfer dies, the last regularly occurring pay warrant that includes wages due before the date of death will be electronically deposited into the employee's checking or savings account. The final remittance for any unpaid wages, benefits and/or travel claims will be generated as a warrant and delivered to the designee.

(8) After all warrants have been delivered to the designee, the designation is canceled.

(9) Warrants must be delivered to the designee by the Department of Administration and accompanied by a photocopy of the warrant details.

(10) Neither refund of retirement contributions nor payment of death benefits is covered by the designation of decedent's warrant.

History

Authorizing statute(s): 2-18-401, MCA
Implementing statute(s): 2-18-412, MCA
History: NEW, 1997 MAR p. 2278, Eff. 12/16/97; AMD, 2025 MAR, Notice No. 2025-161, Eff. 8/23/25.

Mont. Admin. R. 2.21.3106 Voluntary Payroll Deductions

(1) Central payroll may establish the following types of voluntary payroll deductions for:

(a) purchasing insurance;

(b) depositing money into a financial institution or investment program;

(d) transferring funds to any organization when the department of administration determines that allowing the deduction is in the best interests of the state.

(2) All requests for voluntary payroll deductions must be submitted in writing to central payroll and signed by the authorized representative of the firm or organization. The following information must be provided:

(a) the purpose of the deduction;

(b) an agreement not to solicit state employees during normal working hours unless a permit has been granted by the department of administration, general services division;

(c) an agreement to remit, upon telephone notice by central payroll, any corrected balance due the state of Montana by placing a check in the mail within 24 hours;

(d) forms for voluntary payroll deduction for approval by central payroll; and

(e) the name, address, and telephone number of the responsible contact person representing the firm or organization.

(3) Any firm or organization requesting approval of a voluntary deduction must present a minimum of 50 state employees' signatures on a petition in support of the request.

(4) In reviewing applications for payroll deduction, central payroll investigates:

(a) compliance with all federal and state regulatory requirements;

(b) to ensure that applicants have no on-going consumer investigations; and

(5) When a voluntary deduction is approved, an employee shall request the deduction by contacting the employing agency's payroll section.

(6) Central payroll may revoke approval for a voluntary payroll deduction if:

(a) the number of state employees authorizing the voluntary payroll deduction falls below 50. Central payroll must send immediate notice to the authorized representative for the voluntary payroll deduction that the deduction has fallen below the minimum requirement and that the firm or organization has 30 days to meet the requirement;

(b) the organization or the organization's agents solicit state employees during normal working hours without proper authorization or solicit state employees by implying that the organization's product is approved, authorized or in any way supported by the state; or

(7) When the approval of a payroll deduction has been revoked, central payroll must send immediate notice by certified mail to the contact person responsible for the payroll deduction and by state mail or regular mail to all state agencies.

(8) Thirty days after notice of the revocation of approval of a voluntary payroll deduction is sent to all state agencies, central payroll must remove the payroll deduction from the central payroll system.

(9) The department of administration may establish and/or maintain a voluntary payroll deduction when less than 50 employees request the deduction, if allowing the deduction is in the best interest of the state.

History

Authorizing statute(s): 2-18-401, MCA
Implementing statute(s): 2-18-401 et seq. , MCA
History: NEW, 1997 MAR p. 2278, Eff. 12/16/97.

Subchapter 2.21.36 Veterans’ Employment Preference

Mont. Admin. R. 2.21.3601 Short Title

(1) This policy may be cited as the veterans' employment preference policy.

History

Authorizing statute(s): 39-29-112, MCA
Implementing statute(s): 39-29-101, et seq. , MCA
History: NEW, 1990 MAR p. 478, Eff. 3/16/90.

Mont. Admin. R. 2.21.3602 Policy and Objectives

(1) It is the policy of the state of Montana, executive, legislative, and judicial branches, the Montana university system, and covered local governments to provide preference in employment to veterans, disabled veterans, and eligible relatives, as required in 39-29-101 et seq., MCA.

(2) It is the objective of this policy to establish uniform practices and procedures for the administration of the veterans' public employment preference by all public employers covered by 39-29-101 et seq., MCA.

(3) It is not the intention of this policy to dictate selection procedures to be used but rather to explain how the preference should be applied.

History

Authorizing statute(s): 39-29-112, MCA
Implementing statute(s): 39-29-101, et seq. , MCA
History: NEW, 1990 MAR p. 478, Eff. 3/16/90; AMD, 2000 MAR p. 450, Eff. 2/11/00.

Mont. Admin. R. 2.21.3603 Definitions

For purposes of the sub-chapter, the following definitions apply:

(1) "Armed forces" means, as provided in 39-29-101, MCA, "the

(a) United States army, navy, air force, marine corps, and coast guard;

(b) merchant marine for service recognized by the United States department of defense as active military service for the purpose of laws administered by the department of veterans affairs; and

(2)

(a) "Initial hiring" means, as provided in 39-30-103, MCA, "a personnel action for which applications are solicited from outside the ranks of the current employees of:

(i) a department, as defined in 2-15-102, MCA, for a position within the executive branch;

(ii) a legislative agency for a position within the legislative branch;

(iii) a judicial agency, such as the office of supreme court administrator, office of supreme court clerk, state law library, or similar office in a state district court for a position within the judicial branch;

(iv) a city or town for a municipal position, including a city or municipal court position; and

(v) a county for a county position, including a justice's court position."

(b) A personnel action limited to current employees of a specific public entity identified in 39-30-103, MCA, current employees in a reduction-in-force pool who have been identified in 39-30-103, MCA, or current participants in a federally authorized employment program is not an initial hiring.

(3) "Military duty" means, as provided in 39-29-101, MCA, "duty with military pay and allowances in the armed forces."

(4) "Minimum qualifications" means the basic competencies (knowledge, skills, and behaviors) needed to adequately perform the duties of the position from the first day of employment. The applicant must possess the education and experience that leads to the required competencies.

(5) "Non-numerical scoring" means assessing the applicant's degree of success or failure on a selection device or combination of devices without employing a numerical score, for example, a plus (+) for superior, a check ( ü ) for satisfactory and a minus (-) for unsatisfactory.

(6) "Position" means, as provided in 39-29-101, MCA, "a position occupied by a permanent, temporary, or seasonal employee as defined in 2-18-101, MCA, for the state or a similar permanent, temporary, or seasonal employee with a public employer other than the state. The term does not include:

(a) a state or local elected office;

(b) appointment by an elected official to a body such as a board, commission, committee, or council;

(d) a department head appointment by the governor or an executive department head appointment by a mayor, city manager, county commissioner, other chief administrative or executive officer of a local government; or

(e) engagement as an independent contractor or employment as an independent contractor."

(7) "Public employer" means, as provided in 39-29-101, MCA:

(a) "a department, office, board, bureau, commission, agency, or other instrumentality of the executive, legislative, or judicial branches of the government of this state;

(b) a unit of the Montana university system;

(d) a county, city, or town."

(8) "Reduction-in-work force" (RIF) means, "a management action taken for non-disciplinary reasons in which an employee is laid off from employment. The RIF may take place for reasons including, but not limited to: elimination of programs; reduction in FTEs; lack of work; lack of funds; expiration of grants; reorganization of a state agency; or privatization of a service normally or traditionally provided by an employee of a department."

(9) "Scored procedure" means, as provided in 39-29-101, MCA, "a written test, structured oral interview, performance test, or other selection procedure or a combination of these procedures that results in a numerical score to which percentage points may be added."

(10) "Substantially equal qualifications" means, as provided in 39-30-103, MCA, "the qualifications of two or more persons among whom the public employer cannot make a reasonable determination that the qualifications held by one person are significantly better suited for the position than the qualifications held by the other persons."

(11) "Under honorable conditions" means, as provided in 39-29-101, MCA:

(a) "a discharge or separation from military duty characterized by the armed forces as under honorable conditions.

(i) The term includes honorable discharges and general discharges.

(ii) The term does not include dishonorable discharges or other administrative discharges characterized as other than honorable."

History

Authorizing statute(s): 39-29-112, MCA
Implementing statute(s): 39-29-101, 39-29-102, 39-29-103, 39-29-104, 39-29-105, 39-29-111 and 39-29-112, MCA
History: NEW, 1990 MAR p. 478, Eff. 3/16/90; AMD, 1997 MAR p. 1445, Eff. 8/19/97; AMD, 2000 MAR p. 450, Eff. 2/11/00; AMD, 2003 MAR p. 2077, Eff. 10/1/03.

Mont. Admin. R. 2.21.3607 Eligibility

(1) To be eligible to receive veterans' employment preference, a veteran, disabled veteran, or eligible relative, as defined in 39-29-101, MCA, must:

(a) be, as provided in 39-29-102, MCA, a "United States citizen"; and

(b) meet "the minimum qualifications required for the position. If no applicant meets the minimum qualifications and the public employer fills a training position, veterans' preference must be applied."

(2) As provided in 39-29-101, MCA, a veteran must be a person who:

(a) "was separated under honorable conditions from active federal military duty in the armed forces after having served more than 180 consecutive days, other than for training; or

(b) as a member of a reserve component under an order of active federal duty pursuant to 10 U.S.C. 12301(a) , (d) , or (g) , 10 U.S.C. 12302, or 10 U.S.C. 12304, served on active duty during a period of war or in a campaign or expedition for which a campaign badge is authorized and was discharged or released from duty under honorable conditions; or

(c) is or has been a member of the Montana army or air national guard and who has satisfactorily completed a minimum of six years service in the armed forces, the last three years of which have been served in the Montana army or air national guard."

(3) A disabled veteran must have, as provided in 39-29-101, MCA:

(a) been "separated under honorable conditions from military duty in the armed forces; and

(b) established the present existence of a service-connected disability or [be] receiving compensation, disability retirement benefits or pension because of a law administered by the department of veterans affairs or a military department; or

(4) An eligible relative must be, as provided in 39-29-101, MCA:

(a) the unremarried surviving spouse of a veteran or disabled veteran; or

(b) the spouse of a disabled veteran who is unable to qualify for appointment to a position due to the disability and who is incapable of using the employment preference because the disability prevents the veteran from working; or

(c) the mother of a veteran who died under honorable conditions while serving in the armed forces or the mother of a service-connected permanently and totally disabled veteran if:

(i) the mother's spouse is totally and permanently disabled; or

(ii) the mother is the unremarried widow of the veteran's father.

History

Authorizing statute(s): 39-29-112, MCA
Implementing statute(s): 39-29-101 and 39-29-102, MCA
History: NEW, 1990 MAR p. 478, Eff. 3/16/90; AMD, 1994 MAR p. 23, Eff. 1/14/94; AMD, 1997 MAR p. 1445, Eff. 8/19/97; AMD, 2000 MAR p. 450, Eff. 2/11/00; AMD, 2003 MAR p. 2077, Eff. 10/1/03.

Mont. Admin. R. 2.21.3615 Applying Preference

(1) As provided in 39-29-102, MCA, "Whenever a public employer uses a scored procedure, an applicant for an initial hiring, as defined in 39-30-103, MCA, must have added to the applicant's score the following percentage points of the total possible points that may be granted in the scored procedure:

(a) 5 percentage points if the applicant is a veteran," as defined in 39-29-101, MCA; and

(b) "10 percentage points if the applicant is a disabled veteran or an eligible relative," as defined in 39-29-101, MCA.

(2) As provided in 39-29-102, MCA, "a disabled veteran who receives 10 percentage points under [ 39-29-102, MCA], may not receive an additional 5 percentage points under [ 39-29-102, MCA]."

(3) As provided in 39-29-102, MCA, "Whenever a public employer uses a selection procedure other than a scored procedure, the public employer shall give preference to a disabled veteran, eligible relative, or veteran, in that order, over any nonpreferred applicant holding substantially equal qualifications as defined in 39-30-103, MCA." Substantially equal qualifications does not mean a situation in which two or more applicants are exactly equally qualified. It means a range in which two applicants must be considered to be substantially equal in view of the qualifications set for the job. Qualifications shall include job-related competencies (knowledge, skills, and behaviors) .

(4) A current employee of an agency who meets eligibility requirements may claim and receive veterans' employment preference when an applicant for an initial hiring as defined in ARM 2.21.3603.

(5) An agency may use a combination of numerically scored procedures and non-numerically scored procedures to make a hiring decision.

(6) When individual scored procedures are used, percentage points must be added to each scored procedure if the individual score is used to advance or eliminate applicants. When scored selection procedures are used in combination to reach a total score, percentage points must be added to the total score. An applicant must meet the minimum qualifications of the position to be eligible for preference.

(7) An applicant has 90 calendar days from receipt of notice of a hiring decision to file a petition in district court. To comply with this policy, the public employer shall retain a record of the hiring decision for at least 90 calendar days after the notice of the hiring decision and records may be kept longer at the agency's discretion. Other federal and state laws and regulations may require the retention of selection records for longer time periods. Depending on the selection procedures used, the record may include, but is not limited to the following:

(a) a copy of the vacancy announcement or external recruitment announcement;

(b) a record of the selection procedure used to screen job applicants;

(d) a copy of applications that were considered for the specific vacancy; and

(e) a record of the notice of the hiring decision, the written request for an employer's explanation of the hiring decision by an applicant, and the employer's written explanation.

History

Authorizing statute(s): 39-29-112, MCA
Implementing statute(s): 39-29-102, MCA
History: NEW, 1990 MAR p. 478, Eff. 3/16/90; AMD, 1997 MAR p. 1445, Eff. 8/19/97; AMD, 2000 MAR p. 450, Eff. 2/11/00.

Mont. Admin. R. 2.21.3616 Claiming Preference - Documentation and Verification

(1) As provided in 39-29-103, MCA, "a public employer shall, by posting or on the application form, give notice of the preference."

(2) As provided in 39-29-103, MCA, "a job applicant who believes that the applicant is eligible to receive a preference shall claim the preference in writing before the time for filing applications for the position involved has passed." A public employer may provide a standard form for claiming employment preference. Failure to complete such a form does not negate an applicant's claim for preference, as long as a reasonable and timely claim is made. As provided in 39-29-103, MCA, "Failure to make a timely preference claim for a position is a complete defense to an action instituted by an applicant under 39-29-104, MCA, with regard to that position."

(4) The person claiming eligibility for veterans' employment preference is responsible for providing all information necessary to document the claim.

(5) The hiring authority must obtain documentation of eligibility for employment preference from an applicant who claims preference and who is selected for the vacancy and may require documentation from others claiming employment preference.

(7) When appropriate, documentation will include the following or a substitute acceptable to the hiring authority:

(a) from a veteran, disabled veteran, or eligible relative:

(i) a document issued by the department of defense or equivalent certification from the U.S. department of veterans affairs listing military status, and discharge type, commonly form DD-214 or military discharge papers; or

(ii) a document issued by the office of the adjutant general of the Montana national guard which certifies the veteran is or has been a member of the Montana army or air national guard and has satisfactorily completed a minimum of six years service in the armed forces, the last three years of which have been served in the Montana army or air national guard;

(b) from a disabled veteran, a document from the U.S. department of veterans affairs certifying that the applicant has a service-connected disability or a document from the department of defense or the department of veterans affairs indicating the person has received the purple heart medal;

(c) from the unremarried surviving spouse of a deceased veteran, as veteran is defined in 39-29-101, MCA, the documentation required in this rule and a copy of the death certificate or from the unremarried surviving spouse of a deceased disabled veteran, as disabled veteran is defined in 39-29-101, MCA, the documentation required in this rule and a copy of the death certificate;

(d) from the eligible spouse of a disabled veteran, a document from the U.S. department of veterans affairs certifying the veteran is disabled, is unable to use the preference because of the disability, and is married to the disabled veteran in accordance with Montana law. When the department of veterans affairs does not certify that the disabled veteran is unable to use the preference because of the disability, the hiring authority shall obtain a signed statement from the disabled veteran that the veteran is incapable of using the employment preference because the veteran is unable to qualify for appointment to a position because of the disability and the disability prevents the veteran from working;

(e) from an eligible mother of a deceased veteran or disabled veteran, a document from the U.S. department of veterans affairs certifying that the veteran, as provided in 39-29-101, MCA, "died under honorable conditions while serving in the armed forces" or a document certifying, as required in 39-29-101, MCA, that the veteran has a service-connected permanent and total disability. The veteran's mother must also certify in writing that the mother's spouse is permanently and totally disabled or that the mother is the unremarried widow of the veteran's father;

(f) a signed statement by the applicant attesting to U.S. citizenship. If the hiring authority has reason to question the validity of the statement, further documentation may be required. For U.S. citizenship, such evidence may include, but is not limited to, a birth certificate, voter registration card, U.S. passport or naturalization papers.

(8) All documentation submitted to a public employer, or to an entity designated to receive applications for a public employer, in support of the claim of preference shall be considered confidential.

(9) A public employer may release general information relating to a successful applicant's eligibility for preference upon request.

(10) Applicants shall be notified that intentional misrepresentation of the claim for preference is cause for immediate discharge.

History

Authorizing statute(s): 39-29-112, MCA
Implementing statute(s): 39-29-103, MCA
History: NEW, 1990 MAR p. 478, Eff. 3/16/90; AMD, 1994 MAR p. 23, Eff. 1/14/94; AMD, 1997 MAR p. 1445, Eff. 8/19/97; AMD, 2000 MAR p. 450, Eff. 2/11/00; AMD, 2003 MAR p. 2077, Eff. 10/1/03.

Mont. Admin. R. 2.21.3617 Hiring Decision

(1) In making a hiring decision, an agency must be prepared to show:

(a) that the appropriate percentage points were added if numerically scored procedures were used;

(b) that the preference was given to an applicant with substantially equal qualifications who claimed veterans' preference if non-numerical scored procedures were used; and

(2) Written notice must be given to each applicant claiming preference who is actually considered by the public employer as an applicant for a specific vacancy.

(3) As provided in 39-29-103 , MCA, "If an applicant for a position makes a timely written preference claim, the public employer shall give written notice of its hiring decision to the applicant claiming preference."

(4) Public employers who maintain active application files or conduct continuous recruitment must give written notice to each person claiming preference and whose application is active in accordance with the employer's selection procedures and who is actually considered for a specific vacancy. Notice must be given at the time a vacancy is filled or by the end of each month in which a vacancy is filled.

(5) The public employer must maintain a record of which applicants were notified and the date the notification was sent for at least 90 calendar days after notification of the hiring decision.

History

Authorizing statute(s): 39-29-112, MCA
Implementing statute(s): 39-29-103, MCA
History: NEW, 1990 MAR p. 478, Eff. 3/16/90; AMD, 1997 MAR p. 1445, Eff. 8/19/97; AMD, 2000 MAR p. 450, Eff. 2/11/00.

Mont. Admin. R. 2.21.3618 Internal Procedures - Enforcement of Preference

(1) As provided in 39-29-104, MCA, "An applicant who believes that the applicant is entitled to, but has not been given the preference provided in 39-29-102, MCA, may, within 30 days of receipt of the notice of the hiring decision provided for in 39-29-103, MCA, submit to the public employer a written request for an explanation of the public employer's hiring decision."

(2) The written request for an explanation shall contain, but is not limited to, such information as is necessary to determine:

(a) the applicant's name and address;

(b) the applicant is requesting an explanation from the hiring authority regarding the hiring decision; and

(3) As provided in 39-9-104, MCA, "Within 15 days of receipt of the request, the public employer shall give the applicant a written explanation." The written explanation shall contain specific, job-related reasons why the person claiming preference was not hired. The explanation should be dated and identify the specific vacancy in question. The employer should safeguard the confidentiality of information considered in accordance with state and federal law and as provided in ARM 2.21.3616.

(4) All days are calendar days.

History

Authorizing statute(s): 39-29-112, MCA
Implementing statute(s): 39-29-104, MCA
History: NEW, 1990 MAR p. 478, Eff. 3/16/90; AMD, 1997 MAR p. 1445, Eff. 8/19/97; AMD, 2000 MAR p. 450, Eff. 2/11/00.

Mont. Admin. R. 2.21.3619 External Procedures - Enforcement of Preference

(1) As provided in 39-29-104, MCA, "The applicant may, within 90 days after receipt of notice of the hiring decision, file a petition in the district court in the county in which the application was received by the public employer. The petition must state facts that on their face entitle the applicant to a preference."

(2) External enforcement of the veterans' employment preference in district court is provided for in 39-29-104, MCA.

(3) All days are calendar days.

History

Authorizing statute(s): 39-29-112, MCA
Implementing statute(s): 39-29-104, MCA
History: NEW, 1990 MAR p. 478, Eff. 3/16/90; AMD, 2000 MAR p. 450, Eff. 2/11/00.

Mont. Admin. R. 2.21.3623 Retention During Reduction in Force

(1) As provided in 39-29-111, MCA, "during a reduction in [work] force, a public employer shall retain" over all others a veteran, a disabled veteran or an eligible relative who:

(a) has similar job duties and qualifications;

(b) has not been rated unacceptable under a performance appraisal system; and

(c) has the same or greater length of service. Length of service means continuous employment by an individual public employer as defined in 39-29-101, MCA.

(2) As provided in 39-29-111, MCA, "a disabled veteran with a service-connected disability of 30% or more" shall be retained over other veterans, disabled veterans and eligible relatives.

(3) It will be the responsibility of the employee to claim preference in retention. An employee who claims preference in retention as a veteran, a disabled veteran, a 30% disabled veteran or an eligible relative shall document eligibility in the same manner required in ARM 2.21.3616 for the claim of preference for initial hiring.

(4) As provided in 39-29-111, MCA, "The preference in retention...does not apply to a position covered by a collective bargaining agreement."

History

Authorizing statute(s): 39-29-112, MCA
Implementing statute(s): 39-29-111, MCA
History: NEW, 1990 p. 478, Eff. 3/16/90; AMD, 1997 MAR p. 1445, Eff. 8/19/97; AMD, 2003 MAR p. 2077, Eff. 10/1/03.

Subchapter 2.21.37 Recruitment and Selection Policy

Mont. Admin. R. 2.21.3701 Short Title

(1) This policy may be cited as the recruitment and selection policy.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, 49-3-201, MCA
History: NEW, 1984 MAR p. 1560, Eff. 10/26/84.

Mont. Admin. R. 2.21.3702 Policy and Objectives

(1) This policy, consistent with applicable state and federal laws, establishes minimum standards for equitable and consistent treatment of applicants and employees in recruitment and selection for state jobs.

(2) Montana state government is committed to:

(a) attracting and retaining a highly qualified workforce based on competencies and job-related qualifications;

(b) providing applicants with a reasonable opportunity to learn about, and apply and be considered for positions when external recruitment is conducted; and

(3) This policy covers all agencies in Montana's executive branch except the Montana University System, the Montana State Fund, elected officials, personal appointed staff of elected officials, and any other position specifically excluded under 2-18-103 and 2-18-104, MCA.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1984 MAR p. 1560, Eff. 10/26/84; AMD, 1994 MAR p. 1412, Eff. 5/27/94; AMD, 2006 MAR p. 2901, Eff. 11/23/06; AMD, 2010 MAR p. 2208, Eff. 9/24/10.

Mont. Admin. R. 2.21.3703 Definitions

For purposes of this subchapter, the following definitions apply:

(1) "Applicant" means an individual who has followed the agency's standard procedures for submitting the required application materials such as, for example, a resume, cover letter, application form, or other documentation.

(2) "Competencies" means a set of measurable and observable knowledge, skills, abilities, and behaviors that contribute to success in a job.

(3) "External recruitment" means the open, competitive solicitation of applications from any interested persons which includes the general public and current state employees.

(4) "Internal recruitment" means the open, competitive solicitation of applications that, at the agency's discretion, is limited to:

(a) current employees of the agency, the division, or other appropriate internal unit; or

(b) employees laid off from the agency or participating in the job registry.

(5) "Job analysis" means the process of gathering, analyzing, creating, and documenting information about a position to identify the essential duties, functions, roles, and competencies required to perform the work.

(6) "Job-related" means criteria shown by a job analysis to be directly related to specific duties or to a necessary job qualification or competency.

(7) "Qualifications" means the minimum requirements needed to perform the job on the first day of employment, including the education, experience, and competencies associated with successful job performance.

(8) "Vacancy announcement" means a recruitment posting, including the job duties, qualifications, and application instructions. Vacancy announcements are also called job listings and requisitions.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1984 MAR p. 1560, Eff. 10/26/84; AMD, 1994 MAR p. 1412, Eff. 5/27/94; AMD, 2007 MAR p. 33, Eff. 11/23/06; AMD, 2010 MAR p. 2208, Eff. 9/24/10; AMD, 2018 MAR p. 571, Eff. 1/13/18.

Mont. Admin. R. 2.21.3707 Internal Recruitment

(1) Agency managers shall use a competitive process when recruiting internally to fill permanent positions.

(2) Agency managers are encouraged, but are not required to consider applicants included in the job registry in an internal recruitment process. Reinstated employees are not required to participate in a competitive process to be rehired as provided in the Implementing a Reduction in Force Policy ( https://montana.policytech.com/docview/?docid=328&public=true&fileonly=true ).

(3) Agency managers may:

(a) limit the internal competitive recruitment process to current employees of the agency, division, other appropriate internal unit, or laid-off employees participating in the job registry as provided in the Implementing a Reduction in Force Policy; or

(b) recruit internally to the agency, division, or other appropriate internal unit and to the job registry simultaneously unless this practice conflicts with agency policy or the provisions of a collective bargaining agreement.

(4) Agency managers may consider temporary employees hired through a competitive process in an internal recruitment; however, student interns, short-term workers, and temporary employees who were not hired through a competitive process are not eligible to participate in an internal recruitment.

(5) Agency managers may reassign current employees to temporary assignments not to exceed a period of two years without using a competitive recruitment. Agency managers shall use a competitive process when filling the position on a permanent basis.

(6) Agency managers shall post internal vacancy announcements according to agency standard procedures.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1984 MAR p. 1560, Eff. 10/26/84; AMD, 1990 MAR p. 1949, Eff. 10/26/90; AMD, 1994 MAR p. 1412, Eff. 5/27/94; AMD, 2003 MAR p. 1531, Eff. 7/18/03; TRANS & AMD, from ARM 2.21.3712, 2006 MAR p. 2901, Eff. 11/23/06; AMD, 2010 MAR p. 2208, Eff. 9/24/10; AMD, 2018 MAR p. 90, Eff. 1/13/18.

Mont. Admin. R. 2.21.3708 External Recruitment

(1) Agency managers shall use an external competitive recruitment process unless the agency:

(a) fills a position through internal recruitment, as provided in ARM 2.21.3707, Internal Recruitment;

(b) fills a position with a participant in on-the-job training, work experience, or other programs such as those conducted under the federal Workforce Investment Act. Examples include:

(i) dislocated worker programs;

(ii) adult and youth programs;

(iii) welfare-to-work programs;

(iv) Native American programs;

(v) veterans' employment and disabled veterans outreach programs;

(vi) programs authorized under Title I, parts A and B of the federal Rehabilitation Act; and

(vii) school-to-work programs;

(c) recalls a seasonal employee, as defined in 2-18-101, MCA, who was originally selected using a competitive recruitment process;

(d) selects a short-term worker or student intern as defined in 2-18-101, MCA; or

(e) fills a position with a retiree consistent with ARM 2.21.3710, Limited Reemployment for Retirees.

(2) Agency managers shall post a vacancy announcement for all positions open to external recruitment on the State of Montana Careers web site for at least five working days. The State Human Resources Division, Department of Administration, maintains the State of Montana Careers web site http://statecareers.mt.gov .

(3) If an agency manager decides to conduct an external recruitment for a temporary employee, as defined in 2-18-101, MCA, the vacancy announcement must be posted on the Careers web site.

(4) Agency managers may do, but are not limited to, the following:

(a) distribute vacancy announcements to appropriate recruitment sources in an effort to achieve a diverse workforce;

(b) limit external recruitment advertising to a geographic area. However, all properly completed applications received by the closing date must be considered, regardless of whether the applicant resides within that geographic area; and

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1984 MAR p. 1560, Eff. 10/26/84; AMD, 1994 MAR p. 1412, Eff. 5/27/94; AMD, 1997 MAR p. 2279, Eff. 12/16/97; AMD, 2003 MAR p. 1531, Eff. 7/18/03; AMD, 2006 MAR p. 2901, Eff. 11/23/06; AMD, 2010 MAR p. 2208, Eff. 9/24/10; AMD, 2018 MAR p. 90, Eff. 1/13/18.

Mont. Admin. R. 2.21.3710 Limited Reemployment for Retirees

(1) Agency managers may reemploy, without a competitive hiring process, an employee who previously retired from the agency if:

(a) the retiree possesses the requisite skills and qualifications to perform the duties and responsibilities of the position;

(b) the agency determines that reemployment is in the agency’s best interests; and

(2) Agency managers shall document the reasons for reemployment and why it was in the agency's best interests. The documents must be kept in employee's permanent personnel file.

(3) The hour and wage limitations set forth for retirees in 19-3-1106 and 19-20-731, MCA, apply to retiree reemployment. Questions concerning hour and wage limitations should be directed to the Montana Public Employee Retirement Administration or Montana Teachers' Retirement System.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102
History: NEW, 2006 MAR p. 2901, Eff. 11/23/06; TRANS & AMD, from ARM 2.21.3705, 2010 MAR p. 2208, Eff. 9/24/10.

Mont. Admin. R. 2.21.3711 Compliance with Military Selective Service Act

(1) Agencies shall verify that every male person hired on a full-time or part-time basis in permanent or temporary positions has registered in compliance with the federal Military Selective Service Act, except those excluded in (2) of this rule. If an individual has reached his 18th birthday and is under the age of 26, agencies shall require documentation showing he has registered with Selective Service or is exempt from registration. If an individual is age 26 or older and was required to register but has not done so, the individual shall prove to the agency job representative his failure to register was neither known nor willful.

(2) Agencies may exclude certain individuals from their verification procedures who:

(a) were born on or before December 31, 1959;

(b) have been continuously employed in state government without a five-day break in service before July 1, 2001;

(d) have already provided information confirming selective service status; or

(e) are hired as independent contractors or as employees of temporary service contractors.

(3) Agency managers may determine the types of documentation an individual shall provide showing compliance with the federal Military Selective Service Act. At a minimum, agencies shall require a written statement of selective service status.

(4) Agencies shall request the documentation described in this rule at the time an employment offer is made. Agencies may adopt reasonable timelines for individuals to provide the documentation. The Department of Administration, State Human Resources Division, has published the Military Selective Service Act Compliance fact sheet ( http://hr.mt.gov/Portals/78/newdocs/factsheets/SelectiveServiceFactSheet.pdf ) to assist agencies in complying with this rule and the Military Selective Service Act. The fact sheet provides examples of adequate documentation and information about who must register with the Selective Service. If an individual does not provide documentation as required, and the exceptions in the fact sheet do not apply, agencies shall:

(a) rescind an employment offer; or

(b) terminate the individual's employment.

(5) Agency managers shall file the Statement of Selective Service Status Form in the employee's permanent personnel file.

History

Authorizing statute(s): 2-15-130, MCA
Implementing statute(s): 2-15-130, MCA
History: NEW, 2010 MAR p. 2208, Eff. 9/24/10; AMD, 2018 MAR p. 90, Eff. 1/13/18.

Mont. Admin. R. 2.21.3719 Development of Selection Procedures

(1) Individuals familiar with the position shall develop selection procedures before any review of applicant qualifications.

(2) Each selection procedure must be job-related and based on a current job analysis. Agency managers shall review the written job description to ensure it accurately describes the current job duties, competencies, education, and experience to perform the job.

(3) Selection procedures must include defined processes measuring the applicant's suitability for a particular position based on job requirements and ability to integrate successfully into the work unit and agency's culture.

(4) Agency managers may use any selection procedure or combination of procedures that best assess the applicant against the job qualifications. Agencies shall review and update their selection procedures as vacancies occur.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1984 MAR p. 1560, Eff. 10/26/84; AMD, 1994 MAR p. 1412, Eff. 5/27/94; AMD, 1997 MAR p. 2279, Eff. 12/16/97; AMD, 2003 MAR p. 1531, Eff. 7/18/03; AMD, 2006 MAR p. 2901, Eff. 11/24/06; AMD, 2010 MAR p. 2208, Eff. 9/24/10; AMD, 2018 MAR p. 90, Eff. 1/13/18.

Mont. Admin. R. 2.21.3720 Administration of Selection Procedures

(1) During each step in the selection processes, agency managers shall apply consistent selection procedures regarding:

(a) content of the procedure applied;

(b) sequence of procedures;

(d) the maximum time allotted wherever timed procedures are used.

(2) Consistent treatment does not mean identical treatment.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1984 MAR p. 1560, Eff. 10/26/84; AMD, 2010 MAR p. 2208, Eff. 9/24/10.

Mont. Admin. R. 2.21.3721 Evaluation of Qualifications

(1) Agency managers and individuals involved in the selection shall use job-related processes to evaluate the applicant's qualifications against the job requirements and ability to integrate successfully into the agency's culture.

(2) Agency managers and individuals involved in the selection process shall recognize the unique backgrounds and experiences of each applicant. Selection procedures must be flexible enough to elicit information about the applicant's qualifications and potential contributions to the work unit. Agency managers shall compare applicants to the job qualifications and others in the applicant pool to select the best applicant for the job and work unit.

(3) Agency managers may select from any of the most qualified group of applicants. The public employment hiring preferences must be applied as provided in:

(a) the Veterans' Employment Preference Policy (ARM Title 2, chapter, 21, subchapter 36);

(b) the Persons with Disabilities Employment Preference Policy (ARM Title 2, chapter, 21, subchapter 14); and

(c) as provided in 2-18-111, MCA, Hiring preference for residents of Indian reservations for state jobs within reservation – rules.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1984 MAR p. 1560, Eff. 10/26/84; AMD, 1994 MAR p. 1412, Eff. 5/27/94; AMD, 2006 MAR p. 2901, Eff. 11/23/06; AMD, 2010 MAR p. 2208, Eff. 9/24/10; AMD, 2018 MAR p. 90, Eff. 1/13/18.

Mont. Admin. R. 2.21.3723 Intentional Misrepresentation

(1) The employment process (online and traditional application) includes a notice that information applicants provide is subject to verification. Intentional misrepresentation of facts about an applicant’s qualifications, employment history, or other application information may:

(a) exclude an applicant from further consideration for a position; or

(b) result in discharge from employment.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1984 MAR p. 1560, Eff. 10/26/84; AMD, 1997 MAR p. 2279, Eff. 12/16/97; AMD, 2006 MAR p. 2901, Eff. 11/23/06; AMD, 2010 MAR p. 2208, Eff. 9/24/10; AMD, 2018 MAR p. 90, Eff. 1/13/18.

Mont. Admin. R. 2.21.3724 Notification of Applicants

(1) Agency managers shall notify all applicants of their status in the selection process.

(2) As provided in ARM 2.21.1428, Hiring Decision (Persons with Disabilities Employment Preference policy) and 2.21.3617, Hiring Decision (Veterans' Employment Preference policy), when an applicant claims an employment preference, agency managers shall:

(a) provide the applicant a written notice of the hiring decision; and

(b) maintain a record of the notification and date sent.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1984 MAR p. 1560, Eff. 10/26/84; AMD, 1994 MAR p. 1412, Eff. 5/27/94; AMD, 2003 MAR p. 1531, Eff. 7/18/03; AMD, 2006 MAR p. 2901, Eff. 11/23/06; AMD, 2010 MAR p. 2208, Eff. 9/24/10.

Mont. Admin. R. 2.21.3726 Documentation

(1) Agency managers shall document the following in the recruitment and selection process:

(a) job information;

(b) screening information; and

(2) For the purposes of this subchapter, "job information" includes but is not limited to:

(a) a description of the current duties of the job;

(b) a copy of the vacancy announcement;

(d) a list of all recruitment sources used; and

(e) a copy of Internet posting, if any.

(3) For the purposes of this subchapter, "screening information" includes but is not limited to:

(a) a copy of all selection procedures and any criteria used to evaluate qualifications;

(b) the names and titles of any persons who participated in the design or administration of the selection procedures; and

(4) For the purposes of this subchapter, "applicant information" includes, but is not limited to:

(a) all applications, supplemental question responses, evaluation notes, reference checks, and any other application materials received;

(b) applicants' demographic information from the applicant survey page; and

(5) Agencies shall maintain items listed in this rule for a period of time consistent with the General Records Retention Schedule found at http://sos.mt.gov/records/state .

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1984 MAR p. 1560, Eff. 10/26/84; AMD, 1994 MAR p. 1412, Eff. 5/27/94; AMD, 1997 MAR p. 2279, Eff. 12/16/97; AMD, 2006 MAR p. 2901, Eff. 11/23/06; AMD, 2010 MAR p. 2208, Eff. 9/24/10; AMD, 2018 MAR p. 90, Eff. 1/13/18.

Mont. Admin. R. 2.21.3728 Access to Documentation and Confidentiality

(1) Job information as described in ARM 2.21.3726(2) is public information.

(2) Screening information as described in ARM 2.21.3726(3) is public information; however, an agency may maintain the confidentiality of selection procedures and criteria if:

(a) the agency can establish a legitimate business need to reuse the procedures and criteria; or

(b) agency managers determine public disclosure of the information would jeopardize the agency's ability to select the best-qualified candidate for the position.

(3) Applicant information described in ARM 2.21.3726(4) is confidential pursuant to Montana's constitutional guarantee of privacy; however, an agency may release applicant information to third parties if the agency:

(a) receives a court order;

(b) receives a release from the applicant; or

(c) notifies applicants, as part of the application or selection process, that upon weighing the merits of public disclosure against an applicant's individual privacy interests, the agency has determined continued consideration for the position was contingent upon the applicant providing authorization for release of specified applicant information.

(4) Agency managers shall release applicant information under (3) consistent with the terms of the court order or release.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1984 MAR p. 1560, Eff. 10/26/84; AMD, 1994 MAR p. 1412, Eff. 5/27/94; AMD, 2003 MAR p. 1531, Eff. 7/18/03; AMD, 2006 MAR p. 2901, Eff. 11/23/06; AMD, 2010 MAR p. 2208, Eff. 9/24/10.

Mont. Admin. R. 2.21.3735 Closing

(1) This subchapter must be followed unless it conflicts with negotiated labor agreements or specific statutes, which govern to the extent applicable.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1984 MAR p. 1560, Eff. 10/26/84; AMD, 2010 MAR p. 2208, Eff. 9/24/10.

Subchapter 2.21.40 Equal Employment Opportunity, Nondiscrimination, and Harassment Prevention Policy

Mont. Admin. R. 2.21.4001 Short Title

(1) This subchapter may be cited as the Equal Employment Opportunity, Nondiscrimination, and Harassment Prevention Policy.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2000 MAR p. 3515, Eff. 12/22/00; AMD, 2011 MAR p. 1672, Eff. 8/26/11.

Mont. Admin. R. 2.21.4002 Policy and Objectives

(1) These rules establish the minimum requirements for implementing and maintaining an equal opportunity program that promotes compliance with:

(a) federal laws and regulations prohibiting illegal discrimination including the Genetic Information Nondiscrimination Act of 2008 (GINA);

(b) the Montana Human Rights Act, Title 49, MCA;

(d) the Governor's Executive Order No. 04-2016, Executive Order Prohibiting Discrimination in State Employment and Contracts.

(2) These rules establish complaint procedures to promote prompt and equitable resolution of discrimination complaints.

(3) These rules cover all agencies in Montana's executive branch except:

(a) the Montana University System;

(b) the Montana State Fund;

(d) personal appointed staff of elected officials; and

(e) any other position specifically excluded under 2-18-103 and 2-18-104, MCA.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2000 MAR p. 3515, Eff. 12/22/00; AMD, 2011 MAR p. 1672, Eff. 8/26/11; AMD, 2016 MAR p. 1838, Eff. 10/15/16.

Mont. Admin. R. 2.21.4005 Equal Employment Opportunity (eeo) and Nondiscrimination

(1) The executive branch is committed to equal opportunity, nondiscrimination, and harassment prevention in all aspects of employment and in programs, services, and activities offered to the public.

(2) Agency managers, as defined by the agency in policy or rule to promote consistency with internal policies and procedures, may not tolerate discrimination or harassment based on an individual's race, color, national origin, age, physical or mental disability, marital status, religion, creed, sex, pregnancy, childbirth, or a medical condition related to pregnancy or childbirth, sexual orientation, gender identity or expression, political beliefs, genetic information, military service or veteran's status, culture, social origin or condition, or ancestry. Likewise, agency management may not tolerate discrimination or harassment because of a person's marriage to or association with individuals in one of the previously mentioned protected classes.

(3) Agency managers may use a bona fide occupational qualification (BFOQ) where the reasonable demands of a position require a distinction based on age, physical or mental disability, marital status, sex, religion, or national origin. A BFOQ is a legal exception to an otherwise discriminatory hiring practice. Exceptions are strictly construed, as provided in 49-2-303, MCA, and the burden rests with the agency to demonstrate the exemption should be granted. Federal and state laws prohibit BFOQs based on race or color.

(4) To promote a work and customer service environment free from discrimination, agency managers shall:

(a) base hiring decisions on individual competencies and qualifications;

(b) promote an inclusive work environment where individuals are afforded every opportunity to reach their fullest potential;

(d) treat individuals with dignity and respect; and

(e) value the rights of all Montanans to benefit from equal access to employment and programs, services, and activities offered to the public.

(5) Agency managers who observe behaviors that may be viewed as discriminatory shall stop the behavior and notify their agency's EEO officer, Americans with Disabilities Act (ADA) coordinator, or human resources manager.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2000 MAR p. 3515, Eff. 12/22/00; AMD, 2011 MAR p. 1672, Eff. 8/26/11; AMD, 2016 MAR p. 1838, Eff. 10/15/16.

Mont. Admin. R. 2.21.4008 Responsibilities

(1) The Department of Administration shall:

(a) periodically review and update equal opportunity (EO) standards, guidelines, and administrative processes and procedures;

(b) assist agencies in maintaining an effective EO program;

(d) create and maintain an annual report summarizing state government's efforts toward achieving diversity and inclusion;

(e) provide EEO analyses, reports, and technical assistance to agencies;

(f) recommend strategies to promote diversity and overcome potential barriers to employment;

(g) design and develop diversity and inclusion and equal opportunity training that includes minimum standards for new employee orientation and refresher training; and

(h) submit the biennial State and Local Government EEO-4 Report to the Equal Employment Opportunity Commission by the reporting deadline on odd-numbered years.

(2) Executive branch department heads shall:

(a) appoint an EO officer responsible for:

(i) managing the agency's EO program;

(ii) training employees on EO;

(iii) assisting employees and managers with resolving EO issues;

(iv) conducting internal investigations;

(v) updating the department's annual EEO action plan, unless the department has a federal requirement to develop an affirmative action plan that extends to the entire department;

(vi) developing strategies, goals, and objectives for evaluating the effectiveness of the agency's EEO action plan or affirmative action plan;

(vii) reporting the agency's progress toward minimizing underutilization of women and minorities to the department by March 31 of each year;

(viii) developing internal procedures for providing meaningful access (interpreters, translators, etc.) to programs, services, and activities for customers with limited English proficiency by March 31, 2017;

(ix) reporting to the department each year:

(A) the number of diversity and inclusion and EO and harassment prevention trainings provided; and

(B) the number of employees trained, by new employee and refresher training; and

(b) appoint an ADA coordinator responsible for:

(i) training employees on the ADA, disability awareness, and reasonable accommodations;

(ii) conducting self-evaluations to assess accessibility of programs, services, and activities; and

(iii) assisting with reasonable accommodation requests.

(3) Agency managers shall:

(a) retain electronic records for all jobs recording the sex, race, and ethnic group of employees and applicants as provided in 49-2-102, MCA, and the Uniform Guidelines on Employee Selection Procedures (1978); 43 FR 38295 (August 25, 1978);

(b) provide reasonable accommodations, upon request, for qualified individuals with disabilities and for applicants and employees based on their religious practices, unless doing so would create an undue hardship;

(c) provide reasonable accommodations, upon request, for limitations resulting from pregnancy-related disabilities and the interaction of pregnancy with an underlying impairment, unless doing so would create an undue hardship for the agency;

(d) ensure employees provide meaningful access to programs, services, and activities for customers with limited English proficiency;

(e) include provisions in all contracts and subcontracts for construction of public buildings, other public works, and goods and services, that prohibit discrimination or harassment based on race, color, national origin, age, physical or mental disability, marital status, religion, creed, sex, pregnancy, childbirth, or a medical condition related to pregnancy or childbirth, sexual orientation, gender identity or expression, political beliefs, genetic information, military service or veteran's status, culture, social origin or condition, or ancestry in hiring and accessing programs, services, and activities performed on the state's behalf;

(f) post the state's EO policy poster and complaint-resolution procedures, including contact information for the agency EO officer and ADA coordinator, in areas frequented by employees and the public;

(g) provide a copy of these rules to all employees;

(h) have employees sign a statement acknowledging their understanding and acceptance of the standards set forth in these rules and file a copy in their personnel file;

(i) ensure all new employees receive diversity and inclusion and EO and harassment prevention training within 90 days of hire, beginning April 15, 2017, according to guidelines established by the department;

(j) ensure all employees receive diversity and inclusion and EO and harassment prevention refresher training every three years or more frequently as needed, beginning April 15, 2017, according to guidelines established by the department; and

(k) document all training in the employee's personnel file.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2011 MAR p. 1672, Eff. 8/26/11; AMD, 2017 MAR p. 130, Eff. 10/15/16.

Mont. Admin. R. 2.21.4009 Compliance with the Federal Genetic Information Nondiscrimination Act of 2008 (gina)

(1) To comply with GINA, which prohibits discrimination based on genetic information with respect to employment or state-sponsored group health plans, agency managers may not:

(a) request, require, or purchase genetic information about employees or their family members; or

(b) use genetic information to:

(i) discriminate against an individual in hiring, discharge, compensation, terms, conditions, or privileges of employment;

(ii) make decisions about admission to apprenticeship and training programs, including on-the-job training;

(iii) limit, segregate, or classify an individual;

(iv) fail or refuse to refer an individual for employment;

(v) deprive an individual of employment opportunities; or

(vi) acquire health insurance or set premiums under the group health plan.

(2) Requests for genetic information include, but are not limited to:

(a) conducting Internet searches on individuals in a way that is likely to result in obtaining genetic information;

(b) knowingly or purposefully listening to third-party conversations or searching an individual's personal effects for the purpose of obtaining genetic information; and

(c) requesting information about an individual's current health status in a way that is likely to result in obtaining genetic information.

(3) To avoid inadvertently receiving genetic information, agency representatives who request medical information as part of an employment-related medical exam or a medical certification in response to a request for sick leave, leave qualifying under the Family Medical Leave Act, or a reasonable accommodation request under the Americans with Disabilities Act, shall include the following statements verbatim in their written request for medical information:

(a) ''The Genetic Information Nondiscrimination Act of 2008 (GINA) prohibits employers and other entities covered by GINA Title II from requesting or requiring genetic information of employees or their family members. To comply with this law, we ask you not to provide any genetic information when responding to this request for medical information."

(b) "Genetic information, as defined by GINA, includes an individual's family medical history, the results of an individual's or family member's genetic tests, the fact that an individual or an individual's family member sought or received genetic services, and genetic information of a fetus carried by an individual or an individual's family member or an embryo lawfully held by an individual or family member receiving assistive reproductive services."

(c) ''Genetic test means an analysis of human DNA, RNA, chromosomes, proteins, or metabolites that detects genotypes, mutations, or chromosomal changes."

(4) Agency managers may not ask probing questions of an individual if they inadvertently learn of a health condition of an applicant, employee, or the health condition of a family member.

(a) Probing questions include, but are not limited to, asking the individual whether other family members have the condition or whether the individual has been tested for the condition. These questions are likely to result in the acquisition of genetic information.

(5) Agency representatives possessing genetic information about an employee shall maintain the information as confidential in compliance with ARM Title 2, chapter 21, subchapter 66, Employee Records Management Policy.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2011 MAR p. 1672, Eff. 8/26/11.

Mont. Admin. R. 2.21.4013 Harassment

(1) Harassment, including sexual harassment, consists of, but is not limited to, oral, written, or electronic communications (for example, voice mails, e-mails, text messages, or other social networking tools) in the form of repeated and unwelcomed jokes, slurs, comments, visual images, or innuendos based on a protected class. Even mutually agreeable behavior, or behavior accepted between two or more people, can be offensive to others; for this reason it is prohibited in the workplace.

(2) Sexual harassment is a form of discrimination that includes unwelcome verbal or physical conduct of a sexual nature when:

(a) submission to the conduct is implicitly or explicitly made a term or condition of employment;

(b) submission to or rejection of the conduct is used as the basis for an employment decision affecting the individual; or

(c) the conduct has the purpose or effect of unreasonably interfering with an individual's work performance or creating an intimidating, hostile, or offensive working environment.

(3) Agency managers may not tolerate any behavior that negatively focuses on a protected class. Although a behavior or pattern of behavior might not constitute illegal discrimination, it might still violate this rule.

(4) Agency managers who observe behaviors that could be viewed as discrimination or harassment shall stop the behavior and notify their agency's EEO officer, ADA coordinator, or human resources manager.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2000 MAR p. 3515, Eff. 12/22/00; AMD, 2011 MAR p. 1672, Eff. 8/26/11.

Mont. Admin. R. 2.21.4014 Retaliation

(1) Agency managers may not retaliate or allow, condone, or encourage others to retaliate against any customer, applicant, or current or former employee for opposing unlawful discriminatory practices, filing a discrimination complaint or participating in a discrimination proceeding, including testifying in court.

(2) Agency managers who become aware of retaliation shall inform the agency's human resource manager, human resource staff, EEO officer, or ADA coordinator. The human resource manager, human resource staff, EEO officer, or ADA coordinator shall advise management on the appropriate course of action.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2000 MAR p. 3515, Eff. 12/22/00; AMD, 2011 MAR p. 1672, Eff. 8/26/11.

Mont. Admin. R. 2.21.4019 Initiating an Internal Complaint

(1) Agency managers shall encourage employees, applicants, clients, and customers who believe they have been discriminated against or harassed to contact their supervisor, another manager, or the agency's EEO officer, ADA coordinator, or human resources staff.

(2) Complaints may be oral or in writing; however, complainants are encouraged to use the Department of Administration's complaint form found at http://hr.mt.gov/hrpp/policies.mcpx.

(3) For complaints not submitted on a complaint form, the agency representative receiving the complaint shall obtain and document the following information:

(a) name, address, and phone number(s) of the complainant(s);

(b) date(s), time(s), and location(s) of the alleged discriminatory behavior or conduct;

(d) description of the behavior or conduct that resulted in an alleged violation;

(e) whether the alleged discrimination was based on a protected class; and

(f) names of potential witnesses who may have heard or observed the alleged discriminatory conduct or behavior.

(4) Agency representatives who receive a complaint or become aware of allegations of discrimination or harassment shall promptly notify the human resource manager, EEO officer, or ADA coordinator, regardless of their perception of the validity of the complaint.

(5) The human resource manager, EEO officer or ADA coordinator, legal counsel, and appropriate manager shall meet to discuss the appropriate course of action. If the complaint is against any of these individuals, that individual is excluded from the meeting. The discussion must focus on measures to stop the alleged behavior, a review of the investigative process, and management's role in the process.

(6) If management determines an internal investigation would not be appropriate because of a potential conflict, they may request assistance from the State Human Resources Division or other outside source.

(7) The human resource manager or human resource staff, as appropriate, shall coordinate with the investigator and advise management throughout the course of the investigation.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2011 MAR p. 1672, Eff. 8/26/11.

Mont. Admin. R. 2.21.4020 Investigating a Complaint

(1) The EEO officer, ADA coordinator, or another representative chosen by management shall begin an investigation upon receiving a complaint.

(2) Before the investigation begins, the appropriate manager shall separately explain the following to the complainant and accused:

(a) the investigation process and anticipated timelines; and

(b) what retaliation is and that it is illegal.

(3) Agency managers shall provide:

(a) periodic updates to the complainant and the accused; and

(b) documentation of their initial meeting and all subsequent follow-up action to the investigator.

(4) The investigator shall:

(a) gather evidence to determine a "cause" or "no-cause" finding;

(b) coordinate with the agency's legal counsel before conducting interviews and throughout the investigation; and

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2011 MAR p. 1672, Eff. 8/26/11; AMD, 2016 MAR p. 1838, Eff. 10/15/16.

Mont. Admin. R. 2.21.4021 Post-Investigation Actions

(1) After receiving the final report, the appropriate manager shall promptly inform the complainant and accused of the outcome of the investigation in writing.

(2) In the case of a cause finding, the appropriate agency manager shall:

(a) take appropriate disciplinary action, if necessary, according to the ARM Title 2, chapter 21, subchapter 65, Discipline Policy;

(b) advise the complainant corrective action to stop the behavior has been taken, but not disclose the details or nature of disciplinary action;

(d) contact the complainant within 30 days to ensure the behavior has stopped and no retaliation has occurred.

(3) In the case of a no-cause finding, the appropriate agency manager shall contact the complainant within 30 days to ensure the complainant has not experienced retaliation.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2011 MAR p. 1672, Eff. 8/26/11.

Mont. Admin. R. 2.21.4022 Confidentiality Requirements

(1) Agency managers shall make every attempt to protect the privacy of individuals involved in the complaint process; however, individual privacy cannot be guaranteed.

(2) Agency managers may not prohibit employees from discussing a complaint or ongoing investigation with coworkers unless management conducts an individualized assessment and demonstrates that one of the following factors exists:

(a) there are witnesses in need of protection;

(b) evidence is in danger of being destroyed;

(d) there is a need to prevent a cover-up.

(3) Agency managers shall document their rationale for requiring that employees refrain from discussing a complaint or ongoing investigation.

(4) The human resource staff shall maintain the investigative report and supporting documents in a secure, confidential case file separate from the regular employee file.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2011 MAR p. 1672, Eff. 8/26/11; AMD, 2013 MAR p. 110, Eff. 2/1/13.

Mont. Admin. R. 2.21.4027 Tracking and Reporting Internal Complaints

(1) Agency EEO officers shall track internal complaints using the Complaint Tracking Sheet located on the State Human Resources Division web site: http://hr.mt.gov/hrpp/policies.mcpx . EEO officers shall provide quarterly summaries of internal complaints to the State Human Resources Division no later than the fifteenth day of each quarter.

(2) The report must include:

(a) the total number of complaints;

(b) whether the complainant and accused was an employee, customer, or client;

(d) the reason for complaint (for example, employment-related, denied access to a program or service, or inappropriate comment); and

(e) the outcome of the complaint.

(3) The report is for tracking purposes only and may not include confidential information such as names of individuals involved.

(4) The State Human Resources Division shall collect and analyze the data to:

(a) assess program effectiveness;

(b) develop or modify existing policies, procedures, and guides; and

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2011 MAR p. 1672, Eff. 8/26/11.

Mont. Admin. R. 2.21.4028 Initiating an External Complaint

(1) In addition to the internal complaint process, complaints may be filed with the following agencies:

(a) Montana Human Rights Bureau, 33 S. Last Chance Gulch, Suite 2, P.O. Box 1728, Helena, MT 59624-1728, (406) 444-4356, (800) 542-0807, Montana Relay Service 711; or

(b) United States Equal Employment Opportunity Commission (EEOC) Seattle Field Office, 909 First Avenue, Suite 400, Seattle, WA 98104-1061, (800) 669-4000, TTY (800) 669-6820, ASL Video (844) 234-5122.

(2) Jurisdiction may vary based on the nature of the complaint. For example, neither the Human Rights Bureau nor the EEOC considers complaints based on culture, social origin or condition, ancestry, or military or veteran status.

(3) The Human Rights Bureau must receive the complaint within 180 days of when the alleged discriminatory practice occurred or was discovered unless the person has filed an internal complaint. A person who files an internal complaint under these rules has 180 days from the conclusion of the internal investigation to file a complaint with the Human Rights Bureau if management completes the investigation within 120 days of when the alleged discriminatory practice occurred or was discovered. If management does not complete the investigation within 120 days, the person must file a complaint with the Human Rights Bureau within 300 days of when the alleged discriminatory practice occurred or was discovered.

(4) The EEOC must receive the complaint within 300 calendar days from the date the discrimination took place if the Human Rights Bureau enforces a law prohibiting employment discrimination against the same protected class. Otherwise, the complaint must be filed with the EEOC in 180 days.

(5) Service members and veterans who believe they have been discriminated against in employment based on military service or veteran status may contact:

(a) the Employer Support of the Guard and Reserve at (800) 336-4590; or

(b) the Veterans' Employment and Training Service (VETS) at (866)-487-2365. Service members and veterans may submit a formal, online complaint with VETS at http://webapps.dol.gov/elaws/vets/userra/1010.asp . (History: 2-18-102, MCA; IMP, 2-18-102, MCA; NEW, 2011 MAR p. 1672, Eff. 8/26/11; AMD, 2013 MAR p. 110, Eff. 2/1/13; AMD, 2016 MAR p. 1838, Eff. 10/15/16.)

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2011 MAR p. 1672, Eff. 8/26/11; AMD, 2013 MAR p. 110, Eff. 2/1/13; AMD, 2016 MAR p. 1838, Eff. 10/15/16.

Mont. Admin. R. 2.21.4029 Rule Violations

(1) Employees who violate these rules are subject to discipline, up to and including discharge under ARM Title 2, chapter 21, subchapter 65, Discipline Policy. A rule violation includes managers who allow discrimination to occur or fail to take appropriate action to correct inappropriate behavior, including discrimination or harassment.

(2) Failure to conduct an investigation in a proper and timely manner, interference with an investigation, failure to cooperate with an investigator, or making a false statement to an investigator may result in disciplinary action, up to and including discharge.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2011 MAR p. 1672, Eff. 8/26/11.

Subchapter 2.21.41 Reasonable Accommodations and Equal Access Policy

Mont. Admin. R. 2.21.4101 Short Title

(1) This subchapter may be cited as Reasonable Accommodations and Equal Access Policy.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2011 MAR p. 1668, Eff. 8/26/11.

Mont. Admin. R. 2.21.4102 Policy and Objectives

(1) The rules in this subchapter establish the minimum requirements for providing reasonable accommodations, reasonable modifications, and equally effective communication for persons with disabilities as for persons without disabilities consistent with:

(a) the Americans with Disabilities Act of 1990 (ADA);

(b) ADA Amendments Act of 2008;

(d) Montana Human Rights Act, Title 49, MCA;

(e) Governmental Code of Fair Practices provided in Title 49, chapter 3, MCA; and

(f) Rights of Persons with Disabilities provided in Title 49, chapter 4, MCA.

(2) This subchapter covers all agencies in Montana's executive branch except:

(a) the Montana University System;

(b) the Montana State Fund;

(d) personal staff of elected officials; and

(e) any other position specifically excluded under 2-18-103 and 2-18-104, MCA.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, 49-2-101, 49-2-303, 49-3-101, 49-3-201, MCA
History: NEW, 2011 MAR p. 1668, Eff. 8/26/11.

Mont. Admin. R. 2.21.4103 Definitions

(1) The department adopts and incorporates the definitions in Title I and Title II of the ADA, as amended by the ADA Amendments Act of 2008 (P.L. 110-325), effective January 1, 2009, 42 USC 12102, 12103, 12111, and 12131, which set forth all definitions applicable to the law, except those defined under this rule. A copy of these definitions may be obtained by contacting the department at the address provided in ARM 2.21.4121 or at http://www.ada.gov/pubs/adastatute08.htm.

(2) The following definitions also apply to this subchapter:

(a) "Designated personnel" means agency representatives identified this subchapter as those responsible for processing reasonable accommodation requests including agency managers (as defined by the agency in policy or rule to promote consistency with internal policies and procedures), ADA coordinators, Equal Employment Opportunity (EEO) officers, human resource staff, and individuals involved in the hiring process.

(b) "Extenuating circumstances" means circumstances beyond management's control and may include time spent waiting for medical documentation, special equipment, modifications to a work area, or other factors.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2011 MAR p. 1668, Eff. 8/26/11.

Mont. Admin. R. 2.21.4104 Responsibilities

(1) The Department of Administration shall:

(a) periodically review and update, as needed, reasonable accommodation and equal access rules, processes, and procedures; and

(b) design and develop training for employees that includes reasonable accommodations, reasonable modifications, and effective communication processes and procedures.

(2) Agency managers shall:

(a) provide reasonable accommodations to known physical or mental limitations of otherwise qualified employees or applicants with disabilities unless doing so would create an undue hardship;

(b) make reasonable modifications to policies, practices, or procedures unless doing so would create an undue financial or administrative burden or fundamentally alter the nature of a service, program, or activity;

(c) offer equally effective communications to people with disabilities and post public notice statements in areas frequented by employees and the public and on the agency's web site to increase awareness of individual rights and the state's responsibilities under the ADA;

(d) include a reasonable accommodation statement in all job listings; and

(e) provide a copy of these rules to all employees.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, 49-3-201, 49-3-205, MCA
History: NEW, 2011 MAR p. 1668, Eff. 8/26/11.

Mont. Admin. R. 2.21.4105 Reasonable Accommodations

(1) Agency managers shall provide reasonable accommodations to qualified individuals with disabilities in all aspects of employment unless doing so would cause undue hardship.

(2) Agency managers shall encourage employees and applicants with disabilities to request reasonable accommodations at any time they identify a barrier to employment. A barrier may include a policy, procedure, or workplace arrangement preventing applicants from effectively competing for a position and employees from performing essential functions of their position or receiving benefits of employment.

(3) The obligation to provide reasonable accommodations applies to all aspects of employment. This responsibility is ongoing and a reasonable accommodation may become necessary any time a person's disability or job changes.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, 49-2-101, 49-3-101, MCA
History: NEW, 2011 MAR p. 1668, Eff. 8/26/11.

Mont. Admin. R. 2.21.4106 Requesting Reasonable Accommodations

(1) Employees or applicants with a disability may request reasonable accommodations through any one of the designated personnel.

(2) Reasonable accommodation requests may be oral or in writing and do not have to include the words "reasonable accommodation" or "disability." Employees may simply indicate they are having difficulty performing their job or applying for a position because of a disability.

(3) Family members, friends, health care professionals, or other representatives may request reasonable accommodations on employees' or applicants' behalf.

(4) There are no time limits for requesting an accommodation; however, employees should not wait for an impairment to affect their job performance before requesting an accommodation. Employees are encouraged to communicate with agency management about performance issues as soon as they realize the need for an accommodation.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2011 MAR p. 1668, Eff. 8/26/11.

Mont. Admin. R. 2.21.4107 Responding to Reasonable Accommodation Requests

(1) Designated personnel who receive reasonable accommodation requests shall promptly notify their agency ADA coordinator of the request.

(2) If the request comes from someone other than an agency manager, the ADA coordinator shall inform the appropriate manager and provide assistance throughout the reasonable accommodation process. With assistance from the ADA coordinator, the agency manager shall:

(a) participate in an informal dialogue (known as the interactive process) with the employee or applicant;

(b) periodically follow up with the employee or applicant on all reasonable accommodation requests; and

(c) approve or deny the request within 30 working days following the initial request, unless extenuating circumstances exist.

(3) Designated personnel shall always consider an employee's or applicant's requested accommodation; however, they may elect another reasonable accommodation if it would effectively allow the employee to perform the essential functions of the job or allow an applicant to compete for a position.

(4) Employees may refuse the elected accommodation; however, if the employee cannot perform the essential functions of the job, with or without the accommodation, the refusal may limit the employee's qualifications for the position.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2011 MAR p. 1668, Eff. 8/26/11.

Mont. Admin. R. 2.21.4112 Participating in the Interactive Process

(1) Agency managers shall participate in the interactive process until they identify an effective accommodation or determine a reasonable accommodation is not possible. Failure to participate in the interactive process could result in a delay or failure to provide a reasonable accommodation.

(2) When an employee or applicant requests a reasonable accommodation, the dialogue between designated personnel and the employee may include the following:

(a) a discussion of the employee's specific limitations;

(b) how the limitation affects the employee's performance;

(d) possible accommodations; and

(e) if implemented, whether the accommodation was effective.

(3) The extent of the dialogue between designated personnel and the employee or applicant may vary because of the nature of an individual's disability or their specific request. If the disability and the need for an accommodation are obvious, the discussion may be brief. In some cases, the agency manager may need to ask questions about the nature of the individual's disability and the individual's functional limitations in an effort to identify an effective accommodation.

(4) Designated personnel shall limit discussion with applicants to the individual's specific request, their inability to participate in a particular selection process, and possible accommodations.

(5) Designated personnel may not ask probing questions likely to disclose genetic information in compliance with ARM Title 2, chapter 21, subchapter 40, Equal Employment Opportunity, Nondiscrimination, and Harassment Prevention Policy.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2011 MAR p. 1668, Eff. 8/26/11.

Mont. Admin. R. 2.21.4113 Documenting Reasonable Accommodation Requests

(1) Agency managers shall document all reasonable accommodation requests and their contact with designated personnel. Documentation must include the following:

(a) accommodation requested and discussed;

(b) impact of the impairment on the employee's ability to perform their job or an applicant's ability to participate in the selection process;

(d) decisions made and actions taken.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2011 MAR p. 1668, Eff. 8/26/11.

Mont. Admin. R. 2.21.4114 Requesting Medical Documentation

(1) Medical examinations must be job-related and consistent with business necessity.

(2) Agency managers may request documentation from an appropriate health care professional when the need for a reasonable accommodation is not known or obvious. If an agency manager requests medical documentation, the manager:

(a) shall provide the request to the applicant or employee in writing;

(b) shall explain the need for documentation and limit the request to information about the individual's disability, functional limitations, and the need for a reasonable accommodation to perform the essential functions of the job;

(c) shall include a statement to the applicant, employee, or health care provider to not provide genetic information as specified under ARM Title 2, chapter 21, subchapter 40, Equal Employment Opportunity, Nondiscrimination, and Harassment Prevention Policy;

(d) may not request more information than required to support the need for a specific type of accommodation; and

(e) may not request documentation when the disability and the need for a reasonable accommodation are obvious or when the individual has already provided sufficient information to substantiate their need for a reasonable accommodation.

(3) If the individual does not provide the requested documentation, agency managers are not required to provide an accommodation. Agency managers may make exceptions if extenuating circumstances prevent the individual from providing the documentation.

(4) Agency managers shall document the time exhausted while waiting for documentation. This time does not count against the agency's 30-working-day timeline to process the request.

(5) If an individual provides insufficient documentation, the agency manager shall explain why the documentation was insufficient and allow additional time to provide sufficient documentation.

(6) Agency management may require an individual to go to a health care professional of the agency's choice when the individual fails to provide sufficient documentation. If management requires an individual to go to a health care provider, the agency shall pay costs associated with the visit.

(7) If an employee chooses not to see a health care professional of the agency's choice and fails to provide sufficient documentation, agency managers are not required to provide an accommodation.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2011 MAR p. 1668, Eff. 8/26/11.

Mont. Admin. R. 2.21.4115 Approving Reasonable Accommodation Requests

(1) Agency managers shall serve as the approval authority for all reasonable accommodation requests.

(2) If agency managers determine the request is reasonable, they shall:

(a) grant the request and notify the employee or applicant in writing of their decision;

(b) implement the accommodation as soon as practical;

(d) continue the interactive process if the accommodation is not effective, the need for the accommodation has changed, or the job has changed; and

(e) continue the interactive process until they find an alternative or determine it is not possible to provide a reasonable accommodation.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2011 MAR p. 1668, Eff. 8/26/11.

Mont. Admin. R. 2.21.4116 Reassigning an Employee as a Reasonable Accommodation

(1) When an employee with a disability can no longer perform the essential functions of their position with or without a reasonable accommodation, the agency manager shall consider reassigning the employee to an equivalent vacant position unless doing so would create an undue hardship. The employee shall concur with the reassignment.

(2) When reassigning an employee to a vacant position as a reasonable accommodation, agency managers shall:

(a) do so without a competitive process;

(b) consider any implications under a seniority system of a collective bargaining agreement;

(c) attempt to reassign a qualified employee to a vacant position equivalent in pay, status, and other relevant factors (e.g., benefits, geographical location); and

(d) continue the interactive process after reassigning an employee to ensure the employee is able to perform the essential functions of the job, with or without a reasonable accommodation.

(3) If reassigning an employee would violate a seniority system or collective bargaining agreement, it is not reasonable to reassign an employee.

(4) If an equivalent vacant position is not available, management may reassign the employee to a lower-pay position, provided the employee is qualified and agrees to the transfer.

(5) "Vacant" means the position is available when the employee asks for an accommodation, or the employer knows a position is to become available within a reasonable amount of time. Agency managers shall determine a reasonable amount of time on a case-by-case basis.

(6) Agency managers are not required to create a new position as a reasonable accommodation.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2011 MAR p. 1668, Eff. 8/26/11.

Mont. Admin. R. 2.21.4117 Denying Reasonable Accommodation Requests

(1) If agency managers determine they cannot reasonably accommodate a request or an accommodation would create an undue hardship, they shall forward the recommendation to their division administrator. If the division administrator is the manager receiving the request, the administrator shall make the recommendation to their supervisor.

(2) If the division administrator or higher-level manager concurs with the recommendation, the administrator or manager shall notify the employee or applicant in writing within 30 working days of the initial request.

(3) The written notification must include an explanation for the denial and the appeal process.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2011 MAR p. 1668, Eff. 8/26/11.

Mont. Admin. R. 2.21.4118 Discharging Employees with Disabilities

(1) Agency managers may discharge an employee with a disability when the employee is no longer able to perform the essential functions of their job with or without a reasonable accommodation, and managers have ruled out all possible options.

(2) If denial of a reasonable accommodation results in the discharge of an employee, the appeal process outlined in ARM Title 2, chapter 21, subchapter 65, Discipline Policy or applicable collective bargaining agreement supersedes the reasonable accommodation appeal process.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2011 MAR p. 1668, Eff. 8/26/11.

Mont. Admin. R. 2.21.4119 Appealing Denial of Reasonable Accommodation Requests

(1) The department head shall serve as the appeal authority for all denials.

(2) Employees and applicants wishing to appeal a denial shall submit a written request, along with supporting documents, to the department head within 15 working days from the time they receive the denial letter.

(3) The department head shall work with the appropriate agency manager, the ADA coordinator, and human resources manager to review pertinent information and the rationale for denial.

(4) Upon completion of the review, the department head shall:

(a) deny the request, approve the request, or refer it back to management for further action; or

(b) notify the employee or applicant of their decision in writing within 15 working days of receiving the appeal.

(5) If the department head denies the appeal, the written notification must include an explanation for the denial and information on the right to file a complaint with the Montana Human Rights Bureau, Department of Labor and Industry.

(6) Employees and applicants may contact the Montana Human Rights Bureau at (406) 444-2884 or (800) 542-0807 or the federal Equal Employment Opportunity Commission at (800) 669-4000 to file a complaint.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, 49-2-101, 49-2-501, 49-3-102, 49-3-301, MCA
History: NEW, 2011 MAR p. 1668, Eff. 8/26/11.

Mont. Admin. R. 2.21.4120 Confidentiality Requirements

(1) Agency managers shall:

(a) treat all information related to an employee's or applicant's disability as confidential; and

(b) maintain disability-related information according to the requirements of ARM Title 2, chapter 21, subchapter 66, Employee Records Management Policy.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2011 MAR p. 1668, Eff. 8/26/11.

Mont. Admin. R. 2.21.4121 Tracking and Reporting Reasonable Accommodation Requests

(1) Agency ADA coordinators shall track reasonable accommodation requests using the Reasonable Accommodation Tracking Sheet at the State Human Resources Division web site: http://hr.mt.gov/hrpp/policies.mcpx and also available from the State Human Resources Division, Department of Administration, Room 125 Mitchell Building, 125 Roberts Street, P.O. Box 200127, Helena, MT 59620-0127, or telephone (406) 444-3871.

(2) ADA coordinators shall provide a quarterly summary of all reasonable accommodation requests to the State Human Resources Division no later than the fifteenth day of each quarter.

(3) The report must include the following information:

(a) total number of requests;

(b) whether requests were by employees or applicants;

(d) cost of accommodations;

(e) effectiveness of the accommodations;

(f) number of days to process the requests (including extenuating circumstances); and

(g) if denied, the reason for denial and whether the employee or applicant appealed.

(4) Data are for tracking purposes only and must not include confidential information such as names or references to medical conditions or impairments.

(5) The State Human Resources Division shall collect and analyze data to:

(a) assess program effectiveness;

(b) develop or modify existing policies, procedures and guides; and

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, 49-3-205, MCA
History: NEW, 2011 MAR p. 1668, Eff. 8/26/11.

Mont. Admin. R. 2.21.4122 Disability Retirement

(1) Employees with disabilities may be eligible for disability retirement benefits under 19-3-1002, MCA. Employees may contact the Montana Public Employee Retirement System at (877) 275-7372 (toll free) or (406) 444-3154 for more information.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2011 MAR p. 1668, Eff. 8/26/11.

Mont. Admin. R. 2.21.4127 Reasonable Modification Procedures

(1) Agency managers shall make reasonable modifications to policies, practices, and procedures that deny, or have the potential to deny, equal access to programs, services, or activities to individuals with disabilities, unless doing so would result in an undue burden or fundamentally alter a program, service, or activity.

(2) Anyone requesting to modify a policy, practice, or procedure may contact the office responsible for providing the program, service, or activity, including agency management, ADA coordinator, EEO officer, or human resources staff.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, 49-3-201, 49-3-205, MCA
History: NEW, 2011 MAR p. 1668, Eff. 8/26/11.

Mont. Admin. R. 2.21.4128 Effective Communication Procedures

(1) Agency managers shall furnish auxiliary aids and services, upon request, to promote equally effective communication for people with disabilities, unless doing so would result in an undue burden or fundamentally alter the program, service, or activity.

(2) Anyone requiring auxiliary aids and services may contact the department directly responsible for providing the program, service, or activity, including agency management, ADA coordinator, EEO officer, or human resources staff.

(3) Agency managers may not charge individuals with disabilities to offset costs associated with providing required auxiliary aids and services.

(4) Agency managers are not required to provide personal use items such as wheelchairs, prescription eyeglasses, hearing aids, or personal services such as eating, toileting, or dressing.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, 49-3-201, 49-3-205, 49-4-202, 49-4-211, 49-4-503, MCA
History: NEW, 2011 MAR p. 1668, Eff. 8/26/11.

Subchapter 2.21.65 Discipline

Mont. Admin. R. 2.21.6505 Short Title

(1) This subchapter may be cited as the discipline policy.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1984 MAR p. 958, Eff. 6/29/84; AMD, 2006 MAR p. 2565, Eff. 10/27/06.

Mont. Admin. R. 2.21.6506 Policy and Objectives

(1) It is the policy of the executive branch of Montana state government that:

(a) state employees who fail to perform their jobs in a satisfactory manner or whose behavior interferes with or disrupts agency operations be subject to disciplinary action, up to and including discharge;

(b) disciplinary action be administered for just cause, as defined in this policy;

(d) management offer employees the opportunity to respond to formal disciplinary actions.

(2) It is the objective of this policy to establish procedures for implementing informal and formal disciplinary actions.

(3) Management may implement disciplinary actions under this policy regardless of whether a performance evaluation has been completed.

(4) Agencies shall follow this policy unless it conflicts with negotiated labor contracts or specific statutes, which shall take precedence to the extent applicable.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1984 MAR p. 958, Eff. 6/29/84; AMD, 2006 MAR p. 2565, Eff. 10/27/06.

Mont. Admin. R. 2.21.6507 Definitions

As used in this subchapter, the following definitions apply:

(1) "Agency" has the same meaning as defined in 2-18-101 (1) , MCA.

(2) "Discharge" means termination of employment for just cause.

(3) "Disciplinary demotion" means a change in the duties of an employee's position or transfer to a lesser position which may result in a reduction in pay.

(4) "Due process" means an employee:

(a) is informed of the action being taken and the reason for the action; and

(b) has the opportunity to respond.

(5) "Employee" means an employee in a permanent position who has attained permanent status as defined in 2-18-101 , MCA. It does not include employees hired as temporary employees, short-term workers, student interns, and employees who have not attained permanent status as those terms are defined in 2-18-101 , MCA. It does not include officers and employees identified in 2-18-103 and 2-18-104 , MCA.

(6) "Formal disciplinary action" means, but is not limited to, a written warning, suspension without pay, disciplinary demotion, or discharge.

(7) "Informal disciplinary action" means corrective actions taken to improve unsatisfactory employee behavior, conduct, or performance. It may include, but is not limited to, coaching, counseling meetings, oral warnings, and training.

(8) "Just cause" means reasonable, job-related grounds for taking a disciplinary action based on failure to satisfactorily perform job duties, or disruption of agency operations. Just cause may include, but is not limited to: an actual violation of an established agency standard, procedure, legitimate order, policy, or labor agreement; failure to meet applicable professional standards; criminal misconduct; wrongful discrimination; deliberate misconduct; negligence; deliberately providing false information on an employment application; willful damage to public or private property; workplace violence or intimidation; harassment; unprofessional or inappropriate behavior; or a series of lesser violations.

(9) "Management" means those individuals beginning with an employee's immediate supervisor and other managers in a successive direct line of authority within an agency.

(10) "Progressive discipline" means a process of applying disciplinary actions which may progress from less serious actions to more serious actions.

(11) "Suspension without pay" means a management-ordered leave-without-pay for just cause.

(12) "Written warning" means a written disciplinary notice intended to notify an employee of unsatisfactory performance or conduct.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1984 MAR p. 958, Eff. 6/29/84; AMD, 2006 MAR p. 2565, Eff. 10/27/06.

Mont. Admin. R. 2.21.6508 Informal Disciplinary Action

(1) At its discretion, management may use informal discipline prior or in addition to formal discipline to address performance deficiencies or misconduct.

(2) Management should document all informal disciplinary actions.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1984 MAR p. 958, Eff. 6/29/84; AMD, 2006 MAR p. 2565, Eff. 10/27/06.

Mont. Admin. R. 2.21.6509 Formal Disciplinary Action

(1) When formal disciplinary action is necessary, just cause, due process, and documentation, or other evidence of the facts are required.

(2) Management may determine the appropriateness of using progressive discipline on a case-by-case basis.

(3) In each formal disciplinary action, management shall give the employee a written notification that includes, but is not limited to:

(a) the just cause or reason for the disciplinary action;

(b) the disciplinary action to be taken, including the dates, times, and duration where applicable;

(d) the consequences of the employee's failure to make the required improvement or correction, if applicable.

(4) Management shall offer the employee the opportunity to review the notice of formal disciplinary action and to acknowledge its receipt by signing and dating the notice. The employee's signature does not necessarily mean the employee agrees with the disciplinary action. If the employee refuses to sign the notice, management shall make note of that fact.

(5) Management shall offer the employee the opportunity to respond to the notice of formal disciplinary action either orally or in writing.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1984 MAR p. 958, Eff. 6/29/84; AMD, 2006 MAR p. 2565, Eff. 10/27/06.

Mont. Admin. R. 2.21.6515 Grievance Policy

(1) An eligible employee, as defined in the state of Montana's Grievance Policy, may file a grievance under that policy if the employee receives a formal disciplinary action that results in a suspension without pay, disciplinary demotion, or discharge.

(2) An employee may not file a grievance based on an informal disciplinary action or a formal disciplinary action that results in a written warning.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1984 MAR p. 958, Eff. 6/29/84; AMD, 2006 MAR p. 2565, Eff. 10/27/06.

Subchapter 2.21.66 Employee Records Management Policy

Mont. Admin. R. 2.21.6605 Short Title

(1) This subchapter may be cited as the Employee Records Management Policy.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1981 MAR p. 1776, Eff. 12/18/81; AMD, 2007 MAR p. 612, Eff. 5/11/07.

Mont. Admin. R. 2.21.6606 Policy and Objectives

(1) This policy:

(a) defines which records constitute employee records and establishes procedures for collecting and maintaining employee personnel records while protecting an employee's right of privacy under Article II, section 10 of Montana's constitution;

(b) ensures employee awareness of records held, provides employees access to their personnel records, and describes how employee personnel records may be corrected;

(c) provides minimum standards for employee records management and allows agencies to adopt supplemental employee records management procedures; and

(d) covers all positions in Montana's executive branch except elected officials, the personal staff of elected officials, those employed by the Montana University System and the Montana State Fund, and any other position specifically excluded under 2-18-103 and 2-18-104, MCA.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1981 MAR p. 1776, Eff. 12/18/81; AMD, 1992 MAR p. 1232, Eff. 6/12/92; AMD, 2007 MAR p. 612, Eff. 5/11/07; AMD, 2010 MAR p. 1070, Eff. 4/30/10.

Mont. Admin. R. 2.21.6608 Definitions

As used in this subchapter the following definitions apply:

(1) "Access" means viewing or using records.

(2) "Confidential information" has the meaning set forth in 2-6-1002(1), MCA.

(3) "Employee personnel record" means information relating to an employee's employment with the state of Montana that is appropriate for preservation as an official record of employment policies, practices, and decisions. An employee personnel record may be a paper document or it may be information maintained in an information system such as the Statewide Accounting Budgeting and Human Resource System (SABHRS). Employee personnel records include the documents listed in ARM 2.21.6612.

(4) "Genetic information" means information about applicants' or employees' genetic tests, the genetic tests of their family members, and the manifestation of a disease or disorder in their family members, including information obtained orally or inadvertently (refer to ARM 2.21.4009). Records containing genetic information are listed in ARM 2.21.6613.

(5) "Genetic test" means an analysis of human DNA, RNA, chromosomes, proteins, or metabolites that detect genotypes, mutations, or chromosomal changes.

(6) "Records" means a body of recorded information. This information may be manually or electronically recorded and maintained.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1981 MAR p. 1776, Eff. 12/18/81; AMD, 1992 MAR p. 1232, Eff. 6/12/92; AMD, 2007 MAR p. 612, Eff. 5/11/07; AMD, 2010 MAR p. 1070, Eff. 4/30/10; AMD, 2011 MAR p. 1677, Eff. 8/26/11; AMD, 2018 MAR p. 92, Eff. 1/13/18.

Mont. Admin. R. 2.21.6611 Access to Employee Personnel Records

(TRANSFERRED)

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1992 MAR p. 1232, Eff. 6/12/92; AMD, 2007 MAR p. 612, Eff. 5/11/07; TRANS to ARM 2.21.6615, 2010 MAR p.1070, Eff. 4/30/10.

Mont. Admin. R. 2.21.6612 Records That Constitute Employee Personnel Records

(1) Employee personnel records, both electronic and paper, include:

(a) preemployment information (resumes, references, interview questions, etc.);

(b) compensation, job history, and timekeeping records;

(d) I-9 forms;

(e) W-4 forms;

(f) benefit plans and employee medical records (including disability accommodation requests and supporting documents, and any record that contains genetic information);

(g) performance appraisals;

(h) disciplinary action records;

(i) background check information, including criminal and credit checks, and employment verification;

(j) office policies/documents signed by employee; and

(k) awards and acknowledgements.

(2) Disciplinary action records resulting from an investigation are part of the employee personnel records and are confidential. Other documented information related to an investigation, while not a part of an employee record, will be treated as confidential information to protect the privacy of the individuals involved. If a request for the information is made, the agency shall review the information and balance the merits of public disclosure against an individual's right to privacy to determine whether the information or portions of the information may be released.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2010 MAR p. 1070, Eff. 4/30/10; AMD, 2018 MAR p. 92, Eff. 1/13/18.

Mont. Admin. R. 2.21.6613 Records Containing Genetic Information

(1) The federal Genetic Information Nondiscrimination Act (GINA) provides that the following records contain genetic information:

(a) an individual's genetic tests, including genetic tests done as part of a research study;

(b) genetic tests of an individual's family members;

(c) genetic tests of any fetus of an individual or family member who is a pregnant woman, and genetic tests of any embryo legally held by an individual or family member utilizing assisted reproductive technology;

(d) an individual's family medical history; and

(e) any request for, or receipt of, genetic services or participation in clinical research that includes genetic services (genetic testing, counseling, or education).

(2) Examples of frequently used employee personnel records that may contain genetic information include Family and Medical Leave Act (FMLA) request forms, reasonable accommodation requests, medical certifications, medically fit for duty forms, and records relating to worker's compensation claims and employee participation in wellness programs.

(3) Genetic records do not include:

(a) information about the sex or age or an individual or family members;

(b) information about the race or ethnicity of an individual or family member that is not obtained from a genetic test;

(d) routine tests such as blood count, cholesterol, or liver-function tests; and

(e) analysis of infectious agents such as bacteria, viruses, and fungi.

(4) GINA prohibits the collection of genetic information, except in specific instances. For exceptions to obtaining genetic information, refer to:

(a) the Family and Medical Leave Policy ( https://montana.policytech.com/docview/?docid=428&public=true&fileonly=true );

(b) the Sick Leave Policy ( https://montana.policytech.com/docview/?docid=175&public=true&fileonly=true );

(c) the Equal Employment Opportunity, Nondiscrimination, and Harassment Prevention Policy (ARM Title 2, chapter 21, subchapter 40); and

(d) the Reasonable Accommodations and Equal Access Policy (ARM Title 2, chapter 21, subchapter 41).

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2010 MAR p. 1070, Eff. 4/30/10; AMD, 2011 MAR p. 2020, Eff. 8/26/11; AMD, 2018 MAR p. 92, Eff. 1/13/18.

Mont. Admin. R. 2.21.6614 Employee Personnel Records Storage

(1) Agencies shall store employee personnel records as follows:

(a) I-9 forms for all employees may be stored together, but must be kept separate from other records in a secured area such as a locked cabinet or drawer;

(b) employee background check information must also be maintained separate from other records in a secure location such as a locked cabinet or drawer;

(c) an employee's medical and genetic information may be kept in the same folder, but these folders must be stored and secured in separate locked cabinets or drawers from other personnel records as required by the Americans with Disabilities Act (ADA) and GINA;

(d) all other employee personnel records, such as performance appraisals and preemployment information, must be stored in the employee's personnel file. These files must be stored in a secure location, such as a locked cabinet or drawer separate from other records; and

(e) electronic employee personnel records must be stored in secure electronic folders and must be separated in electronic folders as outlined in this rule.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2010 MAR p. 1070, Eff. 4/30/10.

Mont. Admin. R. 2.21.6615 Access to Employee Personnel Records

(1) All employee personnel records are confidential and access is restricted to protect individual employee privacy, except the following employee information which is considered public and must be released upon request:

(a) an employee's name;

(b) position title;

(d) salary; and

(e) claims for vacation, holiday, or sick leave pay, except that the reason for taking leave is confidential and may not be disclosed.

(2) Agencies may require that a request for information be in writing. Agencies may not require justification for a request.

(3) An employee has access to all of his or her employee personnel records. An employee may file a written response to information contained in the employee's personnel records. The employee's response must be filed within ten working days of the date on which the employee is made aware of the information by the agency. The written response becomes a permanent part of the employee's personnel record.

(4) As provided in the ADA and FMLA, access to medical information may not be disclosed except to:

(a) the employee about whom the information pertains;

(b) supervisors and managers when identifying restrictions on the employee's work or duties or identifying necessary accommodations;

(d) government officials investigating compliance with the ADA or FMLA; and

(e) support an employee's compliance with the certification provisions of the FMLA.

(5) As provided in GINA, genetic information may not be disclosed except:

(a) to an occupational or other health researcher if the research is conducted in compliance with the federal regulations and protections provided for under the Protection of Human Subjects, 45 CFR, Part 46;

(b) in response to a court order, but only the genetic information expressly authorized by the court order may be disclosed and the employee must be informed before the disclosure;

(d) to support an employee's compliance with the certification provisions of the FMLA; and

(e) to a federal, state, or local public health agency only regarding information about the manifestation of a contagious disease that presents an imminent hazard of death or life-threatening illness, and the employee must be notified before the disclosure.

(6) The Legislative Audit Division has access to employee personnel records under 5-13-309, MCA, for the purposes of auditing state agencies.

(7) The Human Rights Bureau, Department of Labor and Industry, has access to employee personnel records directly related to discrimination complaints.

(8) The professional staff of the State Human Resources Division has access to confidential records when gathering summary data on personnel programs or systems or when providing technical assistance to an agency.

(9) Certain governmental entities have authority under state or federal law to access an employee's personnel record.

(10) Other persons may access an employee's personnel record only if there is a job-related purpose, the employee has granted written permission, or if a valid court order grants access. An agency shall inform the employee when a valid court order has been received directing access to an employee's personnel record.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: TRANS & AMD, from ARM 2.21.6611, 2010 MAR p. 1070, Eff. 4/30/10; AMD, 2011 MAR p. 1677, Eff. 8/26/11.

Mont. Admin. R. 2.21.6616 Employee Personnel Records Use

(1) Nothing in this subchapter prohibits authorized users from relying on the content of employee personnel records or in agency procedures when responding to requests for employment information from employers to which employees have applied for employment.

(2) Agencies may set and charge fees for copies of employee personnel records.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2010 MAR p. 1070, Eff. 4/30/10; AMD, 2011 MAR p. 2020, Eff. 8/26/11.

Mont. Admin. R. 2.21.6617 Employee Personnel Records Retention

(1) The Montana Secretary of State's Records and Information Management Division maintains a records retention schedule for payroll and personnel records. Most employee personnel records must be kept in the employer's office for three years after an employee terminates employment. The records must then be transferred to the state records center or retained within the agency for seven additional years. Some personnel records have different retention requirements, which are listed in the schedule.

(2) The GS5 payroll and personnel records schedule may be accessed via the Secretary of State's web site.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 2010 MAR p. 1070, Eff. 4/30/10.

Mont. Admin. R. 2.21.6622 Closing

(1) This subchapter shall be followed unless it conflicts with negotiated labor agreements or specific statutes, which shall govern to the extent applicable.

History

Authorizing statute(s): 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1981 MAR p. 1776, Eff. 12/18/81; AMD, 2010 MAR p. 1070, Eff. 4/30/10.

Subchapter 2.21.67 Incentive Award Program

Mont. Admin. R. 2.21.6701 Short Title

(1) This sub-chapter may be cited as the incentive award program.

History

Authorizing statute(s): Sec. 2-18-1103 MCA
Implementing statute(s): 2-18-1103 MCA
History: NEW, 1982 MAR p. 470, Eff. 3/12/82; AMD, 1994 MAR p. 2511, Eff. 9/9/94.

Mont. Admin. R. 2.21.6702 Definitions

(1) The definitions provided in 2-18-1101, MCA, apply to this subchapter.

History

Authorizing statute(s): 2-18-1103, MCA
Implementing statute(s): 2-18-1101, 2-18-1102, 2-18-1103, 2-18-1105, 2-18-1106, MCA
History: NEW, 1982 MAR p. 470, Eff. 3/12/82; AMD, 1986 MAR p. 31, Eff. 1/17/86; AMD, 1994 MAR p. 2511, Eff. 9/9/94; AMD, 2010 MAR p. 1072, Eff. 4/30/10.

Mont. Admin. R. 2.21.6703 Policy and Objectives

(1) The policy of the state of Montana is:

(a) an incentive award program exists recognizing and monetarily rewarding individual employees, groups or teams of employees, and nonemployees for:

(i) ideas, innovations, or prototypes that significantly contribute to documented achievements or outcomes eliminating or reducing an agency's expenditures; or

(ii) improving the effectiveness or services of state government by permitting more work to be accomplished within an agency without increasing the cost of governmental operations.

(b) agency managers shall administer the incentive program in a fair and equitable manner and make reasonable accommodation for persons with disabilities who wish to participate in the incentive award program; and

(2) The policy's objective is to:

(a) establish minimum standards for the administration of the incentive award program; and

(b) delegate to agency heads the authority to adopt an internal agency policy for the implementation of the program, if the agency head chooses to adopt a policy.

History

Authorizing statute(s): 2-18-1103, MCA
Implementing statute(s): 2-18-1101, 2-18-1102, 2-18-1103, 2-18-1105, 2-18-1106, MCA
History: NEW, 1982 MAR p. 470, Eff. 3/12/82; AMD, 1986 MAR p. 31, Eff. 1/17/86; AMD, 1994 MAR p. 2511, Eff. 9/9/94; AMD, 2010 MAR p. 1072, Eff. 4/30/10.

Mont. Admin. R. 2.21.6708 Program Administration

(1) An agency head makes the final decision to grant an incentive award. Any and all disputes concerning an incentive award will be resolved by the agency head.

(2) An agency head may adopt an internal agency policy consistent with this subchapter to implement and administer the incentive award program. The policy may include, but is not limited to:

(a) criteria and methods used to evaluate and prioritize the usefulness or monetary value of documented outcomes or achievements;

(b) a contact point for employees and nonemployees to submit nominations for awards and a means to track nominations, ideas or suggestions; and

(3) To assist agencies in making incentive awards, as provided in 2-18-1103, MCA, the Department of Administration shall develop the following materials, including, but not limited to:

(a) a model agency policy, forms, and notification letters, which an agency head may implement or modify; and

(b) a guide to assist an agency head in evaluating the impact of outcomes and achievements or nominations and in determining a monetary value.

History

Authorizing statute(s): 2-18-1103, MCA
Implementing statute(s): 2-18-1103, MCA
History: NEW, 1986 MAR p. 31, Eff. 1/17/86; AMD, 1994 MAR p. 2511, Eff. 9/9/94; AMD, 2010 MAR p. 1072, Eff. 4/30/10.

Mont. Admin. R. 2.21.6709 Reporting Requirements

(1) Each agency shall submit to the Department of Administration a list including:

(a) the number of incentive awards granted;

(b) to whom each award was granted;

(d) the amount of each award.

(2) The information must be submitted in a format prescribed by the department by August 1 of each year.

History

Authorizing statute(s): 2-18-1103, MCA
Implementing statute(s): 2-18-1106, MCA
History: NEW, 1994 MAR p. 2511, Eff. 9/9/94; AMD, 2010 MAR p. 1072, Eff. 4/30/10.

Subchapter 2.21.80 Grievances

Mont. Admin. R. 2.21.8010 Short Title

(1) This subchapter may be cited as the grievance policy.

History

Authorizing statute(s): Sec. 2-18-102 MCA
Implementing statute(s): 2-18-102 MCA
History: NEW, 1988 MAR p. 2559, Eff. 12/9/88.

Mont. Admin. R. 2.21.8011 Policy and Objectives

(1) It is the policy of the state of Montana that employees who have attained permanent status may file a grievance as provided in these rules, unless the employee is covered by a grievance procedure provided under a collective bargaining agreement or a statutory grievance procedure.

(2) It is the objective of this policy to provide minimum standards for the procedure to be used to adjust grievances filed by eligible employees.

(3) The department of administration delegates the authority to each executive branch department to adopt an internal grievance procedure. An internal grievance procedure must be consistent with the provisions of this policy and at a minimum include all steps contained in ARM 2.21.8017. Additional steps may be added, forms may be included, and timeframes may be modified at the department's discretion.

(4) An employee shall file a grievance under a procedure adopted by the department, if available. If the department has not adopted a procedure, the employee shall proceed under this policy.

(5) Incidents of sexual harassment must be reported using the procedure in the sexual harassment prevention policy, found at ARM 2.21.1305 (also found at policy 3-0620, Montana operations manual, volume III) .

(6) Incidents that are alleged to be in violation of the Americans with Disabilities Act (ADA) of 1990 must be reported using an ADA complaint resolution procedure if such a procedure has been adopted by a department. Otherwise, the employee shall proceed under this policy.

(7) Nothing in this policy precludes an employee who is alleging unlawful discrimination from concurrently exercising any statutorily-protected right to timely file a complaint with a civil rights enforcement agency.

(8) A job classification appeal must be resolved through the procedure adopted by the board of personnel appeals at ARM 24.26.501 et seq., and may not be filed under any other grievance procedure.

History

Authorizing statute(s): Sec. 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1988 MAR p. 2559, Eff. 12/9/88; AMD, 1991 MAR p. 352, Eff. 3/29/91; AMD, 1994 MAR p. 1421, Eff. 5/27/94; AMD, 1997 MAR p. 1448, Eff. 8/19/97.

Mont. Admin. R. 2.21.8012 Definitions

As used in this sub-chapter, the following definitions apply:

(1) "Employee" means any state employee except:

(a) those excepted under 2-18-103 and 2-18-104, MCA, from the statewide classification system;

(b) when an employee is covered by a procedure provided in a collective bargaining agreement, or is covered by a statutory grievance procedure;

(c) when an employee has not completed a probationary period or a probationary period is extended and the employee has to attain permanent status;

(d) when an employee is hired as a temporary employee or short-term worker or an employee is temporarily hired into a permanent position for less than 12 months and is not eligible to attain permanent status; and

(e) when persons are contracted as independent contractors or perform their duties under the terms of a personal services contract.

(2) "Grievance" means a complaint or dispute initiated by an employee regarding the application or interpretation of written laws, rules, personnel policies or procedures which adversely affects the employee.

(3) "Grievant" means an employee who has filed a formal grievance.

(4) "Management" means those individuals, beginning with the employee's immediate supervisor, and including other managers in the direct line of authority above the supervisor, who can resolve a grievance.

(5) "Permanent employee" means a permanent employee as defined in 2-18-101, MCA. For purposes of this policy, the term permanent employee includes a seasonal employee.

(6) "Permanent status" means permanent status as defined in 2-18-101, MCA.

(7) "Short-term worker" means a short-term worker as defined in 2-18-101, MCA.

History

Authorizing statute(s): Sec. 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1988 MAR p. 2559, Eff. 12/9/88; AMD, 1997 MAR p. 1448, Eff. 8/19/97.

Mont. Admin. R. 2.21.8013 Employee Grievance

(1) An employee may file a grievance based on the application or interpretation of laws, written rules, personnel policies and procedures which adversely affects the employee, unless specifically prohibited from doing so by statute or rule.

(2) A grievant shall not use paid working time to prepare and pursue a grievance. A grievant may request to use other appropriate paid leave, accrued compensatory time or leave of absence without pay to prepare a grievance. Use of leave or compensatory time shall be requested and approved consistent with administrative rules and agency policies relating to the type of leave requested. Time spent by the grievant attending a hearing is paid working time only during the grievant's regular work shift and shall not exceed 8 hours per day.

(3) An employee other than the grievant may, at the agency's discretion, be given working time off to participate in an investigation or hearing. This time may be paid working time, if the employee's participation is at the agency's request. Other employees may request to use appropriate paid leave, leave of absence without pay, or accrued compensatory time to attend a hearing. Use of leave or compensatory time shall be requested and approved consistent with administrative rules and agency policies relating to the type of leave requested.

History

Authorizing statute(s): Sec. 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1988 MAR p. 2559, Eff. 12/9/88; AMD, 1997 MAR p. 1448, Eff. 8/19/97.

Mont. Admin. R. 2.21.8017 Grievance Procedure

(1) Step I is the informal resolution. Both the employee and supervisor are encouraged to resolve the grievance informally whenever possible.

(2) Step II is the formal grievance.

(a) A formal grievance shall be filed in writing within 15 working days from the occurrence of the grievable event. The formal grievance shall be filed with the grievant's immediate supervisor, or the next level above the immediate supervisor. A standard form for filing grievances may be required by an agency.

(b) A formal grievance shall state specifically the law, written rule, policy, and/or procedure violated; when the action occurred, and the remedy desired by the grievant. It shall be signed and dated by the grievant.

(d) The grievance is resolved at step II if the grievant accepts management's response, or if the grievant fails to advance the grievance to step III within 10 working days of the receipt of management's response.

(3) Step III is the review by a department head.

(a) If a grievant wishes to advance the grievance to step III, the grievant shall notify a management representative designated by the department head. The grievant shall notify the management representative in writing within 10 working days of receipt of management's response at step II.

(b) If the subject of the grievance is suspension without pay for more than 10 working days, disciplinary demotion, or discharge, the designated management representative shall order a hearing, as provided in ARM 2.21.8018. All other grievances shall advance to final review by the department head.

(c) The department head shall review the grievance and shall issue the final administrative decision on the grievance either:

(i) within 20 working days of the grievant's request for final review;

(ii) within 10 working days of receipt of the hearings summary as provided in ARM 2.21.8018; or

(iii) the department head shall notify the grievant and management concerning any additional actions ordered which will delay the decision.

(d) At the discretion of the department head, the final review may include review of the grievance form, review of management's response, and review of the record of any investigation or hearing, or the department head may authorize an additional investigation, may conduct a discussion with the grievant or may order a hearing.

(e) The department head's final decision shall be issued in writing. This is the final step of this grievance procedure.

History

Authorizing statute(s): Sec. 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1988 MAR p. 2559, Eff. 12/9/88; AMD, 1990 MAR p. 377, Eff. 2/23/90; AMD, 1991 MAR p. 352, Eff. 3/29/91; AMD, 1997 MAR p. 268, Eff. 8/4/97.

Mont. Admin. R. 2.21.8018 Hearing

(1) A hearing shall be conducted at step III, if the grievance is filed as the result of a suspension without pay for more than 10 working days, a disciplinary demotion, or a discharge.

(2) Within 10 working days of advancement of the grievance to step III, the designated management representative shall request either:

(a) a hearings examiner assigned by the office of the attorney general; or

(b) a list of three to five potential hearings examiners from the board of personnel appeals. An examiner shall be selected in one of the following manners:

(i) management and the grievant shall agree on one of the hearings examiners; or

(ii) each shall alternately strike names from the list and the remaining person shall serve as hearings examiner. The grievant shall strike the first name.

(3) The hearings examiner shall set the time and place for the hearing. The parties shall receive notice of the hearing either personally or by certified mail not less than 5 working days before the hearing.

(4) Both parties shall have:

(a) the right to introduce evidence;

(b) the right to cross examine;

(d) the right to a recommendation for resolution based on the recorded evidence and matters officially noticed.

(5) Within 30 working days of the selection of the hearings examiner, the hearings process shall be completed, and the hearings examiner shall submit a written summary of findings and shall make a non-binding recommendation for resolution to the department head.

(6) The agency shall pay all costs of:

(a) a hearings examiner;

(b) physical arrangements for a hearing; and

(7) The grievant shall pay fees and expenses of:

(a) the grievant's representative; and

(b) the grievant's witnesses and evidence, unless the witness also is a management witness.

(8) A recording shall be made of the hearing. Either party may request a transcript of a hearing. The party requesting the transcript shall bear the cost. If both parties request a transcript, they will share the cost.

(9) The department head shall issue the final administrative decision within 10 working days of receipt of the hearing summary.

History

Authorizing statute(s): Sec. 2-18-102, MCA
Implementing statute(s): 2-18-102, MCA
History: NEW, 1988 MAR p. 2559, Eff. 12/9/88; AMD, 1990 MAR p. 377, Eff. 2/23/90; AMD, 1991 MAR p. 352, Eff. 3/29/91; AMD, 1997 MAR p. 1448, Eff. 8/19/97.

Mont. Admin. R. 2.21.8021 Failure to Act

(1) If the employee fails to respond within the timeframes established for a step, the grievance is considered resolved in favor of the last response given by management. The employee may not refile the grievance.

(2) If management fails to respond within the timeframes established for a step, the grievant may proceed to the next appropriate step of the procedure.

History

Authorizing statute(s): Sec. 2-18-102 MCA
Implementing statute(s): 2-18-102 MCA
History: NEW, 1988 MAR p. 2559, Eff. 12/9/88.

Mont. Admin. R. 2.21.8022 Waivers

(1) Any step of the procedure and timeframes in the procedure may be waived upon written agreement of both parties.

History

Authorizing statute(s): Sec. 2-18-102 MCA
Implementing statute(s): 2-18-102 MCA
History: NEW, 1988 MAR p. 2559, Eff. 12/9/88.

Mont. Admin. R. 2.21.8023 Grievance Resolved

(1) A grievance is resolved when:

(a) the grievant requests in writing that the grievance be withdrawn or signs a waiver that a resolution has been achieved;

(b) the grievant leaves state employment, unless discharged;

(d) the grievant fails to advance the grievance in the required timeframes;

(e) the final steps of the grievance procedures are completed.

History

Authorizing statute(s): Sec. 2-18-102 MCA
Implementing statute(s): 2-18-102 MCA
History: NEW, 1988 MAR p. 2559, Eff. 12/9/88.

Mont. Admin. R. 2.21.8030 Closing

(1) This policy shall be followed unless it conflicts with negotiated labor contracts or specific statutes, which shall take precedence to the extent applicable.

History

Authorizing statute(s): Sec. 2-18-102 MCA
Implementing statute(s): 2-18-102 MCA
History: NEW, 1988 MAR p. 2559, Eff. 12/9/88.

Chapter 2.32 BUILDING CODES DIVISION (Transferred to COMMERCE, TITLE 8)

Subchapter 2.32.2 Local Government Enforcement

Mont. Admin. R. 2.32.209 Factory-Built Buildings

History

Authorizing statute(s): Sec. 50-60-302 MCA
Implementing statute(s): 50-60-302 MCA
History: NEW, 1979 MAR p. 142, Eff. 2/16/79; TRANS to Dept. of Commerce, Ch. 352, L. 1985, Eff. 7/1/85.

Chapter 2.41 BOARD OF HOUSING (Transferred to COMMERCE, TITLE 8)

Subchapter 2.41.1 Organizational Rule

Mont. Admin. R. 2.41.101 Organizational Rule

History

Authorizing statute(s): Sec. 2-4-201 MCA
Implementing statute(s): 2-4-201 MCA
History: NEW, Eff. 12/5/75; AMD, Eff. 7/9/76; TRANS, C. 163, L. 1977, Eff. 7/1/77; TRANS, C. 274, L. 1981, Eff. 7/1/81.

Subchapter 2.41.2 Procedural Rules

Mont. Admin. R. 2.41.201 Incorporation of Model Rules

History

Authorizing statute(s): Sec. 2-4-201 MCA
Implementing statute(s): 2-4-201 MCA
History: NEW, Eff. 2/5/76; TRANS, C. 163, L. 1977, Eff. 7/1/77; TRANS, C. 274, L. 1981, Eff. 7/1/81.

Mont. Admin. R. 2.41.202 Meetings of the Board

History

Authorizing statute(s): Secs. 90-6-104 and 90-6-106 MCA
Implementing statute(s): 90-6-105 MCA
History: NEW, Eff. 2/5/76; TRANS, C. 163, L. 1977, Eff. 7/1/77; TRANS, C. 274, L. 1981, Eff. 7/1/81.

Subchapter 2.41.3 Program Rules

Mont. Admin. R. 2.41.301 Purpose and Objective

History

Authorizing statute(s): Secs. 90-6-104 and 90-6-106 MCA
Implementing statute(s): 90-6-102 MCA
History: NEW, Eff. 7/9/76; TRANS, C. 163, L. 1977, Eff. 7/1/77; TRANS, C. 274, L. 1981, Eff. 7/1/81.

Mont. Admin. R. 2.41.302 Lower Income Persons and Families

History

Authorizing statute(s): Secs. 90-6-104 and 90-6-106 MCA
Implementing statute(s): 90-6-106 MCA
History: NEW, Eff. 7/9/76; TRANS, C. 163, L. 1977; Eff. 7/1/77; AMD, 1980 MAR p. 2247A, Eff. 8/1/80; TRANS, C. 274. L. 1981, Eff. 7/1/81.

Mont. Admin. R. 2.41.303 Financing Programs

History

Authorizing statute(s): Secs. 90-6-104 and 90-6-106, MCA
Implementing statute(s): 90-6-104, 90-6-106, 90-6-108, 90-6-109, and 90-6-116 MCA
History: NEW, Eff. 7/9/76; TRANS, C. 163, L. 1977; Eff. 7/1//77; AMD, 1980 MAR p. 2247A, Eff. 8/1/80; TRANS, C. 274, L. 1981, Eff. 7/1/81.

Mont. Admin. R. 2.41.304 Conditions of Financial Assistance

History

Authorizing statute(s): Secs. 90-6-104 and 90-6-106 MCA
Implementing statute(s): 90-6-106, 90-6-108, and 90-6-110 MCA
History: NEW, Eff. 7/9/76; TRANS, C. 163, L. 1977; Eff. 7/1/77; TRANS, C. 274, L. 1981, Eff. 7/1/81.

Mont. Admin. R. 2.41.305 Qualified Lending Institutions

History

Authorizing statute(s): Secs. 90-6-104 and 90-6-106 MCA
Implementing statute(s): 90-6-106, 90-6-108, and 90-6-110 MCA
History: NEW, Eff. 7/9/76; TRANS, C. 163, L. 1977; Eff. 7/1/77; AMD, 1980 MAR p. 2247B, Eff. 8/1/80; TRANS, C. 274, L. 1981, Eff. 7/1/81.

Mont. Admin. R. 2.41.306 Housing Sponsors

History

Authorizing statute(s): Secs. 90-6-104 and 90-6-106 MCA
Implementing statute(s): 90-6-106 and 90-6-110 MCA
History: NEW, Eff. 7/9/76; TRANS, C. 163, L. 1977; Eff. 7/1/77; TRANS, C. 274, L. 1981, Eff. 7/1/81.

Chapter 2.43 Public Employees' Retirement Board

Subchapter 2.43.1 Organizational Rule

Mont. Admin. R. 2.43.101 Organizational Rule

(1) The organizational rule of the public employees' retirement board is set forth in ARM 2.1.101 and is herein adopted and incorporated by this reference.

History

Authorizing statute(s): Sec. 2-4-201 MCA
Implementing statute(s): 2-4-201 MCA
History: Eff. 12/31/72.

Subchapter 2.43.13 General

Mont. Admin. R. 2.43.1301 Retirement Systems Covered

(1) Except where specifically noted, all the rules in this subchapter are in effect for the following retirement systems:

(a) Public Employees' (PERS);

(b) Game Wardens' and Peace Officers' (GWPORS);

(d) Highway Patrol Officers' (HPORS);

(e) Sheriffs' (SRS);

(f) Municipal Police Officers' (MPORS); and

(g) Firefighters' Unified (FURS).

(2) Each of the above-listed retirement systems also have their own subchapter containing rules unique to that system. Both this subchapter and the subchapter designated for a particular retirement system should be consulted when determining applicable administrative rules.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-403, MCA
History: Eff. 12/31/72; AMD, 1986 MAR p. 1454, Eff. 8/29/86; AMD & TRANS, from ARM 2.43.301, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.1302 Definitions

Undefined terms used in this chapter are consistent with statutory meanings. Defined terms will be applied to the statutes unless a contrary meaning clearly appears. For the purposes of this chapter, the following definitions apply:

(1) "Additional service" means one year of service for each five years of membership service as explained in ARM 2.43.2318.

(2) "Benefit recipient" means any retired member, contingent annuitant, or survivor who receives a monthly benefit payment from a retirement system. It does not include a beneficiary who receives a lump-sum payment or an annuity.

(3) "Board" means the Montana Public Employees' Retirement Board.

(4) "Contested case" means a legal proceeding, as set forth in these rules, subsequent to preliminary administrative determination.

(5) "Contingent beneficiary" means a beneficiary designated to receive payments if all primary beneficiaries are deceased. Contingent beneficiaries will be on a share and share alike basis, unless the member specifies otherwise.

(6) "Continuous employment" means a member serves in full-time, part-time, or seasonal employment, but does not terminate service nor withdraw the accumulated contributions from the member's account.

(7) "DBRP" means the defined benefit retirement plan within PERS.

(8) "DCRP" means the defined contribution retirement plan within PERS.

(9) "Employment" or "reemployment" means the performance of services for an employer by a person other than an independent contractor. If any of the four factors listed in (16) indicate control or direction by the employer, an employment relationship exists.

(10) "Filed" or "filed with the board" generally means the electronic delivery or mailing of a form or payment in a properly addressed stamped envelope.

(a) If the form or payment is mailed, the postmark date will be used to determine the date on which filing occurs.

(b) If the form or payment is hand-delivered, it is considered filed on the day it is personally delivered to the MPERA office.

(c) If the form is electronically delivered to MPERA, it is considered filed on the day it is received in the MPERA office.

(11) "Full-time employment" for service credit, means an employer or employers paid the member for at least 160 hours during a calendar month. A member may not receive more than one month credit for months in which the member receives pay for more than 160 hours.

(12) "Full-time public service employment" means full time employment which when it was performed was not covered by a system referred to in 19-2-302, MCA, and may not otherwise be credited in a retirement system.

(13) "FURS" means the Firefighters' Unified Retirement System.

(14) "GWPORS" means the Game Wardens' and Peace Officers' Retirement System.

(15) "HPORS" means the Highway Patrol Officers' Retirement System.

(16) "Independent contractor" means an individual who renders service in the course of an occupation and is both:

(a) engaged in an independent trade, occupation, profession, or business; and

(b) under contract and in fact, at all times free from control or direction over the performance of the services.

(i) MPERA may consider but is not limited to the following factors when determining freedom from control and direction:

(A) right or exercise of control of the means by which the work is accomplished;

(B) method of payment (time basis indicates employment);

(D) employer's right to fire.

(ii) Independent contractor status may only be established by a convincing accumulation of these factors indicating freedom from control or direction over performance of the services.

(17) "JRS" means the Judges' Retirement System.

(18) "MPERA" means the Montana Public Employee Retirement Administration.

(19) "MPORS" means the Municipal Police Officers' Retirement System.

(20) "Part-time employment" for service credit means an employer or employers paid a member for less than 160 hours during a calendar month.

(21) "PERS" means the Public Employees' Retirement System.

(22) "Primary beneficiary" means a beneficiary designated to receive payments upon the death of a member. Primary beneficiaries will be on a share and share alike basis, unless the member specifies otherwise.

(23) "Seasonal employment" means employment of a permanent employee who is designated by an agency as seasonal, who performs duties interrupted by the seasons, and who may be recalled without the loss of rights or benefits accrued during the preceding season.

(24) "Service years" or "years of service" means periods of 12 calendar months of membership service which qualify members for retirement or other benefits.

(25) "Signature" includes an electronic signature as defined in 30-18-102, MCA.

(26) "SRS" means the Sheriffs' Retirement System.

(27) "Survivor" means the designated or statutory beneficiary of a member who dies while in service.

(28) "VFCA" means the Volunteer Firefighters' Compensation Act.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-403, MCA
History: NEW, 1986 MAR p. 1454, Eff. 8/29/86; AMD, 1987 MAR p. 1338, Eff. 8/14/87; AMD, 1990 MAR p. 994A, Eff. 7/1/90; AMD, 1993 MAR p. 2762, Eff. 11/25/93; AMD, 1994 MAR p. 291, Eff. 2/11/94; AMD, 1994 MAR p. 2106, Eff. 7/8/94; AMD, 1998 MAR p. 920, Eff. 4/17/98; AMD, 2001 MAR p. 1834, Eff. 9/21/01; AMD & TRANS, from ARM 2.43.302, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2013 MAR p. 830, Eff. 5/24/13; AMD, 2020 MAR p. 391, Eff. 2/29/20.

Mont. Admin. R. 2.43.1306 Actuarial Rates and Assumptions

(1) The actuary will present the actuarial data and recommend the board adopt specific rates and assumptions. The board in its discretion will adopt rates and assumptions and publish them in a board policy. The board adopts and incorporates by reference BOARD Admin 09 Actuarial Valuation Assumptions and Methods (approved June 11, 2026), providing actuarial rates, assumptions, methods, and factors used for valuation and actuarial equivalence purposes. BOARD Admin 09 also contains the early retirement factor tables applicable to PERS, HPORS, and SRS.

(2) MPERA shall maintain a historical file of all rates, assumptions, methods, and factors, including the current version. The file shall be open and readily available to the public. Copies of the assumptions and board policy BOARD Admin 09 may be obtained from MPERA, 100 North Park Avenue, Suite 200, P.O. Box 200131, Helena, MT 59620-0131, phone 1 (877) 275-7372, e-mail mpera@mt.gov and are available on MPERA's web site at www.mpera.mt.gov.

(3) This rule applies to all systems administered by MPERA, including the VFCA but excluding the DCRP and the (457)(b) deferred compensation plan.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-405, 19-17-107, MCA
History: NEW, 1986 MAR p. 1454, Eff. 8/29/86; AMD, 1998 MAR p. 920, Eff. 4/17/98; AMD, 2008 MAR p. 1018, Eff. 5/23/08; TRANS, from ARM 2.43.304, 2009 MAR p. 78, Eff. 12/1/08; AMD, 2010 MAR p. 1881, Eff. 8/27/10; AMD, 2011 MAR p. 1678, Eff. 8/26/11; AMD, 2011 MAR p. 2800, Eff. 12/23/11; AMD, 2015 MAR p. 1893, Eff. 10/30/15; AMD, 2017 MAR p. 1515, Eff. 9/9/17; AMD, 2023 MAR p. 177, Eff. 2/25/23; AMD, 2026 MAR, Notice No. 2026-132, Eff. 8/22/26.

Mont. Admin. R. 2.43.1310 Application of Actuarial Assumptions for Determining Gaba

(1) For purposes of determining the PERS GABA rates referenced in 19-3-1605(5), MCA, the actuary will:

(a) reduce the 1.5% GABA rate established in 19-3-1605(4), MCA by 0.1% for each full 2 percentage points the funded percentage is below 90%;

(b) establish a GABA rate expressed in tenths of a percent.

(2) This rule will not apply until the PERS amortization period is under 40 years.

(3) Once the PERS amortization period is under 40 years, the actuary will adjust the 1.5% GABA each year, based on that year's funding percentage.

History

Authorizing statute(s): 19-2-403, 19-3-1605, MCA
Implementing statute(s): 19-2-405, 19-3-1605, MCA
History: NEW, 2013 MAR p. 2069, Eff. 11/15/13.

Mont. Admin. R. 2.43.1311 Application of Actuarial Assumptions and Process for Determining Actuarial Equivalent Factors

(1) For purposes of determining actuarial equivalent factors for optional benefit determinations, early retirement factors, money purchase benefit calculations, and service purchases, the actuary will:

(a) assume a 1.5% GABA rate for future years; and

(b) establish new actuarial equivalent factors effective January 1, 2014 following the fiscal year 2013 actuarial valuation.

(2) The 1.5% GABA rate established in (1)(a) is prospective only. Optional benefit determinations, early retirement factor reductions, money purchase benefit calculations, and service purchases implemented prior to July 1, 2013, will not be affected.

(3) Prior to January 1, 2014, MPERA will work with members regarding the options available to them regarding optional benefit determinations, early retirement factor reductions, money purchase benefit calculations, and service purchases.

(4) In the event of a court order prohibiting the board from implementing a 1.5% GABA rate pursuant to 19-3-1605, MCA, the actuary will assume a GABA rate consistent with the court order for purposes of this administrative rule until the court order is amended or lifted.

History

Authorizing statute(s): 19-2-403, 19-3-1605, MCA
Implementing statute(s): 19-2-405, 19-3-1605, MCA
History: NEW, 2013 MAR p. 2069, Eff. 11/15/13.

Subchapter 2.43.14 Procedural Rules - General

Mont. Admin. R. 2.43.1401 Model Procedural Rules

(1) To the extent applicable to the operations of the public employees' retirement board, the board hereby adopts and incorporates by reference ARM 1.3.101 through 1.3.233, which set forth the attorney general's model procedural rules.

History

Authorizing statute(s): 2-4-201, 2-4-307, 19-2-403, MCA
Implementing statute(s): 2-4-201, 19-2-403, MCA
History: Eff. 12/31/72; AMD, 1994 MAR p. 2106, Eff. 7/8/94; AMD, 2003 MAR p. 972, Eff. 5/9/03; TRANS, from ARM 2.43.201, 2009 MAR p. 78, Eff. 12/1/08.

Mont. Admin. R. 2.43.1402 Applicability of Rules

(1) To the extent that procedural rules adopted herein are applicable to an action taken by MPERA or the board, they will be applied. To the extent that they are not applicable, procedural rules adopted herein may be followed at the option of the board. In both cases, these rules shall have full force and effect upon the activities over which the board has responsibility and/or authority.

History

Authorizing statute(s): 2-4-201, 19-2-403, MCA
Implementing statute(s): 2-4-201, 19-2-403, MCA
History: Eff. 12/31/72; AMD, 1994 MAR p. 2106, Eff. 7/8/94; AMD, 2003 MAR p. 972, Eff. 5/9/03; TRANS, from ARM 2.43.202, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.1405 Request for Release of Information

(1) Telephone requests from system members or benefit recipients for general information will be handled in a manner most efficient to both the member or benefit recipient and MPERA, subject to written verification.

(2) Specific information, particular to a member or benefit recipient's account, will only be released by MPERA upon receipt of a written authorization signed by the member or benefit recipient.

(3) The executive director may release information to governmental agencies with statutory authority to access specific information. The requesting agency must submit the request in writing citing proper legal authority to obtain the specific information.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-403, MCA
History: NEW, 1986 MAR p. 1454, Eff. 8/29/86; AMD, 1994 MAR p. 291, Eff. 2/11/94; AMD & TRANS, from ARM 2.43.303, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.1406 Mailing for Nonprofit Retiree Organizations

(1) MPERA may mail materials or contract to have materials mailed to retirees for eligible nonprofit retiree organizations.

(a) Contractors who mail materials for eligible nonprofit retiree organizations must agree to keep addresses confidential and to destroy all address sources immediately following completion of the mailing.

(b) The information may also be sent to system participants as a part of or in addition to regular newsletters.

(2) Eligible nonprofit retiree organizations must be tax exempt under section 501(c)(4) of the Internal Revenue Code. They must also hold a nonprofit mailing permit from the U.S. Postal Service.

(3) MPERA will provide application forms. A nonprofit retiree organization must submit an application to MPERA at least one month before any mailing. An application packet must contain:

(a) an application form signed by an officer of the organization;

(b) a copy of the IRS letter exempting the organization under section 501(c)(4) of the tax code;

(d) if requesting bulk mailing, a copy of the organization's current U.S. Postal Mailing Permit; and

(e) an exact copy of the materials to be mailed.

(4) Upon approval, MPERA will provide the nonprofit retiree organization the estimated cost of the mailing. For bulk mailing, MPERA will provide a proposed completion date.

(5) When the mailing is complete, MPERA will bill the nonprofit retiree organization for the cost of the mailing. For mail inserted with estimates, MPERA will send the organization a bill each month. All charges must be paid within 30 days of billing. Thereafter, MPERA will charge the greater of interest at 9% compounded monthly from the billing date or $10 per day.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 2-6-109, 19-2-403, MCA
History: NEW, 1995 MAR p. 1318, Eff. 7/14/95; AMD, 1998 MAR p. 920, Eff. 4/17/98; AMD & TRANS, from ARM 2.43.308, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.1407 Acceptable Materials -- Nonprofit Retiree Organization Mailing

(1) Pursuant to ARM 2.43.1406, MPERA will mail materials which conform to the following criteria:

(a) the packet of materials mailed to each person must be identical;

(b) each packet may include an application for membership in the nonprofit retiree organization and general information about the organization's activities. Material recommending actions that are not within the nonprofit nature and scope of the organization are prohibited. For example, an organization may not urge voting for a particular individual or joining another organization or affiliation.

(2) Each piece inserted with retirement estimates must be one single page, no larger than 8 1/2 inches by 17 inches, folded to fit within a regular business envelope. It may not be stapled or sealed in any manner.

(3) Each packet for bulk mailing must meet current postal requirements and must be printed with the nonprofit retiree organization's nonprofit mailing permit.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 2-6-109, 19-2-403, MCA
History: NEW, 1995 MAR p. 1318, Eff. 7/14/95; AMD, 1998 MAR p. 920, Eff. 4/17/98; AMD & TRANS, from ARM 2.43.309, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.1408 Right to Be Excluded -- Nonprofit Retiree Organizations

(1) Any member or other person receiving benefits from a retirement system may request to be excluded from receiving, pursuant to ARM 2.43.1406, a mailing on behalf of all nonprofit retiree organizations by submitting a written request to MPERA.

(2) Requests for exclusion will become effective no later than 30 days after MPERA receives the signed written request.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 2-6-109, 19-2-403, MCA
History: NEW, 1995 MAR p. 1318, Eff. 7/14/95; AMD & TRANS, from ARM 2.43.310, 2008 MAR p. 2467, Eff. 12/1/08.

Subchapter 2.43.15 Procedural Rules - Contested Cases and Disabilities

Mont. Admin. R. 2.43.1501 Review of Administrative Decision

(1) An "administrative decision" means a decision issued by MPERA that determines an individual's or an entity's legal rights, duties, or privileges pursuant to the provisions of Title 19, MCA.

(2) Parties who disagree with the administrative decision may appeal the decision to the board within 90 days of the date of written notification.

(3) Administrative decisions that are appealed to the board will be initially decided by the board on the basis of material properly submitted by MPERA and the appealing party, and such other information as the board deems appropriate. The board may, on its own motion, postpone its initial decision until the next regularly scheduled board meeting.

(4) The board will notify the appealing party of its initial decision in writing. If the decision is adverse to the appealing party, the board will include a general statement of the reasons for its decision, which need not be exhaustive. The appealing party will be given two options, either of which must be exercised within 30 days of the date of written notification. The appealing party may submit a request in writing for:

(a) reconsideration by the board; or

(b) a contested case proceeding.

(5) A reconsideration by the board will be based on facts and matters submitted by the appealing party and MPERA to the board, the testimony of the appealing party before the board, and the presentation of the appealing party and MPERA, or their legal counsel, to the board.

(a) Unless otherwise ordered by the board pursuant to (5)(c), facts and matters may be submitted any time after the board's initial decision is issued until 21 days prior to the third regularly scheduled board meeting following issuance of the initial decision.

(b) Any response to submitted facts and matters must be provided to the opposing party no later than seven days prior to the regularly scheduled board meeting at which the matter will be considered.

(c) The board may, prior to issuing its decision on reconsideration and on its own motion, require the appealing party, MPERA, or both to submit additional facts and matters relevant to the issue before the board. The board may also, on its own motion, postpone its decision on reconsideration. However, in no case may the board prolong issuance of its decision on reconsideration for more than six months following issuance of its initial decision.

(d) The board will notify the party in writing of its decision on reconsideration. That decision will become final and will not be subject to a contested case proceeding or judicial review unless the party files a written request for a contested case proceeding within 30 days of the written notice of decision on reconsideration.

(6) MPERA's administrative decision, the board's initial decision, and its decision on reconsideration will be mailed to the affected parties. The time period for requesting further review of any of the decisions will commence three days following the date of the letter notifying the parties of the decision.

(7) If a party fails to exercise an available option within the time allowed by the board, the board's decision becomes final and is not subject to contested case proceedings or judicial review. Thereafter, a party may only appear before the board on the same matter based on new and different facts that are not repetitive, and for good cause shown.

(8) Unless otherwise provided, time periods may be enlarged only in writing by the board or its authorized representative and only on requests made prior to the expiration of the time period.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-403, MCA
History: NEW, 1994 MAR p. 2106, Eff. 7/8/94; AMD, 1995 MAR p. 205, Eff. 2/10/95; AMD, 1997 MAR p. 1660, Eff. 9/23/97; AMD, 2003 MAR p. 972, Eff. 5/9/03; AMD & TRANS, from ARM 2.43.203, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2013 MAR p. 2240, Eff. 11/28/13

Mont. Admin. R. 2.43.1502 Contested Case Procedures

(1) Contested cases will be presided over and heard by a quorum of the board or a hearing examiner who may be any individual appointed by the board, including any board member.

(a) A party may seek to disqualify a hearing examiner only on the basis of a prehearing motion and affidavit containing an affirmative showing of prejudicial personal bias or lack of independence. The hearing examiner will rule on the motion or voluntarily disqualify himself or herself. The ruling will not be reviewed by the board.

(b) The hearing examiner has general authority to regulate the course of contested cases and may exercise the power and authority provided or implied by law, including 2-4-611, MCA.

(c) The hearing examiner may establish prehearing and hearing dates and procedures, rule on procedural matters, make proposed orders, findings and conclusions, and otherwise regulate the conduct and adjudication of contested cases as provided by law. The hearing, unless the parties stipulate otherwise, shall be conducted in the following order:

(i) the statement and evidence of the party opposing the board's initial decision or decision on reconsideration;

(ii) the statement and evidence of MPERA; and

(iii) rebuttal testimony.

(d) The contested case hearing must be conducted in Helena. The parties and their witnesses must appear in person unless, for good cause shown, the hearing examiner determines otherwise.

(e) The hearing examiner shall enter proposed findings of fact, conclusions of law, and order, with any necessary explanation, for review and final determination by the board.

(f) The jurisdiction and authority of a hearing examiner terminates upon the entry of a proposed order unless the board delegates further authority.

(2) Exceptions to proposed findings of fact, conclusions of law, and orders that are allowed by statute must be filed with MPERA and served upon opposing counsel within 20 days of service of the proposed findings, conclusions, and order. Any response must be filed within ten days of service of the exceptions.

(a) Briefs in support are not required, but if filed, must be filed simultaneously with exceptions or responses.

(b) Requests for oral argument must be in writing, and must be filed simultaneously with the exceptions or responses.

(d) The board may request briefing, additional briefing, or oral argument by the parties.

(e) The board's final decision must be issued no later than 90 days after the matter is submitted to the board, unless, for good cause shown, the period is extended for an additional time not to exceed 30 days.

(3) If a quorum of the board hears the contested case, the board may use a hearing examiner for procedural rulings and administrative purposes, and to assist in the drafting of a final order. A final order so adopted will be the final administrative decision of the board, subject only to judicial review.

(4) An attorney may be assigned to present a case or to appear in any contested case to represent the interests of MPERA. A different attorney will be assigned to assist the board in reaching its determinations with respect to that contested case.

(5) A contested case hearing, and any other proceeding before a hearings examiner, will be recorded electronically unless a party notifies the hearing examiner no later than 20 days prior to the proceeding that the party wants to retain a court reporter for the hearing. The party requesting the court reporter must arrange and pay for the court reporter.

(a) The record shall be transcribed on the request of any party. The cost of the transcription shall initially be paid by the requesting party. A party who has a transcript prepared shall provide a copy to any other party requesting it in exchange for the proportional cost of transcribing the original and the necessary copies. A copy must also be provided to the hearing examiner, at no cost.

(b) The party(ies) filing exceptions to the hearing examiner's proposed order must file the original and one copy of the transcript with the board only if exceptions have been filed to the hearing examiner's proposed findings of fact.

(c) If an electronic recording of any hearing or proceeding is defective or cannot be transcribed, the hearing examiner may reconstruct the record or the parties may reconstruct the record by stipulation. The record so reconstructed will constitute the record for determination and review of findings of fact.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-403, MCA
History: NEW, 1994 MAR p. 2106, Eff. 7/8/94; AMD, 1994 MAR p. 2711, Eff. 10/14/94; AMD, 2003 MAR p. 972, Eff. 5/9/03; AMD & TRANS, from ARM 2.43.204, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.1503 Regulations Applicable to Contested Cases

(1) To the extent these rules do not provide for or specify procedures, or where necessary to supplement these rules, the Montana Administrative Procedure Act, Montana Rules of Civil Procedure, Montana Uniform District Court Rules, or Montana Rules of Evidence may be utilized to the extent that they clarify fair procedures, expedite determinations, and assist in the adjudication of rights, duties, or privileges of parties.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-403, MCA
History: NEW, 1994 MAR p. 2106, Eff. 7/8/94; AMD, 2003 MAR p. 972, Eff. 5/9/03; AMD & TRANS, from ARM 2.43.205, 2008 MAR p. 2467, Eff. 12/1/08.

Subchapter 2.43.21 Membership Service and Service Credit

Mont. Admin. R. 2.43.2101 Membership

(1) An eligible employee becomes a member of a retirement system on his or her first day of covered employment under that system.

(2) If a member changes his or her name, the member must submit a name change form to MPERA.

(3) A member of PERS, GWPORS, or SRS who elects to purchase previously refunded service in their current system will increase their service credit but will not change first day of membership in their current retirement system. Therefore, their guaranteed annual benefit adjustment (GABA) eligibility date will not be affected.

(4) A voluntary election to transfer service credit from another system by a member hired into PERS or HPORS on or after July 1, 2013, will not affect that member’s hire date in PERS or HPORS for GABA eligibility purposes.

(5) A member of MPORS or FURS who elects to purchase previously refunded service in their current system will increase their service credit but will not change their first day of membership in their current retirement system. Therefore, the formula used for calculating their retirement benefit will not be affected.

(6) A retirement system member's first day of membership service will not change due to any voluntary election to transfer service credit into that system from another system or to the purchase of any other full-time public service employment or military service.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-303, 19-3-1605, 19-7-711, 19-8-1105, MCA
History: NEW, 1986 MAR p. 1454, Eff. 8/29/86; AMD & TRANS, from ARM 2.43.405, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2013 MAR p. 2240, Eff. 11/28/13; AMD, 2025 MAR, Notice No. 1, Eff. 6/7/25.

Mont. Admin. R. 2.43.2102 Optional Membership

(1) Employees for whom membership in PERS is optional may become members by completing an application provided by the board. The application must be filed within the time set in applicable statute. Membership becomes effective upon filing and is not retroactive except as provided in (5). Except as provided in (2), once elected, members may not discontinue membership without termination of employment.

(2) The board may permit an employee to discontinue optional membership if the employee submits proof that the employee was not informed membership was optional. The employee must submit such proof within 180 days of the employee's first day of employment, or within 180 days of the filing of the application form, whichever is later.

(a) Membership discontinued pursuant to (2) must be treated as a reporting error and will be corrected pursuant to ARM 2.43.2115.

(b) The board shall issue a credit to the employer for all erroneous contributions.

(3) If an employer discovers that an eligible employee was not notified of the option to join PERS, the employer must:

(a) provide the employee the optional membership application form immediately upon discovery of the omission;

(b) notify the employee that the application must be completed within 180 days of employment, or within 30 days after receipt of the application, whichever is later; and

(4) If, pursuant to (3), the employee elects not to become a member of PERS, the employer must still report the employee to MPERA as a nonmember pursuant to ARM 2.43.2114.

(5) If, pursuant to (3), the employee elects to become a member of PERS, membership will begin the first day of the first pay-period for which the employer reports the employee as a member of PERS and pays PERS contributions on behalf of the member. Membership will not be retroactive. However, a member electing the DBRP may choose to purchase the retroactive service under 19-3-505, MCA.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-903, 19-3-412, MCA
History: Eff. 12/31/72; AMD, 1986 MAR p. 1454, Eff. 8/29/86; AMD, 1994 MAR p. 291, Eff. 2/11/94; AMD, 1999 MAR p. 1504, Eff. 7/2/99; AMD, 2001 MAR p. 1834, Eff. 9/21/01; AMD & TRANS, from ARM 2.43.403, 2009 MAR p. 78, Eff. 12/1/08.

Mont. Admin. R. 2.43.2104 New Members

(1) New members must complete a membership/designation of beneficiary form upon employment and return the form to their employer. The form must be immediately forwarded by the employer to MPERA. The designation of beneficiary is only effective upon receipt by MPERA.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-801, 19-6-505, 19-9-1102, 19-13-903, MCA
History: Eff. 12/31/72; AMD, 1986 MAR p. 1454, Eff. 8/29/86; AMD & TRANS, from ARM 2.43.402, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2013 MAR p. 2240, Eff. 11/28/13; AMD, 2025 MAR, Notice No. 2025-212, Eff. 9/13/25

Mont. Admin. R. 2.43.2105 Basic Period of Service

(1) The month is the basic period for the awarding of service credit and membership service for all retirement systems.

(a) Except as otherwise specified by rule or statute, 160 hours of service or 240 hours of service in a three-paycheck month for members who are paid biweekly will equal one month of service credit, regardless of the calendar period during which the service credit was earned.

(b) Except as otherwise specified by rule or statute, 12 months of service credit will equal one year of service credit, regardless of the calendar period during which the service credit was earned.

(2) Except as provided in (3), service credit of less than 160 hours in a calendar month constitutes part-time service.

(3) If the regularly established work schedule of a full-time employee who works at least 2,080 nonovertime hours in a fiscal year results in their employer reporting the employee to the Montana Public Employee Retirement Administration as working less than 160 hours in any month or months during that fiscal year, the employee shall receive one year of service credit.

(4) Upon retirement, MPERA will adjust the service credit for members who work less than full time.

(a) For a member initially hired prior to July 1, 2011, the service earned during the member's normal work year will be the total service earned during the period of the "highest average compensation" or "final average compensation" divided by three.

(b) For a member initially hired on or after July 1, 2011, in a PERS, SRS, or GWPORS-covered position, the service earned during the member's normal work year will be the total service earned during the period of the "highest average compensation" divided by five.

(c) The member must be granted proportional service credit for each fiscal year of employment on the basis of the member's normal work year.

(d) The proportion will be equal to the number of documented hours for which compensation during a calendar month was reported for the employee, divided by the average number of hours worked each month during the period of the "highest average compensation" or "final average compensation" times 12, but may not be greater than 1.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-701, 19-3-108, 19-3-904, 19-5-502, 19-6-502, 19-7-101, 19-7-503, 19-8-101, 19-8-603, 19-9-804, 19-13-704, MCA
History: NEW, 1986 MAR p. 1454, Eff. 8/29/86; AMD, 1987 MAR p. 1338, Eff. 8/14/87; AMD, 1990 MAR p. 994A, Eff. 7/1/90; AMD, 1997 MAR p. 1660, Eff. 9/23/97; AMD, 2001 MAR p. 2219, Eff. 11/9/01; AMD & TRANS, from ARM 2.43.406, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 643, Eff. 4/29/11; AMD, 2011 MAR p. 1678, Eff. 8/26/11; AMD, 2024 MAR p. 1577, Eff. 7/6/24.

Mont. Admin. R. 2.43.2106 No Duplication of Service Credit

(1) A member employed in multiple jobs covered by the same retirement system during any given month may not earn more than one month service credit in that retirement system.

(2) A member employed in multiple jobs covered by different retirement systems will earn appropriate service credit in each system.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-703, 19-2-715, 19-3-508, 19-6-302, 19-7-307, 19-8-305, 19-9-401, 19-13-401, MCA
History: NEW, 1986 MAR p. 1454, Eff. 8/29/86; AMD & TRANS, from ARM 2.43.407, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.2109 Receipt of Service Credit on or After Termination of Employment

(1) A member terminating employment shall receive service credit for lump sum payments for which required contributions have been made of severance pay or paid leave, including banked holiday time, vacation, personal, sick, or compensatory leave, received in the month following termination of employment unless the member elects to retire effective that month. A member may not receive service credit for lump-sum payments and a retirement benefit for the same month.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-303, 19-3-108, 19-6-101, 19-7-101, 19-8-101, 19-9-104, 19-13-104, MCA
History: NEW, 1986 MAR p. 1454, Eff. 8/29/86; AMD, 1994 MAR p. 291, Eff. 2/11/94; AMD, 2001 MAR p. 1834, Eff. 9/30/01; AMD & TRANS, from ARM 2.43.408, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11; AMD, 2024 MAR p. 1577, Eff. 7/6/24.

Mont. Admin. R. 2.43.2110 Calculation of Highest Average Compensation with Lump-Sum Payments

(1) For applicable systems, lump-sum payments made upon termination of employment and for which required contributions have been made for paid leave, including banked holiday time, vacation, personal, sick, or compensatory leave may be included in the calculation of a member's highest average compensation (HAC) by replacing lower compensation months with the same number of higher compensation months.

(2) The number of replacement months and the amount of compensation included in the replacement months are determined by dividing the lump-sum payment by an amount calculated by multiplying the averaged hourly rate during the HAC period by the averaged hours worked per month during the same period.

(3) Lump-sum payments made without termination of employment for banked holiday time, compensatory leave, sick leave, or vacation leave will not be considered as compensation for any purpose regardless how the payout is classified, including identifying the payout as a bonus.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-303, 19-2-506, 19-2-1005, 19-3-108, 19-6-101, 19-7-101, 19-8-101, 19-13-104, MCA
History: NEW, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11; AMD, 2013 MAR p. 2235, Eff. 11/28/13; AMD, 2020 MAR p. 391, Eff. 2/29/20; AMD, 2024 MAR p. 1577, Eff. 7/6/24; AMD, 2026 MAR, Notice No. 2026-20, Eff. 5/9/26.

Mont. Admin. R. 2.43.2114 Required Employer Reports

(1) All reporting agencies shall file the following employer reports, for member and nonmember employees no later than five working days after each regularly occurring payday:

(a) a contributing employee report;

(b) a noncontributing employee report; and

(2) Each report must be accompanied by statutorily required employer and employee contributions to the appropriate retirement system as follows:

(a) the contributing employee report requires employer and employee contributions;

(b) the noncontributing employee report requires no contributions; and

(3) The required contribution rate is the rate in effect at the time the employees or workers are paid, and not the contribution rate in effect when the compensation was earned.

(4) Reporting agencies shall use MPERA's employer web reporting system and shall remit payment via automated clearing house.

(5) The report must be in alphabetical order by last name and contain for each employee or worker, regardless whether the employee or worker is a member of a MPERA-administered retirement system or not:

(a) social security number;

(b) last and first name;

(d) regular contributions, if any;

(e) service purchase contributions, if any;

(f) the actual hours for which the employee or worker received compensation; and

(g) each employee or worker who terminated during the pay period being reported.

(6) In addition to the information contained in (5), employers must also provide the home addresses of employees and workers who are members of an MPERA-administered retirement system. Home addresses of nonmembers are not required.

(7) Reports filed by PERS employers must also include any state or local elected official.

(8) Reporting agencies of the Montana university system (MUS) shall report employees in PERS-covered positions who elect the MUS retirement program (MUS-RP). The MUS-RP report must include all information required in (5). At the same time, reporting agencies of the MUS shall transmit amounts equal to the statutorily required plan choice rate and the education fund rate for those employees.

(9) Delinquent reports are subject to a $10 per day penalty fee, unless the board waives all or part of the penalty for good cause. Penalty fees shall be submitted separate from normal payroll reports.

(10) Employer reporting that retroactively adjusts previously reported compensation, such as in the case of a settled wage claim or delayed bargaining agreement, must be accompanied by required contributions and interest calculated at the assumed actuarial rate of return for the trust fund in effect at the time of the adjusted reporting.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-506, 19-3-315, 19-3-316, 19-3-412, 19-3-1106, 19-3-1113, 19-3-2117, 19-7-1101, MCA
History: Eff. 12/31/72; AMD, 1986 MAR p. 1454, Eff. 8/29/86; AMD, 1990 MAR p. 994A, Eff. 7/1/90; AMD, 1991 MAR p. 2216, Eff. 11/15/91; AMD, 2002 MAR p. 1884, Eff. 7/12/02; AMD, 2003 MAR p. 1186, Eff. 6/13/03; AMD, 2003 MAR p. 1981, Eff. 9/12/03; AMD & TRANS, from ARM 2.43.404, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11; AMD, 2013 MAR p. 830, Eff. 5/24/13; AMD, 2013 MAR p. 1519, Eff. 8/23/13; AMD, 2013 MAR p. 2070, Eff. 11/15/13; AMD, 2013 MAR p. 2237, Eff. 11/28/13; AMD, 2020 MAR p. 391, Eff. 2/29/20; AMD, 2025 MAR, Notice No. 2025-418, Eff. 12/20/25.

Mont. Admin. R. 2.43.2115 Correction of Defined Benefit Retirement System Reporting Errors

(1) Employers may correct reporting errors affecting defined benefit retirement system members on subsequent pay period reports via a letter of explanation. The explanation must include all salary and service documentation for the reported error and the affected time period.

(2) After MPERA verifies that an error has been made in the contributions paid and the service reported, MPERA shall:

(a) notify the reporting agency of any contributions and interest due;

(b) credit any excess employer and member contributions to the employer on MPERA's payroll records; and

(3) MPERA may waive interest if delinquent contributions are made within 60 days of the original due date.

(4) The board may reduce interest due on delinquent contributions if the reporting error was not timely identified by MPERA staff.

(5) Corrections reducing a defined benefit retirement system member's contribution cannot be accepted if the employee has received a refund.

(6) If the service related to the reporting error was initially reported to the wrong retirement system, MPERA shall:

(a) transfer the correct amount of employer and employee contributions from the original retirement system to the correct retirement system;

(b) credit the employer with any excess employer and employee contributions or collect from the employer and pay to the original retirement system any additional employer and employee contributions; and

(7) The employer must correct its payroll records and pay the refund to the DBRP participant.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-403, 19-2-506, 19-2-903, MCA
History: NEW, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11; AMD, 2013 MAR p. 2236, Eff. 11/28/13

Mont. Admin. R. 2.43.2116 Correction of Defined Contribution Retirement Plan Reporting Errors

(1) Reporting errors affecting PERS members who elect the PERS defined contribution retirement plan (DCRP) will be corrected as follows:

(a) Corrections increasing a contribution will be credited to the participant's individual account within two working days of receipt of the contributions in good order.

(i) The employer must submit correct contributions for the entire period(s) of improper reporting.

(ii) The corrected contributions cannot be invested on a retroactive basis.

(iii) MPERA shall adjust the member's membership service to the correct amount, if necessary.

(b) Corrections reducing a contribution will decrease the participant's individual account.

(i) The DCRP recordkeeper will recover the incorrect contribution from the participant's individual account and submit a refund to MPERA.

(ii) MPERA shall credit the employer's account with the recovered contribution.

(iii) The employer must correct its payroll records and pay the refund to the DCRP participant.

(iv) MPERA shall adjust the member's membership service, if necessary.

(2) Reporting errors that result in a defined benefit retirement system member improperly electing to participate in the DCRP require the following accounting transactions:

(a) all funds from the ineligible member's DCRP account must be transferred to the member's appropriate defined benefit retirement system trust fund;

(b) the portion of employer contributions allocated to the plan choice rate must be transferred to the DBRP trust fund;

(c) the portion of employer contributions paid into the DCRP long-term disability trust fund must be transferred to the DBRP trust fund; and

(d) the portion of employer contributions paid into the DCRP education fund must be transferred to:

(i) the defined benefit education fund, if a PERS member; or

(ii) the member's appropriate DBRP trust fund, if not a PERS member.

(3) Reporting errors that result in a Montana University System Retirement Program (MUS-RP) member improperly electing to participate in the DCRP will be corrected by allocating contributions pursuant to 19-21-214, MCA.

(4) Corrections reducing a DCRP participant's contribution cannot be accepted if the participant has received a refund.

(5) After MPERA has documented to its satisfaction that all corrections have been made to the DCRP, MPERA shall then make any necessary corrections to the applicable defined benefit retirement system pursuant to ARM 2.43.2115.

History

Authorizing statute(s): 19-2-403, 19-3-2104, MCA
Implementing statute(s): 19-2-403, 19-2-903, MCA
History: NEW, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2013 MAR p. 2237, Eff. 11/28/13

Mont. Admin. R. 2.43.2120 Reinstatement -- Credit for Lost Time

(1) An inactive member whose service was involuntarily terminated and who is later returned to employment as the result of a suit, court order, arbitration, or out-of-court settlement may petition the board for membership service and service credit to be granted for the period of time lost, provided the member is awarded retroactive compensation as a result of the claim.

(2) An involuntarily terminated member who refunds or retires prior to being returned to employment as the result of a suit, court order, arbitration, or out-of-court settlement and who is awarded retroactive compensation because of the claim may petition the board for membership service and service credit to be granted for the time lost.

(a) The retired member must repay all retirement benefits, plus the actuarially assumed rate of interest on the benefits.

(b) The member who refunded must repay all accumulated contributions, plus the actuarially assumed rate of interest on the accumulated contributions.

(3) In order to receive full membership service and service credit, employee and employer contributions must be paid by the employer on the total compensation the member would have received, including any interim earnings. Proportional service credit will be granted if employee and employer contributions are paid on a lesser amount of compensation. Any statutorily required state contributions must also be received.

(4) Lump-sum awards not considered compensation under state and federal tax laws will not be considered compensation for the purposes of this rule.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-303, MCA
History: NEW, 1986 MAR p. 1454, Eff. 8/29/86; AMD, 1997 MAR p. 1660, Eff. 9/23/97; AMD & TRANS, from ARM 2.43.427, 2008 MAR p. 2474, Eff. 11/27/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11; AMD, 2013 MAR p. 2240, Eff. 11/28/13; AMD, 2020 MAR p. 391, Eff. 2/29/20.

Subchapter 2.43.22 Reporting Qualified Plan Compensation

Mont. Admin. R. 2.43.2201 Treating Salary Deferrals Under a Cafeteria Plan as Compensation - Policy and Objectives

(1) Pursuant to 19-2-1010 , MCA, the public employees' retirement board (board) must administer the retirement systems under its purview "in a manner required to satisfy the applicable qualification requirements for a qualified governmental plan, as provided in the internal revenue code." The board has received favorable determination letters from the internal revenue service indicating that the retirement systems it administers have met this requirement and are qualified governmental plans under Internal Revenue Code (IRC) sections 401(a) and 414(d) .

(2) The board's primary objective is to maintain the qualified status of the retirement systems it administers. In order to meet this objective, the board must comply with the IRC when determining what constitutes compensation.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-1001, 19-2-1005, 19-2-1010, 19-3-108, 19-5-101, 19-6-101, 19-7-101, 19-8-101, 19-9-104, 19-13-104, MCA
History: NEW, 2005 MAR p. 2241, Eff. 11/11/05; TRANS, from ARM 2.43.901, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.2202 Treating Salary Deferrals Under a Cafeteria Plan as Compensation - Applicability

(1) This subchapter applies when considering whether a salary deferral permitted under an employer's cafeteria plan should be considered compensation for any of the board-administered retirement systems.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-1001, 19-2-1005, 19-2-1010, 19-3-108, 19-5-101, 19-6-101, 19-7-101, 19-8-101, 19-9-104, 19-13-104, MCA
History: NEW, 2005 MAR p. 2241, Eff. 11/11/05; TRANS, from ARM 2.43.902, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.2205 Treating Salary Deferrals Under a Cafeteria Plan as Compensation – Background

(1) Pretax deductions allowed by state and federal law are included in compensation as that term is defined in the following statutes:

(a) 19-3-108, MCA (PERS);

(b) 19-5-101, MCA (JRS);

(d) 19-7-101, MCA (SRS);

(e) 19-8-101, MCA (GWPORS);

(f) 19-9-104, MCA (MPORS); and

(g) 19-13-104, MCA (FURS).

(2) Under federal law, pretax deductions that may be included in the definition of compensation include elective contributions under an IRC section 125 cafeteria plan, but only to the extent the amounts would be includible in gross income but for IRC section 125(a). See IRC section 415.

(3) The board is required to administer PERS, JRS, HPORS, SRS, GWPORS, MPORS, and FURS in a manner required to satisfy the applicable qualification requirements for a qualified governmental plan, as provided in the IRC. Therefore, the board adopts this subchapter to ensure that only elective contributions that would be includible in gross income but for the fact they were made under a bona fide cafeteria plan under IRC section 125 will be included as compensation for purposes of PERS, JRS, HPORS, SRS, GWPORS, MPORS, and FURS.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-1001, 19-2-1005, 19-2-1010, 19-3-108, 19-5-101, 19-6-101, 19-7-101, 19-8-101, 19-9-104, 19-13-104, MCA
History: NEW, 2005 MAR p. 2241, Eff. 11/11/05; AMD & TRANS, from ARM 2.43.905, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.2209 Procedures - Compensation Must Be Treated Consistently

(1) If an employer increases a member's compensation to account for health, dental, vision, life or disability costs, the amount of the increase can be included in compensation for retirement system purposes only if the employer includes that amount, to the extent required by applicable federal and state law, in its calculation of the member's compensation for all purposes, including, but not limited to:

(a) federal income taxes;

(b) state income taxes;

(d) state unemployment insurance;

(e) overtime under the Fair Labor Standards Act (FLSA) ;

(f) overtime under Montana's Wage Protection Act;

(g) shift differentials;

(h) workers' compensation; and

(i) benefits based on compensation, such as life or disability benefits based on a multiple or percentage of annual pay.

(2) If the employer does not comply with (1) , the board will not consider the amount as an elective contribution under a cafeteria plan that would be includible in gross income but for IRC section 125, and will not include the increase as compensation for purposes of PERS, JRS, HPORS, SRS, GWPORS, MPORS, and FURS.

(3) If the board has any reason to doubt that the employer is complying with (1) , the board has the right to obtain documentation up to and including an audit of any participating employer to ensure compliance with (1) . If compliance with (1) cannot be verified by the board, the participating employer's 125 plan contribution will not be considered compensation for retirement system purposes.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-1001, 19-2-1005, 19-2-1010, 19-3-108, 19-5-101, 19-6-101, 19-7-101, 19-8-101, 19-9-104, 19-13-104, MCA
History: NEW, 2005 MAR p. 2241, Eff. 11/11/05; TRANS, from ARM 2.43.909, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.2210 Procedures - Plans That Offer a Choice Among Nontaxable Benefits Only

(1) If an employer has a plan or program under which it contributes on behalf of its employees a certain dollar amount, which can be used by the employee to purchase optional nontaxable benefits, but there is no ability for the employee to receive the employer contribution in cash or other taxable benefit, the board will not consider the employer contribution an elective contribution under a cafeteria plan that would be includible in gross income but for IRC section 125, and will not include the employer contribution as compensation for purposes of PERS, JRS, HPORS, SRS, GWPORS, MPORS, and FURS.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-1001, 19-2-1005, 19-2-1010, 19-3-108, 19-5-101, 19-6-101, 19-7-101, 19-8-101, 19-9-104, 19-13-104, MCA
History: NEW, 2005 MAR p. 2241, Eff. 11/11/05; TRANS, from ARM 2.43.910, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.2211 Procedures - Bona Fide Cafeteria Plans

(1) Elective employee contributions must be made to a bona fide cafeteria plan for that contribution to be eligible for treatment as compensation for purposes of PERS, JRS, HPORS, SRS, GWPORS, MPORS, and FURS.

(2) To be a bona fide cafeteria plan, the employer must establish and sponsor a written plan that includes the requirements of IRC section 125 outlined in (3) through (12) . The cafeteria plan must also be operated in compliance with the requirements of IRC section 125 outlined in (3) through (12) . The board may, from time to time, review an employer's cafeteria plan documentation and require that an employer certify or provide evidence to the board that its cafeteria plan has been operating in compliance with IRC section 125.

(3) The written plan document must incorporate all of the operating rules prescribed in IRC section 125 and its regulations and must be formally adopted by the employer before the first day of the first plan year of the cafeteria plan.

(4) The written cafeteria plan document must contain operating rules covering each of the following topics:

(a) a description of benefits available under the plan;

(b) eligibility rules;

(d) the plan year;

(e) timing of participant elections and how elections are made; and

(f) irrevocability of participant elections.

(5) All participants in the cafeteria plan must be employees.

(a) Self-employed individuals cannot participate in the cafeteria plan; and

(b) Independent contractors cannot participate in the cafeteria plan.

(6) The cafeteria plan must allow participants to choose among two or more benefits consisting of cash and qualified benefits.

(7) Under an affirmative election, the employee must be permitted to elect, on an annual basis, whether to purchase qualified benefits under the cafeteria plan.

(8) Under a mandatory election, the cafeteria plan can mandate that, if an employee chooses a certain benefit, he must pay for it on a pretax basis; however, the employer cannot mandate both that the employee choose the benefit and that he pay for it on a pretax basis under the cafeteria plan.

(9) Under a waiver, an employee will be deemed to have elected qualified benefits under the cafeteria plan unless the employee signs a waiver, on an annual basis, of those benefits under the cafeteria plan.

(10) The cafeteria plan may offer only qualified benefits as defined under IRC section 125(f) .

(a) Qualified benefits include:

(i) benefits that do not defer the receipt of compensation and are not included in gross income by reason of an express provision in chapter I of the IRC, including:

(A) coverage under an accident or health plan to the extent the coverage is excludable from income under IRC section 106 (including medical expense reimbursement accounts) ;

(B) group term life insurance excluded under IRC section 79; and

(ii) vacation days;

(iii) contributions to a 401(k) plan; and

(iv) adoption assistance excluded under IRC section 137.

(b) Qualified benefits do not include:

(i) fringe benefits governed by IRC section 132 (such as pretax parking and qualified employee discounts) ;

(ii) scholarships under IRC section 117;

(iii) educational assistance programs under IRC section 127; and

(iv) long-term care insurance.

(11) Elections made under the cafeteria plan must be irrevocable for an entire plan year, except to the extent mid-year election changes are permitted under IRC section 125 and its regulations.

(12) The cafeteria plan must satisfy the nondiscrimination requirements of IRC section 125.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-1001, 19-2-1005, 19-2-1010, 19-3-108, 19-5-101, 19-6-101, 19-7-101, 19-8-101, 19-9-104, 19-13-104, MCA
History: NEW, 2005 MAR p. 2241, Eff. 11/11/05; TRANS, from ARM 2.43.911, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.2214 Implementation and Compliance

(1) A participating employer must demonstrate compliance with this subchapter as follows:

(a) The employer must submit to the board a copy of the employer's IRC section 125 plan document and the salary reduction or election form that must be completed by the employees wishing to participate.

(b) The salary reduction or election form must be the document that will be used for the enrollment period that precedes the next IRC section 125 plan year.

(c) The open enrollment period must be specifically identified in the material provided to the participating employer's employees and in the material provided to the board.

(d) Once compliance has been demonstrated, the employer must verify on an annual basis that its IRC section 125 plan document and election form have not changed. If either document does change, the new document or election form must be submitted to the board.

(2) If an employer fails to provide the IRC section 125 plan document, the salary reduction or election form in a format that complies with this subchapter, or fails to use the salary reduction or election form during the enrollment period, then compensation for that employer shall not include the IRC section 125 plan's salary reduction amount.

(3) Board policy number BOARD Admin 05 titled "Treating Salary Deferrals Under a Cafeteria Plan as Compensation" contains several examples of both valid and invalid cafeteria plans, elections, and waivers and should be referenced for further guidance.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-1001, 19-2-1005, 19-2-1010, 19-3-108, 19-5-101, 19-6-101, 19-7-101, 19-8-101, 19-9-104, 19-13-104, MCA
History: NEW, 2005 MAR p. 2241, Eff. 11/11/05; AMD & TRANS, from ARM 2.43.914, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2013 MAR p. 2240, Eff. 11/28/13

Subchapter 2.43.23 Service Purchases

Mont. Admin. R. 2.43.2301 Process for Purchasing Service

(1) Members of MPERA-administered retirement systems interested in purchasing any service credit permitted in PERS, JRS, HPORS, SRS, GWPORS, MPORS, or FURS must submit a written request to MPERA providing the following member information:

(a) full name, including previous surnames, if any;

(b) social security number;

(d) current retirement system;

(e) name of employer for whom service was performed;

(f) type of service to be purchased, if known;

(g) dates of service to be purchased, if applicable; and

(h) number of years of "one-for-five" service to be purchased, if applicable.

(2) MPERA shall provide written notification to the member of the type and amount of service eligible to be purchased, and the cost of that service. All cost statements are valid for 30 days. Written notification will include:

(a) cost statement;

(b) service purchase contract;

(d) rollover/transfer notification form.

(3) A member who chooses to purchase service must complete and return the service purchase contract and the applicable payment form to MPERA. The service purchase contract must indicate:

(a) the type of service the member wishes to purchase;

(b) whether the member intends to purchase all, or a specific portion of the service; and

(4) Service can be purchased in a lump sum, through monthly payments, or by a combination of both. Service purchases other than by lump sum are subject to interest as determined by MPERA and computed over the entire payment period.

(5) Lump-sum payment methods include cash, personal check, and direct rollovers or trustee-to-trustee transfers from an eligible retirement plan.

(a) Lump-sum payments by cash or personal check require completion of the service purchase contract only.

(b) Payment by direct rollover or trustee-to-trustee transfers from an eligible retirement plan require completion of the service purchase contract and the rollover/transfer notification.

(6) Monthly installment payments can be made after tax through cash or personal check, or pretax through payroll deductions.

(a) Monthly installment payments that come directly from the member to MPERA require completion of the service purchase contract only.

(b) Monthly installment payments through paycheck deduction require completion of the service purchase contract and the payroll deduction authorization.

(7) If a monthly installment payment is missed, the service purchase contract will terminate and the member will receive prorated service credit based on the amount previously paid.

(8) The type of service being purchased cannot be changed once the purchase commences.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-704, 19-3-513, 19-6-804, 19-7-804, 19-8-904, 19-9-411, 19-13-405, MCA
History: NEW, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11; AMD, 2025 MAR, Notice No. 2025-212, Eff. 9/13/25.

Mont. Admin. R. 2.43.2302 Documentation of Service

(1) MPERA shall use employer certified records of employment to correct employer reports and to calculate the cost of service credit granted to members.

(2) If employer records are missing or alleged to be inaccurate, it shall be the member's responsibility to provide acceptable documentation to the board that proves the amount of service earned and salary paid to the member by the employer during the period in question.

(3) For the purposes of (2), the board will consider other documents, including but not limited to:

(a) pay stubs;

(b) copies of logs, time sheets, or other documents required to be kept by the employee for the employer;

(d) any other binding agreement or contract in effect at that time;

(e) certified copy of a court order or out-of-court settlement agreement;

(f) social security records;

(g) W-2s; or

(h) other notarized or official documents which would support the member's claim.

(4) If the board approves a request for correction of employer records or a request to purchase service, membership service and service credit will be granted only after payment of required contributions, plus interest, into the retirement system.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-704, 19-3-315, 19-3-316, 19-5-402, 19-5-404, 19-6-402, 19-6-404, 19-7-403, 19-7-404, 19-8-502, 19-8-504, 19-9-703, 19-9-710, 19-13-601, 19-13-605, MCA
History: NEW, 1986 MAR p. 1454, Eff. 8/29/86; AMD & TRANS, from ARM 2.43.410, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.2303 Documentation of Amount of Service Eligible to Be Purchased

(1) When military, U.S. government, federal volunteer, Montana public employment, or other public employment related service is eligible to be purchased into a retirement system, the member is responsible for ensuring acceptable documentation is provided to MPERA.

(2) The documents submitted must be sufficient to prove to MPERA that the service is eligible to be purchased by the member.

(a) Documents used to prove military or federal volunteer service must include:

(i) military service records, including DD 214s, verified by the appropriate branch of service;

(ii) Peace Corps service records verified by the appropriate federal service agency; or

(iii) national service position records verified by the corporation for national and community service.

(b) Documents used to prove U.S. government, Montana public employment, or other public employment must include employer certification of:

(i) dates of employment, full- or part-time employment status, monthly hours of employment, compensation received, date and amount of refund, and current membership status; and

(ii) if the member was employed before the employer contracted to a public retirement system, the name of the public retirement system and the date the employer contracted to join that system, if applicable.

(c) If employer certified salary and employment documentation is not available from the employer, or if the member contests the certified documents, the member may petition the board to purchase the service based upon acceptable documentation listed in ARM 2.43.2302.

(3) MPERA shall review the documents presented to determine whether the service qualifies to be purchased. If the service can be purchased, MPERA will then calculate the cost of the service.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-715, 19-3-503, 19-3-505, 19-3-510, 19-3-512, 19-3-515, 19-6-801, 19-6-803, 19-7-803, 19-8-901, 19-8-903, 19-9-403, 19-13-403, MCA
History: NEW, 1986 MAR p. 1454, Eff. 8/29/86; AMD, 1990 MAR p. 994A, Eff. 7/1/90; AMD, 2003 MAR p. 1982, Eff. 9/12/03; AMD & TRANS, from ARM 2.43.423, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2013 MAR p. 2240, Eff. 11/28/13

Mont. Admin. R. 2.43.2304 Purchase of Service at Actuarial Cost

(1) Members of an MPERA-administered retirement system who are eligible to and wish to purchase military, federal volunteer, one-for-five, out-of-state, Montana public service, or other public service from a previous retirement system to their current retirement system must pay the actuarial cost of that service.

(2) The actuarial cost of the service is determined as follows:

(a) The member's age and membership service as of the date of the request, each rounded to the nearest whole year, is used to determine the actuarial factor related to the number of years service to be purchased.

(b) The actuarial factor determined in (2)(a) is then multiplied by the member's compensation for the immediately preceding 12 months to determine the cost of the service to be purchased.

(3) A member of a retirement system is eligible to purchase only that service permitted to be purchased by statute.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-704, MCA
History: NEW, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.2309 Service Purchases by Inactive Vested Members

(1) An inactive vested member may purchase any service for which the member is eligible any time prior to retirement. The actuarial cost of the service credit must be based on the system's most recent actuarial valuation and determined using:

(a) the member's age at the time of the purchase and the member's salary at the time of the member's most recent termination; and

(b) interest, equaling the assumed actuarial rate of return for the trust fund in effect at the time of the purchase, charged and compounded annually until the member completes payment for the cost of the purchase.

(2) An inactive vested member who purchases service may not elect a retirement date prior to the date the service purchase is completed.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-603, 19-2-908, 19-3-401, 19-3-505, 19-5-301, 19-6-301, 19-7-301, 19-8-301, 19-9-301, 19-13-301, MCA
History: NEW, 1995 MAR p. 2386, Eff. 11/10/95; AMD & TRANS, from ARM 2.43.440, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11; AMD, 2017 MAR p. 1515, Eff. 9/9/17; AMD, 2020 MAR p. 391, Eff. 2/29/20; AMD, 2025 MAR, Notice No. 2025-418, Eff. 12/20/25.

Mont. Admin. R. 2.43.2310 Purchase of Full-Time Service or One-for-Five Service by Part-Time Members

(1) When a member employed on a part-time basis is eligible to purchase periods of full-time service or one-for-five service, the compensation used to calculate the cost to purchase the full-time or one-for-five service will be the actual part-time compensation earned.

(2) If the member later retires with a full-time final average compensation or highest average compensation, the member may either:

(a) have the amount of full-time service purchased under (1) proportionally reduced based upon the ratio of time worked when the service was purchased to full-time work; or

(b) retain the full-time service by paying the difference between the cost actually paid and the cost had the member been paid a full-time salary at the time of the purchase, plus interest equaling the actuarially assumed rate of return for the trust fund in effect on the date of the member's purchase.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-704, 19-2-715, MCA
History: NEW, 1990 MAR p. 994A, Eff. 7/1/90; AMD & TRANS, from ARM 2.43.433, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11; AMD, 2017 MAR p. 1515, Eff. 9/9/17.

Mont. Admin. R. 2.43.2311 Limitations on Purchases of Service

(1) A PERS member may not purchase service unless and until the member elects to participate in the PERS Defined Benefit Retirement Plan.

(2) A retirement system member may not purchase the same period of military, federal volunteer service, or public service employment in more than one retirement system.

(3) A retirement system member may not receive service credit for any purchase of service related to any calendar month for which full service credit has already been granted.

(4) Retired members may not purchase service.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-603, 19-2-715, 19-3-503, 19-3-515, 19-3-522, 19-5-410, 19-6-801, 19-7-803, 19-8-901, 19-9-403, 19-13-403, MCA
History: NEW, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2025 MAR, Notice No. 2025-212, Eff. 9/13/25.

Mont. Admin. R. 2.43.2312 Purchase of Service Through Direct Trustee-to-Trustee Transfer of Funds

(1) Subject to (2), any time prior to retirement, a member who is statutorily eligible to do so may purchase service in the member's current retirement system through a rollover of funds from an eligible retirement plan account belonging to the member or a direct trustee-to-trustee transfer of funds from the member's 26 USC 403(b) tax-sheltered annuity or 26 USC 457 governmental plan.

(2) A direct trustee-to-trustee transfer of funds from the member's 26 USC 403(b) tax-sheltered annuity or 26 USC 457 governmental plan prior to the member's severance from employment can be made only if the transfer is either for the purchase of permissive service credit (as defined in section 415(n)(3)(A) of the Internal Revenue Code) under the receiving defined benefit governmental plan or a repayment to which section 415 of the Code does not apply by reason of section 415(k)(3) of the Code. A purchase of service pursuant to 19-3-513, 19-5-409, 19-6-804, 19-7-804, 19-8-904, 19-9-411, or 19-13-405, MCA, is a purchase of permissive service credit.

History

Authorizing statute(s): 19-2-403, 19-2-1010, 19-3-2104, MCA
Implementing statute(s): 19-2-704, 19-3-2113, 19-3-2115, MCA
History: NEW, 2002 MAR p. 1889, Eff. 7/12/02; AMD, 2003 MAR p. 1800, Eff. 8/15/03; AMD, 2005 MAR p. 913, Eff. 6/17/05; AMD, 2008 MAR p. 117, Eff. 2/1/08; TRANS, from ARM 2.43.441, 2009 MAR p. 78, Eff. 12/1/08.

Mont. Admin. R. 2.43.2314 Eligible Federal Volunteer Service

(1) Federal volunteer service eligible to be purchased into a member's PERS account is limited to:

(a) any documented period of service in the peace corps; and

(b) any documented, successfully completed required term of service in the following National and Community Service Act (NCSA) programs:

(i) americorps VISTA;

(ii) americorps national community conservation corps; or

(iii) any other NCSA program that requires the volunteer to enroll for a specific term of service.

(2) Federal volunteer service eligible to be purchased into a member's PERS account does not include NCSA programs such as:

(a) freedomcorps;

(b) seniorcorps;

(d) any other NCSA program for which a specific term of service is not required.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-3-515, MCA
History: NEW, 2003 MAR p. 1982, Eff. 9/12/03; TRANS, from ARM 2.43.442, 2009 MAR p. 78, Eff. 12/1/08.

Mont. Admin. R. 2.43.2315 Credit for Service in the Uniformed Services

(1) If an actively employed member of PERS, JRS, HPORS, SRS, GWPORS, MPORS, or FURS is called to duty for a period or periods of service in the uniformed services, the member receives membership service for that time and may receive service credit within the member's retirement system, provided the member:

(a) remains a member of the retirement system during the period of service in the uniformed services by leaving his or her accumulated contributions on deposit;

(b) complies with the requirements of the Uniformed Services Employment and Reemployment Rights Act of 1994, commonly known as USERRA or the Montana Military Service Employment Rights Act (MMSERA);

(c) complies with all Code of Federal Regulations implementing USERRA or all administrative rules implementing MMSERA; and

(d) is reemployed pursuant to USERRA or MMSERA.

(2) The member must complete payment of the member's contributions for the uniformed services related absence within three times the period of the member's uniformed service, starting upon return to employment, but not to exceed five years.

(3) The member may pay the employee contributions:

(a) on a pretax basis pursuant to 19-2-704, MCA;

(b) in a lump sum, including a direct transfer from an eligible retirement plan or individual retirement account;

(d) any combination of (3)(a), (b), and (c).

(4) If the member pays the employee's contributions, the member's employer must pay the employer's contributions. Employer contributions may be due from the member's local government employer and the state.

(5) The member's, the employer's, and the state's contributions are determined based on the compensation the member would have received had the member not been called to uniformed services duty. No interest is charged on their respective contributions.

(6) A member making contributions under a service purchase contract at the time he or she is called to service in the uniformed services will have their payments suspended by MPERA until return to employment as required under USERRA or MMSERA.

(7) For purposes of this rule, service in the uniformed services is any service covered by USERRA or by MMSERA, including:

(a) service in the Army, Navy, Marine Corps, Air Force, Coast Guard, or Public Health Service Commissioned Corps;

(b) service in the reserve components of each of the services listed in (7)(a);

(d) service in the Montana National Guard.

(8) For purposes of this rule, service includes:

(a) active duty;

(b) active duty for training;

(d) initial active duty training; and

(e) any period of time during which a member is absent from employment for the purpose of an examination to determine fitness to perform any of the above-listed duties.

(9) If the member dies while engaged in USERRA or MMSERA service, the balance of the service credit remaining to be purchased may be made from the member's estate, subject to the limitations of section 415 of the Internal Revenue Code.

(10) Regardless any provisions of state law to the contrary, the board will administer this rule in accordance with USERRA, and the federal department of labor regulations regarding USERRA.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-704, 19-2-707, MCA
History: NEW, 1986 MAR p. 1454, Eff. 8/29/86; AMD, 2004 MAR p. 561, Eff. 3/12/04; AMD & TRANS, from ARM 2.43.421, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2020 MAR p. 391, Eff. 2/29/20.

Mont. Admin. R. 2.43.2316 Reserve Military Service

(1) The following requirements pertain to the purchase of membership service and service credit for the member's reserve military service in the armed forces, including the Army National Guard and the Air National Guard:

(a) The member may not purchase any more reserve military service for a one year period than the amount of reserve military service that, when combined with all other earned or purchased service for that one year period,

does not exceed one year of service credit. The reserve military service cannot be purchased if the member has received service credit for the same time period.

(b) The member may purchase reserve military service even if that period of service may be, or is, used to determine the member's right to, or amount of, military service retired pay under federal law, as provided by Title 10, chapter 1223 of the United States Code.

(2) The purchase of service pursuant to the Uniformed Services Employment and Reemployment Rights Act of 1994, commonly known as USERRA or the Montana Military Service Employment Rights Act is addressed in ARM 2.43.2315.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-3-503, 19-5-410, 19-6-801, 19-7-803, 19-8-901, 19-9-403, 19-13-403, MCA
History: NEW, 1991 MAR p. 2216, Eff. 11/15/91; AMD, 1999 MAR p. 1504, Eff. 7/2/99; AMD, 2000 MAR p. 70, Eff. 1/14/00; AMD, 2004 MAR p. 563, Eff. 3/12/04; AMD & TRANS, from ARM 2.43.437, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.2317 Purchase of Refunded Service or Service from Another Mpera-Administered Retirement System

(1) At any time prior to retirement, a member who is statutorily eligible to do so may:

(a) elect to purchase into their current retirement system all or any portion of their previously refunded service in that system; or

(b) elect to purchase service from another MPERA-administered retirement system for which the member has received or is eligible to receive a refund.

(2) Section (1)(b) shall not be construed to allow the purchase of service between two retirement systems while the individual is a member of both systems.

(3) In order to purchase the service, an eligible member must file a request to purchase service with MPERA identifying, in writing, the system to which the member currently contributes and the period of employment which is to be purchased.

(4) After reviewing the information in its files, MPERA shall notify the member of the amount of service eligible to be purchased and the cost of that service.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-704, 19-2-709, 19-2-710, 19-2-715, MCA
History: NEW, 1986 MAR p. 1454, Eff. 8/29/86; AMD, 1990 MAR p. 994A, Eff. 7/1/90; AMD & TRANS, from ARM 2.43.420, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11.

Mont. Admin. R. 2.43.2318 "one-for-Five" Additional Service

(1) Subject to the requirements of each retirement system, a vested member may purchase additional service credit. Members may purchase one full year of additional service for each five full years of membership service in the retirement system. A member eligible to purchase additional service may purchase months of service totaling 11 months or less.

(2) The board will include a member's additional service when calculating the amount of a benefit, but not for determining early or service retirement eligibility, except in the following cases:

(a) additional service purchased into PERS is required to be included when determining a member's early retirement reduction factor; and

(b) additional service purchased into SRS is required to be used when determining a member's retirement eligibility.

(3) A retired member who returns to active membership in the system from which they retired may purchase one-for-five service after at least 12 months of active service. The amount of one-for-five service which may be purchased will be based on the member's total membership service in the member's current retirement system.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-3-513, 19-3-902, 19-3-904, 19-3-906, 19-5-409, 19-6-804, 19-7-804, 19-8-904, 19-9-411, 19-13-405, MCA
History: NEW, 1990 MAR p. 994A, Eff. 7/1/90; AMD, 1991 MAR p. 510, Eff. 4/26/91; AMD, 1991 MAR p. 2216, Eff. 11/15/91; AMD, 1995 MAR p. 1033, Eff. 6/16/95; AMD, 1999 MAR p. 1504, Eff. 7/2/99; AMD & TRANS, from ARM 2.43.432, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2013 MAR p. 2238, Eff. 11/28/13

Mont. Admin. R. 2.43.2319 Purchase of "one-for-Five" Service by Employers for Reduction in Force Employees

(1) Members who are subject to a reduction in force and wish to apply for additional service under 19-2-706, MCA, must do so on forms provided by MPERA prior to involuntary termination from covered employment.

(2) MPERA will review the application and the member's file to determine the number of years of additional service a member is eligible to purchase and the required employer contributions for the purchase. MPERA may request any additional information it deems necessary from the employer or the member to complete this review.

(3) After review, MPERA will send the application to the employer to certify the following data:

(a) termination date;

(b) reason for termination (voluntary, reduction in force, or other);

(d) whether the position was eliminated or reclassified.

(4) After receiving the requested certified information, MPERA will formally review and approve the request, if appropriate.

(5) The cost of the one-for-five service will be based on the member's final 12 months of salary, ending with the last full month of service. When calculating the cost for a member working part-time but whose final average compensation or highest average compensation will be based on full-time service, the final 12-month salary will be proportionally adjusted.

(6) A cost statement for the employer's portion of the cost of the one-for-five service will be sent to the member's former employer after the member terminates. The employer may pay the amount in full within one month of billing, or may select an installment plan of no more than ten years duration. Installment plans will include interest compounded monthly at the actuarially assumed rate of return for the trust fund in effect on the date of the member's termination.

(7) Employers who chose the installment plan option must make annual payments no later than June of each year.

(a) MPERA will provide early payoff or pay down figures at the request of an employer.

(b) If the employer prepays on the installment plan, MPERA will recalculate the interest due following each payment, based on the remaining balance due. Prepayments will not relieve the employer of the obligation to make the next installment payment unless the amount owing is paid in full.

(8) The member will be billed for his or her portion of the cost of the one-for-five service.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-706, MCA
History: NEW, 1993 MAR p. 2008, Eff. 8/27/93; AMD, 1995 MAR p. 1320, Eff. 7/14/95; AMD, 1999 MAR p. 1504, Eff. 7/2/99; AMD & TRANS, from ARM 2.43.451, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11; AMD, 2017 MAR p. 1515, Eff. 9/9/17.

Mont. Admin. R. 2.43.2323 Service Credit for Period(s) of Absence Due to Illness or Injury

(1) A member of PERS, HPORS, or GWPORS whose absence from service is compensated by workers' compensation, and who elects to leave their accumulated contributions on deposit with the retirement system during that absence, may elect to purchase up to five years of the period of absence for service credit.

(2) No service credit will be granted to the member until the total contributions due are deposited into the system.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-3-504, 19-6-810, 19-8-905, MCA
History: NEW, 1986 MAR p. 1454, Eff. 8/29/86; AMD & TRANS, from ARM 2.43.424, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.2324 Guaranteed Annual Benefit Adjustment Coverage

(1) Defined benefit members who terminate covered employment, accept a refund of their accumulated contributions, and later return to covered employment in the same system, are eligible for the GABA provisions in effect at the time the member returns to covered employment.

(2) Purchase of refunded service or allowable retroactive periods of service (for example, periods when excluded from membership, periods for which optional membership was declined, periods of service credit from other public retirement systems, or periods of federal employment) does not affect the member's hire date. The member remains subject to the GABA provisions applicable to their hire date, not the GABA in effect during the periods of refunded or retroactive service.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-603, 19-2-715, 19-3-403, 19-3-505, 19-3-510, 19-3-512, 19-3-1605, 19-6-712, 19-7-711, 19-8-1105, MCA
History: NEW, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2013 MAR p. 2238, Eff. 11/28/13; AMD, 2025 MAR, Notice No. 2025-212, Eff. 9/13/25.

Subchapter 2.43.26 Applying for Retirement - Service or Disability

Mont. Admin. R. 2.43.2601 Application Process for Service Retirement

(1) In order to receive the first retirement benefit in a timely manner, prospective retirees must request an estimate of retirement benefits no less than 30 days prior to a member's anticipated retirement date.

(2) The request must include the retiring member's:

(a) full name;

(b) social security number;

(d) date of birth;

(e) name, social security number, and date of birth of beneficiary, if any;

(f) name, social security number, and date of birth of contingent annuitant(s), if any; and

(g) anticipated date of retirement.

(3) Upon request, MPERA will calculate retirement benefit estimates for the eligible retiring member and their contingent annuitant(s) under any options which are statutorily available and will mail those estimates along with complete retirement information and an application for service retirement to the member.

(4) Based on the retirement estimates and information provided by MPERA, the member may elect whether to retire and if so, the statutorily-allowed retirement option the member prefers. A member wishing to retire must return a signed retirement application to MPERA, along with certified copies of the member's and the member's contingent annuitant's birth certificates or other acceptable proof of age, before benefits will be paid.

(5) The option factors used in the calculation of the option 2 or option 3 retirement benefit pursuant to ARM 2.43.1306 will be based on the nearest whole ages of the member and contingent annuitant.

(6) Retirement applications must be received by the 14th of any month in order for the initial retirement benefit to be paid that month.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-403, 19-2-801, 19-3-1210, 19-3-1501, 19-5-701, 19-5-802, 19-6-903, 19-7-503, 19-7-1001, 19-8-801, 19-8-1002, 19-9-1102, 19-13-903, MCA
History: NEW, 1986 MAR p. 1454, Eff. 8/29/86; AMD & TRANS, from ARM 2.43.503, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.2602 Application Process for Disability Benefits

(1) All forms necessary to apply for disability benefits may be obtained by contacting MPERA.

(2) The following forms must be completed and submitted to MPERA before the board will act on the application for disability benefits:

(a) application for disability retirement and summary of disability;

(b) job duty questionnaire for disability retirement completed by the employer;

(d) authorization to release information; and

(e) a Health Insurance Portability and Accountability Act (HIPAA) authorization.

(3) If MPERA or the board's medical consultant requests that an applicant complete an application package or requests additional medical documentation, all requested information must be received within 90 days or the application may be administratively closed unless the applicant is unable to provide the requested information due to a disabling condition.

(4) MPERA requires documentation from specialists when an applicant alleges certain disabling conditions:

(a) mental or emotional disorders require a report from a psychiatrist or a minimum of one report each from a psychologist and a medical physician;

(b) orthopedic conditions require a report from a treating or consulting orthopedic specialist or orthopedic surgeon; and

(5) The requesting party may provide additional medical information for consideration until 21 days prior to the next scheduled board meeting or, if different, the board meeting at which the request will be considered.

(6) The employer of the disability benefit applicant must define the essential elements of the member's position and show reasonable accommodation was attempted for the member's disabling condition(s) in compliance with the Americans with Disabilities Act (ADA), statutes and rules.

(7) "Total inability" for purposes of determining disability means the member is unable to perform the essential elements of the member's job duties even with reasonable accommodation required by the ADA.

History

Authorizing statute(s): 19-2-403, 19-3-2104, 19-3-2141, MCA
Implementing statute(s): 19-2-406, 19-3-1002, 19-3-2141, 19-5-601, 19-6-601, 19-7-601, 19-8-701, 19-9-902, 19-13-802, MCA
History: Eff. 12/31/72; AMD, 1986 MAR p. 1454, Eff. 8/29/86; AMD, 1994 MAR p. 291, Eff. 2/11/94; AMD, 1994 MAR p. 2106, Eff. 7/8/94; AMD, 2002 MAR p. 1884, Eff. 7/12/02; AMD & TRANS, from ARM 2.43.502, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2013 MAR p. 2236, Eff. 11/28/13; AMD, 2024 MAR p. 44, Eff. 1/13/24.

Mont. Admin. R. 2.43.2603 Acceptable Proof of Date of Birth

(1) A certified copy of a birth certificate or state birth registration shall be proof of the date of birth for the purpose of completing an application for retirement benefits.

(2) If a birth certificate or state birth registration is not available, the board will accept a driver's license and one of the following as proof of date of birth:

(a) baptismal record;

(b) selective service record;

(d) passport;

(e) school record;

(f) tribal identification or registration;

(g) naturalization record;

(h) alien registration record; or

(i) other records submitted by the member which are acceptable to MPERA.

(3) If the birth certificate is in a language other than English, MPERA may request one of the alternative means of identification listed in (2).

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-403, MCA
History: NEW, 1986 MAR p. 1454, Eff. 8/29/86; AMD & TRANS, from ARM 2.43.504, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.2606 Commencement of Guaranteed Annual Benefit Adjustment

(1) If otherwise eligible, a retired member of any retirement system will receive their first guaranteed annual benefit adjustment (GABA) in their January benefit if they have been receiving a monthly benefit in every month for at least 12 months. Except as provided in (3), commencement of the 12-month period starts the month in which the first benefit payment is made, not the month for which any part of the payment is due.

(2) HPORS retirees hired on or after July 1, 2013 will receive their first GABA in their January benefit if they have been receiving a monthly benefit in every month for at least 36 months. Except as provided in (3), commencement of the 36-month period starts the month in which the first benefit payment is made, not the month for which any part of the payment is due.

(3) In the event a member timely applies to begin retirement in January of any year, but through no fault of the member the January payment is not paid until a later month, the member will be eligible for GABA the January immediately following commencement of payment of the benefit. HPORS retirees hired on or after July 1, 2013, will be eligible the third January following commencement of payment of the benefit.

(a) "Timely applies" is dependent upon individual circumstances, but in any event a fully completed application must be filed on or before the 14th of any month in order to be considered timely for receipt of a retirement benefit payment in that month.

(b) MPORS DROP applications must be filed pursuant to ARM 2.43.4609(4) in order to be considered "timely."

History

Authorizing statute(s): 19-2-403, 19-3-1605, 19-5-901, 19-5-902, 19-6-710, 19-6-711, 19-6-712, 19-8-1105, 19-9-1009, 19-9-1010, 19-9-1013, 19-13-1010, 19-13-1011, MCA
Implementing statute(s): 19-2-908, 19-3-1605, 19-5-901, 19-5-902, 19-6-710, 19-6-711, 19-6-712, 19-7-711, 19-8-1105, 19-9-1009, 19-9-1010, 19-9-1013, 19-9-1207, 19-13-1010, 19-13-1011, MCA
History: NEW, 2018 MAR p. 1719, Eff. 8/25/18; AMD, 2025 MAR, Notice No. 2025-418, Eff. 12/20/25.

Mont. Admin. R. 2.43.2607 Payment of Estimated Benefits

(1) MPERA shall pay estimated retirement benefits to qualified members for up to three months. To qualify for estimated retirement benefits, a member must submit an application for early or normal service retirement, terminate active service, and meet retirement age and membership service requirements.

(2) MPERA shall pay estimated disability retirement benefits for up to three months to members granted disability retirement status by the board.

(3) The first benefit will be payable the last working day of the month in which the benefit began. Future benefits will be payable the last working day of each succeeding month.

(4) MPERA shall obtain from the employer all documentation necessary to determine the member's total service credit and final compensation and calculate the amount of the member's retirement benefit. The member's retirement application shall be submitted to the board for approval at the next meeting after MPERA finalizes the benefit amount.

(5) Estimated retirement benefits will be suspended after three months if the member's retirement application has not been finalized by MPERA and approved by the board. Monthly benefit payments to the member will not resume until after the board approves the retirement application. The first payment following board approval will include any previously suspended payments and retroactive amounts owed the member.

(a) If more than 225 retirement applications are received for members wishing to retire on a specific date, estimated retirement benefits for those retirees may be paid for up to five months prior to suspension under (4).

(6) Once a member has received and accepted a retirement benefit, the member is no longer entitled to a refund of the member's accumulated contributions.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-403, 19-2-502, 19-2-901, MCA
History: NEW, 1994 MAR p. 3182, Eff. 12/23/94; AMD& TRANS, from ARM 2.43.617, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2013 MAR p. 830, Eff. 5/24/13.

Mont. Admin. R. 2.43.2608 Return to Covered Employment by Pers, Srs, or Furs Retiree – Report

(1) An employer who pays for work performed by a retired PERS member in a position covered by PERS or in "employment covered by the retirement system" as specified in 19-3-1106, MCA, must submit a certification to MPERA for each payroll period during which the work is performed.

(a) This certification requirement does not apply to a PERS retiree who is elected to a state or local public office and chooses to not become an active member of PERS.

(b) The PERS certification must contain information for every position held by the PERS retiree, whether the position is covered by PERS or not.

(2) An employer who employs a retired SRS member in a position covered by SRS must submit a certification to MPERA for each payroll period during which a retired SRS member is employed.

(3) An employer who employs a retired FURS member in a position covered by FURS must submit a certification to MPERA for each payroll period during which a retired FURS member is employed.

(4) The certification must include the following information for each individual referred to in (1) through (3):

(a) name and social security number;

(b) pay period being certified;

(d) the daily and total number of regular, overtime, holiday, sick leave, and vacation or annual leave hours worked for the employer;

(e) compensation received from the employer; and

(f) the employer's verification that the employer provided the working retiree with the information submitted to MPERA.

(5) The employer must submit the certification by filing it with MPERA no later than ten working days after each regularly occurring payday for which working retirees are reported pursuant to ARM 2.43.2114. The certification must be submitted electronically using MPERA's employer web reporting system.

(6) A separate certification must be filed with MPERA for each working retiree.

(7) Delinquent reports are subject to a $10 per day penalty fee unless the board waives all or part of the penalty for good cause. Penalty fees shall be submitted separate from normal payroll reports.

History

Authorizing statute(s): 19-2-403, 19-3-1113, MCA
Implementing statute(s): 19-2-506, 19-3-1104, 19-3-1106, 19-7-1101, 19-13-301, MCA
History: NEW, 1990 MAR p. 994A, Eff. 7/1/90; AMD, 1991 MAR p. 2216, Eff. 11/15/91; AMD, 2003 MAR p. 1981, Eff. 9/12/03; AMD & TRANS, from ARM 2.43.506, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11; AMD, 2011 MAR p. 2515, Eff. 11/26/11; AMD, 2013 MAR p. 830, Eff. 5/24/13; AMD, 2013 MAR p. 1519, Eff. 8/23/13.

Mont. Admin. R. 2.43.2609 Return to Employment Within Same Jurisdiction

(1) A PERS, GWPORS, SRS, FURS, or HPORS member who receives additional service under 19-2-706, MCA, may again be employed within the same jurisdiction provided the member does not work for more than 960 hours in a calendar year in any position covered by a retirement system administered by MPERA.

(a) A retired member must terminate employment and receive at least one monthly retirement benefit before returning to active service.

(b) An inactive member may return to active service within the same jurisdiction after a five-day break in service.

(2) A retired member who returns to employment as a working retiree must notify the board and ensure a working retiree report is filed with MPERA for each payroll period worked. Service performed under a contract that fails the tests set out in ARM 2.43.1302 is employment subject to the 960-hour limitation and reporting requirements.

(3) When a member who has returned to work under (1) exceeds 960 hours in a calendar year, the member forfeits the additional service attributable to the contributions paid by the employer. Pursuant to 19-2-706, MCA, the board will credit the member's employer with the employer's contribution for the additional service that exceeds the proportional amount of retirement benefits related to the additional service purchased under 19-2-706, MCA, and paid to the member from retirement to forfeiture.

(a) If the employer paid the contributions owed MPERA in a lump sum, the employer will be credited with the difference between contributions paid and benefits received;

(b) If the employer is paying the contributions owed MPERA on an installment contract and the total retirement benefits received by the member:

(i) do not exceed the amount that has been paid on the installment contract, the employer will be credited with the difference between contributions paid and benefits received;

(ii) exceed the amount that has been paid on the installment contract but not the total amount due on the installment contract, the employer will be required to continue paying on the installment contract until the amount paid equals the retirement benefits received. Any outstanding balance due on the installment contract will continue to be charged interest at the actuarially assumed rate of interest, compounded monthly.

(c) If the total benefits received by the member exceed the total contributions owed by the employer, no adjustment will be made to the employer's contributions.

(4) Additional service purchased by the member pursuant to 19-2-706(4), MCA, is not forfeited.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-706, MCA
History: NEW, 1993 MAR p. 2008, Eff. 8/27/93; AMD, 1993 MAR p. 2762, Eff. 11/25/93; AMD, 1995 MAR p. 1320, Eff. 7/14/95; AMD, 1999 MAR p. 1504, Eff. 7/2/99; AMD, 2001 MAR p. 1834, Eff. 9/21/01; AMD & TRANS, from ARM 2.43.452, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11; AMD, 2013 MAR p. 2236, Eff. 11/28/13

Mont. Admin. R. 2.43.2610 Designation of Beneficiary by Retirees, Alternate Payees, and Contingent Annuitants

(1) Beneficiaries may only be designated on a form provided by MPERA, which must be dated and signed by the member or payment recipient.

(2) Except as provided in (3), the designation of beneficiary shall be effective immediately upon filing with MPERA.

(3) If a retirement system member who has applied for retirement dies prior to receipt of their initial retirement benefit, the member's beneficiary must revert to the beneficiary or beneficiaries designated on their retirement system membership form.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-801, 19-2-907, 19-3-1501, 19-5-701, 19-7-1001, 19-8-1105, MCA
History: NEW, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2020 MAR p. 391, Eff. 2/29/20; AMD, 2025 MAR, Notice No. 2025-212, Eff. 9/13/25.

Mont. Admin. R. 2.43.2611 Return to Covered Employment by Pers Retiree – Less Than 90 Days Since Termination of Employment

(1) A retired PERS member who returns to PERS-covered employment of any type less than 90 days following termination of employment is no longer a retired PERS member and is no longer eligible to receive a retirement benefit.

(a) The member's retirement benefit will be stopped effective the month the member returns to PERS-covered employment.

(b) The member will become an active PERS member, ineligible to receive a PERS retirement benefit.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-3-1106, MCA
History: NEW, 2011 MAR p. 2515, Eff. 11/26/11.

Mont. Admin. R. 2.43.2612 Return to Covered Employment by Pers Retiree – Earnings Limitations

(1) If a retired PERS member returns to a position covered by PERS and is also currently employed by the same employer in one or more positions not covered by PERS, the earnings attributable to all positions with the employer must be used to determine whether the retired member's retirement benefit must be reduced pursuant to 19-3-1106, MCA.

(2) The PERS retirement benefit of a working retiree under 65 years of age who exceeds 960 hours of PERS-covered employment in a calendar year must be reduced by earnings attributable to all positions with the employer.

(3) The PERS retirement benefit of a working retiree 65 years of age and older but less than 70 1/2 years of age, who either exceeds 960 hours of PERS-covered employment or whose benefit and all earnings listed in (1) exceed the member's highest average compensation, whichever provides the higher compensation, must be reduced by earnings attributable to all positions with the employer.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-3-1106, MCA
History: NEW, 2011 MAR p. 2515, Eff. 11/26/11.

Subchapter 2.43.27 Disability Retirement - Medical Reviews

Mont. Admin. R. 2.43.2701 Periodic Medical Review of Disability Benefit Recipients

(1) The medical status of each member receiving a disability benefit will be reviewed annually by the board to determine whether the member continues to be disabled, unless:

(a) the board determines reviews are unnecessary and may be discontinued;

(b) the board determines more frequent reviews are warranted by the nature of the disability;

(c) the board converts the disability retirement benefit of a participant in the defined benefit retirement plan to a service retirement benefit; or

(d) a participant in the defined contribution retirement plan receiving a disability benefit reaches 65 years of age.

History

Authorizing statute(s): 19-2-403, 19-3-2104, 19-3-2141, MCA
Implementing statute(s): 19-2-408, 19-3-1015, 19-3-2141, 19-5-612, 19-6-612, 19-7-612, 19-8-712, 19-9-904, 19-13-804, MCA
History: NEW, 1994 MAR p. 2106, Eff. 7/8/94; AMD, 2002 MAR p. 1884, Eff. 7/12/02; AMD & TRANS, from ARM 2.43.508, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.2702 Periodic Medical Review of Disability Benefit Recipients – Initial Notice to Member

(1) MPERA will send written notification of medical review to a member receiving a disability benefit which is subject to periodic review. The notice will be sent to the member at the most recent address provided and will inform the member of the date by which medical information and records must be filed.

(2) The member will be required to have the results of a current medical examination filed directly with MPERA by the examining medical authority(ies) within 60 calendar days of initial notification. The medical examination must be performed by the member's treating physician or other competent medical authority. To be considered current, the date of a medical examination must be no earlier than six months prior to the date filed with MPERA.

History

Authorizing statute(s): 19-2-403, 19-3-2104, 19-3-2141, MCA
Implementing statute(s): 19-3-1015, 19-3-2141, 19-5-612, 19-6-612, 19-7-612, 19-8-712, 19-9-904, 19-13-804, MCA
History: NEW, 1994 MAR p. 2106, Eff. 7/8/94; AMD, 1995 MAR p. 206, Eff. 2/10/95; AMD, 2002 MAR p. 1884, Eff. 7/12/02; AMD & TRANS, from ARM 2.43.509, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11.

Mont. Admin. R. 2.43.2703 Periodic Review of Medical Evidence – Notice of Additional Evidence Required

(1) The board's medical consultant and disability claims examiner will review all medical records previously submitted and those requested for the current period and submit interpretations and recommendations as to the current disability status of the member.

(2) If MPERA determines the records submitted by the member's treating physician in response to the initial notice of review are not current or are otherwise inadequate to complete a review, MPERA will send written notice to the member of the specific examinations, diagnoses, or tests necessary for adequate review of the disabling condition. When appropriate, the type of medical authority to conduct the necessary tests or examination will be specified or a particular physician may be appointed to conduct the required examinations or tests.

(3) Any medical tests requested under this rule will be paid for by MPERA.

(4) Members will be reimbursed for travel necessary to obtain the MPERA-required examinations or tests. Reimbursement for lodging, meals, and mileage will be at the rates established for state employees in Title 2, chapter 18, MCA.

(5) The member will be allowed 60 days from the date of notification to complete the required examinations or tests and have the results sent directly to MPERA by the examining physician.

(6) If the member chooses not to provide additional medical evidence administratively determined as necessary, the previous medical evidence filed will be presented to the board along with staff recommendations regarding continuing disability of the member.

History

Authorizing statute(s): 19-2-403, 19-3-2104, 19-3-2141, MCA
Implementing statute(s): 19-2-406, 19-3-1015, 19-3-2141, 19-5-612, 19-6-612, 19-7-612, 19-8-712, 19-9-904, 19-13-804, MCA
History: NEW, 1994 MAR p. 2106, Eff. 7/8/94; AMD, 2002 MAR p. 1884, Eff. 7/12/02; AMD & TRANS, from ARM 2.43.510, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 p. 1678, Eff. 8/26/11.

Mont. Admin. R. 2.43.2704 Failure to Respond -- Second Notice

(1) A member who fails to file all medical information as required in the initial notice will be sent a second notice by certified mail, return receipt requested. The second notice will inform the member of:

(a) their failure to submit current medical information and records required by the board for the review; and

(b) the date on which disability benefits will be suspended if the member does not provide the medical evidence.

(2) The member may request an extension to accommodate scheduled appointments. The written request justifying the need for additional time must be filed with MPERA at least 15 days prior to the end of the time period. Any requests for extensions in excess of 30 days will not be approved.

History

Authorizing statute(s): 19-2-403, 19-3-2104, 19-3-2141, MCA
Implementing statute(s): 19-3-1015, 19-3-2141, 19-5-612, 19-6-612, 19-7-612, 19-8-712, 19-9-904, 19-13-804, MCA
History: NEW, 1994 MAR p. 2106, Eff. 7/8/94; AMD, 2002 MAR p. 1884, Eff. 7/12/02; AMD & TRANS, from ARM 2.43.511, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11.

Mont. Admin. R. 2.43.2705 Suspension of Disability Benefits -- Notice

(1) If the member fails to respond appropriately to the second notice, the MPERA will notify the member, by certified mail, return receipt requested, that disability benefits have been suspended.

(2) The suspension notice will also inform the member that:

(a) the disability benefit will be cancelled if the previously noticed medical reports and information are not provided to the MPERA within 30 days from the date of notice;

(b) deductions from benefits for insurance premiums paid to an employer-sponsored health insurance plan, if any, will continue to be paid on the member's behalf until such time as the board cancels the benefits; and

(c) disability benefits will not be restored until such time as the board determines the member has demonstrated continuous disability.

History

Authorizing statute(s): 19-2-403, 19-3-2104, 19-3-2141, MCA
Implementing statute(s): 19-3-1015, 19-3-2141, 19-5-612, 19-6-612, 19-7-612, 19-8-712, 19-9-904, 19-13-804, MCA
History: NEW, 1994 MAR p. 2106, Eff. 7/8/94; AMD, 2002 MAR p. 1884, Eff. 7/12/02; TRANS, from ARM 2.43.512, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.2706 Cancellation of Disability Benefits for Refusal to Comply -- Notice

(1) Failure to appropriately respond to the notice of suspension will be deemed refusal to submit to a medical review and cause for cancellation of the disability benefit. The member will be notified of the effective date of cancellation of benefits by certified mail, return receipt requested.

(2) The effective date of cancellation will be the first day of the month following the date of the cancellation notice.

(3) The notice of cancellation will inform the member of appeal rights under the board's rules for contested cases and any rights for service retirement benefits or distribution of the member's DCRP individual account, or for requesting termination of membership from the retirement system.

History

Authorizing statute(s): 19-2-403, 19-3-2104, 19-3-2141, MCA
Implementing statute(s): 19-3-1015, 19-3-2141, 19-5-612, 19-6-612, 19-7-612, 19-8-712, 19-9-904, 19-13-804, MCA
History: NEW, 1994 MAR p. 2106, Eff. 7/8/94; AMD, 1995 MAR p. 206, Eff. 2/10/95; AMD, 2002 MAR p. 1884, Eff. 7/12/02; TRANS, from ARM 2.43.513, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.2707 Cancellation of Disability Benefits Due to Change of Medical Status

(1) If the board determines the medical information available, including that provided by the member, does not demonstrate continuing disability, the monthly disability benefit will be cancelled.

(2) The effective date of cancellation for members of PERS and JRS and elected officials of SRS will be the first day of the second month following board action. For example, board action on January 28 to cancel disability benefits would result in cancellation of the March benefit.

(3) Except in the case of a member of JRS or an elected official in PERS or SRS, the member's former employer will be notified of the member's eligibility for reinstatement to service.

History

Authorizing statute(s): 19-2-403, 19-3-2104, 19-3-2141, MCA
Implementing statute(s): 19-3-1015, 19-3-2141, 19-5-612, 19-6-612, 19-7-612, 19-8-712, 19-9-904, 19-13-804, MCA
History: NEW, 1994 MAR p. 2106, Eff. 7/8/94; AMD, 1995 MAR p. 206, Eff. 2/10/95; AMD, 2002 MAR p. 1884, Eff. 7/12/02; AMD & TRANS, from ARM 2.43.514, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.2711 Appeal of Cancellation of Benefits

(1) A member may appeal the cancellation of disability benefits only by requesting an administrative hearing (contested case) in writing within 30 days of the date of written notice of cancellation.

History

Authorizing statute(s): 19-2-403, 19-3-2104, 19-3-2141, MCA
Implementing statute(s): 19-3-1015, 19-3-2141, 19-5-612, 19-6-612, 19-7-612, 19-8-712, 19-9-904, 19-13-804, MCA
History: NEW, 1994 MAR p. 2106, Eff. 7/8/94; AMD, 2002 MAR p. 1884, Eff. 7/12/02; AMD & TRANS, from ARM 2.43.515, 2008 MAR p. 2467, Eff. 12/1/08.

Subchapter 2.43.29 Refunds, Distributions, and Adjustments

Mont. Admin. R. 2.43.2901 Refunds to Members

(1) Any contributing member who has terminated employment for any reason other than death or retirement may elect to withdraw their accumulated contributions provided:

(a) the refund application is completed by the member and forwarded to MPERA;

(b) the contribution and service credit from the report on which the member last appears is credited to the member's account;

(d) the member will not return to covered employment for at least 30 days; and

(e) the member does not have an established agreement for reemployment in a position covered by the retirement system providing the refund.

(2) Correctly completed and submitted refund applications will be processed within three weeks after the member's final contributions are credited to the member's account, including termination payments of sick and annual leave.

(3) No partial refunds of normal contributions will be made.

(4) Refunds may not be reversed or returned to MPERA once the payment has been distributed.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-303, 19-2-602, 19-5-403, 19-6-403, MCA
History: Eff. 12/31/72; AMD, 1986 MAR p. 1454, Eff. 8/29/86; AMD, 1990 MAR p. 994A, Eff. 7/1/90; AMD & TRANS, from ARM 2.43.603, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11; AMD, 2013 MAR p. 2240, Eff. 11/28/13; AMD, 2025 MAR, Notice No. 2025-418, Eff. 12/20/25.

Mont. Admin. R. 2.43.2902 Death Payments, Survivor Benefits, and Optional Retirement Benefits

(1) Upon the death of an active or inactive member, the member's designated beneficiary or statutory beneficiary must submit a certified copy of the member's death certificate and a completed death claim form to MPERA. A statutory beneficiary must also submit adequate documentation confirming their status as a surviving spouse or dependent child. Documentation can include, but it is not limited to, birth and marriage certificates.

(2) Upon the death of a retired member receiving an option 1 benefit, the member's designated beneficiary, or personal representative if no designated beneficiary, must submit a certified copy of the member's death certificate. Completed death claim forms may be required if there are multiple designated beneficiaries or a lump sum payment remains.

(3) Upon the death of a retired member receiving an option 2, 3, or 4 benefit, a contingent annuitant must submit a certified copy of the member's death certificate to MPERA. Once the death certificate is filed with MPERA, the missed payments, if any, will be paid.

(4) If all designated or statutory beneficiaries predecease the member, the member's personal representative or next of kin as defined in 19-2-802, MCA, must submit the required documents.

(5) If all designated or statutory beneficiaries renounce their interest in their payment rights, a contingent beneficiary or other identified payment recipient may submit the required documents.

(6) Upon receipt of the required documents, MPERA will advise the beneficiary or contingent annuitant of the benefits available.

(7) Contact MPERA to obtain a death claim form.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-801, 19-3-1201, 19-5-801, 19-5-802, 19-6-901, 19-6-902, 19-6-903, 19-7-901, 19-8-1001, 19-8-1002, 19-8-1003, 19-9-1101, 19-9-1102, 19-13-902, 19-13-903, MCA
History: Eff. 12/31/72; AMD, 1986 MAR p. 1454, Eff. 8/29/86; AMD, 2001 MAR p. 1834, Eff. 9/21/01; AMD & TRANS, from ARM 2.43.604, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2013 MAR p. 830, Eff. 5/24/13; AMD, 2020 MAR p. 391, Eff. 2/29/20.

Mont. Admin. R. 2.43.2903 Payment to an Estate

(1) Payment due to an estate will be made upon receipt of a certified copy of a personal representative's letters testamentary or letters of administration. MPERA will also make payment to an estate upon receipt of certified documentation recognized in Title 72, MCA, as proof that payment to an estate should be made.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-802, 19-9-1102, 19-13-903, MCA
History: NEW, 1986 MAR p. 1454, Eff. 8/29/86; AMD & TRANS, from ARM 2.43.607, 2008 MAR p. 2467, Eff. 12/1/08.

Subchapter 2.43.30 Family Law Orders

Mont. Admin. R. 2.43.3001 Family Law Orders -- General Requirements

(1) Upon request, MPERA will provide a checklist of mandatory and optional family law order (FLO) provisions.

(2) Information concerning a participant's account will only be released subject to the terms of ARM 2.43.1405, and policies adopted by MPERA and the board.

(3) An account cannot be established for an alternate payee in a retirement system or plan.

(4) A FLO may not force a member to:

(a) terminate employment;

(b) retire from employment; or

(5) Upon receipt of a certified copy of a stay from the issuing court or the Montana Supreme Court, MPERA and the board will suspend further consideration or implementation of a proposed FLO. Unless otherwise directed by court order, MPERA will retain payments withheld prior to receipt of the stay and simultaneously resume making payments of participant's full benefit. MPERA will take further action only on receipt of a certified copy of an order directing such action. If the stay is lifted, MPERA will proceed with consideration, approval, and implementation procedures.

(6) A restraining order may be used to temporarily stop or prohibit payment to a participant. The order must contain the same information identifying the participant and alternate payee as required for a FLO. If a proposed FLO is not received before the order expires, payments will resume and any retained payments will be made to the participant.

(7) The administrative cost, if any, of a FLO will be billed to the party filing the proposed FLO with the board, unless another party is designated in the FLO to pay the cost. Amounts owing may be offset against payments to be received by the appropriate party.

(8) An alternate payee may receive monthly benefit payments by electronic fund transfer upon submission of a properly executed form required by MPERA.

(9) An alternate payee must promptly inform MPERA of any change of name or address.

History

Authorizing statute(s): 19-2-403, 19-2-907, MCA
Implementing statute(s): 19-2-907, MCA
History: NEW, 2002 MAR p. 2182, Eff. 8/16/02; AMD & TRANS, from ARM 2.43.1701, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11.

Mont. Admin. R. 2.43.3004 Family Law Orders for the Pers Defined Contribution Retirement Plan

(1) This rule applies only to the DCRP.

(2) A "participant" may be a member or a "primary" or "contingent beneficiary."

(3) Disability benefits under the defined contribution plan may not be divided by a FLO.

(4) In the PERS defined contribution retirement plan, the payments to an alternate payee are allowed as follows:

(a) The FLO must state the amount or the proportion, or it must describe the method for calculating the amount or proportion.

(b) If the participant is not eligible for a distribution of their account, the alternate payee's amount or proportion must be paid as soon as administratively feasible.

(c) If the participant is receiving or is eligible to receive distributions from their account, the alternate payees' amount or proportion must be paid from the distributions as set out in the applicable family law order.

(d) The fixed amount, the designated monthly dollar amount, the designated number of months, and the proportion may not be changed by future conditions or events.

(e) Payments will end when:

(i) payments to the participant end;

(ii) the fixed amount is paid; or

(iii) the account is depleted.

History

Authorizing statute(s): 19-2-403, 19-2-907, MCA
Implementing statute(s): 19-2-907, MCA
History: NEW, 2002 MAR p. 2182, Eff. 8/16/02; TRANS, from ARM 2.43.1702, 2009 MAR p. 78, Eff. 12/1/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11.

Mont. Admin. R. 2.43.3005 Family Law Orders – Approval and Implementation for the Defined Contribution Retirement Plan

(1) This rule applies only to the DCRP.

(2) A participant or alternate payee must submit a certified copy of a family law order (FLO) to MPERA for board approval. The board has delegated authority for approval to the executive director.

(3) MPERA will notify the participant and the alternate payee when it receives a certified copy of a FLO. The notice will explain the procedures for determining if the FLO can be approved.

(4) While reviewing the FLO, MPERA will work with the record keeper to prevent distributions from the participant's account and to segregate the amounts, and earnings thereon, that will be owed to the alternate payee if the FLO is approved. The participant will remain eligible to manage and invest the funds not owed to the alternate payee.

(5) The segregated amount, with any earnings thereon, will be distributed to the participant if the FLO is not approved within 18 months of the date it was received by MPERA and the participant is entitled to and requests distribution of the account.

(6) MPERA will notify the participant and the alternate payee when the FLO is approved.

(7) The FLO will be applied prospectively if approved more than 18 months after the date it was first received by MPERA.

History

Authorizing statute(s): 19-2-403, 19-2-907, MCA
Implementing statute(s): 19-2-907, MCA
History: NEW, 2002 MAR p. 2653, Eff. 9/27/02; AMD & TRANS, from ARM 2.43.1703, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11.

Mont. Admin. R. 2.43.3008 Family Law Orders – Contents and Duration for Defined Benefit Plans

(1) Pursuant to this rule and ARM 2.43.3009, the board will accept and apply family law orders (FLOs) in the PERS DBRP, and the JRS, SRS, GWPORS, HPORS, MPORS, and FURS.

(2) Specific designations of a participant(s) in a FLO may include:

(a) for all systems and plans listed in (1), an individual "member" (active, inactive, or retired);

(b) for the PERS DBRP, or JRS, SRS, and GWPORS, "primary" and "contingent beneficiaries" eligible to receive a lump sum payment and "contingent annuitants"; and

(c) for HPORS, MPORS, and FURS, "survivors" and "designated beneficiaries" who are eligible to receive lump sum payments.

(3) FLOs for participants who are in more than one retirement system, choose to be in a DROP, or are eligible for multiple monthly benefit payments from the same retirement system must specify the benefit or benefits to which the FLO applies. If a benefit is not included in a FLO, it is not subject to distribution pursuant to the FLO.

(4) A FLO may specify a future effective date provided:

(a) a FLO may not be effective any earlier than the date the FLO is received by MPERA;

(b) if the participant is a benefit recipient, the first monthly benefit payment that may be divided is the first benefit payment following the month MPERA receives the FLO; and

(c) a FLO may not provide for payments to an alternate payee prior to the date on which the participant first receives a payment from the retirement system or plan.

(5) Unless otherwise specified in the FLO, payments to an alternate payee will continue only while the participant is receiving payments. The FLO may further limit payments to:

(a) the life of the participant whose payment rights are being transferred;

(b) a specified maximum time;

(d) the life of a designated participant.

(6) The two basic types of payments allowed to alternate payees are:

(a) A "defined sum" must designate a specific total dollar amount to be paid to the alternate payee in the form of a fixed dollar amount payable for a designated maximum number of months. If the fixed monthly payment designated is more than the total monthly benefit or payment to the participant, the lesser amount will be paid until the alternate payee receives the specific total dollar amount. If the defined sum cannot be divided evenly by the number of payments or monthly amount, any odd amount will be paid in the first payment. The defined sum, the designated monthly dollar amount, and the designated number of months will not be increased by subsequent conditions or events. Payments will cease when the defined sum is paid or when payments from the account end.

(b) A FLO may order "proportionate payments" by designating either a fixed percentage or a formula describing how to calculate the percentage. The fixed percentage must be expressed as a specific percentage or as a fraction for which the numerator and denominator are indicated. A formula calculating a fixed percentage may use months, years, or dollar amounts to establish a proportionate benefit.

(7) A FLO that orders the assessment of interest on the amounts payable to the alternate payee until the time of withdrawal may not specify an amount other than “regular interest” as defined in 19-2-303, MCA.

History

Authorizing statute(s): 19-2-403, 19-2-907, MCA
Implementing statute(s): 19-2-907, MCA
History: NEW, 1993 MAR p. 2400, Eff. 10/15/93; AMD, 2002 MAR p. 2182, Eff. 8/16/02; TRANS, from ARM 2.43.615, Eff. 9/30/02; AMD & TRANS, from ARM 2.43.1704, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2013 MAR p. 2240, Eff. 11/28/13; AMD, 2020 MAR p. 391, Eff. 2/29/20; AMD, 2026 MAR, Notice No. 2026-20, Eff. 5/9/26.

Mont. Admin. R. 2.43.3009 Family Law Orders -- Approval and Implementation for Defined Benefit Plans

(1) A participant or alternate payee must submit a certified copy of a family law order (FLO) to the MPERA for board approval. The board has delegated authority for approval to the executive director of MPERA.

(2) All FLOs must be applied prospectively and may only allocate future payments. However, a FLO may include procedures for collecting retroactive amounts from future payments.

(3) For purposes of allocating a lump sum payment, the FLO must be received before the payment is mailed or otherwise conveyed to the participant.

(4) If a member requests a refund, the MPERA will notify the alternate payee. The alternate payee may request a direct payment or a direct rollover to another eligible plan. Within 60 days of the date of notification, the alternate payee must inform MPERA of his or her choice and if necessary, provide MPERA with any information necessary for a rollover. Otherwise a direct payment will be made to the alternate payee after 60 days.

(5) Beginning on the effective date, payments to the participant, if any, will be adjusted as directed in the FLO and payments to the alternate payee(s), if any, will be retained by the MPERA. If the proposed FLO is approved, retained payments will be paid to the alternate payee(s); if not approved, to the participant.

(6) The board's decision to approve or not approve a FLO is final unless the participant or alternate payee files a request for an administrative contested case hearing within ten days from the date the MPERA sends notice of the decision. If an administrative hearing is properly requested, the board must make the final administrative decision after receiving the hearing examiner's proposed decision.

History

Authorizing statute(s): 19-2-403, 19-2-907, MCA
Implementing statute(s): 19-2-303(18), 19-2-907, MCA
History: NEW, 1993 MAR p. 2400, Eff. 10/15/93; AMD, 2002 MAR p. 2182, Eff. 8/16/02; TRANS, from ARM 2.43.616, Eff. 9/30/02; TRANS, from ARM 2.43.1705, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11.

Subchapter 2.43.34 PERS - Elected Officials

Mont. Admin. R. 2.43.3401 Retirement Options for Elected Officials Other Than Legislators

(1) Any elected or appointed official, other than a legislator, who becomes a member of PERS pursuant to 19-3-412, MCA, will receive service credit based upon the number of the member's compensated hours. Per diem or other benefits are not compensation.

(2) A retired PERS member who is elected or appointed to a state or local government public office covered by PERS may elect to become an active member of PERS or remain a retired member, with no limitation on the number of hours worked in the elected or appointed position.

(3) An active PERS member who is elected or appointed to a local government public office and works less than 960 hours a year in the elected position may decline membership in PERS with respect to the elected or appointed position.

(4) A PERS DBRP member who elects to purchase into PERS previous service as an elected or appointed official must comply with 19-3-505, MCA, except the cost will not include interest for any contributions due on service prior to July 1, 1993.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-701, 19-2-702, 19-3-412, 19-3-1106, MCA
History: NEW, 1986 MAR p. 1454, Eff. 8/29/86; AMD, 1990 MAR p. 994A, Eff. 7/1/90; AMD, 1993 MAR p. 1199, Eff. 7/1/93; AMD, 1995 MAR p. 1319, Eff. 7/14/95; AMD, 1999 MAR p. 1504, Eff. 7/2/99; AMD, 2003 MAR p. 1981, Eff. 9/12/03; AMD & TRANS, from ARM 2.43.418, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.3402 Retirement System Membership Options for Legislators

(1) A legislator has three options with respect to retirement system membership.

(a) A legislator may elect membership in PERS.

(b) A legislator who is a member, but not a retiree, of JRS, GWPORS, HPORS, SRS, MPORS, or FURS due to their nonlegislative employment may elect to continue participation in their current public retirement system rather than electing PERS.

(2) A legislator's application to join PERS, to join their existing public retirement system, or to decline retirement system membership must be filed with MPERA within 90 days of the first day of the legislator's term of office.

(3) A retired PERS member who is elected to a state or local government public office covered by PERS may elect to become an active member of PERS or remain a retired member, with no limitation on the number of hours worked in the elected position.

(4) A legislator who becomes a member of PERS must pay regular contributions on all compensation for service in office. PERS DBRP members may pay contributions for their entire term of office.

(a) Contributions must be paid through payroll deduction during a legislative session.

(b) Contributions for DBRP members may be paid directly to MPERA when the Legislature is not in session.

(c) The total contribution required for each term will be based on the statutory salary prescribed in 5-2-301, MCA, for that term, less any previous contributions.

(d) All contributions must be paid to MPERA no later than the last day of the legislator's final term in that office.

(e) Service credit and membership service will be granted pursuant to 19-3-521, MCA.

(5) A legislator who elects to continue participation in their nonlegislative retirement system pursuant to (1)(b):

(a) must pay contributions into their nonlegislative retirement system as provided for in 5-2-304, MCA; and

(b) may not retire from that system until their legislative service terminates.

(6) A senator who is subsequently elected to serve as a representative, or a representative who is subsequently elected to serve as a senator, is considered to have started a new term of office and has a new 90-day election period under (1) if they previously declined participation in any public service retirement system.

(7) A senator or representative whose district changes as a result of redistricting is not considered to have started a new term of office and does not have a new 90-day election period.

(8) A PERS DBRP member who elects to purchase into PERS previous service as a legislator must comply with 19-3-505, MCA, except the cost will not include interest for any contributions due on service prior to July 1, 1993.

(9) A PERS DCRP member cannot purchase noncompensated legislative service into the DCRP as service purchases are not available in the DCRP plan.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 5-2-304, 19-2-715, 19-3-412, 19-3-521, 19-3-522, MCA
History: NEW, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11.

Mont. Admin. R. 2.43.3403 Involuntary Retirement

(1) If an elected official, including a legislator, chooses not to run, runs for another office that is not covered by that retirement system, or is otherwise removed from office for cause, that official shall not be eligible for an involuntary retirement allowance.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-2-706, MCA
History: NEW, 1986 MAR p. 1454, Eff. 8/29/86; AMD, 1991 MAR p. 2216, Eff. 11/15/91; AMD & TRANS, from ARM 2.43.505, 2008 MAR p. 2467, Eff. 12/1/08.

Subchapter 2.43.35 Pers - Dcrp

Mont. Admin. R. 2.43.3501 Adoption of Defined Contribution Plan Document and Trust Agreement

(1) The board adopts and incorporates by reference the following:

(a) State of Montana Public Employee Defined Contribution Plan Document that was approved by the board on June 12, 2025, and describes the terms and conditions related to the operation and administration of the plan;

(b) State of Montana Public Employee Defined Contribution Plan Trust Agreement (July 1, 2002, edition), that was approved by the board on April 26, 2001, and September 28, 2001, and approved by the Internal Revenue Service on September 24, 2001. The trust agreement sets the board's responsibilities as trustee of the defined contribution plan and requires that the assets of the trust be used for the exclusive benefit of the plan participants and beneficiaries.

(2) Copies of the Defined Contribution Plan Document, Trust Agreement, and related materials may be obtained from MPERA, 100 North Park Avenue, Suite 200, P.O. Box 200131, Helena, MT 59620-0131, phone 1 (877) 275-7372 , e-mail mpera@mt.gov, and are available on MPERA's web site at www.mpera.mt.gov.

History

Authorizing statute(s): 19-3-2104, MCA
Implementing statute(s): 19-3-2102, MCA
History: NEW, 2002 MAR p. 1884, Eff. 7/12/02; TRANS, from ARM 2.43.1001, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2009 MAR p. 82, Eff. 1/30/09; AMD, 2010 MAR p. 1725, Eff. 7/30/10; AMD, 2014 MAR p. 1999, Eff. 9/5/14; AMD, 2015 MAR p. 1891, Eff. 10/30/15; AMD, 2016 MAR p. 1161, Eff. 7/9/16; AMD, 2018 MAR p. 433, Eff. 2/24/18; AMD, 2020 MAR p. 1614, Eff. 8/29/20; AMD, 2025 MAR, Notice No. 2025-212, Eff. 9/13/25.

Mont. Admin. R. 2.43.3502 Adoption of Investment Policy Statement and Fixed Fund Investment Policy Statement

(1) The board adopts and incorporates by reference the State of Montana Investment Policy Statement 401(a) Defined Contribution Retirement Plan (DCRP Investment Policy Statement) approved by the board on June 11, 2026. The DCRP Investment Policy Statement provides investment guidelines for the DCRP, a long-term retirement-savings vehicle that permits participants to invest employer and participant contributions on a tax-deferred basis. The investment guidelines help the board to meet its fiduciary responsibilities to evaluate and positively influence the direction of the plan and its investments for the benefit of the plan participants and beneficiaries.

(2) The board adopts and incorporates by reference the Montana Fixed Fund Investment Policy Statement approved by the board on February 10, 2022. These guidelines apply to the investment of DCRP participant assets and 457(b) deferred compensation plan participant assets that are pooled together in the plans' stable value group trust. The investment policy statement was developed through mutual agreement amongst the board, the investment manager, and the insurance wrap providers and provides guidance to the investment manager when investing participants' funds contained within the stable value group trust.

(3) Copies of the DCRP Investment Policy Statement and the Montana Fixed Fund Investment Policy Statement may be obtained from MPERA, 100 North Park Avenue, Suite 200, P.O. Box 200131, Helena, MT 59620-0131, phone 1 (877) 275-7372, e-mail mpera@mt.gov. The documents are also available online at www.mpera.mt.gov.

History

Authorizing statute(s): 19-3-2104, MCA
Implementing statute(s): 19-3-2104, 19-3-2122, MCA
History: NEW, 2002 MAR p. 1884, Eff. 7/12/02; AMD, 2004 MAR p. 1131, Eff. 5/7/04; AMD, 2005 MAR p. 1907, Eff. 10/7/05; AMD, 2007 MAR p. 677, Eff. 5/25/07; AMD & TRANS, from ARM 2.43.1002, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2009 MAR p. 1010, Eff. 6/26/09; AMD, 2010 MAR p. 1724, Eff. 7/30/10; AMD, 2010 MAR p. 2571, Eff. 10/29/10; AMD, 2011 MAR p. 2799, Eff. 12/23/11; AMD, 2013 MAR p. 1815, Eff. 10/18/13; AMD, 2014 MAR p. 2443, Eff. 10/10/14; AMD, 2015 MAR p. 1889, Eff. 10/30/15; AMD, 2016 MAR p. 1162, Eff. 7/9/16; AMD, 2017 MAR p. 1514, Eff. 9/9/17; AMD, 2018 MAR p. 821, Eff. 4/28/18; AMD, 2019 MAR p. 288, Eff. 3/16/19; AMD, 2019 MAR p. 424, Eff. 4/27/19; AMD, 2019 MAR p. 736, Eff. 6/8/19; AMD, 2020 MAR p. 1117, Eff. 6/27/20; AMD, 2021 MAR p. 465, Eff. 5/1/21; AMD, 2022 MAR p. 609, Eff. 4/30/22; AMD, 2024 MAR p. 1576, Eff. 7/6/24; AMD, 2026 MAR, Notice No. 2026-132, Eff. 8/22/26.

Mont. Admin. R. 2.43.3503 Defined Contribution Retirement Plan Investment Options

(1) The board will choose, regularly review, and may discontinue, add, or change investment options offered to participants of the DCRP. In doing so, the board will consider recommendations of the statutorily established Employee Investment Advisory Council and follow criteria established in the Investment Policy Statement.

(2) A DCRP participant with assets in a discontinued investment option will be given notice and 90 days to move assets from the investment option being discontinued to an offered investment option. Assets remaining in a discontinued investment option at the end of the 90-day period will be automatically transferred to the investment option similar in investment category and style selected by the board to replace the discontinued investment option. If the discontinued investment option is not replaced, the board will transfer the fund balance to the default balanced fund.

(3) DCRP participants will be provided a minimum of 30 days notice if the board replaces or changes the stable value investment option manager. The stable value investment option assets will automatically transfer to the new manager(s).

History

Authorizing statute(s): 19-2-403, 19-3-2104, MCA
Implementing statute(s): 19-3-2104, 19-3-2122, MCA
History: NEW, 2002 MAR p. 1884, Eff. 7/12/02; AMD, 2004 MAR p. 1131, Eff. 5/7/04; AMD & TRANS, from ARM 2.43.1003, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.3504 Defined Contribution Retirement Plan Default Investment Fund

(1) The board will identify an age-appropriate target date fund offered by the DCRP to be the default investment fund.

(2) Unless otherwise directed by the DCRP participant, the following assets will be deposited in the default investment fund:

(a) assets initially transferred from the PERS DBRP pursuant to ARM 2.43.1030 on behalf of DCRP participants;

(b) assets transferred from a discontinued, but not replaced, investment option pursuant to ARM 2.43.3503(2); and

(3) These assets will remain in the default investment fund until the DCRP participant files valid investment directions and redirects assets from the default investment fund to the selected investment option(s).

History

Authorizing statute(s): 19-2-403, 19-3-2104, MCA
Implementing statute(s): 19-3-2114, 19-3-2115, 19-3-2117, 19-3-2122, MCA
History: NEW, 2002 MAR p. 1884, Eff. 7/12/02; AMD, 2004 MAR p. 1131, Eff. 5/7/04; AMD & TRANS, from ARM 2.43.1004, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2015 MAR p. 1894, Eff. 10/30/15.

Mont. Admin. R. 2.43.3505 Establishment of Long-Term Disability Trust Fund

(1) The board shall establish a long-term disability trust fund to be used exclusively for the payment of disability benefits to participants of the Defined Contribution Retirement Plan (DCRP).

(2) The long-term disability trust fund is a governmental plan under Internal Revenue Code section 401(a)(24) and may be invested in one or more group trust funds as determined by the Montana Board of Investments.

(a) The group trust fund or funds may be a group trust fund presently in existence or later established as permitted under IRC section 401(a)(24), IRS Revenue Ruling 81-100, IRS Revenue Ruling 2004-67, IRS Revenue Ruling 2011-1, and IRS Revenue Ruling 2014-24.

(b) The group trust fund or funds must be operated and maintained exclusively for the commingling and collective investment of monies pursuant to applicable IRS guidance and must be adopted as a part of the long-term disability trust fund.

(c) No part of the corpus or income of the long-term disability trust fund may be used for, or diverted to, any purpose other than the exclusive benefit of the disabled DCRP participants and their beneficiaries. This exclusive benefit provision is irrevocable.

(3) The long-term disability trust fund must be separate and distinct from the Defined Benefit Plan Trust Fund and the DCRP.

(4) The long-term disability trust fund must be funded by the statutorily determined percentage of the employers' contributions made for employees who are active DCRP participants.

(5) In addition to the requirements of (2), funds in the long-term disability trust fund will be invested pursuant to Article VIII, section 13, of the Constitution and Title 17, chapter 6, part 2, MCA.

History

Authorizing statute(s): 19-3-2104, 19-3-2141, MCA
Implementing statute(s): 19-2-504, 19-3-2117, 19-3-2141, MCA
History: NEW, 2002 MAR p. 1884, Eff. 7/12/02; TRANS, from ARM 2.43.1005, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2015 MAR p. 812, Eff. 6/26/15.

Mont. Admin. R. 2.43.3506 Adoption of State of Montana Public Employees Pooled Trust

(1) The board adopts and incorporates by reference the amended Declaration of Trust - State of Montana Public Employees Pooled Trust that was approved by the board on December 13, 2018, and became effective on January 31, 2019. The Declaration of Trust created a pooled trust effective January 1, 2010, under which stable value assets in the 401(a) defined contribution plan and the 457(b) deferred compensation plan were commingled and jointly invested, but separately maintained and recorded.

(2) Copies of the State of Montana Public Employees Pooled Trust as amended and related materials may be obtained from MPERA, 100 North Park Avenue, Suite 200, P.O. Box 200131, Helena, MT 59620-0131, telephone 1 (877) 275-7372, or email mpera@mt.gov, and are available on MPERA's website at www.mpera.mt.gov .

History

Authorizing statute(s): 19-3-2104, MCA
Implementing statute(s): 19-3-2102, MCA
History: NEW, 2019 MAR p. 288, Eff. 3/16/19.

Mont. Admin. R. 2.43.3510 Election Period

(1) Active PERS members have 12 months to complete the retirement plan choice election form provided by the board and file the election with MPERA. The 12-month election period starts the first day of the month following the month the member is initially reported to MPERA.

(2) Any newly hired PERS member, including seasonal, temporary, or part-time employees, who subsequently becomes inactive, must still file an election within their 12-month election period. Members will not have a new election period by virtue of returning to active employment at a later date.

(3) The 12-month election period for any PERS member who has not been properly reported to MPERA will start the first day of the month following the month the member is properly reported.

(a) An election to transfer to the PERS DCRP or the Montana University System Retirement Program will be effective upon confirmation by MPERA pursuant to ARM 2.43.3512 and will not be retroactive.

(4) The 12-month election period for employees of any municipal corporation, county, or public agency which becomes a contracting employer with PERS as provided under 19-3-201, MCA will start the first day of the month following the month the contracting employer initially reports the employee to MPERA.

History

Authorizing statute(s): 19-2-403, 19-3-2104, MCA
Implementing statute(s): 19-3-2104, 19-3-2111, MCA
History: NEW, 2002 MAR p. 1884, Eff. 7/12/02; AMD & TRANS, from ARM 2.43.1010, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2013 MAR p. 2237, Eff. 11/28/13

Mont. Admin. R. 2.43.3511 Retirement Plan Choice Election Form

(1) MPERA shall provide PERS members a retirement plan choice election form which will require the following information:

(a) full name (first, last, middle initial);

(b) social security number;

(d) complete address;

(e) employing agency or agencies;

(f) the member's signature indicating the elected retirement plan or program; and

(g) the date the member signed the election form.

(2) The PERS member shall complete and file the election form directly with MPERA within the timeframes defined in ARM 2.43.3510. Election forms given to employers or any other party are not considered to be filed with MPERA.

(3) The PERS member's election is irrevocable once the election form is filed with MPERA.

(4) The effective date of the election will be the date the member's election is confirmed by MPERA pursuant to ARM 2.43.3512.

History

Authorizing statute(s): 19-2-403, 19-3-2104, MCA
Implementing statute(s): 19-3-2111, MCA
History: NEW, 2002 MAR p. 1884, Eff. 7/12/02; AMD & TRANS, from ARM 2.43.1011, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.3512 Election Eligibility and Confirmation

(1) Upon receipt of a retirement plan choice election form, MPERA will verify that the member is eligible to make the election.

(2) The member is eligible to make an election if all the following conditions are met:

(a) the member was an active PERS member on or after July 1, 2002, with a PERS membership card on file with MPERA;

(b) the member made the election within the timeframes defined in ARM 2.43.3510;

(d) the member is not subject to a PERS DBRP Family Law Order.

(3) MPERA will confirm the PERS member's eligibility and election within five working days of receipt of the election form.

(4) The effective date of the election will be the date it is confirmed by MPERA.

History

Authorizing statute(s): 19-2-403, 19-3-2104, MCA
Implementing statute(s): 19-3-2104, 19-3-2111, 19-3-2112, 19-3-2115, MCA
History: NEW, 2002 MAR p. 1884, Eff. 7/12/02; AMD & TRANS, from ARM 2.43.1012, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.3515 Purchase of Service Not Permitted by Participant in Defined Contribution Retirement Plan

(1) A member of PERS with an existing non-PERS service purchase contract entered into pursuant to any MPERA statute or rule who wishes to elect the DCRP or the Montana University System Retirement Program (MUS-RP) must terminate or complete the service purchase contract before the election will be confirmed by MPERA.

(2) If a member of PERS with an existing service purchase contract files an election form electing either the DCRP or the MUS-RP, MPERA will send written notice to the member that the election cannot be confirmed until the service purchase contract is either terminated or completed.

(3) The notice will give the member 30 days to provide MPERA with written notification of the member's intentions.

(4) The member must choose one of the following options:

(a) pay to MPERA in a lump sum the entire amount remaining due under the service purchase contract and have the entire amount of service purchased under the contract transferred to the DCRP; or

(b) pay nothing more to MPERA and have the prorated amount of service purchased under the contract credited and applicable contributions transferred to the DCRP; or

(5) If a member chooses the option in (4)(a), the member may, pursuant to ARM 2.43.441, complete the service purchase contract with a rollover of funds from an eligible retirement plan account belonging to the member or a direct trustee-to-trustee transfer of funds from the member's 26 USC 403(b) tax-sheltered annuity or 26 USC 457 governmental plan, subject to (5)(a):

(a) A direct trustee-to-trustee transfer of funds from the member's 26 USC 403(b) or 26 USC 457 governmental plan prior to the member's severance from employment can be made only if the transfer is either for the purchase of permissive service credit (as defined in section 415(n)(3)(A) of the Internal Revenue Code) under the receiving defined benefit governmental plan or a repayment to which section 415 of the Code does not apply by reason of section 415(k)(3) of the Code. A purchase of service pursuant to 19-3-513, 19-5-409, 19-6-804, 19-7-804, 19-8-904, 19-9-411, or 19-13-405, MCA, is a purchase of permissive service credit.

(6) If a member chooses the option in (4)(a), but then fails to complete the service purchase contract by the end of the member's 12-month election period, MPERA will unilaterally implement (4)(b).

(7) If a member with an existing service purchase contract fails to provide MPERA with written notice of the member's intentions within the 30 days provided in (3), MPERA will unilaterally implement (4)(b). MPERA will take this action at the close of the 30-day time frame.

(8) A member with an existing service purchase contract who elects the DCRP or the MUS-RP in the last month of the member's 12-month election period may pay to MPERA in a lump sum the entire amount remaining due under the service purchase contract.

(a) The entire amount of service purchased under the contract will then be transferred to the DCRP.

(b) The member will not be given time to pay off the existing service purchase contract after the close of the member's 12-month election period.

(9) Any member of an MPERA-administered retirement system with an existing service purchase contract who does not elect the DCRP or the MUS-RP may not terminate the service purchase contract pursuant to this rule.

History

Authorizing statute(s): 19-2-403, 19-2-1010, 19-3-2104, MCA
Implementing statute(s): 19-2-710, 19-3-2111, 19-3-2112, 19-3-2115, MCA
History: NEW, 2002 MAR p. 1884, Eff. 7/12/02; AMD, 2003 MAR p. 1800, Eff. 8/15/03; AMD, 2005 MAR p. 913, Eff. 6/17/05; AMD & TRANS, from ARM 2.43.1015, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2013 MAR p. 2237, Eff. 11/28/13

Mont. Admin. R. 2.43.3517 Family Law Orders, Executions, and Income-Withholding Orders and Elections

(1) A member of PERS who is subject to a PERS Family Law Order pursuant to 19-2-907, MCA, and wishes to elect the DCRP or the Montana University System Retirement Program (MUS-RP), must have the Family Law Order amended to comply with the DCRP or MUS-RP and approved by the board no later than the end of the member's 12-month election period.

(2) A member of PERS who is subject to an execution or income-withholding order pursuant to 19-2-909, MCA, and wishes to elect the DCRP or the MUS-RP, must have the execution or income-withholding order amended to comply with the DCRP or the MUS-RP no later than the end of the member's 12-month election period.

(3) If the order discussed in (1) or (2) is not properly amended and approved by the close of the member's 12-month election period, MPERA will not confirm the member's election. The member will remain a participant of the DBRP.

History

Authorizing statute(s): 19-2-403, 19-3-2104, MCA
Implementing statute(s): 19-2-907, 19-2-909, 19-3-2111, MCA
History: NEW, 2002 MAR p. 1884, Eff. 7/12/02; AMD & TRANS, from ARM 2.43.1017, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2013 MAR p. 2237, Eff. 11/28/13

Mont. Admin. R. 2.43.3520 Election for Employees in Optional Pers Membership Positions

(1) An employee eligible for optional membership who, pursuant to 19-3-412, MCA, chooses to be a member of PERS will initially be a participant of the PERS DBRP. The DBRP participant will have 12 months from the first day of the month following the month the member is initially reported to MPERA as a PERS member to file a retirement plan choice election form with MPERA pursuant to ARM 2.43.3510.

(2) An employee who declines optional membership under 19-3-412, MCA, is not a member of PERS and has no retirement plan choice.

History

Authorizing statute(s): 19-2-403, 19-3-2104, MCA
Implementing statute(s): 19-3-2104, 19-3-2111, MCA
History: NEW, 2002 MAR p. 1884, Eff. 7/12/02; AMD & TRANS, from ARM 2.43.1020, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.3523 Membership in Other Title 19 Retirement Plans

(1) A PERS member who is also a member of another Title 19 retirement system shall make a retirement plan election pursuant to ARM 2.43.3510 and 2.43.3511.

(2) PERS members employed full- or part-time by both a PERS-covered employer and another Title 19 retirement system employer will be bound by the statutory membership requirements of the PERS Defined Benefit Retirement Plan or Defined Contribution Retirement Plan, whichever they elect.

History

Authorizing statute(s): 19-2-403, 19-3-2104, MCA
Implementing statute(s): 19-3-2111, MCA
History: NEW, 2002 MAR p. 1884, Eff. 7/12/02; TRANS, from ARM 2.43.1023, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.3524 Retirees Not Entitled to Election

(1) Retired members of the PERS may not elect the PERS Defined Contribution Retirement Plan or the Montana University System Retirement Program, but must remain members of the PERS Defined Benefit Retirement Plan regardless of reemployment in a PERS-covered position.

(2) Section (1) also applies to retired members who later return to active PERS membership.

History

Authorizing statute(s): 19-2-403, 19-3-2104, MCA
Implementing statute(s): 19-3-1106, 19-3-2104, 19-3-2111, MCA
History: NEW, 2002 MAR p. 1884, Eff. 7/12/02; TRANS, from ARM 2.43.1024, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2013 MAR p. 2237, Eff. 11/28/13

Mont. Admin. R. 2.43.3525 Montana University System Employee Elections

(1) A Montana University System (MUS) employee who is a PERS member is required to make a retirement plan election pursuant to ARM 2.43.3510 and 2.43.3511.

(2) A MUS employee who is a PERS member may be a participant of the MUS Retirement Program (MUS-RP) and either the PERS Defined Benefit Retirement Plan (DBRP) or the PERS Defined Contribution Retirement Plan (DCRP) only under one of the following conditions:

(a) The PERS member is employed part- or full-time by both the MUS and another PERS-covered employer and does not have previous retirement plan election(s) on file with MPERA. The member may elect the MUS-RP for his or her MUS employment and the DBRP or DCRP for his or her other PERS-covered employment.

(b) The PERS member is employed by the MUS, elected the MUS-RP, and accepted employment with another PERS-covered employer, other than MUS. The member may have terminated employment with the MUS or may have taken a separate (second) job with the other PERS-covered employer. In either case, the member must elect either the DBRP or DCRP as the member's retirement plan for the member's employment with the other PERS-covered employer.

(3) A MUS employee who is in both a PERS-covered position and an MUS-RP-covered position may be a participant of both the MUS-RP and either the DBRP or DCRP.

History

Authorizing statute(s): 19-2-403, 19-3-2104, MCA
Implementing statute(s): 19-3-2104, 19-3-2112, MCA
History: NEW, 2002 MAR p. 1884, Eff. 7/12/02; TRANS, from ARM 2.43.1025, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2013 MAR p. 2237, Eff. 11/28/13

Mont. Admin. R. 2.43.3531 Timing of Transfers to the Defined Contribution Retirement Plan

(1) Once a member's election to join either the PERS DCRP or the Montana University System Retirement Program (MUS-RP) has been confirmed, MPERA will transfer contributions to the participant's individual account in the DCRP or the MUS-RP within 15 working days.

History

Authorizing statute(s): 19-2-403, 19-3-2104, MCA
Implementing statute(s): 19-3-2114, 19-3-2117, MCA
History: NEW, 2002 MAR p. 1884, Eff. 7/12/02; AMD & TRANS, from ARM 2.43.1031, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2013 MAR p. 2237, Eff. 11/28/13

Mont. Admin. R. 2.43.3532 Crediting of Individual Accounts

(1) MPERA will transfer a DCRP participant's statutorily required employee and employer contributions to the DCRP recordkeeper within two working days after receipt in good order of each reporting agency's contribution report and contributions.

(2) The DCRP recordkeeper will credit individual accounts and transfer contributions to a DCRP participant's selected investment option(s) within one working day after receipt of contributions from MPERA.

History

Authorizing statute(s): 19-2-403, 19-3-2104, MCA
Implementing statute(s): 19-3-2117, MCA
History: NEW, 2002 MAR p. 1884, Eff. 7/12/02; AMD & TRANS, from ARM 2.43.1032, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.3540 Disability Benefits for Members of the Defined Contribution Retirement Plan

(1) Members of the Defined Contribution Retirement Plan (DCRP) who are found by the board to be disabled are entitled to a disability benefit pursuant to 19-3-2141, MCA.

(2) The disability benefit awarded a member of the DCRP is calculated based on the member's years of service credit, not years of membership service. The applied factor is based on membership service and the member's initial hire date, pursuant to 19-3-2141, MCA.

(3) The disability benefit awarded a member of the DCRP is not a retirement benefit, but a benefit paid from the long-term disability trust fund established pursuant to 19-3-2141, MCA.

(4) The disability benefit awarded a member of the DCRP is not subject to option 2, option 3 or option 4 contained in 19-3-1501, MCA.

(5) The disability benefit paid to a member of the DCRP is not subject to distribution pursuant to a family law order or a qualified domestic relations order.

(6) Disability benefits paid from the long-term disability trust fund will be tax-reported to the receiving participant and the IRS on the appropriate IRS form.

History

Authorizing statute(s): 19-3-2104, 19-3-2141, MCA
Implementing statute(s): 19-3-2141, MCA
History: NEW, 2002 MAR p. 1884, Eff. 7/12/02; AMD, 2003 MAR p. 1800, Eff. 8/15/03; TRANS, from ARM 2.43.1040, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11.

Mont. Admin. R. 2.43.3545 Distribution to Participant

(1) A DCRP participant is entitled to receive the participant's vested accounts upon termination of service in a PERS-covered position, whether for retirement or for other purposes.

(2) The participant shall, within 120 days after the participant terminates service in a PERS-covered position, notify MPERA of the date upon which the participant wants distribution of the accounts to start.

(a) Distribution must start no later than April 1 of the calendar year following the later of the calendar year:

(i) in which the participant reaches age 70 1/2 if born before July 1, 1949; or

(ii) in which the participant reaches age 72 if born after June 30, 1949, and before January 1, 1951; or

(iii) in which the participant reaches age 73 if born after December 31, 1950; or

(iv) in which the participant retires from service in a PERS-covered position.

(b) If the participant does not select the date upon which distributions are to start, distributions will start 120 days after termination of service from a PERS-covered position.

(c) Once selected, the participant may change the distribution date provided the date continues to meet the requirements of (2)(a).

(3) The participant shall also, no later than 30 days before the start of the distribution of the accounts, select a payment option.

(a) Payment options include:

(i) a lump-sum distribution of the participant's vested accounts, less applicable taxes;

(ii) a direct trustee-to-trustee rollover of the participant's vested accounts to an eligible retirement plan;

(iii) a regular rollover of the participant's vested accounts to an eligible retirement plan;

(iv) periodic payments of a fixed amount; or

(v) periodic payments based on the participant's life expectancy, determined annually.

(b) A payment option may only be selected if the amounts payable to the participant are expected to be at least equal to the minimum distribution required under section 401(a)(9) of the Internal Revenue Code and satisfy the minimum distribution incidental benefit requirements of section 401(a)(9)(G) of the Internal Revenue Code.

(c) If the participant does not select a payment option, the vested accounts will be paid in a lump sum, less applicable taxes.

(4) If the participant fails to choose a payment option or a distribution time, a lump-sum distribution with 20% withheld for federal taxes will occur 120 days after termination of service from a PERS-covered position.

History

Authorizing statute(s): 19-2-403, 19-3-2104, MCA
Implementing statute(s): 19-2-303(22), 19-2-1007, 19-3-2123, 19-3-2124, MCA
History: NEW, 2002 MAR p. 1884, Eff. 7/12/02; AMD & TRANS, from ARM 2.43.1045, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11; AMD, 2024 MAR p. 2051, Eff. 8/24/24.

Mont. Admin. R. 2.43.3546 Distribution Upon Death of Participant

(1) If a DCRP participant dies prior to the start of the distribution of the participant's benefits, the participant's beneficiary, provided the beneficiary is the participant's spouse, has the same payment options as the participant would have had.

(a) Those payment options include:

(i) a lump sum distribution of the participant's vested accounts, less applicable taxes;

(ii) a direct trustee-to-trustee rollover of the participant's vested accounts to an eligible retirement plan, a traditional or Roth individual retirement account, or an annuity;

(iii) a regular rollover of the participant's vested accounts to an eligible retirement plan;

(iv) periodic payments of a fixed amount; or

(v) periodic payments based on the beneficiary's life expectancy, determined annually.

(b) A payment option may only be selected if the amounts payable to the beneficiary are expected to be at least equal to the minimum distribution required under section 401(a)(9) of the Internal Revenue Code and satisfy the minimum distribution incidental benefit requirements of section 401(a)(9)(G) of the Internal Revenue Code.

(c) The beneficiary must select the payment option prior to 60 days after the receipt by the board of the satisfactory proof of the participant's death.

(d) If the beneficiary does not select a payment option, the vested accounts will be paid in a lump sum, less applicable taxes.

(2) If the beneficiary is not the member's spouse, the beneficiary may elect to rollover only to an individual retirement account or individual retirement annuity that is treated as an inherited individual retirement account or annuity.

(3) Unless the participant's beneficiary is the participant's spouse, the payment of benefits must start within 60 days after receipt by the board of satisfactory proof of the participant's death.

(4) If the beneficiary is the participant's spouse, the spouse may, within 60 days of the participant's death, elect to defer distribution until a date no later than the date the participant would have attained:

(a) age 70 1/2 if the participant was born before July 1, 1949;

(b) age 72 if the participant was born after June 30, 1949, and before January 1, 1951; or

History

Authorizing statute(s): 19-2-403, 19-3-2104, MCA
Implementing statute(s): 19-2-1007, 19-3-2124, 19-3-2125, MCA
History: NEW, 2002 MAR p. 1884, Eff. 7/12/02; AMD & TRANS, from ARM 2.43.1046, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2024 MAR p. 2051, Eff. 8/24/24.

Subchapter 2.43.40 Highway Patrol Officers' Retirement System

Mont. Admin. R. 2.43.4003 Highway Patrol Officers' Minimum Benefit Adjustments

(1) When the state of Montana has not negotiated a salary agreement with its actively employed highway patrol officers by July 1 of any year, MPERA shall take the following actions:

(a) Retirement benefits will be paid to non-GABA retirees using the most recent base salary for a newly confirmed highway patrol officer negotiated by the state and reported to MPERA.

(b) When a salary agreement is negotiated by the state and MPERA is notified of a change in base pay for newly confirmed highway patrol officers, retirement benefits will be recalculated and adjustments paid retroactively to non-GABA retirees.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-6-707, MCA
History: NEW, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.4006 Definitions

(1) "DROP" means the HPORS deferred retirement option plan.

(2) "DROP account" means the accumulated amount of money that has accrued to a DROP participant, and interest.

(3) "Monthly DROP accrual" means the amount equal to the monthly benefit that would have been payable to the participant had the participant terminated and retired, plus the participant's member contributions for the month at the percentage provided in 19-6-402, MCA.

History

Authorizing statute(s): 19-2-403, 19-6-1003, MCA
Implementing statute(s): 19-6-1005, MCA
History: NEW, 2015 MAR p. 2244, Eff. 12/25/15.

Mont. Admin. R. 2.43.4009 Drop Application Process

(1) Eligible members who wish to participate in the DROP must file a DROP information request with MPERA.

(2) The information request must include the member's:

(a) full name;

(b) social security number;

(d) date of birth; and

(e) anticipated DROP period start date.

(3) MPERA will calculate estimates of the monthly benefit that would have been payable to the member had the member terminated employment and retired at the commencement of the DROP period. The estimate and a DROP application will be sent to the member.

(4) An eligible member who wishes to participate must complete the DROP application and return it to MPERA. MPERA must receive the completed application at least two weeks before the first day of the month the member wants the DROP period to be effective; otherwise MPERA will notify the member that the DROP period will be effective the following month. If a birth certificate or other acceptable proof of age is required by the application, it must accompany the application for the application to be complete.

(5) Once the application is filed with MPERA, the election to participate in the DROP is irrevocable.

History

Authorizing statute(s): 19-2-403, 19-6-1003, MCA
Implementing statute(s): 19-6-1003, 19-6-1004, MCA
History: NEW, 2015 MAR p. 2244, Eff. 12/25/15.

Mont. Admin. R. 2.43.4010 Drop Period

(1) The DROP period must begin on the first day of a month, must be prospective, and must end on the last day of a month. The DROP period will end as specified on the application, upon termination, or upon the participant's death, whichever occurs first.

(2) If the participant terminates or dies during the DROP period, the DROP period will end on the last day of the last full month of active service.

(3) A participant may not receive a retirement benefit or the monthly benefit portion of the DROP accrual for the month in which they terminate or die.

History

Authorizing statute(s): 19-2-403, 19-6-1003, MCA
Implementing statute(s): 19-6-1003, 19-6-1004, 19-6-1006, MCA
History: NEW, 2015 MAR p. 2244, Eff. 12/25/15.

Mont. Admin. R. 2.43.4013 Drop Participation Limits

(1) A DROP participant:

(a) is not eligible for disability retirement;

(b) may not purchase service;

(d) may not receive a refund of their HPORS account balance.

History

Authorizing statute(s): 19-2-403, 19-6-1003, MCA
Implementing statute(s): 19-6-1003, 19-6-1004, 19-6-1005, MCA
History: NEW, 2015 MAR p. 2244, Eff. 12/25/15.

Mont. Admin. R. 2.43.4015 Estimated Monthly Drop Accrual

(1) Once a member files an application to participate in the DROP and the participant's DROP period begins, estimated monthly DROP accruals will be paid into the participant's DROP account.

(2) The employer shall provide all documents MPERA needs to determine the participant's total service credit and highest average compensation. Once the documents are received, the MPERA will finalize the monthly benefit portion of the participant's monthly DROP accrual.

(3) MPERA will suspend the estimated monthly benefit portion of the participant's monthly DROP accrual after three months if the employer has not provided the above documents.

(a) The monthly benefit portion of the participant's monthly DROP accrual will not resume until after the documents are received from the employer and the monthly benefit has been approved.

(b) Retroactive payments of the monthly benefit will be made to the member's DROP account, if necessary.

(c) The participant's member contributions portion of the monthly DROP accrual will continue despite suspension of the estimated monthly benefit portion.

History

Authorizing statute(s): 19-2-403, 19-6-1003, MCA
Implementing statute(s): 19-6-1003, 19-6-1005, MCA
History: NEW, 2015 MAR p. 2244, Eff. 12/25/15.

Mont. Admin. R. 2.43.4016 Interest Paid to Participants

(1) A participant's DROP account must include compounded annual interest.

(2) Subject to (3), the interest rate will be fixed at the end of each fiscal year and will equal the actuarially assumed rate of return for the trust fund.

(3) Interest credited on the DROP account shall comply with any applicable provisions of 29 USC 623(i)(10)(B)(i) of the federal Age Discrimination in Employment Act (ADEA) and any applicable federal treasury regulations establishing market rates of return for purposes of complying with ADEA.

History

Authorizing statute(s): 19-2-403, 19-6-1003, MCA
Implementing statute(s): 19-6-1003, 19-6-1005, MCA
History: NEW, 2015 MAR p. 2244, Eff. 12/25/15.

Mont. Admin. R. 2.43.4017 Distribution of Drop Benefit

(1) The DROP benefit will be distributed upon the participant's termination of employment. The participant may request to receive the DROP benefit in a lump sum, or in a direct rollover to another eligible plan, as allowed by the Internal Revenue Service (IRS).

(2) To make a direct rollover of the DROP benefit, the participant must make arrangements with the other plan and provide any necessary information to MPERA.

(3) A participant must designate a distribution method within 60 days after termination of employment; otherwise MPERA will pay the DROP benefit to the participant in a lump sum. Any required federal or state withholding will reduce the amount of the payment.

(4) MPERA will distribute the DROP benefit as soon as administratively feasible once all appropriate documents are filed with MPERA.

(5) Upon a DROP participant's death, the participant's DROP benefit will be paid to the participant's survivors or, if no survivors exist, then to the participant's designated beneficiaries. The DROP benefit will be paid in a lump sum, unless the recipient chooses to receive the DROP benefit in a direct rollover to another eligible retirement plan, as allowed by the IRS.

History

Authorizing statute(s): 19-2-403, 19-6-1003, MCA
Implementing statute(s): 19-6-1003, 19-6-1006, 19-6-1008, MCA
History: NEW, 2015 MAR p. 2244, Eff. 12/25/15.

Mont. Admin. R. 2.43.4018 Distribution of Drop Benefit Pursuant to Family Law Order

(1) A family law order (FLO) may distribute all or a portion of a DROP participant's DROP benefit to an alternate payee. To do so, the FLO must specifically reference distribution of a DROP benefit and provide a specific method for determining the amount of the DROP benefit to be paid to the alternate payee.

(2) The alternate payee named in the FLO is entitled to the same distribution options available to the participant and as allowed by the IRS.

(3) A FLO may distribute all or a portion of a DROP participant's DROP benefit even if the participant joined the DROP subsequent to approval of the FLO.

(4) A FLO that does not specifically address a DROP benefit will not be considered to distribute any portion of the payee's DROP benefit to an alternate payee.

(5) A FLO cannot specifically require or forbid that the payee participate in the DROP.

(6) To distribute any portion of a participant's DROP benefit, a FLO approved prior to the effective date of the DROP legislation (October 1, 2015) must be amended to specifically address the DROP benefit.

(7) A DROP benefit cannot be distributed pursuant to a FLO until the DROP participant terminates employment.

History

Authorizing statute(s): 19-2-403, 19-6-1003, MCA
Implementing statute(s): 19-6-1003, MCA
History: NEW, 2015 MAR p. 2244, Eff. 12/25/15.

Mont. Admin. R. 2.43.4020 Employment After the Drop Period -- Payments

(1) Unless the participant's DROP period is extended pursuant to ARM 2.43.4023, monthly DROP accruals will stop at the end of the designated DROP period even if the participant continues HPORS-covered employment.

(2) The participant's monthly service retirement benefit payments for the pre-DROP and the post-DROP period will begin the month following the month in which the participant terminates post-DROP HPORS-covered employment.

(3) The participant's DROP benefit will be distributed pursuant to ARM 2.43.4017.

(4) The surviving spouse or dependent child(ren) in existence at the time of the participant's death will receive both continuing monthly service retirement benefit payments. If there is no surviving spouse or dependent child(ren) at the time of the participant's death:

(a) any remaining accumulated contributions attributable to the pre-DROP period will be paid to the designated beneficiary for that benefit payment; and

(b) any remaining accumulated contribution attributable to the post-DROP period will be paid to the designated beneficiary for that benefit payment.

History

Authorizing statute(s): 19-2-403, 19-6-1003, MCA
Implementing statute(s): 19-6-505, 19-6-1003, 19-6-1007, MCA
History: NEW, 2015 MAR p. 2244, Eff. 12/25/15; AMD, 2020 MAR p. 391, Eff. 2/29/20.

Mont. Admin. R. 2.43.4023 Impact of Uniformed Service During Drop Period

(1) HPORS DROP participants called to duty for a period or periods of service in the uniformed services during their DROP period must, within 90 days from the date they return to employment, make an irrevocable election to either:

(a) include in their original DROP period, pursuant to ARM 2.43.2315, the time in which they were called to duty; or

(b) add this time to the end of their original DROP period.

(2) The time that can be either included in or added to a participant's DROP period under (1) is the total number of whole months during which the participant served in uniformed services during the DROP period. However, the total number of months in the new DROP period may not exceed the total number of months in the DROP period originally elected by the participant under 19-6-1004, MCA.

(3) If the participant elects to include the period of uniformed services in the participant's original DROP period:

(a) the participant's member contributions must be based on the compensation the participant would have received had the participant not been called to uniformed services duty, including any pay raises; and

(b) once the member and employer contributions are paid to MPERA pursuant to ARM 2.43.2315, the applicable member contributions and the participant's monthly retirement benefit for each month of included USERRA service will be added to the participant's DROP account.

(4) If the participant elects to add the period of uniformed services to the participant's original DROP period:

(a) the participant's member contributions to the participant's DROP account will be determined based on the compensation earned during the added months; and

(b) the participant's monthly retirement benefit will be paid to the participant's DROP account during the added months.

History

Authorizing statute(s): 19-2-403, 19-6-1003, MCA
Implementing statute(s): 19-6-1004, MCA
History: NEW, 2015 MAR p. 2244, Eff. 12/25/15.

Mont. Admin. R. 2.43.4024 Differential Pay for Military Leave

(1) For purposes of (2) and (3), differential pay is pay by an employer to a member who leaves HPORS-covered employment to serve in the uniformed services, and the pay is for all or some of the difference between the member's normal salary and military pay.

(2) During the DROP period, employer contributions under 19-6-404, MCA, for all differential pay must continue to be made to the retirement system.

(3) Member contributions under 19-6-402, MCA, for differential pay must be made to the member's DROP account.

(4) The remainder of the participant's monthly DROP accrual will be subject to ARM 2.43.4023.

History

Authorizing statute(s): 19-2-403, 19-6-1003, MCA
Implementing statute(s): 19-6-1005, MCA
History: NEW, 2015 MAR p. 2244, Eff. 12/25/15.

Subchapter 2.43.42 Sheriffs' Retirement System

Mont. Admin. R. 2.43.4203 Detention Officer Membership in Sheriffs' Retirement System (srs)

(1) An active PERS member on July 1, 2005 is eligible to become a member of the SRS, and an employee hired by a sheriff after July 1, 2005 must become a member of the SRS, pursuant to Title 19, chapter 7, part 3, MCA, if the member or employee meets the definition of "detention officer" in 19-7-101(2), MCA, which includes:

(a) being employed in a detention center, a juvenile detention center, a temporary detention center, or a detention facility;

(b) having authority and responsibility for maintaining custody of an inmate for any period of time and performing tasks related to the operation of a detention center; and

(c) completing, within the time allowed by ARM 23.13.206, a detention officers' basic course as provided by the Montana Law Enforcement Academy or equivalent training in a training school meeting the minimum standards of the Board of Crime Control, as required by ARM 23.13.206, pursuant to 44-4-301, MCA.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-7-101, 19-7-301, 19-7-302, MCA
History: NEW, 2005 MAR p. 1670, Eff. 9/9/05; AMD & TRANS, from ARM 2.43.1210, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2013 MAR p. 2240, Eff. 11/28/13

Mont. Admin. R. 2.43.4204 Detention Officer Election to Transfer to Sheriffs' Retirement System (srs)

(1) An active PERS member who, on July 1, 2005, met all the criteria to be a "detention officer" was eligible to make an election to become a member of SRS.

(2) A detention officer who elected to change retirement system membership from PERS to SRS pursuant to (1) has not terminated from service and is not eligible to receive any benefit from PERS until termination of employment.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-7-101, 19-7-301, 19-7-302, MCA
History: NEW, 2005 MAR p. 1670, Eff. 9/9/05; AMD & TRANS, from ARM 2.43.1211, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.4207 Detention Center Reports from Sheriffs

(1) On or before June 1 of each year, the board will provide each sheriff an employer report containing the information from the immediately preceding report, on which the sheriff need only provide new information or corrections regarding employees of the sheriffs' office.

(2) By the 15th day of July each year, the sheriff of each county with a detention center must file the revised employer report with the board.

(3) The employer report will include information documenting the appropriate retirement system for detention officers, as of June 30 of each year, including:

(a) each detention officer's name, social security number, retirement system, and date of initial employment in current position;

(b) whether the employee is acting as a detention officer, and has completed a detention officers' basic course or equivalent training at a training school meeting the minimum standards of the Board of Crime Control or is expected to receive such training within the time allowed by ARM 23.13.206; and

(4) If the sheriff's office employs no detention officers, the report referenced in (3) must indicate that there are no employees who are detention officers.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-7-101, 19-7-301, 19-7-302, MCA
History: NEW, 2005 MAR p. 1670, Eff. 9/9/05; AMD & TRANS, from ARM 2.43.1212, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2013 MAR p. 2240, Eff. 11/28/13

Subchapter 2.43.46 Municipal Police Officers' Retirement System

Mont. Admin. R. 2.43.4603 Municipal Police Officers' Minimum Benefit Adjustments

(1) When a city belonging to MPORS has not negotiated a salary agreement with its actively employed police officers by July 1 of any year, the following actions will be taken by MPERA:

(a) Retirement benefits will be paid to non-GABA retirees from that city using the most recent base salary for a newly confirmed police officer negotiated by the city and reported to MPERA.

(b) When a salary is negotiated by the city and MPERA is notified of a change in base pay for the city's newly confirmed police officers, retirement benefits will be recalculated and adjustments paid retroactively to non-GABA retirees from that city.

(c) Updated reports will be sent to the State Auditor certifying the increased retirement benefits payable from insurance premium tax funds during a given fiscal year as those amounts become known.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-9-1007, MCA
History: NEW, 1991 MAR p. 2216, Eff. 11/15/91; AMD & TRANS, from ARM 2.43.611, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.4606 Definitions

(1) "DROP" means the deferred retirement option plan.

(2) "DROP account" means the amount of money that has accrued to a DROP participant and includes the monthly DROP accrual plus post retirement adjustments, times the applicable number of months of participation, and interest.

(3) "Monthly DROP accrual" means the amount equal to the monthly benefit that would have been payable to the participant had the participant terminated and retired.

History

Authorizing statute(s): 19-2-403, 19-9-1203, MCA
Implementing statute(s): 19-9-1205, MCA
History: NEW, 2002 MAR p. 2652, Eff. 7/12/02; AMD & TRANS, from ARM 2.43.1101, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.4609 Drop Application Process

(1) Eligible members who wish to participate in the DROP must file a DROP information request with MPERA.

(2) The information request must include the member's:

(a) full name;

(b) social security number;

(d) date of birth; and

(e) anticipated date to start the DROP period.

(3) MPERA will calculate estimates of monthly DROP accruals and the DROP benefit. The estimates and a DROP application will be sent to the member.

(5) Once the application is filed with MPERA, the election to participate in the DROP is irrevocable.

History

Authorizing statute(s): 19-2-403, 19-3-1203, MCA
Implementing statute(s): 19-3-1203, 19-9-1204, MCA
History: NEW, 2002 MAR p. 1891, Eff. 7/12/02; AMD, 2003 MAR p. 1800, Eff. 8/15/03; AMD & TRANS, from ARM 2.43.1104, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.4610 Drop Period

(2) If the participant terminates or dies during the DROP period, the DROP period will end on the last day of the last full month of active service.

(3) A participant may not receive a retirement or DROP benefit distribution for the month in which they terminate or die.

History

Authorizing statute(s): 19-2-403, 19-9-1203, MCA
Implementing statute(s): 19-9-1203, 19-9-1204, 19-9-1206, MCA
History: NEW, 2002 MAR p. 1891, Eff. 7/12/02; TRANS, from ARM 2.43.1105, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.4613 Drop Participation Limits

(1) A DROP participant:

(a) is not eligible for disability retirement;

(b) may not purchase service;

(d) may not receive a refund.

History

Authorizing statute(s): 19-2-403, 19-9-1203, MCA
Implementing statute(s): 19-9-1203, 19-9-1204, 19-9-1205, MCA
History: NEW, 2002 MAR p. 1891, Eff. 7/12/02; TRANS, from ARM 2.43.1108, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.4615 Estimated Monthly Drop Accrual

(1) Once a participant files an application to participate in the DROP, the participant may be paid estimated monthly DROP accruals.

(2) The employer shall provide all documents MPERA needs to determine the participant's total service credit and final average compensation. Once the documents are received, the MPERA will finalize the amount of the participant's monthly DROP accrual. Once the monthly accrual amount is finalized, the board will take appropriate action on the application at the next board meeting.

(3) MPERA will suspend estimated monthly DROP accruals after three months if the employer has not provided the above documents. Monthly DROP accruals will not resume until after the documents are received and the board approves the DROP application. The first monthly DROP accrual following board approval will include any previously suspended accruals and retroactive accruals.

History

Authorizing statute(s): 19-2-403, 19-9-1203, MCA
Implementing statute(s): 19-9-1203, 19-9-1205, MCA
History: NEW, 2002 MAR p. 1891, Eff. 7/12/02; TRANS, from ARM 2.43.1110, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.4616 Interest Paid to Participants

(1) A participant's DROP account must include compounded annual interest.

(2) Subject to (3), the interest rate will be fixed at the end of each fiscal year and will equal the actuarially assumed rate of return for the trust fund.

(3) Interest credited on the DROP account shall comply with any applicable provisions of 29 USC section 623(i)(10)(B)(i) of the federal Age Discrimination in Employment Act (ADEA) and any applicable federal treasury regulations establishing market rates of return for purposes of complying with ADEA.

History

Authorizing statute(s): 19-2-403, 19-9-1203, MCA
Implementing statute(s): 19-2-303(23), 19-9-1206, 19-9-1208, MCA
History: NEW, 2002 MAR p. 1891, Eff. 7/12/02; AMD & TRANS, from ARM 2.43.1111, 2008 MAR p. 2467, Eff. 12/1/08; AMD, MAR p. 1678, Eff. 8/26/11.

Mont. Admin. R. 2.43.4617 Distribution of Drop Benefit

(1) The DROP benefit will be distributed upon the participant's termination of service. The participant may request to receive the DROP benefit in a lump sum, or in a direct rollover to another eligible plan, as allowed by the Internal Revenue Service (IRS).

(2) To make a direct rollover of the DROP benefit, the participant must make arrangements with the other plan and provide any necessary information to MPERA.

(4) MPERA will distribute the DROP benefit as soon as administratively feasible once all appropriate documents are filed with MPERA.

History

Authorizing statute(s): 19-2-403, 19-9-1203, MCA
Implementing statute(s): 19-2-1007, 19-9-1206, 19-9-1208, MCA
History: NEW, 2002 MAR p. 1891, Eff. 7/12/02; AMD & TRANS, from ARM 2.43.1112, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11; AMD, 2025 MAR, Notice No. 2025-212, Eff. 9/13/25.

Mont. Admin. R. 2.43.4618 Distribution of Drop Benefit Pursuant to Family Law Order

(2) The alternate payee named in the FLO is entitled to the same distribution options available to the participant and as allowed by the IRS.

(3) A FLO may distribute all or a portion of a DROP participant's DROP benefit even if the participant joined the DROP subsequent to approval of the FLO.

(4) A FLO that does not specifically address a DROP benefit will not be considered to distribute any portion of the payee's DROP benefit to an alternate payee.

(5) A FLO cannot specifically require or forbid that the payee participate in the DROP.

(6) To distribute any portion of a participant's DROP benefit, a FLO approved prior to the enactment of the DROP legislation (May 1, 2001) must be amended to specifically address the DROP benefit.

(7) A DROP benefit cannot be distributed pursuant to a FLO until the DROP participant terminates employment.

History

Authorizing statute(s): 19-2-403, 19-9-1203, MCA
Implementing statute(s): 19-9-1208, MCA
History: NEW, 2003 MAR p. 1801, Eff. 8/15/03; TRANS, from ARM 2.43.1113, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.4620 Employment After the Drop Period -- Payments

(1) Monthly DROP accruals will stop at the end of the designated DROP period even if the participant continues employment.

(2) The participant's monthly service retirement benefit payments for the pre-DROP period and the post-DROP period will begin the month following the month in which the participant terminates post-DROP employment.

(3) The participant's DROP benefit will be distributed pursuant to ARM 2.43.4617.

(a) any remaining accumulated contributions attributable to the pre-DROP period will be paid to the designated beneficiary for that benefit payment; and

(b) any remaining accumulated contribution attributable to the post-DROP period will be paid to the designated beneficiary for that benefit payment.

History

Authorizing statute(s): 19-2-403, 19-9-1203, MCA
Implementing statute(s): 19-9-804, 19-9-1207, MCA
History: NEW, 2002 MAR p. 1891, Eff. 7/12/02; TRANS, from ARM 2.43.1115, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2020 MAR p. 391, Eff. 2/29/20.

Mont. Admin. R. 2.43.4623 Guaranteed Annual Benefit Adjustment Increases for Drop Participants

(1) This rule applies to participants eligible for the guaranteed annual benefit adjustment (GABA) under 19-9-1009 , 19-9-1010 , or 19-9-1013 , MCA.

(2) A participant will be eligible for subsequent GABA increases after participating in the DROP for at least 12 months. The first GABA increase will begin the following January. The GABA will be applied to the participant's monthly DROP accrual.

(3) Participants who continue employment after the DROP period will not receive GABA increases during the period of post-DROP employment.

(4) After termination of employment, GABA increases will be applied to the participant's retirement benefits, but not to the DROP benefit. The participant will receive GABA increases after receiving monthly DROP accruals or retirement benefits for a combined total of at least 12 months. The GABA increase will begin the following January.

History

Authorizing statute(s): 19-2-403, 19-9-1203, MCA
Implementing statute(s): 19-9-1205, 19-9-1207, 19-9-1208, MCA
History: NEW, 2002 MAR p. 1891, Eff. 7/12/02; TRANS, from ARM 2.43.1118, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.4624 Minimum Benefit for Drop Participants

(1) This rule applies to participants eligible for the minimum benefit adjustment under 19-9-1007, MCA.

(2) The monthly DROP accrual paid during the DROP period may not be less than the minimum benefit.

(3) Participants who continue employment after the DROP period may not receive minimum benefit increases during the period of post-DROP employment.

(4) The total retirement benefit paid to a participant after termination may not be less than the minimum benefit.

History

Authorizing statute(s): 19-2-403, 19-9-1203, MCA
Implementing statute(s): 19-9-1205, 19-9-1207, 19-9-1208, MCA
History: NEW, 2002 MAR p. 1891, Eff. 7/12/02; TRANS, from ARM 2.43.1119, 2008 MAR p. 2467, Eff. 12/1/08.

Subchapter 2.43.48 Firefighters' Unified Retirement System

Mont. Admin. R. 2.43.4803 Firefighters' Minimum Benefit Adjustments

(1) When a city belonging to FURS has not negotiated a salary agreement with its actively employed firefighters by July 1 of any year, MPERA shall take the following actions:

(a) Retirement benefits will be paid to non-GABA retirees from that city using the most recent base salary for a newly confirmed firefighter negotiated by the city and reported to MPERA.

(b) When a salary agreement is negotiated by the city and MPERA is notified of a change in base pay for the city's newly confirmed firefighters, retirement benefits will be recalculated and adjustments paid retroactively to non-GABA retirees from that city.

(c) Updated reports will be sent to the State Auditor certifying the increased retirement benefits payable from insurance premium tax funds during a given fiscal year as those amounts become known.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-13-1007, MCA
History: NEW, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.4807 Part-Paid Firefighters' Service

(1) Service credit earned by part-paid firefighters prior to July 1, 1981, will be computed and granted on the basis of the ratio of salary earned by the part-paid firefighter to the salary paid to a newly confirmed full-paid firefighter during the same time period.

(2) Service credit earned on or after July 1, 1981, shall be granted under the assumption that all part-paid firefighters work 15% time. Employer and part-paid employee contributions to FURS will be based on an assumed salary for part-paid firefighters which is 15% of a newly confirmed full-paid firefighter's salary for the same time period.

(3) A part-paid firefighter will accrue service credit of one month for each calendar month during which contributions are made; however, if and when the part-paid service is qualified into another system, or if the part-paid firefighter also has full-paid firefighter service credit, each calendar month of part-paid service shall be credited as only .15 months of service.

History

Authorizing statute(s): 19-2-403, MCA
Implementing statute(s): 19-13-301, MCA
History: NEW, 1986 MAR p. 1454, Eff. 8/29/86; AMD & TRANS, from ARM 2.43.426, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 1678, Eff. 8/26/11.

Subchapter 2.43.50 Volunteer Firefighters' Compensation Act

Mont. Admin. R. 2.43.5001 Basic Unit of Service

(1) As of July 1, 1965, the basic unit of service for volunteer firefighters is one fiscal year. Volunteer firefighters not continuously on the active membership list of a single qualifying volunteer fire company for the entire fiscal year shall not be listed on the annual certificate and shall not receive credit for service under the Volunteer Firefighters' Compensation Act (VFCA) for that fiscal year. A volunteer fire company qualifies to participate in the VFCA if the requirements of 19-17-402, MCA, are met.

(2) A volunteer firefighter shall receive one year of credit for service under the VFCA for each two full fiscal years of service performed prior to July 1, 1965.

History

Authorizing statute(s): 19-17-203, MCA
Implementing statute(s): 19-17-201, 19-17-401, 19-17-402, MCA
History: NEW, 1986 MAR p. 1454, Eff. 8/29/86; AMD, 2003 MAR p. 1188, Eff. 6/13/03; AMD & TRANS, from ARM 2.43.801, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.5002 Failure to File Required Reports

(1) Annual certificates filed after the September 1 due date must be appealed to and considered by the board for approval. Information provided to the board by the fire chief or designated official must include:

(a) the original, notarized annual certificate;

(b) certified training documents showing the required 30 hours of training per listed member, including the date, title, description, and hours of all applicable training classes, and the names of all members who attended the specific training classes;

(d) a request for oral argument before the board if oral argument is desired.

History

Authorizing statute(s): 19-17-203, MCA
Implementing statute(s): 19-17-108, 19-17-201, 19-17-402, MCA
History: NEW, 1986 MAR p. 1454, Eff. 8/29/86; AMD, 2003 MAR p. 1188, Eff. 6/13/03; AMD & TRANS, from ARM 2.43.802, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 2261, Eff. 10/28/11.

Mont. Admin. R. 2.43.5003 Membership Cards

(1) Each member must complete a VFCA membership card upon commencing service as a volunteer firefighter, name change, change of statutory beneficiary, or change of fire company/district.

History

Authorizing statute(s): 19-17-203, MCA
Implementing statute(s): 19-17-112, MCA
History: NEW, 2011 MAR p. 2261, Eff. 10/28/11.

Mont. Admin. R. 2.43.5004 Effective Date for Pension Benefit Adjustments

(1) By October 31 of each year the board shall determine whether the VFCA pension trust fund is actuarially sound and the amortization period for any unfunded liability remains at 20 years or less. As required by 19-17-404, MCA, the board shall then make pension adjustments for the next 12 months commencing with November benefits.

History

Authorizing statute(s): 19-17-203, MCA
Implementing statute(s): 19-17-404, MCA
History: NEW, 2011 MAR p. 2261, Eff. 10/28/11.

Mont. Admin. R. 2.43.5005 Application Process for Vfca Disability Benefits

(1) All forms necessary to apply for disability benefits may be obtained from MPERA.

(2) The following forms must be completed and submitted to MPERA before the board will act on the application for disability benefits:

(a) application for disability benefit and summary of disability;

(b) VFCA duty questionnaire for disability retirement completed by the fire chief;

(d) authorization to release information; and

(e) a Health Insurance Portability and Accountability Act (HIPAA) authorization.

(3) The requesting party may provide additional medical information for consideration until 21 days prior to the next scheduled board meeting or, if different, the board meeting at which the request will be considered.

History

Authorizing statute(s): 19-17-203, MCA
*Implementing statute(s): *
History: 19-17-603, 19-17-604, 19-17-605, MCA; NEW, 2011 MAR p. 2261, Eff. 10/28/11.

Mont. Admin. R. 2.43.5006 Application for Group Insurance Premium Payments

(1) Each volunteer fire company, or organization or agency maintaining supplemental insurance for a fire company, is eligible for payments toward supplemental insurance coverage for active members of the fire company provided the company files each year:

(a) by September 1 a roster for the current fiscal year; and

(b) by December 31 proof of insurance and a completed MPERA-provided application form.

History

Authorizing statute(s): 19-17-203, MCA
Implementing statute(s): 19-17-103, 19-17-108, 19-17-201, 19-17-205, MCA
History: NEW, 1986 MAR p. 1454, Eff. 8/29/86; AMD, 2003 MAR p. 1188, Eff. 6/13/03; AMD & TRANS, from ARM 2.43.803, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 2261, Eff. 10/28/11.

Mont. Admin. R. 2.43.5007 Payments for Medical Expenses Resulting from Duty-Related Injuries and Illnesses

(1) Payments for medical expense claims made pursuant to Title 19, chapter 17, part 5, MCA, will be paid after:

(a) the claim is properly filed as described in 19-17-502, MCA; and

(b) all personal and/or group insurance payments for those services first have been deducted from the claim.

(2) Medical expense claims in excess of $1,000 must be approved by the board prior to payment by MPERA.

(3) Subsequent insurance settlements in payment of medical expenses which have been previously paid by the board shall be reimbursed to the pension fund within 60 days of receipt by member or service provider.

History

Authorizing statute(s): 19-17-203, MCA
Implementing statute(s): 19-17-504, 19-17-506, MCA
History: NEW, 1986 MAR p. 1454, Eff. 8/29/86; AMD, 2003 MAR p. 1188, Eff. 6/13/03; AMD & TRANS, from ARM 2.43.804, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 2261, Eff. 10/28/11.

Mont. Admin. R. 2.43.5008 Payments for Funeral Expenses Resulting from Duty-Related Death

(1) Payments for funeral expense claims made pursuant to Title 19, chapter 17, part 5, MCA, will be paid after:

(a) the claim is properly filed as described in 19-17-503, MCA; and

(b) all personal and/or group insurance payments for those services first have been deducted from the claim.

(2) Funeral expense claims in excess of $1,000 must be approved by the board prior to payment by MPERA.

(3) Subsequent insurance settlements in payment of funeral expenses which have been previously paid by the board shall be reimbursed to the pension fund within 60 days of receipt by member or service provider.

History

Authorizing statute(s): 19-17-203, MCA
Implementing statute(s): 19-17-505, 19-17-506, MCA
History: NEW, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2011 MAR p. 2261, Eff. 10/28/11.

Subchapter 2.43.51 Deferred Compensation (457) Plan

Mont. Admin. R. 2.43.5101 Adoption of Deferred Compensation Plan Document and Trust Agreement

(1) The board adopts and incorporates by reference the following:

(a) State of Montana Public Employee Deferred Compensation Plan Document, that was approved by the board on June 12, 2025, and describes the terms and conditions related to the operation and administration of the plan; and

(b) State of Montana Public Employee Deferred Compensation Plan Trust Agreement (January 1, 2002 edition), that was approved by the board on February 22, 2001, and September 28, 2001. The trust agreement sets the board's responsibilities as trustee of the deferred compensation plan and requires that the assets of the trust be used for the exclusive benefit of the plan participants and beneficiaries.

(2) Copies of the Deferred Compensation Plan Document, Trust Agreement, and related materials may be obtained from the MPERA, 100 North Park Avenue, Suite 200, P.O. Box 200131, Helena, MT 59620-0131, phone 1 (877) 275-7372 , e-mail mpera@mt.gov, and are available on MPERA's web site at www.mpera.mt.gov.

History

Authorizing statute(s): 19-50-102, MCA
Implementing statute(s): 19-50-102, MCA
History: NEW, 2002 MAR p. 1893, Eff. 7/12/02; AMD, 2005 MAR p. 1908, Eff. 10/7/05; TRANS, from ARM 2.43.1801, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2009 MAR p. 81, Eff. 1/30/09; AMD, 2010 MAR p. 1725, Eff. 7/30/10; AMD, 2013 MAR p. 2234, Eff. 11/28/13; AMD, 2014 MAR p. 1999, Eff. 9/5/14; AMD, 2015 MAR p. 1891, Eff. 10/30/15; AMD, 2018 MAR p. 433, Eff. 2/24/18; AMD, 2020 MAR p. 1614, Eff. 8/29/20; AMD, 2023 MAR p. 401, Eff. 4/29/23; AMD, 2025 MAR, Notice No. 2025-212, Eff. 9/13/25.

Mont. Admin. R. 2.43.5102 Adoption of Investment Policy Statement and Fixed Fund Investment Policy Statement

(1) The board adopts and incorporates by reference the State of Montana Investment Policy Statement 457(b) Deferred Compensation Plan (457(b) Investment Policy Statement) approved by the board on June 11, 2026. The 457(b) Investment Policy Statement provides investment guidelines for the plan, a supplemental retirement-savings vehicle that permits participants to invest on either a pre-tax or a tax-deferred basis. The investment guidelines help the board to meet its fiduciary responsibilities to evaluate and positively influence the direction of the plan and its investments for the benefit of the plan participants and beneficiaries.

(2) The board adopts and incorporates by reference the Montana Fixed Fund Investment Policy Statement approved by the board on February 10, 2022. These guidelines apply to the investment of DCRP participant assets and 457(b) deferred compensation plan participant assets that are pooled together in the plans' stable value group trust. The investment policy statement was developed through mutual agreement amongst the board, the investment manager, and the insurance wrap providers and provides guidance to the investment manager advisor when investing participants' funds contained within the stable value group trust.

(3) Copies of the 457(b) Investment Policy Statement and the Montana Fixed Fund Investment Policy Statement may be obtained from MPERA, 100 North Park Avenue, Suite 200, P.O. Box 200131, Helena, MT 59620-0131, phone 1 (877) 275-7372, e-mail mpera@mt.gov. The documents are also available online at www.mpera.mt.gov.

History

Authorizing statute(s): 19-50-102, MCA
Implementing statute(s): 19-50-102, MCA
History: NEW, 2002 MAR p. 1893, Eff. 7/12/02; AMD, 2004 MAR p. 1132, Eff. 5/7/04; AMD, 2005 MAR p. 1908, Eff. 10/7/05; AMD, 2007 MAR p. 677, Eff. 5/25/07; AMD & TRANS, from ARM 2.43.1802, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2009 MAR p. 1010, Eff. 6/26/09; AMD, 2010 MAR p. 1724, Eff. 7/30/10; AMD, 2010 MAR p. 2571, Eff. 10/29/10; AMD, 2011 MAR p. 2799, Eff. 12/23/11; AMD, 2013 MAR p. 1815, Eff. 10/18/13; AMD, 2015 MAR p. 1889, Eff. 10/30/15; AMD, 2016 MAR p. 1162, Eff. 7/9/16; AMD, 2017 MAR p. 1514, Eff. 9/9/17; AMD, 2018 MAR p. 827, Eff. 4/28/18; AMD, 2019 MAR p. 288, Eff. 3/16/19; AMD, 2019 MAR p. 424, Eff. 4/27/19; AMD, 2019 MAR p. 736, Eff. 6/8/19; AMD, 2020 MAR p. 1117, Eff. 6/27/20; AMD, 2021 MAR p. 465, Eff. 5/1/21; AMD, 2022 MAR p. 609, Eff. 4/30/22; AMD, 2024 MAR p. 1576, Eff. 7/6/24; AMD, 2026 MAR, Notice No. 2026-132, Eff. 8/22/26.

Mont. Admin. R. 2.43.5103 Deferred Compensation Plan Investment Options

(1) The board will choose, regularly review, and may discontinue, add, or change investment options offered to participants of the Deferred Compensation Plan. In doing so, the board will consider recommendations of the statutorily established Employee Investment Advisory Council and follow criteria established in the Plan's Investment Policy Statement.

(2) A Deferred Compensation Plan participant with assets in a discontinued investment option will be given notice and 90 days to move assets from the investment option being discontinued to an offered investment option. Assets remaining in a discontinued investment option at the end of the 90-day period will be automatically transferred to the investment option similar in investment category and style selected by the board to replace the discontinued investment option. If the discontinued investment option is not replaced, the board will transfer the fund balance to an age-appropriate target date fund offered by the Deferred Compensation Plan.

(3) Deferred Compensation Plan participants will be provided a minimum of 30 days notice if the board replaces or changes the stable value investment option manager. The stable value investment option assets will automatically transfer to the new manager(s).

History

Authorizing statute(s): 19-50-102, MCA
Implementing statute(s): 19-50-102, MCA
History: NEW, 2002 MAR p. 1893, Eff. 7/12/02; AMD, 2004 MAR p. 1132, Eff. 5/7/04; AMD & TRANS, from ARM 2.43.1803, 2008 MAR p. 2467, Eff. 12/1/08; AMD, 2015 MAR p. 1894, Eff. 10/30/15.

Mont. Admin. R. 2.43.5104 Adoption of State of Montana Public Employees Pooled Trust

(1) The board adopts and incorporates by reference the Declaration of Trust – State of Montana Public Employees Pooled Trust approved by the board and effective on December 13, 2018, and became effective on January 31, 2019. The Declaration of Trust created a pooled trust effective January 1, 2010, under which stable value assets in the 401(a) defined contribution plan and the 457(b) deferred compensation plan were commingled and jointly invested, but separately maintained and recorded.

(2) Copies of the State of Montana Public Employees Pooled Trust and related materials may be obtained from MPERA, 100 North Park Avenue, Suite 200, P.O. Box 200131, Helena, MT 59620-0131, telephone 1 (877) 275-7372, or e-mail mpera@mt.gov, and are available on MPERA's web site at www.mpera.mt.gov .

History

Authorizing statute(s): 19-3-2104, 19-50-102, MCA
Implementing statute(s): 19-3-2102, 19-50-102, MCA
History: NEW, 2010 MAR p. 1725, Eff. 7/30/10; AMD, 2010 MAR p. 2572, Eff. 10/29/10; AMD, 2019 MAR p. 288, Eff. 3/16/19.

Mont. Admin. R. 2.43.5109 Definitions

(1) Domestic Relations Order (DRO) is a draft document designed to divide a participant's 457 account pursuant to a domestic relations order.

(2) Qualified Domestic Relations Order (QDRO) is a domestic relations order that has been approved by the board.

History

Authorizing statute(s): 19-50-102, MCA
Implementing statute(s): 19-50-102, MCA
History: NEW, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.5110 Qualified Domestic Relations Orders – General Requirements

(1) The board will accept and implement QDROs in the Deferred Compensation (457) Plan sponsored by the State of Montana.

(2) Upon request, MPERA will provide to the public a checklist of required and optional provisions for QDROs.

(3) Information concerning a participant's account will only be released subject to the terms of ARM 2.43.1405.

(4) Upon receipt of a certified copy of a stay from the issuing court or the Montana Supreme Court, MPERA and the board will suspend further consideration or implementation of a Domestic Relations Order (DRO). Unless otherwise directed by court order, MPERA will not distribute the participant's 457 account pending resolution of the stay. MPERA will take further action only on receipt of a certified copy of an order directing such action. If the stay is lifted, MPERA will proceed with consideration, approval, and implementation procedures.

(5) A restraining order may be used to temporarily stop or prohibit payment to a participant. The order must contain the same information identifying the participant and alternate payee as required for a QDRO. If a DRO is not received before the order expires, payments will resume and any retained payments will be made to the participant.

(6) The board will not charge a fee for approving or implementing a QDRO. However, the board may charge a reasonable fee if a participant, an alternate payee, or any of their attorneys make excessive demands of MPERA staff to provide assistance in drafting a DRO which can be qualified.

(7) Any fees required by a third party administrator or record keeper for segregated accounts will be charged against the participant's account unless the QDRO states the fee should be deducted from amounts paid to the alternate payee.

(8) The alternate payee must promptly inform MPERA of any change of name or address prior to payment of their share of the participant's account.

History

Authorizing statute(s): 19-50-102, MCA
Implementing statute(s): 19-50-102, MCA
History: NEW, 2002 MAR p. 2185, Eff. 8/16/02; AMD & TRANS, from ARM 2.43.1810, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.5111 Qualified Domestic Relations Orders – Contents

(1) A QDRO must contain the following information:

(a) the name, current mailing address, date of birth, and social security number of the participant;

(b) the name, current mailing address, date of birth, and social security number of the alternate payee;

(c) the amount or percentage of the participant's account, distribution, or payments to be paid by the Deferred Compensation (457) Plan to the alternate payee, or a description of how to calculate the amount or percentage;

(d) the number of payments or the period of time to which the order applies if the participant is receiving periodic or annuity payments; and

(e) if the participant receives lump sum payments in addition to periodic payments, the QDRO must specify a separate proportion or fixed amount to be applied to the lump sum payments. Otherwise the lump sum payments will not be divided.

(2) A QDRO must meet the following requirements:

(a) a QDRO must create or recognize the right of an alternate payee to all or a portion of a participant's account;

(b) a QDRO must relate to Title 40, MCA marital property rights, alimony, or child or other dependent support;

(c) the specified distribution or payment must be of a type or form permitted under the Deferred Compensation (457) Plan;

(d) the specified amount or duration of the payment to the alternate payee may not be greater than that available to the participant under the Deferred Compensation (457) Plan;

(e) the alternate payee may not be granted payment of any benefits that have already been awarded to another alternate payee under another order previously determined to be a QDRO; and

(f) the QDRO must contain a statement that the QDRO is subject to review and approval by the board.

History

Authorizing statute(s): 19-50-102, MCA
Implementing statute(s): 19-50-102, MCA
History: NEW, 2002 MAR p. 2185, Eff. 8/16/02; AMD & TRANS, from ARM 2.43.1811, 2008 MAR p. 2467, Eff. 12/1/08.

Mont. Admin. R. 2.43.5112 Qualified Domestic Relations Orders – Approval and Implementation

(1) A participant or alternate payee must submit a certified copy of a DRO to MPERA for board approval. The board may delegate authority for approval to the executive director.

(2) MPERA will notify the participant and the alternate payee when it receives a certified copy of a DRO. The notice will explain the procedures for determining if the DRO is qualified.

(3) While reviewing the DRO, MPERA will work with the recordkeeper to:

(a) prevent distributions from the participant's account, but allow the participant to manage the investments; and

(b) segregate the amounts, and earnings thereon, that will be owed to the alternate payee if the DRO is qualified.

(4) The segregated amount, with any earnings thereon, will be distributed to the participant if the DRO is not qualified within 18 months of the date it was received by MPERA and the participant is entitled to and requests distribution of the account.

(5) The information and requirements identified in ARM 2.43.5111 are considered the minimum the board needs to administer a QDRO. Domestic relations orders that do not contain the minimum information or address the minimum requirements are not QDROs and will be rejected by the board as not qualified. Rejected orders will be returned to the appropriate party with information on how to have the DRO qualified.

(6) Once the DRO is qualified, the board will:

(a) notify the participant and the alternate payee that the DRO is being implemented as a QDRO; and

(b) apply the QDRO prospectively if approved more than 18 months after the date it was first received by MPERA.

(7) The alternate payee may receive their payment only as a direct payment, a rollover, or a transfer.

(a) If the alternate payee is a participant or is eligible to participate in the state's Deferred Compensation (457) Plan and establishes an account, the alternate payee's distribution may be made to the alternate payee's 457 plan account.

(b) If the alternate payee is not eligible to participate in the state's Deferred Compensation (457) Plan, a 457 plan account cannot be established for the alternate payee.

History

Authorizing statute(s): 19-50-102, MCA
Implementing statute(s): 19-50-102, MCA
History: NEW, 2002 MAR p. 2185, Eff. 8/16/02; AMD & TRANS, from ARM 2.43.1812, 2008 MAR p. 2467, Eff. 12/1/08.

Chapter 2.44 Teachers' Retirement Board

Subchapter 2.44.1 Organizational Rule

Mont. Admin. R. 2.44.101 Organizational.rule

(1) The organizational rule of the Teachers' Retirement Board is set forth in ARM 2.1.101 and is herein adopted and incorporated by this reference.

History

Authorizing statute(s): Sec. 2-4-201 MCA
Implementing statute(s): 2-4-201 MCA
History: Eff. 12/31/72

Subchapter 2.44.2 Procedural Rules

Mont. Admin. R. 2.44.201 Model Procedural Rule

(1) To the extent applicable to the operations of the teachers' retirement board, the board has herein adopted and incorporated the attorney general's model procedural rules one through 28 by reference to such rules as stated in ARM 1.3.101 through 1.3.234, as amended as of June 12, 1992.

History

Authorizing statute(s): Sec. 2-4-201 MCA
Implementing statute(s): 2-4-201 MCA
History: Eff. 12/31/72; AMD, 1993 MAR p. 1201, Eff. 6/11/93.

Mont. Admin. R. 2.44.202 Applicability of Rules

(1) All of the following rules may not be subject to the provisions of the Montana Administrative Procedure Act. To the extent that they are applicable, procedural rules adopted herein will be applied. To the extent that they are not applicable, procedural rules may be followed at the option of the board. In both cases, these rules shall have full force and effect upon the activities over which the teachers' retirement board has responsibility and/or authority.

History

Authorizing statute(s): Sec. 2-4-201 and 19-4-201 MCA
Implementing statute(s): 2-4-201 and 19-4-201 MCA
History: Eff. 12/31/72.

Subchapter 2.44.3 Membership

Mont. Admin. R. 2.44.301A DEFINITIONS

2.44.301A DEFINITIONS

For the purpose of this chapter, the following definitions apply:

(1) "Alternate payee" means an alternate payee as defined in 19-20-305, MCA.

(2) "Board" or "retirement board" means the Teachers' Retirement Board as provided for in 2-15-1010, MCA.

(3) “Creditable service” is that service defined by 19-20-401, MCA.

(4) "Direct rollover" means a distribution made by the Teachers' Retirement System directly to an eligible retirement plan specified by the participant.

(5) "Eligible retirement plan" means any of the following that accepts a participant's eligible rollover distribution:

(a) an individual retirement account described in Internal Revenue Code (IRC) section 408(a);

(b) an individual retirement annuity described in IRC section 408(b);

(d) a qualified trust described in section 401(a);

(e) effective January 1, 2002, an annuity contract described in IRC section 403(b);

(f) effective January 1, 2002, a plan eligible under IRC section 457(b) that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or a political subdivision of a state that agrees to separately account for amounts transferred into that plan from a plan under this chapter; or

(g) effective January 1, 2008, a Roth Individual Retirement Account (IRA) described in IRC section 408A.

(6) "Family law order (FLO)" means a family law order as defined in 19-20-305, MCA.

(7) "Nonqualified service credit" means permissive service credit other than for services as defined in IRC section 415(n)(3)(C).

(8) "Participant" means a person who is eligible to receive a distribution from the Teachers' Retirement System and to make a direct rollover of the distribution to another eligible plan, including:

(a) a member or retired member;

(b) a member's or retired member's surviving spouse;

(c) a member's or retired member's spouse or former spouse who is the alternate payee under a FLO that qualifies as a domestic relations order as defined in IRC section 414(p); and

(d) effective January 1, 2007, a nonspouse who is a designated beneficiary as defined in IRC section 401(a)(9)(E).

(9) "School term or school year" means the fiscal year July 1 through June 30.

(10) “TRS” or “retirement system” means the Teachers’ Retirement System of the state of Montana as provided for in 19-20-102, MCA.

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): 19-20-101, 19-20-106, 19-20-204, 19-20-302, 19-20-305, MCA
History: NEW, 1987 MAR p. 2233, Eff. 12/11/87; AMD, 1995 MAR p. 2122, Eff. 10/13/95; AMD, 2007 MAR p. 2120, Eff. 12/21/07; AMD, 2009 MAR p. 3, Eff. 12/25/08; AMD, 2025 MAR, Notice No. 2025-107, Eff. 10/25/25.

Mont. Admin. R. 2.44.304 Qualification of the Actuary

(1) The actuary designated by the Teachers' Retirement Board, at a minimum, must:

(a) be a member of at least one of the following professional organizations, as designated:

(i) a Member of the American Academy of Actuaries;

(ii) a Fellow or Member of the American Society of Pension Professionals; or

(iii) an Associate or Fellow of the Society of Actuaries.

(b) comply with the qualification standards applicable to actuaries issuing statements of actuarial opinion as adopted by the American Academy of Actuaries, which qualification standards may be obtained from the American Academy of Actuaries, 1850 M Street NW, Suite 300, Washington, DC 20036, or on the Academy's web site at www.actuary.org; and

(2) The actuary designated by the Teachers' Retirement Board must comply with the identified qualifications at all times while engaged as the actuary for the Teachers' Retirement System, including that the actuary must comply with the standards set forth in (1)(b) and (1)(c) as those standards may be amended from time to time by the adopting entity.

(3) Upon request of the board, proof of qualification must be provided.

History

Authorizing statute(s): 19-4-201, 19-20-201, MCA
Implementing statute(s): 19-4-203(4), 19-20-203, MCA
History: NEW, 1987 MAR p. 2233, Eff. 12/11/87; AMD, 2010 MAR p. 2344, Eff. 10/15/10.

Mont. Admin. R. 2.44.305 Reporting of Montana University System Retirement Program (mus-Rp) Participants

(1) Each unit of the university system shall provide TRS with a monthly report of all members participating in the MUS-RP and remit the employer contributions due. The report shall contain the following and be in alphabetical order:

(a) last name, first name;

(b) social security number;

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): 19-20-302, 19-20-621, MCA
History: NEW, 1987 MAR p. 2233, Eff. 12/11/87; AMD, 2007 MAR p. 2120, Eff. 12/21/07; AMD, 2025 MAR, Notice No. 2025-107, Eff. 10/25/25.

Mont. Admin. R. 2.44.306 Actuarial Assumptions, Rates and Tables

(1) All actuarial assumptions, rates and tables shall be adopted at a meeting of the board and included in the minutes of that meeting.

(2) This rule refers to but is not limited to the following:

(a) optional retirement table;

(b) monthly annuity table;

(d) rates for mortality, disability, retirement, and withdrawal;

(e) assumptions for future salaries, investment earnings, administrative expense and termination.

(3) The assumptions, rates and tables shall be effective as provided in the minutes.

History

Authorizing statute(s): Sec. 19-4-201 MCA
Implementing statute(s): Sec. 19-4-206 MCA
History: NEW, 1989 MAR p. 1276, Eff. 9/1/89; AMD, 1991 MAR p. 2596, Eff. 12/27/91.

Mont. Admin. R. 2.44.307 Membership of Teacher's Aides and Part-Time Employees

(1) Teacher's aides employed in an instructional services capacity after September 1, 1989, are required to participate in the teachers' retirement system provided their predominate duties are those of a teacher's aide and not a substitute teacher or any other position for which membership is mandatory under 19-20-302 , MCA and that they are:

(a) employed for 3.5 hours per day or 17.5 hours per week and;

(b) employed at least 210 hours during the school year.

(2) Teacher's aides employed prior to September 1, 1989, who remained in the public employee's retirement system are not eligible to participate in the teachers' retirement system while employed as a teacher's aide with the same employer.

(3) A teacher's aide will be considered in an instructional services capacity if they are assisting a certified teacher in the education and instruction of students in the regular curriculum of the institution.

(4) Part-time, post graduate instructors in the university system are not eligible for membership.

(5) A part-time employee, who has not been re-employed under 19-20-804 , MCA will be considered an active member after completing the equivalent of 30 full-time days of membership service.

History

Authorizing statute(s): Sec. 19-4-201 and 19-20-201 MCA
Implementing statute(s): Sec. 19-4-302 and 19-20-302 MCA
History: NEW, 1989 MAR p. 1276, Eff. 9/1/89; AMD, 1995 MAR p. 2122, Eff. 10/13/95; AMD, 2000 MAR p. 822, Eff. 3/31/00.

Mont. Admin. R. 2.44.308 Independent Contractor

(1) Any person employed as an independent contractor shall be ineligible for membership in the TRS. Certification from the Montana Department of Labor and Industry pursuant to 39-71-401, MCA, as an independent contractor shall be accepted as prima facie evidence of independent contractor status by the Teachers' Retirement Board.

(2) In absence of certification by the Department of Labor and Industry, it must be shown that the worker is both free from direction and control of the party utilizing their services and have an independently established business.

(3) If a person's status as an independent contractor is in question, they must become a member of the TRS as provided under 19-20-302, MCA. The burden of proof before the Teachers' Retirement Board is on the employer. Upon request, the employer will submit to the Teachers' Retirement Board a copy of the independent contractor certification issued by the Department of Labor and Industry for any contractor employed in a position normally eligible for membership under the TRS.

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): 19-20-302, MCA
History: NEW, 1995 MAR p. 349, Eff. 3/17/95; AMD, 2007 MAR p. 2121, Eff. 12/21/07.

Subchapter 2.44.4 Creditable Service

Mont. Admin. R. 2.44.401 Calculating Service Credits

(1) The basic period of time for calculating service credit shall be the fiscal year July 1 through June 30. Generally, service credit in the Montana Teachers' Retirement System shall be based upon the following unless otherwise provided by rule or statute:

(a) Service credit for Public Employees' Retirement System service qualified in the Teachers' Retirement System shall be credited to the member's account at the same rate earned under and reported to the Public Employees' Retirement System.

(b) A member employed less than full-time during the fiscal year shall receive part-time service credit based on the total number of hours, days, or months reported to the Teachers' Retirement System, divided by the number of hours, days, or months of equivalent full-time service. For the purpose of this subsection, seven hours shall be considered one day.

(2) For employees of the university system and community colleges, part-time service credit shall be prorated based upon the portion of the full-time contract completed and/or the daily rate of pay if available.

History

Authorizing statute(s): 19 4 201, 19-20-201, MCA
Implementing statute(s): 19-4-401 through 19-4-411, 19-20-204, 19-20-401, 19-20-402, 19-20-403, 19-20-404, 19-20-405, 19-20-406, 19-20-407, 19-20-408, 19-20-409, 19-20-410, 19-20-411, MCA
History: Eff. 12/31/72; AMD, 1987 MAR p. 2233, Eff. 12/11/87; AMD, 1991 MAR p. 2596, Eff. 12/27/91; AMD, 1999 MAR p. 2243, Eff. 10/8/99; AMD, 2007 MAR p. 2120, Eff. 12/21/07.

Mont. Admin. R. 2.44.402 Credit for Military Service

(1) Creditable service may be granted for any period of active service allowed under 19-20-404, MCA.

(2) Any member having purchased military service that is subsequently granted at no cost shall receive a refund of their accumulated contributions attributable to the service purchase.

(3) Verification of military service should be submitted on form DD 214 or, if not applicable, a form which certifies the date of entry into active military duty and the date of separation. A form should be provided for each term of active duty.

(4) The period of time used for crediting military service shall be the fiscal year of July 1 through June 30. Military service shall be credited on the basis of 12 full months of active duty equals one year of creditable service or a proportion thereof, based on the number of full months to 12. A partial month will be credited on the basis of the number of active duty days divided by 360.

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): 19-20-404, MCA
History: Eff. 12/31/72; AMD, 1987 MAR p. 2233, Eff. 12/11/87; AMD, 1989 MAR p. 1276, Eff. 9/1/89; AMD, 2025 MAR, Notice No. 2025-107, Eff. 10/25/25.

Mont. Admin. R. 2.44.403 Redeposit of Amounts Withdrawn

(1) If a member wishes to redeposit previous withdrawals, it is necessary that the most recent withdrawal be redeposited first.

History

Authorizing statute(s): Sec. 19-4-201 MCA
Implementing statute(s): Sec. 19-4-602 MCA
History: Eff. 12/31/72; AMD, 1988 MAR p. 2213, Eff. 10/14/88.

Mont. Admin. R. 2.44.407 Creditable Service for Teaching in Private Educational Institutions

(1) A member may apply for creditable service for teaching in a private elementary, secondary, post-secondary educational institution, or special purpose school. For purpose of this section the term "educational institution" means only an institution or school that normally maintains a regular faculty and curriculum and normally has a regular organized body of students in attendance at the place where its educational activities are carried on and has been accredited by either the state in which it operates or a recognized association. A school or other function operated in a private home will not be considered an "educational institution".

(2) The person applying to purchase private teaching service must have been in compliance with the certification requirements of the state (or federal agency) in which the institution was located at the time the service was performed.

History

Authorizing statute(s): Sec. 19-4-201 and 19-20-201 MCA
Implementing statute(s): Sec. 19-4-408 and 19-20-408 MCA
History: NEW, 1982 MAR p. 2016, Eff. 11/11/82; AMD, 1987 MAR p. 2233, Eff. 12/11/87; AMD, 1994 MAR p. 561, Eff. 3/18/94.

Mont. Admin. R. 2.44.409 Transfer of Service Credit from the Public Employees' Retirement System

(1) A member may at any time before retirement request that his or her public employees' retirement service credits earned prior to their latest TRS membership service be transferred in accordance with the provisions of 19-20-409 , MCA provided that the member:

(a) is an active contributing member of the teachers' retirement system; and

(b) is not eligible for membership under the public employees' retirement system.

(2) In no instance shall a member be able to qualify more service into the teachers' retirement system than they had in the public employees' retirement system.

(3) No more than 1 year's creditable service shall be awarded for service during the same fiscal year.

History

Authorizing statute(s): Sec. 19-4-201 and 19-20-201 MCA
Implementing statute(s): Sec. 19-4-409 and 19-20-409 MCA
History: NEW, 1989 MAR p. 1276, Eff. 9/1/89; AMD, 1991 MAR p. 2596, Eff. 12/27/91; AMD, 1995 MAR p. 2122, Eff. 10/13/95.

Mont. Admin. R. 2.44.411 Creditable Service for Employment in a Federal, Public or Private School Outside the United States or Its Possessions

(1) A member may apply to purchase creditable service for employment outside the United States or its possessions in a federal, public or private school if it is an organized, existing institution established and operated for the purpose of instructing students.

(2) A member must provide adequate documentation to permit the board to reasonably ascertain:

(a) if the services performed would be eligible for membership under the teachers' retirement system had they been performed in Montana and;

(b) if the school is a qualified institution established for the purpose of instructing students.

History

Authorizing statute(s): Sec. 19-4-201 MCA
Implementing statute(s): Sec. 19-4-402 MCA
History: NEW, 1989 MAR p. 1276, Eff. 9/1/89.

Mont. Admin. R. 2.44.412 National Guard, Reservists, and Veterans Called to Active Duty

(1) Members of the TRS called to active duty for a period not to exceed five years and reemployed in accordance with the provisions of the Uniformed Services Employment and Reemployment Rights Act of 1994 shall be considered continuously employed during their military leave when determining vested interest and eligibility for retirement benefits.

(2) Reemployed National Guard, reservists, and veterans may elect to purchase creditable service for their military leave to be used in the calculation of retirement benefits. The cost to purchase this service shall be equal to the employee contributions that would have been made had they not been called to active duty.

(3) To qualify for service under this rule, the member called to uniformed service must remain an inactive member of the retirement system during the period of service in the uniformed services by leaving his or her accumulated contributions on deposit.

(4) A member who is making additional contributions under a service purchase contract at the time he or she is called to service in the uniformed services may suspend payments under the contract if they return to employment as required by the Act.

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): 19-20-212, 19-20-415, 19-20-801, 19-20-901, 19-20-1001, MCA
History: NEW, 1991 MAR p. 2596, Eff. 12/27/91; AMD, 2008 MAR p. 38, Eff. 12/21/07; AMD, 2025 MAR, Notice No. 2025-107, Eff. 10/25/25.

Mont. Admin. R. 2.44.413 Creditable Service - Actuarial Cost

(1) The actuarial cost to purchase creditable service will vary by the member's compensation, age and years of service at the time they apply or are eligible to purchase the additional service.

(a) The total compensation reported to the TRS for the most recent fiscal year or the member's average final compensation, whichever is greater, will be used to determine the actuarial cost.

(b) The members age at the time they make application to purchase service will be determined in compliance with ARM 2.44.525.

(c) The years of service used in the formula to determine the actuarial cost will include the total number of years of creditable service the member is eligible to purchase on the date they apply or are eligible to purchase service under this rule.

(2) Service will be credited to the member's account at the time they have completed payment in full. If the member retires or dies prior to completing payment in full, purchasable service will be credited on a prorated basis.

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): Title 19, chapter 20, part 4, MCA
History: NEW, 1995 MAR p. 2122, Eff. 10/13/95; AMD, 2007 MAR p. 2121, Eff. 12/21/07.

Mont. Admin. R. 2.44.414 Installment Purchase

(1) If a member signs an irrevocable payroll deduction authorization and subsequently terminates employment, the cost to purchase the balance of the remaining service will be recalculated at the time the member reapplies to purchase the balance of the service.

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): 19-20-402, 19-20-403, 19-20-404, 19-20-408, 19-20-409, 19-20-410, 19-20-411, 19-20-414, 19-20-415, 19-20-416, 19-20-417, 19-20-426, 19-20-427, MCA
History: NEW, 1995 MAR p. 2122, Eff. 10/13/95; AMD, 1999 MAR p. 2837, Eff. 10/8/99; AMD, 2008 MAR p. 38, Eff. 12/21/07.

Mont. Admin. R. 2.44.416 Service Purchase Resolutions

(1) The effective date of any resolution adopted for the purpose of allowing employees to purchase service with contributions on a picked-up, pre-tax basis, must be at least 2 months following the month in which the resolution is adopted. For example: if the resolution is adopted by the governing board on July 8, 1999, the earliest effective date would be September 1, 1999 for additional contributions withheld from compensation earned after September 1, 1999, and reported on the employer's teachers' retirement system (TRS) report for September, 1999.

(2) On the first monthly report coinciding with the effective date of the resolution, all additional contributions must stop and cannot be reinstated until the employee and employer have signed the irrevocable election form required by 19-20-415 , MCA.

(3) The service purchase-irrevocable election form will be available only through the office of the teachers' retirement system and must be requested at least 30 days prior to the effective date of the resolution to ensure the member will be able to continue payroll deductions uninterrupted.

(4) Employers who fail to withhold additional contributions in compliance with the applicable state and federal laws and rules adopted by the board will be notified that the additional contributions cannot be credited to the member's account. The employer will be required to take a credit on their next monthly report for any amounts reported in error, and to correct their tax withholding records.

History

Authorizing statute(s): Sec. 19-20-201 MCA
Implementing statute(s): Sec. 19-20-415 MCA
History: NEW, 1999 MAR p. 2243, Eff. 10/8/99.

Mont. Admin. R. 2.44.417 Limitation on After-Tax Purchase of Permissive Service Credit

(1) The Teachers' Retirement System can accept after-tax contributions from a member during a limitation year only if:

(a) the voluntary additional contribution to be made by the member does not exceed the amount determined by the Teachers' Retirement System to be necessary to fund the benefit attributable to such service credit; and

(b) the requirements of Internal Revenue Code (IRC) section 415(b) are met (without regard to any reductions for early retirement age), determined by treating the accrued benefit derived from all such contributions as an annual benefit for purposes of IRC section 415(b); or

(c) the requirements of IRC section 415(c)(1)(A) are met (without regard to the compensation limit), determined by treating all such contributions as annual additions for purposes of IRC section 415(c).

(2) After-tax member contributions cannot be accepted if:

(a) the member is purchasing more than five years of nonqualified service credit; or

(b) any nonqualified service credit is taken into account under this rule before the member has at least five years of participation under the retirement system.

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): 19-20-106, MCA
History: NEW, 2008 MAR p. 2619, Eff. 12/25/08.

Subchapter 2.44.5 Benefits

Mont. Admin. R. 2.44.506 Benefit Payments

(1) The first benefit will be payable the last day of the month in which the benefit began and future benefits will be payable the last day of each succeeding month.

(2) Monthly benefits will be paid based upon information provided by the member and estimates prepared by the teachers' retirement system until final salary information and contributions are received. Adjustments will be retroactive to the retirement effective date.

(3) At the time application for retirement benefits is made, each applicant must submit a copy of their final year's contract, any previous contract(s) as may be requested and a copy of their letter of resignation if one was submitted to their employer. If a member does not have a written contract, a statement from their employer verifying their daily or hourly rate of pay, their full time equivalent and the number of days they were employed in the fiscal year will be accepted.

(4) Monthly benefits will be prorated to the date of death of the retiree or beneficiary.

History

Authorizing statute(s): Sec. 19-4-201, 19-20-201 MCA
Implementing statute(s): Sec. 19-4-703, 19-20-703 and 19-20-716 MCA
History: Eff. 12/31/72; AMD, 1987 MAR p. 2233, Eff. 12/11/87; AMD, 1989 MAR p. 1276, Eff. 9/1/89; AMD, 1993 MAR p. 493, Eff. 6/11/93; AMD, 1999 MAR p. 2243, Eff. 10/8/99.

Mont. Admin. R. 2.44.507 Payment of Minor Child Benefits

(1) A minor child's benefit will be last payable the month in which the child attains age 18.

(2) A birth certificate or some evidence of birth date is required for each child eligible to receive the minor child benefit.

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): 19-20-1002, MCA
History: Eff. 12/31/72; AMD, 1987 MAR p. 2233, Eff. 12/11/87; AMD, 1989 MAR p. 1276, Eff. 9/1/89; AMD, 2025 MAR, Notice No. 2025-107, Eff. 10/25/25.

Mont. Admin. R. 2.44.509 Computation of Average Final Compensation

(1) The average final compensation of a member who retires or dies before they receive full service credit for the fiscal year, shall be determined by using the greater of:

(a) the equivalent of the final three consecutive years' contracts reported to the system, based on the percentage of the member's final contract reported during their last fiscal year, plus any additional compensation reported during the same period. For example, if 50% of the member's contract is reported during their final fiscal year, then we would calculate AFC using the compensation reported during the last fiscal year, plus the salary reported the first fiscal year preceding retirement, plus the salary reported the second fiscal year preceding retirement, plus 50% of the salary reported the third fiscal year preceding retirement; or

(b) any 3 full consecutive fiscal years' compensation which yield the highest average.

(2) Only salaries earned under contract on which contributions have been made can be used to determine the average final compensation.

History

Authorizing statute(s): Sec. 19-4-201 and 19-20-201 MCA
Implementing statute(s): Sec. 19-4-801 through 19-4-804 and 19-20-801 through 19-20-804
History: Eff. 12/31/72; AMD, 1987 MAR p. 2233, Eff. 12/11/87; AMD, 1991 MAR p. 2596, Eff. 12/27/91; AMD, 1995 MAR p. 2122, Eff. 10/13/95.

Mont. Admin. R. 2.44.515 Correction of Errors on Contributions and Overpayments

(1) Corrections of errors may be made by the employer on subsequent monthly reports via a letter of explanation and credit taken or additional payment remitted. Corrections reducing an employee's contributions cannot be accepted if the employee has received a refund.

(2) Contributions and wages reported for prior school years must be corrected using the employee and employer contribution rates in effect for the period the wages were earned.

(3) If the error caused membership service to be credited incorrectly, the member's account must be adjusted accordingly.

History

Authorizing statute(s): 19-4-201, 19-20-201, MCA
Implementing statute(s): 19-4-208, 19-20-208, 19-20-716, MCA
History: NEW, 1987 MAR p. 2233, Eff. 12/11/87; AMD, 1989 MAR p. 1276, Eff. 9/1/89; AMD, 2000 MAR p. 822, Eff. 3/31/00; AMD, 2007 MAR p. 2120, Eff. 12/21/07.

Mont. Admin. R. 2.44.517 Formula for Determining Contributions Due on Termination Pay

(1) Except as provided in (2) , the formula for determining contributions due under Option 1, 19-20-716, MCA shall be a percentage of the termination pay, based upon the member's age at the time of retirement, times the total years of creditable service.

(2) Upon disability retirement, the contributions due to

adequately compensate the system for the additional benefit for termination pay under Option 1, shall be based on 15 years or the member's total years of creditable service, whichever is greater.

History

Authorizing statute(s): Sec. 19-4-201 and 19-20-201 MCA
Implementing statute(s): Sec. 19-4-101(5), 19-20-101 and 19-20-716 MCA
History: NEW, 1987 MAR p. 2233, Eff. 12/11/87; AMD, 1988 MAR p. 473, Eff. 3/1/88; AMD, 1991 MAR p. 2596, Eff. 12/27/91; AMD, 1999 MAR p. 2837, Eff. 10/8/99.

Mont. Admin. R. 2.44.517A REPORTING OF TERMINATION PAY

2.44.517A REPORTING OF TERMINATION PAY

(1) A completed and signed Termination Pay Form together with the employee and employer contributions due must be received by the TRS by the 15th of the month, following the month in which the employee terminated employment. Only termination pay that is paid at the time of termination and retirement is reportable to the TRS.

(2) Tax deferred contributions remitted by an employer cannot exceed the total termination pay amount payable to the employee. Any contributions due that are greater than the termination pay amount payable to the employee cannot be picked up by the employer.

(3) Interest will be assessed at the actuarially assumed rate on employee and/or employer contributions over 30 days delinquent.

(4) If contributions on termination pay are not received within 60 days of the effective date of retirement, monthly benefits calculated using termination pay may be recalculated and adjusted retroactive to the date of retirement.

(5) If the member submits the employee contributions due but the employer refuses or does not timely remit the employer contributions due, the member will be given 30 days to work with the employer to remit contributions due before benefits will be recalculated.

(6) The retiree and their employer will be notified in writing prior to assessing interest on unpaid contributions, or recalculating retirement benefits.

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): 19-20-101, 19-20-716, MCA
History: NEW, 1995 MAR p. 2122, Eff. 10/13/95; AMD, 2007 MAR p. 2121, Eff. 12/21/07.

Mont. Admin. R. 2.44.518 Limit on Earned Compensation - 10% Cap

(1) Except as described in this rule, the earned compensation for each year used in calculating a member's average final compensation may not exceed either the member's actual earned compensation or earnings adjusted by this rule for the preceding year by more than 10%. Earned compensation reported for a member with an effective date of retirement on or before July 1, 2011, is exempt from the 10% cap for increases that result from:

(a) collective bargaining agreements;

(b) a change or adjustments in a salary schedule covering a certifiable group of employees not covered under a collective bargaining agreement. The employer must certify the group of employees affected by the change or adjustment in the salary schedule, the increase received by each employee, and the methodology for determining the increases;

(c) compensation received for summer employment, provided summer compensation does not exceed one-ninth of the academic year contract for each full month or prorated for each portion of a month employed during the summer;

(d) change of employer;

(e) re-employment for a period of not less than one year following a break in service;

(f) a promotion to an existing permanent position with the same employer. The assignment of temporary duties or a new job added to existing duties, an acting or interim appointment, a change in classification or title, or an increase in compensation received would not qualify as a promotion; or

(g) the combination of salary from multiple employers that when reviewed separately does not exceed 10%.

(2) The member must provide adequate documentation to permit the board to make an informed decision concerning exceptions to the 10% limitation. Adequate documentation includes but is not limited to the following:

(a) employment contracts;

(b) official minutes of board meetings;

(d) salary schedules.

(3) The assignment of additional duties of a one time or temporary nature shall not be exempt from the 10% limitation.

(4) Average final compensation is equal to total compensation less excess earnings not qualifying for an exemption.

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): 19-20-101, 19-20-715, 19-20-805, MCA
History: NEW, 1989 MAR p. 1276, Eff. 9/30/89; AMD, 1995 MAR p. 349, Eff. 3/17/95; AMD, 1995 MAR p. 2122, Eff. 10/13/95; AMD, 1999 MAR p. 2243, Eff. 10/8/99; AMD, 2007 MAR p. 2121, Eff. 12/21/07; AMD, 2025 MAR, Notice No. 2025-107, Eff. 10/25/25.

Mont. Admin. R. 2.44.522 Family Law Order -- Contents and Duration

(1) TRS will make available to the public model forms approved for use as a Family Law Order (FLO).

(2) A FLO may not provide for payments to an alternate payee prior to the date on which the member first becomes eligible for payment from TRS.

(3) If benefits are payable pursuant to a FLO that meets the requirements of a domestic relations order as defined in IRC section 414(p), the applicable provisions of IRC section 414(p) will be followed by TRS in giving effect to the FLO.

(4) Two basic types of payment distributions are allowed to alternate payees: "fixed amount" and "actuarially equivalent amount."

(a) A fixed amount distribution may be expressed as a percentage of the benefit otherwise payable by the retirement system or as a specific dollar amount may not exceed the amount of the periodic or lump-sum benefit payable by the retirement system at any time. A fixed amount distribution expressed as a percentage of the benefit will include a share of any guaranteed annual benefit adjustment applied to the benefit. The duration of the fixed amount distribution may be for a specific period of time; for the life of the member; or for as long as a benefit is payable on the member’s account. In all cases, a fixed amount distribution will terminate, at the latest, when a benefit is no longer payable to the member or to a joint annuitant or beneficiary of the member, even if the dollar amount specified in the FLO has not been paid in full or payments have not been made for the period of time specified in the FLO.

(b) An actuarially equivalent amount distribution must be expressed as a percentage of the benefit otherwise payable to the member, and is actuarially adjusted to be paid for the life of the alternate payee. An actuarially equivalent amount FLO may be entered only on the account of an active or inactive member.

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): 19-20-106, 19-20-305, MCA
History: NEW, 1993 MAR p. 2404, Eff. 10/15/93; AMD, 2007 MAR p. 2120, Eff. 12/21/07; AMD, 2008 MAR p. 2619, Eff. 12/25/08; AMD, 2025 MAR, Notice No. 2025-107, Eff. 10/25/25.

Mont. Admin. R. 2.44.523 Family Law Orders -- Approval and Implementation

(1) A participant or alternate payee must submit a certified copy of the final court order, the FLO, to TRS for approval.

(2) A FLO is effective upon final approval by TRS and the terms of the FLO will be given effect:

(a) if benefits are not currently payable on the member’s account, at the time benefits become payable on the member’s account; or

(b) if benefits are currently payable on the member’s account, on the first of the month following submission to and approval of the final FLO by TRS.

(3) A FLO may not require and TRS will not apply a FLO to a monthly or lump-sum distribution processed for payment by TRS prior to the effective date of the FLO. A distribution has been processed for payment by TRS when the payment has been loaded by TRS to the state’s automated accounts payable system to effectuate electronic funds transfer or issuance and mailing of a check in satisfaction of the distribution obligation, notwithstanding that electronic funds transfer or printing and mailing of the check may not yet have occurred.

(4) Costs of reviewing and administering a FLO, including actuarial analysis and attorneys' fees, may be assessed by TRS and charged in equal shares to the parties to the FLO, unless one party is ordered by the court to pay the costs. Amounts owing plus interest thereon at an annualized effective rate of 8% may be offset against payments to be received by the appropriate party.

(5) An alternate payee may receive payment by electronic fund transfer upon submission of a properly executed form required by TRS.

(6) An alternate payee must promptly inform TRS of any change of name or address.

(7) TRS may establish separate benefits for a member and an alternate payee.

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): 19-20-305, MCA
History: NEW, 1993 MAR p. 2404, Eff. 10/15/93; AMD, 2007 MAR p. 2120, Eff. 12/21/07; AMD, 2008 MAR p. 2619, Eff. 12/25/08; AMD, 2025 MAR, Notice No. 2025-107, Eff. 10/25/25.

Mont. Admin. R. 2.44.524 Adjustment of Disability Allowance for Outside Earnings

(1) A disabled member who is engaged in a gainful occupation must notify the Teachers' Retirement System within thirty days of being engaged in that occupation. Notification must include:

(a) name and address of employer, including if self-employed;

(b) salary or hourly rate of pay and estimated yearly earnings; and

(2) The disabled member must report to the Teachers' Retirement System, no less than annually, the total amount earned each year. Members are encouraged to report earnings each month so that the TRS can advise the member when they will earn more than allowed and adjust their benefit if necessary.

(3) A disabled member who is at least sixty years of age and is not engaged in a gainful occupation is not required to file an annual earnings statement if the disabled member has not been engaged in a gainful occupation and has reported no earnings for at least the three consecutive preceding years.

(4) A disabled member who is not required to submit an annual earnings statement by application of (3) must resume submitting annual earnings statements if the disabled member again becomes gainfully employed, and must continue to submit annual earnings statements until the disabled member again has not been gainfully employed and has reported no employment income for at least the three consecutive preceding years.

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): 19-20-904, MCA
History: NEW, 1993 MAR p. 561, Eff. 3/18/94; AMD, 1995 MAR p. 2122, Eff. 10/13/95; AMD, 2010 MAR p. 2344, Eff. 10/15/10.

Mont. Admin. R. 2.44.525 Calculation of Age

(1) If a member applies for benefits which are based on the member's age, the whole age that the member is or will be closest to on the effective date of the benefit will be used. For example; if the member is age 55, 6 months, 1 day, age 56 will be used in the calculation of benefits. If the member is age 55, 6 months, 0 days, age 55 will be used in the calculation of benefits.

History

Authorizing statute(s): Sec. 19-20-201 MCA
Implementing statute(s): Sec. 19-20-101 and 19-20-702 MCA
History: NEW, 1995 MAR p. 2122, Eff. 10/13/95.

Mont. Admin. R. 2.44.526 Value of Housing

(1) Effective March 10, 1995, the value of any housing included as part of a member's contract, that was not reported to TRS, must not be reported to the teachers' retirement system in the future. Members with the value of housing included in earned compensation reported during fiscal year 1995 must continue to report the value of housing for as long as they remain with their current employer.

History

Authorizing statute(s): Sec. 19-20-201 MCA
Implementing statute(s): Sec. 19-20-101(8) MCA
History: NEW, 1995 MAR p. 2122, Eff. 10/13/95.

Mont. Admin. R. 2.44.527 Payment for Service -- Calculation of Retirement Benefits

(1) If the final payment due to purchase service credits is over 60 days past due, the member will be notified in writing that contributions, plus accrued interest, are due and payable, and that benefits will be recalculated and corrected retroactive to the date of retirement if payment is not received within 30 days of notification.

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): 19-20-801, 19-20-901, 19-20-1001, MCA
History: NEW, 1995 MAR p. 979, Eff. 10/12/95; AMD, 2007 MAR p. 2121, Eff. 12/21/07.

Mont. Admin. R. 2.44.529 Limitation on Annual Benefit

(1) For purposes of this rule, all defined benefit plans of the employer, whether or not terminated, are to be treated as a single defined benefit plan.

(2) For purposes of applying the limits under Internal Revenue Code (IRC) section 415(b), in no event shall a member's annual benefit payable under the Teachers' Retirement System in any limitation year be greater than the limit applicable at the annuity starting date, as increased in subsequent years pursuant to IRC section 415(d) and the regulations thereunder.

(3) If the form of benefit is not a straight life or a qualified joint and survivor annuity, then (2) is applied by either reducing:

(a) the limit in IRC section 415(b) applicable at the annuity starting date; or

(b) adjusting the form of benefit to an actuarially equivalent straight life annuity benefit determined using the assumptions required by the Treasury Regulation under IRC section 415, and the applicable mortality table described in Treasury Regulations section 1.417(e)-1(d)(2) (the mortality table specified in Revenue Ruling 2001-62).

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): 19-20-106, MCA
History: NEW, 2008 MAR p. 2619, Eff. 12/25/08.

Mont. Admin. R. 2.44.530 Determination of Incentives and Bonuses as Part of a Series of Annual Payments and Included in Earned Compensation

(1) An incentive or bonus payment paid to a member is part of a series of annual payments, and therefore included in earned compensation, only if:

(a) the incentive or bonus has been paid to the member for at least five consecutive years;

(b) the employer publishes, in some official manner (in board minutes, in a collective bargaining agreement, in employment contracts, etc.):

(i) its intent to make the incentive or bonus payments;

(ii) who will receive the incentive or bonus payments;

(iii) the criteria for determining the award and amount of the incentive and bonus payments with respect to all employees and certification classes to receive the payments;

(iv) the anticipated duration of the incentive or bonus payments;

(v) the specific annual amount of the incentive or bonus payment or the specific percentage of annual salary by which the incentive or bonus payment will be calculated;

(vi) how the incentive or bonus payments will be made (annually, monthly, etc.); and

(vii) the date by which the payment will be made.

(c) the incentive or bonus payment amount in each year is the same or is subject to fluctuation only if the payment is determined as a percentage of annual salary, in which case, the percentage increase in annual salary is the same in each year for all employees of the certification class (teacher, administrator, or superintendent);

(d) continuation of the incentive or bonus payment is relatively certain and not subject to budgetary discretion, revenue stream factors, or award or payment criteria that puts the payment at any greater risk of nonpayment than the base salary; and

(e) eligibility criteria and payment calculation methodologies do not weight the award of or amount of incentive or bonus payments in a manner that disproportionately increases compensation to employees based on years of service or age, including that:

(i) if an incentive or bonus is paid to one employee of a certification class, the incentive or bonus must be paid to every member of that certification class; and

(ii) the amount of the incentive or bonus paid to each employee of a certification class must be the same, except that the incentive or bonus payment amount paid to each member of the certification class may be calculated as a percentage of each employee's annual salary, in which case, the percentage of annual salary to be calculated must be the same for all employees of the certification class.

(2) If incentive or bonus payments that are otherwise part of a series of annual payments have not been paid to a member for at least five consecutive years at the time the member retires, any amounts reported in the three-year period that constitutes a member's average final compensation will be included in average final compensation as termination pay Option 2 as provided under 19-20-716, MCA.

(3) An employer who wants incentive and bonus payments that are part of a series of annual payments included as part of the earned compensation of its employee(s) should submit the published information described in (1)(b) to the Teachers' Retirement System for review prior to submitting contributions for those compensation amounts.

(4) As used in this rule, "annual salary" means the salary to be paid to a member of the Teachers' Retirement System in a particular year as set forth in the employer's salary schedule or in a written employment agreement, without consideration for pay for additional duties, bonuses, incentives, fringe benefits, or other additions to remuneration.

(5) Bonus and incentive payments that are part of a series of annual payments are subject to the 110% cap set forth in 19-20-715, MCA, and administrative rules clarifying 19-20-715, MCA.

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): 19-20-101, 19-20-102, MCA
History: NEW, 2009 MAR p. 1778, Eff. 10/16/09.

Subchapter 2.44.7 Vesting/Distributions

Mont. Admin. R. 2.44.701 Vesting in Member Contributions

(1) A member shall be 100% vested in his or her accumulated contributions at all times.

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): 19-20-106, MCA
History: NEW, 2008 MAR p. 2619, Eff. 12/25/08.

Mont. Admin. R. 2.44.702 Good Faith Compliance with Internal Revenue Code

(1) The Teachers' Retirement System will pay all benefits in accordance with a good faith interpretation of the requirements of IRC section 401(a)(9) and the regulations thereunder as applicable to a governmental plan, within the meaning of IRC section 414(d).

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): 19-20-106, MCA
History: NEW, 2008 MAR p. 2619, Eff. 12/25/08.

Mont. Admin. R. 2.44.703 Timing of Distribution

(1) A member's entire benefit must be distributed:

(a) over the member's life or the lives of the member and a designated beneficiary; or

(b) over a period not extending beyond the life expectancy of the member or of the member and a designated beneficiary.

(2) If a member dies after the required distribution of benefits has begun, the remaining portion of the member's benefit must be distributed at least as rapidly as under the method of distribution before the member's death.

(3) If a member dies before the required distribution of the member's benefits has begun, the member's entire benefit must be:

(a) distributed (in accordance with federal regulations) over the life or life expectancy of the designated beneficiary, with the distributions beginning no later than December 31 of the calendar year following the calendar year of the member's death; or

(b) distributed within five years of the member's death.

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): 19-20-106, MCA
History: NEW, 2008 MAR p. 2619, Eff. 12/25/08.

Mont. Admin. R. 2.44.704 Limitation of Amount of Annuity Distribution to Beneficiary

(1) The amount of an annuity paid to a member's beneficiary may not exceed the maximum determined under the incidental death benefit requirement in IRC section 401(a)(9)(G).

(2) Effective for any annuity commencing on or after July 1, 2008, the amount of annuity paid to a member's beneficiary may not exceed the minimum distribution incidental benefit rule under Treasury Regulation section 1.401(a)(9)-6, Q&A-2.

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): 19-20-106, MCA
History: NEW, 2008 MAR p. 2619, Eff. 12/25/08.

Mont. Admin. R. 2.44.705 Death and Disability Benefits Limited by Incidental Benefit Rule

(1) The death and disability benefits distributed by the Teachers' Retirement System will be limited by the incidental benefit rule set forth in IRC section 401(a)(9)(G) and Treasury Regulation section 1.401-1(b)(1)(i).

(2) The total death or disability benefits payable may not exceed 25% of the cost for all of the members' benefits received from the Teachers' Retirement System.

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): 19-20-106, MCA
History: NEW, 2008 MAR p. 2619, Eff. 12/25/08.

Mont. Admin. R. 2.44.706 Good Faith Continuation of Distribution Options

(1) Notwithstanding any other provision of this chapter or the Treasury Regulations, benefit distribution options may continue so long as the option satisfies IRC section 401(a)(9) based on a reasonable and good faith interpretation of that section.

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): 19-20-106, MCA
History: NEW, 2008 MAR p. 2619, Eff. 12/25/08.

Mont. Admin. R. 2.44.707 Distribution by Direct Rollover

(1) A participant may elect to have any portion of an eligible rollover distribution made as a direct rollover.

(2) An "eligible rollover distribution" means any allowed distribution of all or any portion of the accumulated contributions of a member to an eligible retirement plan to the credit of a participant, except that an eligible rollover distribution does not include:

(a) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or the life expectancy) of the participant or the joint lives (or joint life expectancies) of the participant and the participant's designated beneficiary, or for a specified period of ten years or more;

(b) any distribution to the extent such distribution is required under IRC 401(a)(9);

(d) any other distribution that is reasonably expected to total less than $200 during the year.

(3) Effective January 1, 2002, a portion of a distribution will not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions that are not includible in gross income; however, such portion may be transferred only:

(a) to an individual retirement account or annuity described in IRC section 408(a) or (b);

(b) to a qualified defined contribution plan described in IRC section 401(a);

(d) on or after January 1, 2007, to an annuity contract described in IRC section 403(b) that agrees to separately account for amounts so transferred (and earnings thereon), including separately accounting for the portion of the distribution that is includible in gross income and the portion of the distribution that is not so includible.

(4) Effective January 1, 2002, the definition of eligible rollover distribution also includes a distribution to a surviving spouse, or to a spouse or former spouse who is an alternate payee under a FLO, as defined in IRC section 414(p).

(5) A participant who is a nonspouse beneficiary may rollover a distribution only to an individual retirement account or individual retirement annuity established for the purpose of receiving the distribution. The account or annuity will be treated as an inherited individual retirement account or annuity.

History

Authorizing statute(s): 19-20-201, MCA
Implementing statute(s): 19-20-106, MCA
History: NEW, 2008 MAR p. 2619, Eff. 12/25/08.

Chapter 2.51 Montana Tax Appeal Board

Subchapter 2.51.1 Organizational Rule

Mont. Admin. R. 2.51.101 Organizational Rule

(1) The organizational rule of the Montana Tax Appeal Board is set forth in ARM 2.1.101 and is herein adopted and incorporated by this reference.

History

Authorizing statute(s): 2-4-201 MCA
History: 2-4-201 MCA; EMERG, NEW, Eff. 11/5/73; AMD, Eff. 6/27/23.

Subchapter 2.51.2 Model Procedural Rule

Mont. Admin. R. 2.51.201 Model Procedural Rule

(1) The Montana Tax Appeal Board has adopted and incorporated the attorney general's model procedural rules one through 28, by reference to such rules as stated in ARM 1.3.101 through ARM 1.3.233.

History

Authorizing statute(s): 2-4-201 MCA
Implementing statute(s): 2-4-201 MCA
History: EMERG, NEW, Eff. 11/5/73; AMD, 2023 MAR p. 868, Eff. 8/26/23.

Subchapter 2.51.3 County Tax Appeal Boards

Mont. Admin. R. 2.51.307 Orders of the Board

(1) The final action of a county tax appeal board upon applications shall be entered in the record by order on forms prescribed by the Montana Tax Appeal Board. The orders shall specify the changes to be made in the assessment roll.

(2) A signed copy of a board's order shall be mailed to the applicant and to the property assessment division of the department of revenue within 3 days following the signing of the order.

(3) With respect to personal property, the decision of the county tax appeal board shall be final and binding on all interested parties for the tax year in question unless reversed or modified upon review by the Montana Tax Appeal Board.

(4) With respect to taxable real property and improvements thereon, the decision of a county tax appeal board shall be final and binding unless reversed or modified upon review by the Montana Tax Appeal Board. If the decision, of the county tax appeal board is not reviewed by the Montana Tax Appeal Board, it shall be final and binding on all interested parties for all subsequent tax years unless there is a change in the property itself or circumstances surrounding the property which affect its value. Statutory reappraisal by the Department of Revenue pursuant to 15-7-111, MCA, is a circumstance affecting the value of real property and improvements thereon.

History

Authorizing statute(s): 15-2-201 MCA
Implementing statute(s): 15-2-201, 15-2-301, 15-15-103 MCA
History: EMERG, NEW, Eff. 11/5/73; AMD, 1977 MAR p. 723, Eff. 10/25/77; AMD, 1986 MAR p. 1174, Eff. 7/18/86; AMD, 1988 MAR p. 474, Eff. 3/11/88; AMD, 1996 MAR p. 1295, Eff. 5/10/96; AMD, 2023 MAR p. 868, Eff. 8/26/23.

Subchapter 2.51.4 Montana Tax Appeal Board Appeals and Orders

Mont. Admin. R. 2.51.403 Decision by the Board

(1) With respect to personal property, the decision of the Montana Tax Appeal Board shall be final and binding upon the parties to the appeal for the tax year in question unless it is reversed or modified by the district court upon judicial review.

(2) With respect to taxable real property and improvements thereon, the decision of the Montana Tax Appeal Board shall be final and binding unless reversed or modified by the district court upon judicial review. If the decision of the Montana Tax Appeal Board is not reviewed by a district court, it is final and binding for subsequent tax years unless there is a change in the property itself or circumstances surrounding the property which affects its value. Statutory reappraisal by the Department of Revenue pursuant to 15-7-111, MCA, is a circumstance affecting the value of real property and improvements thereon.

History

Authorizing statute(s): 15-2-201 MCA
Implementing statute(s): 15-2-201, 15-2-301, 15-15-104 MCA
History: NEW, 1988 MAR p. 474, Eff. 3/11/88; AMD, 2023 MAR p. 868, Eff. 8/26/23.

Subchapter 2.51.5 Informal Review Procedures

Mont. Admin. R. 2.51.501 Class Four Residential Property Appeals; Optional Informal Review

(1) A taxpayer filing an appeal with the Montana Tax Appeal Board (board) in accordance with 15-2-301(1)(b), MCA, for Class Four residential property may elect to have the appeal heard informally.

(2) A taxpayer elects an informal review of their appeal:

(a) on the MTAB 801 appeal form when filing their appeal;

(b) by filing a motion with the Board prior to the initial scheduling conference that sets the appeal schedule; or

(3) An election for an informal review is irrevocable after the initial scheduling conference.

(4) The informal review may be conducted in person or via telephonic or video conferencing methods.

(5) No dispositive motions, such as motions to dismiss or motions for summary judgment, may be filed during an informal review.

(6) During an informal review, the board may limit the exchange of information. Each party shall disclose the names of any proposed witnesses and provide copies of all proposed exhibits to the board and the opposing party in accordance with the schedule. If a party fails to disclose any witnesses or exhibits prior to the informal review hearing, the board may exclude its admittance into the proceedings. All properly disclosed exhibits will be admitted into the record. Either party may still object to exhibits. The board may allow undisclosed rebuttal exhibits only to counter opposing evidence.

(7) At an informal review hearing, each party may present witnesses and exhibits, cross-examine opposing witnesses, and provide closing statements. While equal time will be allotted to the parties for presentations, the board may allocate that time at its discretion.

(8) The board’s decisions made under an informal review are final and binding on all parties and are not subject to reconsideration, further appeal, or judicial review. Decisions issued through the board’s informal review process are unpublished and shall not be considered binding precedent.

History

Authorizing statute(s): 2-4-201, 15-2-301 MCA
Implementing statute(s): 15-2-301, 15-15-104, MCA
History: NEW, 2025 MAR, Notice No. 2025-365, Eff. 12/6/25.

Chapter 2.53 Board of Examiners

Subchapter 2.53.1 Organizational Rule

Mont. Admin. R. 2.53.101 Organizational Rule

(1) The Board of Examiners, established in 2-15-1007, MCA, is comprised of the Governor, Secretary of State, and Attorney General. The Governor serves as the president, and the Secretary of State serves as secretary of the board.

(2) The board is allocated to the Department of Administration for administrative purposes. The department director serves as the board's executive secretary. The department also provides staffing for the board.

(3) Correspondence may be sent to the board staff at 125 North Roberts Street, Room 175, P.O. Box 200107, Helena, MT 59620-0107.

(4) The board's web page address is http://boe.mt.gov/ .

(5) The board's primary duty is to serve as the issuer of state debt.

History

Authorizing statute(s): 2-4-201, MCA
Implementing statute(s): 2-4-201, MCA
History: Eff. 12/31/72; AMD, Eff. 6/1/16.

Subchapter 2.53.2 Procedural Rules

Mont. Admin. R. 2.53.201 Model Procedural Rules

(1) The Board of Examiners adopts and incorporates by reference the following model rules relating to citizen participation, notice and hearing procedures, and declaratory rulings, which may be found at http://sos.mt.gov :

(a) the Attorney General's model procedural rules ARM 1.3.201, 1.3.202, 1.3.211 through 1.3.224, and 1.3.226 through 1.3.233, including, as applicable, the appendix of sample forms in effect April 11, 2016; and

(b) the Secretary of State's model rules ARM 1.3.101, 1.3.102, 1.3.301, 1.3.302, 1.3.304, 1.3.305, 1.3.307 through 1.3.309, and 1.3.311 through 1.3.313 in effect April 11, 2016. These rules define model requirements for rulemaking under the Montana Administrative Procedure Act.

History

Authorizing statute(s): 2-4-201, MCA
Implementing statute(s): 2-4-201, MCA
History: Eff. 12/31/72; AMD, 2016 MAR p. 1006, Eff. 6/4/16.

Chapter 2.55 State Compensation Insurance Fund

Subchapter 2.55.1 Organizational Rule

Mont. Admin. R. 2.55.102 Organizational Rule

(1) Organization of the State Compensation Insurance Fund:

(a) History . The State Compensation Insurance Fund (state fund) was implemented under the provisions of 39-71-2313, MCA (1989) , on January 1, 1990. Its functions and responsibilities are set forth in Title 39, chapter 71, part 23, MCA.

(b) Departments . The state fund consists of the following departments:

(i) Underwriting department;

(ii) Benefits department;

(iii) Legal department;

(iv) Administrative and finance department; and

(v) Management information services department.

(c) Board of Directors . The board of directors, appointed by the governor, is responsible for the management and control of the state fund.

(d) President . The president, appointed by the board of directors, has general responsibility for the operations of the state fund.

(e) Executive Vice President . The executive vice president has the responsibility of assisting the president in the implementation of policy and procedures under the direction of the president.

(f) Executive Staff . The executive staff performs general administrative functions for the president and vice president of the state fund. Its activities include, but are not limited to, personnel, special projects, and support.

(2) Functions of Department .

(a) Underwriting Department . The underwriting department has the responsibility of underwriting and administering policies of workers' compensation insurance. Its activities include marketing, issuance, and cancellation of policies; safety; audits; and employer services regarding policies of insurance.

(b) Benefits Department . The benefits department has the responsibility for all aspects of administering and adjusting claims for benefits.

(d) Administrative and Finance Department . The administrative and finance department has the responsibility of performing accounting and related services, providing administrative support, and assisting in compliance with state budgetary laws and procedures.

(e) Management Information Services Department . The management information services department has the responsibility for collection, analysis and dissemination of data, and responsibility for programming and hardware administration.

(3) Information or submissions . General inquiries regarding the state fund may be addressed to the executive vice president. Specific inquiries regarding the functions of each department may be addressed to the vice president who heads the particular department. The address of the State Fund is 5 South Last Chance Gulch, Helena, Montana 59601.

History

Authorizing statute(s): Sec. 39-71-2315 and 39-71-2316, MCA
Implementing statute(s): Sec. 2-4-201, MCA
History: NEW, 1992 MAR p. 907, Eff. 5/1/92.

Subchapter 2.55.2 Open Meetings

Mont. Admin. R. 2.55.202 Policies and Objectives in Providing Citizen Participation in the Operation of the State Compensation Insurance Fund

(1) Participation of the public is to be provided for, encouraged, and assisted to the fullest extent practicable consistent with other requirements of state law and the rights and requirements of individual privacy. The major objectives of such participation include responsiveness of governmental actions to public concerns and priorities, and improved public understanding of official programs and actions. Prior to the adoption, amendment or repeal of rule or policy the state fund shall, where the decision is of significant public interest, give adequate notice that the decision is to be made and provide a means for public participation in the making of the decision.

History

Authorizing statute(s): Sec. 39-71-2315 and 39-71-2316 MCA
Implementing statute(s): Sec. 2-3-103 MCA
History: EMERG, NEW, 1992 MAR p. 300, Eff. 2/28/92.

Mont. Admin. R. 2.55.203 Guidelines for Determination of Significant Public Interest

(1) The following will be deemed of a significant public interest to require notice and the availability of an opportunity for public participation in the decision making process:

(a) The adoption, amendment or repeal of an administrative rule which sets forth formula and factors for adopting or changing premium rates for classifications or other administrative rulemaking pursuant to Title 2, chapter 4, MCA.

(b) Premium rate adjustments.

History

Authorizing statute(s): Sec. 39-71-2315 and 39-71-2316, MCA
Implementing statute(s): Sec. 2-3-103, MCA
History: EMERG, NEW, 1992 MAR p. 300, Eff. 2/28/92.

Mont. Admin. R. 2.55.204 Guidelines for State Fund Programs

(1) The state fund shall maintain a current list of interested persons and organizations including any who in writing request inclusion on such list for prior notification of items of significant public interest.

(2) The state fund files, other than personnel files and those files required by law or requirements of personal privacy to remain confidential, are open to public inspection during office hours. These files are located at the state fund office in Helena. Copies of specific documents are available within a reasonable time, upon a written request, for a copying charge plus employee time if applicable. A written request may be either mailed, delivered or filled out on a form provided by the state fund if the request is in person. Copies of documents will be mailed to parties upon their specific written request and upon payment of copying charges, employee time, if applicable, and mailing costs.

(3) One person appointed by the president shall be designated as contact person with the public on a proposed decision or action of significant public interest as enumerated in ARM 2.55.203. This person should be a state fund employee familiar with the proposed decision or action.

(4) General inquires regarding the state fund may be addressed to the president. Specific inquires regarding the functions of each department or for requests for information may be addressed to the vice president who heads the particular department. The address of the State Fund is 855 Front Street, Helena, Montana 59601.

(5) The listing of specific measures in this section shall not preclude additional techniques for obtaining, encouraging or assisting public participation.

History

Authorizing statute(s): Sec. 39-71-2315 and 39-71-2316, MCA
Implementing statute(s): Sec. 2-3-103, MCA
History: EMERG, NEW, 1992 MAR p. 300, Eff. 2/28/92.

Mont. Admin. R. 2.55.205 Notice and Means for Public Participation

(1) One or more of the following steps, as applicable, shall be taken to assist public participation in decision making or items of significant public interest as enumerated in ARM 2.55.203:

(a) a proceeding or hearing shall be held in compliance with the provisions of the Montana Administrative Procedure Act, Title 2, chapter 4, MCA;

(b) notice shall be mailed to those persons on the list of interested persons in ARM 2.55.204 above;

(c) a news release, legal advertisement, or other method of publication shall be given to news media which shall include the proposed action, and the date, time and place of the meeting where oral data, views or arguments may be submitted, or the name and address where written data, views or arguments may be submitted concerning the proposed action.

History

Authorizing statute(s): Sec. 39-71-2315 and 39-71-2316, MCA
Implementing statute(s): Sec. 2-3-103, MCA
History: EMERG, NEW, 1992 MAR p. 300, Eff. 2/28/92.

Mont. Admin. R. 2.55.206 Open Meetings

(1) All meetings of the state fund board of directors are open to the public, subject to the provisions of Title 2, chapter 3, part 2, MCA. The date, time, and place of a meeting of the board of directors may be obtained by contacting the State Fund,

855 Front Street, Helena, Montana 59601

or by calling (406) 495-5209. Persons interested in receiving on a regular basis written notice of the meeting and a copy of the agenda should write the president of the state compensation insurance fund at the above address.

History

Authorizing statute(s): Sec. 39-71-2315 and 39-71-2316, MCA
Implementing statute(s): Sec. 2-3-103, MCA
History: EMERG, NEW, 1992 MAR p. 300, Eff. 2/28/92.

Subchapter 2.55.3 Premium Rates

Mont. Admin. R. 2.55.311 Multiple Rating Tiers

(1) Multiple rating tiers may be applied to new and renewal policies during each fiscal year, beginning July 1, 2002.

(2) The State Fund, upon approval of the board, must establish multiple rating tiers for the following fiscal year, to be applied to all classification rates with assignment of individual policies to a tier based on factors as approved by the board. Factors utilized by the board may include but are not limited to:

(a) loss experience;

(b) premium size;

(d) length of coverage with the State Fund;

(e) number of losses;

(f) expense;

(g) management;

(h) loss experience of a premium segment;

(i) location of the insured; and

(j) type of industry.

(3) An analysis shall be conducted upon policy renewal, or upon enrollment for new policies, and will result in placement of insureds into a rating tier for the policy period for policies with new or renewal effective dates in the fiscal year (July 1 through June 30) .

(4) Notwithstanding placement in a rating tier under (2) , a policyholder may be placed in a higher or lower rated tier based on underwriting criteria including, but not limited to:

(a) industry type;

(b) the prior insolvency of the insured or any of the insured's principals;

(d) the work is primarily performed at locations other than the insured's principal job site or place of business and the insured does not have control over the job site or place of business;

(e) the insured has a history of preventable losses;

(f) an employer's history and experience with any other insurer; or

(g) new business without workers' compensation experience history.

(5) This rule is to be effective July 1, 2002.

History

Authorizing statute(s): 39-71-2315, 39-71-2316, MCA
Implementing statute(s): 39-71-2311, 39-71-2316, 39-71-2330, MCA
History: NEW, 2002 MAR p. 164, Eff. 7/1/02.

Mont. Admin. R. 2.55.319 Calculation of Manual Rates

(1) The board of directors shall approve one or more loss-cost multipliers that, when applied to loss-costs as filed by the advisory or rating organization as provided for in (2) or loss-costs as provided for in (3) and (4) , results in the State Fund's manual rates effective for new and renewal policies as of July 1 of each year or other effective date as determined by the board. In determining the loss-cost multipliers, the board shall take into consideration the following factors such as, but not limited to:

(a) the aggregate adequacy of advisory organization loss-costs;

(b) State Fund loss adjustment expense;

(d) investment yield on underwriting cash flow;

(e) net credits or debits attributable to underwriting programs;

(f) the desired target level of contribution to surplus; and

(g) the risk characteristics of policyholders assigned to each applicable rate tier as provided for in ARM 2.55.311. This subsection is to be effective July 1, 2002.

(2) The advisory or rating organization loss-costs used by the board shall be the latest filed or prior filed loss-costs, as determined by the board, at the time the board determines the loss-cost multiplier.

(3) Using processes, procedures, formulas, and factors certified by the consulting actuary as being consistent with generally accepted actuarial principles, State Fund staff shall conduct an analysis of the adequacy of the advisory or rating organization's filed loss-costs, by classification. State Fund staff shall present the conclusions of this analysis to the board along with recommendations, if any, to establish loss-costs for classifications which differ from the advisory or rating organization loss-costs as provided for in (2) . The determination whether to establish loss-costs for a classification which differ from the advisory or rating organization loss-costs shall consider factors such as, but not limited to:

(a) indications based on State Fund loss experience;

(b) indications based on other rating sources;

(d) the amount of payroll written or potentially written by the State Fund in the affected classification;

(e) administrative convenience;

(f) volatility of rates;

(g) differences in State Fund classifications or their usage; and

(h) other relevant underwriting and actuarial judgments.

(4) For classifications in use by the State Fund which are not part of the advisory or rating organization loss-cost filing and for classifications identified in (3) , State Fund staff shall develop a loss-cost using the processes, procedures, formulas, and factors provided for in (3) and other factors consistent with generally accepted actuarial principles. Upon certification of the consulting actuary, State Fund staff shall present the results of this analysis to the board along with recommendations if any, for approval of the board. The consulting actuary shall certify that such loss-cost rates are neither excessive, inadequate, nor unfairly discriminatory. The board shall act to accept or not accept the consulting actuary's certification.

(5) NCCI classifications not in the State Fund's inventory at the time rates are adopted under this rule for the following fiscal year, may be adopted during a fiscal year in accordance with ARM 2.55.320 and attendant NCCI loss-costs and the previously approved loss-cost multiplier shall be applied for new and renewal policies during the fiscal year.

History

Authorizing statute(s): 39-71-2315, 39-71-2316, MCA
Implementing statute(s): 39-71-2311, 39-71-2316, 39-71-2330, MCA
History: NEW, 2001 MAR p. 657, Eff. 4/27/01; AMD, 2002 MAR p. 164, Eff. 2/1/02.

Mont. Admin. R. 2.55.320 Method for Assignment of Classifications of Employments

(1) Risks insured by the State Fund must be divided by the State Fund into classifications. An individual classification must group together risks so that each classification reflects exposures common to those employers in the classification.

(2) An employer covered by a State Fund policy must be assigned a classification according to the type of exposure to risk within the employer's business. The classification generally includes all the various types of labor of the business. If a single classification is not sufficient to describe the risk, more than one classification may be assigned to the employer.

(3) The State Fund staff shall assign its insureds to classifications contained in the classifications section of the State Compensation Insurance Fund Policy Services Underwriting Manual effective July 1, 2014, and assign new or changed classifications as approved by the board. That section of the manual is incorporated by reference. Copies of the classification section of the manual may be obtained from the Insurance Operations Support Department of the State Fund, 855 Front Street, P.O. Box 4759, Helena, Montana 59604-4759.

History

Authorizing statute(s): 39-71-2315, 39-71-2316, MCA
Implementing statute(s): 39-71-2311, 39-71-2316, MCA
History: EMERG, NEW, 1992 MAR p. 300, Eff. 2/28/92; AMD, 1992 MAR p. 907, Eff. 5/1/92; AMD, 1993 MAR p. 1485, Eff. 7/16/93; AMD, 1994 MAR p. 1423, Eff. 5/27/94; AMD, 2000 MAR p. 1033, Eff. 4/28/00; AMD, 2001 MAR p. 657, Eff. 4/27/01; AMD, 2002 MAR p. 164, Eff. 2/1/02; AMD, 2002 MAR p. 3558, Eff. 12/27/02; AMD, 2004 MAR p. 176, Eff. 1/30/04; AMD, 2004 MAR p. 3013, Eff. 12/17/04; AMD, 2005 MAR p. 2649, Eff. 12/23/05; AMD, 2006 MAR p. 3065, Eff. 12/22/06; AMD, 2007 MAR p. 2123, Eff. 12/21/07; AMD, 2009 MAR p.140, Eff. 2/13/09; AMD, 2010 MAR p. 306, Eff. 2/12/10; AMD, 2011 MAR p. 142, Eff. 2/11/11; AMD, 2012 MAR p. 394, Eff. 2/24/12; AMD, 2013 MAR p. 211, Eff. 2/15/13; AMD, 2014 MAR p. 322, Eff. 2/14/14; AMD, 2015 MAR p. 141, Eff. 2/13/15.

Mont. Admin. R. 2.55.323 Overall Rate Level

(1) In order to determine the aggregate premium to be charged to new and renewal policies for the fiscal year that begins on the next July 1, the State Fund actuary shall evaluate the adequacy of the projected overall rate level for the fiscal year of the State Fund. The projected overall rate level must be sufficient to cover:

(a) the value of claims, as determined by actuarial analysis, expected to be incurred as a direct result of covered accidents during the following fiscal year of the State Fund;

(b) operational and administrative expenses, claims adjustment expense related to covered claims, and other expenses required to operate the State Fund for the fiscal year; and

(2) In determining the projected revenue requirements for the following State Fund fiscal year, the State Fund actuary shall consider:

(a) the present financial condition of the State Fund;

(b) trends in the number and cost of accidents;

(d) recent court decisions that may affect the liability of the State Fund;

(e) legislative changes in the statutory benefit scheme;

(f) factors relating to maintenance of the policy base of the State Fund;

(g) the anticipated changes in covered payroll during the year for which the premium rates will be in effect; and

(h) other factors considered relevant in recommending an accurate projection of an overall rate level adjustment.

History

Authorizing statute(s): 39-71-2315, 39-71-2316, MCA
Implementing statute(s): 39-71-2311, 39-71-2316, 39-71-2330, MCA
History: EMERG, NEW, 1992 MAR p. 300, Eff. 2/28/92; AMD, 1996 MAR p. 410, Eff. 2/9/96; AMD, 2000 MAR p. 1033, Eff. 4/28/00; AMD, 2001 MAR p. 657, Eff. 4/27/01; AMD, 2004 MAR p. 176, Eff. 1/30/04.

Mont. Admin. R. 2.55.324 Premium Ratesetting - Horse Racing and Board Interim Modification of Rates

(1) Payrolls for horse racing activities conducted at licensed Montana race tracks and hauling of horses between those race tracks from March 1 through September 30 of each year have been determined not to be sufficiently verifiable and a fee basis shall be used, except as provided in (2) below. The fee for each March 1 through September 30 period shall be based on the aggregate revenue requirement of this classification and allocated among the projected number of industry participants. This subsection will become effective October 1, 1994.

(2) The board, in lieu of a fee based policy for horse racing activities, may utilize classifications and establish loss-costs under ARM 2.55.319 for horse racing activities if a fee based policy is determined to be inappropriate.

(3) The State Fund may, with concurrence of the State Fund board of directors, adopt and implement changes to previously adopted rates. These changes may be based on, but are not limited to, statutory or other legal changes in benefits or costs, or revisions in actuarial indications. These rate changes shall be effective on a date and in such manner as determined by the board of directors, and shall apply to each policy for the remainder of the policy year to which the previously adopted rates apply, and for new and renewal policies.

History

Authorizing statute(s): 39-71-2315, 39-71-2316, MCA
Implementing statute(s): 39-71-2211, 39-71-2311, 39-71-2316, 39-71-2330, MCA
History: EMERG, NEW, 1992 MAR p. 300, Eff. 2/28/92; AMD, 1992 MAR p. 907, Eff. 5/1/92; AMD, 1993 MAR p. 340, Eff. 3/12/93; AMD, 1994 MAR p. 1423, Eff. 5/27/94; AMD, 1994 MAR p. 2108, Eff. 8/12/94; AMD, 1994 MAR p. 3084, Eff. 12/9/94; AMD, 1996 MAR p. 410, Eff. 2/9/96; AMD, 1997 MAR p. 194, Eff. 1/28/97; AMD, 1998 MAR p. 158, Eff. 1/16/98; AMD, 2000 MAR p. 1033, Eff. 4/28/00; AMD, 2001 MAR p. 657, Eff. 4/27/01.

Mont. Admin. R. 2.55.326 Minimum Loss Based Premium

(1) The State Fund, subject to the approval of the State Fund board of directors, may establish each fiscal year and charge a minimum loss based premium to a policy with an effective date between July 1 and June 30 inclusive, in order to cover the risk of loss for coverage of small employers.

(2) The minimum loss based premium may be derived by establishing a minimum yearly payroll. The minimum loss based premium shall be determined by multiplying the minimum yearly payroll by the rate of the governing classification of the policy. The board may adopt an amount that the minimum loss based premium may not be below, and may adopt an amount that the minimum loss based premium may not exceed.

(3) Minimum loss based premium may be established as a flat dollar amount.

History

Authorizing statute(s): 39-71-2315, 39-71-2316, MCA
Implementing statute(s): 39-71-2311, 39-71-2316, MCA
History: EMERG, NEW, 1992 MAR p. 300, Eff. 2/28/92; AMD, 1994 MAR p. 1817, Eff. 7/8/94; TEMP, AMD, 1995 MAR p. 1792, Eff. 9/15/95; AMD, 2000 MAR p. 1033, Eff. 4/28/00.

Mont. Admin. R. 2.55.327A CONSTRUCTION INDUSTRY PREMIUM CREDIT PROGRAM

2.55.327A CONSTRUCTION INDUSTRY PREMIUM CREDIT PROGRAM

(1) The State Fund shall each fiscal year offer a program which provides a premium credit to insureds in the construction industry who pay their workers wages equal to or in excess of 1.168 times the state's average weekly wage.

(2) To become eligible for the program, the insured must meet all of the following criteria:

(a) maintain accurate individual employee records of the total hours worked and payroll by class code and make those records available for verification and audit;

(i) If a payroll audit period includes all or a portion of a policy year to which a construction credit applies, the survey period will also be audited to determine the proper credit for the payroll audit period even though the survey period may be more than three years prior.

(ii) If the verification or audit reveals hourly records are not available, the insured is disqualified from the program.

(iii) If the insured fails to make the records available within a reasonable period of time after contact, the insured is disqualified from the program.

(iv) If the application of the insured was originally disapproved based on criteria (2)(c) or (2)(d) but otherwise qualified and a subsequent verification or audit results in adjustments which determine the insured actually met those criteria, a credit will be applied retroactively.

(b) apply for the premium credit program and submit the completed and signed application form to State Fund no later than seven calendar days after the stated due date on the application form;

(c) have paid an average hourly wage equal to or in excess of 1.168 times the state's average weekly wage as published by the Department of Labor and Industry for each fiscal year; and

(d) have at least 50% of the manual premium during the survey period attributable to one or more of the eligible construction class codes.

(3) The following class codes are the construction codes eligible for the construction industry premium credit program:

(4) The following credit percentages, are to be applied to the manual premium of the insured's construction class codes during the survey period to determine the premium credit factor for policies with effective dates between:

(a) July 1, 2000 and June 30, 2001 inclusive:

(b) July 1, 2001 and June 30, 2002 inclusive:

(c) The credit percentages for policies with effective dates between each July 1 and June 30, beginning July 1, 2002, will be those filed with the Commissioner of Insurance by the designated advisory organization as provided for both the State Fund and Compensation Plan Number Two under 39-71-2211, MCA, or as approved by the board.

(5) Procedures and processes for the premium credit program are:

(a) The State Fund will provide an application form to insureds who are assigned one or more of the construction codes listed in (3);

(b) The insured must sign the application, report total payroll and hours worked by class code (both construction and nonconstruction) for the survey period and return the form by the stated due date. Following are the only allowed exceptions to reporting total payroll and/or actual hours worked:

(i) The premium portion of overtime wages must be excluded.

(ii) In the absence of specific hourly records for salaried employees, the insured must report total payroll and an assumed 40 hours per week.

(iii) In the absence of specific hourly records for covered corporate officers, or managers of a limited liability company, the insured must report total payroll, subject to the officer minimum and maximum payroll reporting requirements in effect for the survey period, and an assumed 40 hours per week.

(iv) If specific hourly records are maintained for covered corporate officers, or managers of a limited liability company the insured must report those hours and total payroll, subject to the officer minimum and maximum payroll reporting requirements in effect for the survey period.

(v) Covered owners must report an assumed 40 hours per week and payroll (wages) equal to their elected coverage level in effect for the survey period.

(c) The State Fund will determine whether the insured meets the criteria, approve or disapprove the application and notify the insured of approval or disapproval;

(i) If approved, the notice will include the premium credit factor.

(ii) If disapproved the notice will specify the reason(s) for disapproval.

(d) The State Fund will calculate the premium credit factor of each insured based on the information reported for the survey period. The State Fund reserves the right to verify or audit the records of the insured before and/or after the premium credit factor is calculated to verify the information submitted and to adjust the premium credit factor accordingly if necessary;

(e) The premium credit factor will be calculated as follows using the information for the survey period provided by the insured or as adjusted by verification or audit:

(i) The average hourly wage will be calculated for each of the construction and nonconstruction class codes by dividing payroll by the number of hours worked.

(ii) The manual premium will be calculated for each construction and nonconstruction class code by multiplying the payroll, divided by 100, times the manual class code rate in effect for the insured during the survey period.

(iii) The manual premium for each construction class code will be multiplied by the appropriate credit percentage to determine the construction credit dollar amount and these amounts will be totaled for the survey period.

(iv) The total of the construction credit dollar amounts will be divided by total manual premium and the result will be subtracted from 1.0000 to arrive at the premium credit factor.

(6) The following definitions apply to the construction industry premium credit program:

(a) "Policy year" means the period beginning on the effective date of the policy and ending on the expiration date of the policy.

(b) "Premium credit factor" means the factor as calculated in (5)(e). This factor will be applied to the insured's total standard premium for that policy year.

(c) "Survey period" means the third calendar quarter, July 1 through September 30, preceding the program year to which the premium credit factor will apply. Program year as used in this rule means July 1 through June 30. If the insured did not engage in operations for the complete usual survey period (July 1 through September 30), then the last complete quarter prior to the policy effective date shall be used or if there was no complete quarter of operations prior to the policy effective date, the first complete quarter after the policy effective date shall be used.

2799 | 5057 | 5213 | 5443 | 5491 | 5645 | 6217 | 6400 3365 | 5059 | 5215 | 5445 | 5506 | 5703 | 6229 | 7538 3719 | 5069 | 5221 | 5462 | 5507 | 5705 | 6233 | 7605 3724 | 5102 | 5222 | 5472 | 5508 | 6003 | 6251 | 7855 3726 | 5146 | 5223 | 5473 | 5511 | 6005 | 6252 | 8227 5020 | 5160 | 5348 | 5474 | 5535 | 6017 | 6306 | 9521 5022 | 5183 | 5402 | 5478 | 5537 | 6018 | 6319 | 9534 5037 | 5188 | 5403 | 5479 | 5551 | 6045 | 6325 | 9552 5040 | 5190 | 5437 | 5480 | 5610 | 6204 | 6365 |

Average Hourly Wage | Credit Percentage $ 12.40 or less | 0% 12.41- 13.43 | 2% 13.44 - 14.46 | 3% 14.47 - 15.49 | 4% 15.50 - 16.52 | 5% 16.53 - 17.55 | 6% 17.56 - 18.58 | 8% 18.59 - 19.61 | 10% 19.62 - 20.64 | 12% 20.65 - 21.67 | 14% 21.68 - 22.70 | 16% 22.71 - 23.73 | 18% 23.74 - 24.76 | 20% 24.77 and above | 22%

Average Hourly Wage | Credit Percentage $ 12.80 or less | 0% 12.81 - 13.86 | 2% 13.87 - 14.93 | 3% 14.94 - 15.99 | 4% 16.00 - 17.05 | 5% 17.06 - 18.12 | 6% 18.13 - 19.18 | 8% 19.19 - 20.24 | 10% 20.25 - 21.31 | 12% 21.32 - 22.37 | 14% 22.38 - 23.43 | 16% 23.44 - 24.50 | 18% 24.51 - 25.56 | 20% 25.57 and above | 22%

History

Authorizing statute(s): 39-71-2315, 39-71-2316, MCA
Implementing statute(s): 39-71-2211, 39-71-2311, 39-71-2316, 39-71-2330, MCA
History: NEW, 2000 MAR p. 1033, Eff. 4/28/00; AMD, 2001 MAR p. 657, Eff. 4/27/01; AMD, 2002 MAR p. 164, Eff. 2/1/02; AMD, 2002 MAR p. 3558, Eff. 12/27/02; AMD, 2009 MAR p. 140, Eff. 2/13/09; AMD, 2012 MAR p. 394, Eff. 2/24/12; AMD, 2013 MAR p. 211, Eff. 2/15/13; AMD, 2014 MAR p. 1080, Eff. 5/23/14.

Mont. Admin. R. 2.55.328 Employers' Liability - Limits and Rates

(1) The State Fund may, upon approval of the board, provide employers liability insurance as part of the workers' compensation policy for employers insured by the State Fund. The board shall approve the terms and conditions of employers' liability coverage including, but not limited to, the limits of liability.

(2) In establishing rates the board shall, in consultation with the actuary, consider employers' liability basic limits coverage in establishing the overall rate level adjustment. Limits of liability above the basic limit, and related rates, may be established by the board in consultation with the actuary.

History

Authorizing statute(s): 39-71-2315, 39-71-2316, MCA
Implementing statute(s): 39-71-2211, 39-71-2311, 39-71-2316, 39-71-2330, MCA
History: NEW, 1998 MAR p. 158, Eff. 1/16/98.

Subchapter 2.55.4 Premium Modifiers

Mont. Admin. R. 2.55.401 Experience Modification Factor

(1) An insured, whose premium level qualifies, must be assigned an experience modification factor that reflects the insured's actual experience in comparison to the expected experience. "Experience modification factor" means a factor derived from an evaluation of payroll and accident experience in previous policy periods that is based on the formula of an advisory or rating organization.

(2) The state fund shall use the methods used by the workers' compensation advisory or rating organization to identify a qualified insured and determine the insured's experience modification factor in order to reward an insured with a good safety record and penalize an insured with a poor safety record.

History

Authorizing statute(s): Sec. 39-71-2315 and 39-71-2316 MCA
Implementing statute(s): 39-71-2311, 39-71-2316 and 39-71-2330 MCA
History: EMERG, NEW, 1992 MAR p. 300, Eff. 2/28/92; AMD, 1996 MAR p. 410, Eff. 2/9/96; AMD, 2001 MAR p. 657, Eff. 4/27/01.

Mont. Admin. R. 2.55.402 Medical Deductible

(1) The state fund offers an annual (fiscal year July l through June 30) medical deductible plan for policies with effective dates between each July 1 and June 30 inclusive, in increments of $500, $1,000, $1,500, $2,000 and $2,500 per claim. This plan allows qualified employers to reimburse the state fund for a selected deductible amount of the medical costs of each claim in exchange for a premium discount.

(2) To qualify for the plan for the next policy year, an employer must:

(a) file an endorsement form, provided by the state fund prior to the beginning of the next policy year;

(b) have estimated annual premium for the next policy year which equals or exceeds the chosen deductible amount; and

(c) demonstrate the ability to promptly pay the deductible amounts by not having a poor premium payment history with the state fund.

(3) The state fund is responsible for initial payment of medical benefits; then bills the employer for reimbursement up to the chosen deductible amount. The state fund may cancel the employer's policy for failure to reimburse the state fund for expended medical deductible amounts.

History

Authorizing statute(s): Sec. 39-71-2315 and 39-71-2316 MCA
Implementing statute(s): Sec. 39-71-434, 39-71-2311, and 39-71-2316 MCA
History: EMERG, NEW, 1992 MAR p. 300, Eff. 2/28/92; AMD, 1993 MAR p. 340, Eff. 3/12/93; AMD, 1994 MAR p. 1423, Eff. 5/27/94; AMD, 1998 MAR p. 158, Eff. 1/16/98; AMD, 2000 MAR p. 1033, Eff. 4/28/00.

Mont. Admin. R. 2.55.403 Volume Discount

(1) The state fund may establish each fiscal year for insureds covered by the state fund a percentage reduction of premium for policies with effective dates between each July 1 and June 30 inclusive, based on premium volume.

(2) The state fund may provide a group volume discount to a group as provided by 39-71-433 , MCA.

History

Authorizing statute(s): Sec. 39-71-2315 and 39-71-2316 MCA
Implementing statute(s): Sec. 39-71-433, 39-71-2311, 39-71-2316 and 39-71-2330 MCA
History: EMERG, NEW, 1992 MAR p. 300, Eff. 2/28/92; AMD, 1996 MAR p. 410, Eff. 2/9/96; AMD, 2000 MAR p. 1033, Eff. 4/28/00.

Mont. Admin. R. 2.55.406 Scheduled Rating - Unique Risk Characteristics Modifier

(1) The state fund may modify the premium for an insured to acknowledge characteristics of the business that are not reflected in its experience. Such characteristics may include but are not limited to the condition of the insured's premises and worksites, peculiarities of classification, medical facilities, safety devices, employees and management. The modifier will be a percentage increase (scheduled rating debit modifier) or decrease (scheduled rating credit modifier) applied to standard premium.

(2) All scheduled rating debit and credit modifiers shall be based on evidence contained in the file of the state fund at the time the scheduled rating modifier is applied. The effective date of any scheduled rating modifier shall not be any date prior to the receipt in the state fund's office of the evidence supporting the debit or credit.

(3) The derivation of the scheduled rating modifier must be made available to the insured upon request.

(4) To the degree that the insured can correct the reason for any scheduled rating debit modifier to the satisfaction of the state fund, the modifier may be removed at the beginning of the next quarterly period.

(5) If the insured fails to maintain the basis for which a scheduled rating credit modifier was applied, the modifier may be removed by the state fund at the beginning of the next quarterly period.

(6) An insured subject to the modifier may be assigned a quarterly report basis.

History

Authorizing statute(s): Sec. 39-71-2315 and 39-71-2316 MCA
Implementing statute(s): Sec. 39-71-2316 and 39-71-2330 MCA
History: NEW, 1994 MAR p. 292, Eff. 2/11/94; AMD, 1994 MAR p. 661, Eff. 4/1/94; AMD, 1996 MAR p. 410, Eff. 2/9/96.

Mont. Admin. R. 2.55.407 Optional Deductible Plans

(1) The state fund may offer to an employer an optional deductible plan for benefits payable under the Workers' Compensation Act.

(2) The board shall establish deductible plans for each fiscal year. The board shall determine the factors, multipliers, ratios or other formula components for the plan.

(3) Except as provided in (4) , to qualify for a plan an employer must meet the following conditions:

(a) be selected by the state fund pursuant to criteria established by the board, and be provided a written proposal for state fund optional deductible plan;

(b) the employer shall have an annual estimated earned premium that equals or exceeds the deductible level chosen or such annual estimated earned premium as established by the board;

(d) the endorsement is approved by the state fund for the plan chosen by the employer.

(4) The employer may be disqualified or terminated at any time from participation in a plan because of a poor payment history with the state fund; as a result of a credit investigation, or review of relevant financial information which demonstrates the employer is not sufficiently financially stable to be responsible for the payment of the reasonably anticipated deductible amounts. As a condition of approval or continuation in a plan, the state fund may require security including, but not limited to, surety bond, cash deposit or guarantee sufficient to meet the reasonably anticipated obligations of the employer for the policy year.

(5) The plan shall provide for penalty for early termination of the plan by an employer.

History

Authorizing statute(s): Sec. 39-71-2315 and 39-71-2316 MCA
Implementing statute(s): Sec. 39-71-435, 39-71-2316, 39-71-2330 and 39-71-2341 MCA
History: NEW, 1994 MAR p. 3084, Eff. 12/9/94; AMD, 1996 MAR p. 410, Eff. 2/9/96; AMD, 2000 MAR p. 1033, Eff. 4/28/00; AMD, 2001 MAR p. 657, Eff. 4/27/01.

Mont. Admin. R. 2.55.408 Retrospective Rating Plans

(1) The State Fund may offer an employer, or a group, a retrospective rating plan for coverage under the Workers' Compensation Act.

(2) The board shall establish employer retrospective rating plans for each fiscal year utilizing the methods and formulas published by the National Council on Compensation Insurance Retrospective Rating Manual, 2009 edition. The board shall determine the factors, multipliers, ratios, or other formula components for the plan. The board may establish a group retrospective rating plan utilizing the methods, formulas, factors, multipliers, ratios, or other formula components as determined by the board.

(3) To qualify for participation in a plan the employer or group shall:

(a) be selected by the State Fund pursuant to criteria established by the board, and be provided a written proposal for a State Fund retrospective rating plan;

(b) execute an agreement with the State Fund; and

(4) The employer, group, or group member may be disqualified from participation in a plan because of a poor payment history with the State Fund, as a result of a credit investigation or review of relevant financial information which demonstrates the employer, group, or group member is not sufficiently financially stable to be responsible for the payment of any retrospective rating adjustment. As a condition of approval the State Fund may require security including, but not limited to, surety bond, cash deposit or guarantee sufficient to meet the reasonably anticipated obligations of the employer for the policy year.

(5) The plan shall provide for penalty for early termination of the plan by an employer. The plan may provide for penalty for early termination of the plan by a group.

History

Authorizing statute(s): 39-71-2315, 39-71-2316, MCA
Implementing statute(s): 39-71-2316, 39-71-2330, MCA
History: NEW, 1994 MAR p. 3084, Eff. 12/9/94; AMD, 1996 MAR p. 410, Eff. 2/9/96; AMD, 1996 MAR p. 2278, Eff. 8/23/96; AMD, 2000 MAR p. 1033, Eff. 4/28/00; AMD, 2010 MAR p. 306, Eff. 2/12/10.

Mont. Admin. R. 2.55.409 Expense Constant

(1) The state fund may assess an expense constant on all policies in effect during a fiscal year. The amount of the charge shall be determined annually by the board for the future fiscal year, and may be in addition to any other charge, premium or loss based premium.

(2) The expense constant is included in the total minimum premium charged if the expense constant plus premium is less than the total minimum premium established by the board for the fiscal year.

(3) The expense constant includes, but is not limited to, expense components for issuing, maintaining and servicing policies, which are common to all policies regardless of premium size.

(4) The state fund may cancel the employer's policy for failure to pay an expense constant.

History

Authorizing statute(s): Sec. 39-71-2315 and 39-71-2316, MCA
Implementing statute(s): Sec. 39-71-2311 and 39-71-2316, MCA
History: TEMP, NEW, 1995 MAR p. 1792, Eff. 9/15/95; AMD, 2000 MAR p. 1033, Eff. 4/28/00; AMD, 2002 MAR p. 164, Eff. 2/1/02; AMD, 2004 MAR p. 176, Eff. 1/30/04.

Subchapter 2.55.5 Individual Loss Sensitive Dividend Distribution Plan

Mont. Admin. R. 2.55.501 Definitions

The following definitions apply to ARM 2.55.502:

(1) "Dividend factors" means the percentage multiplied times premium to arrive at the dividend amount payable to an eligible policyholder.

(2) "Fiscal year" or "dividend year" means the period of time between July 1 and the succeeding June 30.

(3) "Incurred losses" means:

(a) losses as reflected on the first report of the unit statistical reports including any corrections to the first report as provided to the National Council on Compensation Insurance (NCCI) for the dividend year; or

(b) incurred losses for the dividend year on a date, or on various dates based on policy period such that eligible policyholder losses are captured at equivalent maturities, as selected by the State Fund board of directors.

(4) "Individual loss sensitive dividend" means dividends authorized pursuant to 39-71-2323 , MCA, declared by the board as an amount not to exceed the approved dividend amount, and distributed based upon a table of dividend factors.

(5) "Insurance charge" means an actuarially determined loss component associated with the probability of exceeding an expected range of loss.

(6) "Loss ratios" means incurred losses divided by premium for the dividend year.

(7) "Premium" means payroll times the manual rate for each classification code, times premium modifiers, minus volume discount for the dividend year and any premium adjustment pursuant to a rating plan. The premium utilized for dividend calculation purposes shall be the premium on a date selected by the State Fund board of directors and the premium utilized is not subject to change thereafter.

(8) "Table of dividend factors" means a dividend distribution table created for each dividend year pursuant to ARM 2.55.502.

History

Authorizing statute(s): 39-71-2315, 39-71-2323, MCA
Implementing statute(s): 39-71-2323, MCA
History: NEW, 1998 MAR p. 1273, Eff. 5/15/98; AMD, 1998 MAR p. 3268, Eff. 12/18/98; AMD, 2002 MAR p. 164, Eff. 2/1/02.

Mont. Admin. R. 2.55.502 Individual Loss Sensitive Dividend Distribution Plan

(1) Upon declaration of a dividend by the State Fund board of directors (board) as of the end of any fiscal year, but in no event prior to July 1, 1998, the following factors and procedures shall be utilized to determine the entitlement of a State Fund policyholder to an individual loss sensitive dividend. The dividend shall be declared as an amount not to exceed the approved dividend amount, to aid distribution of the declared dividend among policyholders through the table of dividend factors.

(2) Distribution of dividends to individual policyholders shall be based on a table of dividend factors as approved by the board, subject to the certification by the State Fund independent consulting actuary pursuant to (4). The table of dividend factors shall be constructed with one axis based on increments of policyholder premium size in the dividend year and the other axis based on increments of policyholder loss ratios from the dividend year.

(3) Dividend factors shall be based on an actuarial determination of policyholders' proportionate contribution to the operating results of the State Fund during the dividend year. The proportionate contribution of the policyholder shall be determined by taking into consideration factors such as, but not limited to, the following: incurred losses, loss development, credibility of incurred loss ratios, provision for excess losses, loss adjustment expenses, other expenses including differences in expense levels by premium segment, rate adequacy by premium segment, actuarially determined insurance charges, and future investment income on premiums paid.

(4) The independent actuary shall certify that the approved table of dividend factors, to include the increments of policyholder premium size and loss ratios, is consistent with (3) and generally accepted actuarial principles.

(5) To be eligible for a dividend a policyholder must have six continuous months of coverage with the State Fund in the policy period that is new or renewed within the dividend year.

(6) Individual retrospectively rated and optional deductible policies shall not be eligible for a dividend declared by the board under this rule. This section applies to policies with policy effective dates after December 31, 2006.

(7) The board may set a minimum amount below which a dividend shall not be payable to an individual policyholder.

(8) A dividend will be issued as a warrant to a policyholder, unless (8)(a) through (8)(c) exist. The dividend will be applied to the account, unless an exception is made by the board of directors for a warrant to be issued, if the following situations exist:

(a) a current policy has a past-due premium or other debt pending;

(b) a canceled policy with an existing obligation owed the State Fund, including a past-due premium or an outstanding payroll report; or

(c) a current policy when the dividend amount is above the minimum amount established pursuant to (7) but below an amount as established by the board.

(9) If a dispute under the policy arising from the dividend year exists and remains unresolved at the time the dividend is declared, the dividend amount will be withheld and not applied to the account or a warrant issued until such time as outstanding issues with the State Fund are resolved.

History

Authorizing statute(s): 39-71-2315, 39-71-2323, MCA
Implementing statute(s): 39-71-2323, MCA
History: NEW, 1998 MAR p. 1273, Eff. 5/15/98; AMD, 1998 MAR p. 3268, Eff. 12/18/98; AMD, 2000 MAR p. 1033, Eff. 4/28/00; AMD, 2002 MAR p. 164, Eff. 2/1/02; AMD, 2006 MAR p. 3065, Eff. 12/22/06; AMD, 2014 MAR p. 322, Eff. 2/14/14; AMD, 2014 MAR p. 2444, Eff. 10/10/14.

Chapter 2.59 Banking and Financial Institutions

Subchapter 2.59.1 Banks

Mont. Admin. R. 2.59.101 Banks - Reserve Requirements

(1) No bank shall act as a reserve bank unless:

(a) the bank has unimpaired paid-up capital and surplus of at least $1,000,000. For purposes of this rule, "unimpaired paid-up capital and surplus" shall mean the aggregate of the bank's capital stock account(s) and its surplus account, as defined in 32-1-109 , MCA, minus any deficit balance existing after aggregating the bank's undivided profits account, profit and loss (or similar) account, capital reserve account(s) , valuation reserve account(s) , and allocated or specific reserve account(s) ; and

(b) the bank has received written approval from the department in response to the bank's written request to act as a reserve bank.

(2) In addition to maintaining a reserve in the amount required by Federal Reserve Board regulations, approved reserve banks shall maintain an additional reserve balance equal to at least 10% of bank deposits.

(3) The reserve shall be held in the form(s) and manner(s) established by Federal Reserve Board regulations, or deposits in a federal home loan bank in the district in which the bank is located.

History

Authorizing statute(s): 32-1-455, MCA
Implementing statute(s): 32-1-455, MCA
History: Eff. 12/31/72; AMD, Eff. 5/5/75; AMD, 1993 MAR p. 2776, Eff. 11/25/93; TRANS, from Commerce, 2001 MAR p. 1178.

Mont. Admin. R. 2.59.102 Banks - Direct Leasing of Personal Property

(1) Under authority granted by 32-1-362 , MCA, the department hereby permits state banks of Montana to engage in the business of direct leasing of personal property under the following regulations:

(a) A bank may purchase personal property to be leased only after it has a valid and binding commitment from the prospective lessee to lease the specific property under terms acceptable to the bank.

(b) Lease agreements with any one lessee may not exceed 40% of the unimpaired capital and surplus of the bank. If the lessee is also a borrower from the bank this 40% must be reduced by the balance of loans to the lessee.

(c) Every lease agreement must provide for full payout to the bank of its full acquisition cost of the lease property during the initial term of the lease.

(d) Residual value of the property at the end of a lease agreement's original term may be considered by the bank to constitute partial recovery of its cost of acquisition if such residual value is not more than 25% of the cost of acquisition.

(e) No lease agreement shall extend for an initial period of more than ten years or the leased property's normal useful life, whichever is less, unless the bank receives from the department prior written approval of each lease agreement of longer term.

(f) Each lease agreement must include provisions whereby the lessee disclaims any liability of the bank for the condition of the leased property or its quality; and whereby the lessee assumes full responsibility for protection and maintenance of the leased property.

(2) Any formerly leased personal property returned to the bank by default, completion of the lease, or otherwise, must be disposed of by the bank by sale or lease within one year after gaining legal possession.

History

Authorizing statute(s): 32-1-362, 32-1-455, MCA
Implementing statute(s): 32-1-362, 32-1-455, MCA
History: Eff. 9/5/74; AMD, 1989 MAR p. 1280, Eff. 9/1/89; TRANS, from Commerce, 2001 MAR p. 1178.

Mont. Admin. R. 2.59.104 Semiannual Assessment

(1) The department invoices banks, investment companies, and trust companies for semiannual assessments every June and December. The assessment is based on each institution's total assets provided in its previous March and September call reports.

(2) The fee is calculated based on the total assets of the bank, investment company, or trust company multiplied by .0000375, plus the flat fee listed below.

Example: Bank A reports total assets of $58,873,000 x .0000375 plus $3,000 equals $5,207.74.

(3) The assessment is due 30 days after each invoice date, or July 31 and January 31, whichever is later.

(4) The fee shall not exceed $400,000 for each semiannual assessment.

(5) In the event of a merger between Montana state-chartered banks, investment companies, or trust companies during the second or fourth quarter of the year, the assessment fee for the acquired institution must be paid by the surviving institution.

History

Authorizing statute(s): 32-1-213, 32-1-218, MCA
Implementing statute(s): 32-1-213, 32-1-218, MCA
History: NEW, 1984 MAR p. 440, Eff. 3/16/84; AMD, 1985 MAR p. 776, Eff. 6/28/85; AMD, 1994 MAR p. 1143, Eff. 4/29/94; TRANS, from Commerce, 2001 MAR p. 1178; AMD, 2007 MAR p. 1926, Eff. 11/22/07; AMD, 2012 MAR p. 883, Eff. 4/27/12; AMD, 2013 MAR p. 667, Eff. 4/26/13; AMD, 2014 MAR p. 1918, Eff. 8/22/14; AMD, 2015 MAR p. 748, Eff. 6/12/15; AMD, 2016 MAR p. 878, Eff. 5/21/16; AMD, 2016 MAR p. 2326, Eff. 12/10/16; AMD, 2019 MAR p. 2228, Eff. 12/7/19; AMD, 2020 MAR p. 1515, Eff. 8/8/20; AMD, 2020 MAR p. 2133, Eff. 11/21/20; AMD, 2021 MAR p. 328, Eff. 3/27/21; AMD, 2021 MAR p. 1319, Eff. 10/9/21; AMD, 2022 MAR p. 1656, Eff. 8/6/22; AMD, 2023 MAR p. 869, Eff. 8/26/23.

Mont. Admin. R. 2.59.106 Investment in Corporate Stock

(1) Ownership of stock in a bank service corporation is subject to the following conditions:

(a) The department adopts the definition of bank service corporation in 12 USC 1861 (a corporation organized to perform services authorized by this Act, all of the capital stock of which is owned by one or more insured banks).

(b) Services which may be provided by a bank service corporation include, but are not limited to:

(i) electronic data processing;

(ii) accounting services;

(iii) clearinghouse functions;

(iv) investment services for the account(s) of bank(s) ;

(v) advertising and marketing services;

(vi) communications services;

(vii) audit services;

(viii) loan review and collateral inspections;

(ix) retention of bank records, including data backup retention;

(x) safekeeping services, including vault and safe deposit box facilities;

(xi) courier services.

(2) As provided by 32-1-422(3), MCA, a bank may invest in the stock of certain corporations. Investment in the stock of an approved corporation is limited to:

(a) the greater of 5% of a bank's unimpaired capital and surplus;

(b) the minimum number of shares necessary to participate in government sponsored enterprises; or

(c) the minimum dollar value of such shares necessary for the bank to participate in the services or programs. This limitation is exclusive of all accrued or declared stock dividends generated by such corporate stock.

(3) In addition to the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Federal Agricultural Mortgage Corporation, the department has determined that it is in the public interest for banks to be able to invest in the following corporations, subject to the restrictions listed above:

(a) federal home loan banks.

History

Authorizing statute(s): 32-1-218, 32-1-422, MCA
Implementing statute(s): 32-1-422, MCA
History: NEW, 1993 MAR p. 2776, Eff. 11/25/93; TRANS, from Commerce, 2001 MAR p. 1178; AMD, 2025 MAR, Notice No. 2025-900, Eff. 9/13/25.

Mont. Admin. R. 2.59.109 Loans to a Managing Officer, Officer, Director, or Principal Shareholder of a Bank

(1) The definitions of capital and unimpaired surplus are as follows:

(a) "Capital" shall mean the aggregate of the bank's outstanding capital stock account(s) minus any deficit balance existing in an impaired surplus account.

(b) "Surplus" is defined in 32-1-109 , MCA. "Unimpaired surplus" shall mean surplus minus any deficit balance existing after aggregating the bank's undivided profits account, profit and loss (or similar) account, capital reserve account(s) , valuation reserve account(s) and allocated or specific reserve account(s) .

(2) Any loan to a managing officer, officer, director, employee or principal shareholder which was made before October 1, 1993, and which was in compliance with state law at the time, shall be considered legal throughout its term unless:

(a) the loan is renewed, or

(b) the terms of the loan are modified in any way, except for specified periodic interest rate adjustments, or

(c) security for the loan is changed in any way, except for substitutions or deletions agreed upon at the origination of the loan.

(i) If (a) , (b) or (c) occur on or after October 1, 1993, the loan shall be restructured to comply with the provisions of 32-1-465 and 32-1-467 , MCA, as amended.

(3) The following types of loans will not be included in the 2.5% of capital and unimpaired surplus aggregate loan limitation:

(a) loans or portions of loans guaranteed by a department, bureau, board, commission or establishment of the United States, including a corporation wholly owned, directly or indirectly, by the United States;

(b) loans or portions of loans guaranteed by or covered by a commitment or agreement to take over or purchase, issued by an agency or board of the state of Montana;

(d) loans or portions of loans secured by pledged deposits in the lending bank.

History

Authorizing statute(s): 32-1-465, 32-1-467, MCA
Implementing statute(s): 32-1-467, MCA
History: NEW, 1993 MAR p. 2776, Eff. 11/25/93; TRANS, from Commerce, 2001 MAR p. 1178.

Mont. Admin. R. 2.59.111 Retention of Bank Records

(1) Records of customer accounts, as defined in (7), must be held in accordance with 32-1-491, MCA.

(2) The publication "Bank Record Retention Periods - Appendix A to ARM 2.59.111" (Appendix A) establishes the minimum period for retention of bank records other than those specified in 32-1-491, MCA. The June 2, 2014, edition of Appendix A is incorporated by reference as part of this rule. A copy of Appendix A can be obtained from the Division of Banking and Financial Institutions, Department of Administration, P.O. Box 200546, Helena, MT 59620-0546 or found on the department's web site at banking.mt.gov.

(3) When a bank reproduces records in any manner in the regular course of business as permitted by 32-1-492 through 32-1-494, MCA, the retention period of the reproduced records is the same as specified in Appendix A.

(4) Banks must comply with all applicable federal banking laws and regulations requiring specific retention periods for records set forth in those laws or regulations. If a federal banking law or regulation concerning record retention conflicts with a retention period contained in 32-1-491, MCA, this rule, or Appendix A, a bank must comply with whichever retention period is longer. Banks must comply with state laws governing retention of personnel records, corporation records, etc.

(5) If a bank does not maintain records set forth in Appendix A, but maintains similar records with the same information, the bank's similar records must be retained for the time set forth in Appendix A.

(6) Records not covered by this rule or 32-1-491, MCA, must be retained for an appropriate period of time as determined by the bank's board of directors. Retention periods determined by the board must be kept as a permanent part of the board's minutes.

(7) "Customer accounts," for record retention purposes under 32-1-491, MCA, and this rule, means customer deposit accounts including savings deposit accounts, checking accounts, demand deposit accounts, certificates of deposit, safety deposit boxes, trust accounts, Negotiable Order of Withdrawal (NOW) accounts, and money market deposit accounts.

History

Authorizing statute(s): 32-1-218, 32-1-491, MCA
Implementing statute(s): 32-1-218, 32-1-491, 32-1-492, MCA
History: NEW, 1994 MAR p. 1137, Eff. 4/29/94; TRANS, from Commerce, 2001 MAR p. 1178; AMD, 2007 MAR p. 183, Eff. 12/22/06; AMD, 2014 MAR p. 1917, Eff. 8/22/14; AMD, 2016 MAR p. 2326, Eff. 12/10/16; AMD, 2025 MAR, Notice No. 2025-900, Eff. 9/13/25.

Mont. Admin. R. 2.59.112 Underwriting of Securities

(1) Banks are permitted to underwrite issues of investment securities if the following conditions are met:

(a) No banks having unimpaired capital and surplus of less than $5,000,000 shall underwrite or otherwise participate as principal in the marketing of securities, except for the account of and upon specific instructions from its customer.

(b) Banks that qualify to underwrite or participate by having unimpaired capital and surplus of $5,000,000 or greater, may do so with any securities that such banks could purchase for their own account.

(c) Accounting and other records of trading in such securities must be separately maintained from accounting and other records relating to purchases of securities for the bank's own account.

History

Authorizing statute(s): 32-1-424, 32-1-433, MCA
Implementing statute(s): 32-1-424, 32-1-433, MCA
History: NEW, 1994 MAR p. 1137, Eff. 4/29/94; TRANS, from Commerce, 2001 MAR p. 1178; AMD, 2002 MAR p. 166, Eff. 2/1/02; AMD, 2022 MAR p. 234, Eff. 2/12/22.

Mont. Admin. R. 2.59.113 Investments by Banks to Promote the Public Welfare

(1) The department incorporates by reference the Office of the Comptroller of the Currency Code of Federal Regulations (12 CFR Part 24.1 through 24.7, 1996 edition) that implement 12 USC 24, which authorizes national banks to make investments designed primarily to promote the public welfare, including the welfare of low and moderate income areas or individuals, such as providing housing, services, or jobs.

History

Authorizing statute(s): 32-1-218, 32-1-422, MCA
Implementing statute(s): 32-1-422, MCA
History: NEW, 2000 MAR p. 2306, Eff. 8/25/00; TRANS, from Commerce, 2001 MAR p. 1178; AMD, 2025 MAR, Notice No. 2025-900, Eff. 9/13/25.

Mont. Admin. R. 2.59.115 Adoption of Examination Procedure

(1) The department adopts the revised Uniform Financial Institution Rating System as one of its examination procedures. The edition adopted is the December 19, 1996, edition as published in the Federal Register at 61 Fed. Reg. 67021. It may be viewed at fdic.gov/news/news/financial/1996/fil96105.pdf. A copy may be obtained from the Federal Financial Institutions Examination Council (FFIEC) at 3501 Fairfax Drive, Room D-8073a, Arlington, VA 22226-3550.

History

Authorizing statute(s): 32-1-218, MCA
Implementing statute(s): 32-1-211, MCA
History: NEW, 2010 MAR p. 1884, Eff. 8/27/10; AMD, 2025 MAR, Notice No. 2025-900, Eff. 9/13/25.

Mont. Admin. R. 2.59.116 Definitions

The following definitions apply to ARM 2.59.117 through 2.59.124:

(1) "Actuarial method" means the method of allocating payments made on a debt between the amount financed and the finance charge. Under this method, a payment is applied first to the accumulated finance charge and any remainder is subtracted from, or any deficiency is added to, the unpaid balance of the amount financed.

(2) "Contract" means a debt cancellation contract or a debt suspension agreement.

(3) "Customer" means an individual who obtains from a bank an extension of credit that is primarily for personal, family, or household purposes. For purposes of this subchapter, the term means the same thing as "borrower."

(4) "Debt cancellation contract" means a loan term or contractual arrangement modifying loan terms under which a bank agrees, for a fee, to suspend all or part of a customer's obligation to repay an extension of credit from that bank upon the occurrence of a specified event. The agreement must specify the extension of credit to which it pertains. The extension of credit may be a direct loan made by the bank or an indirect loan in the form of a retail installment sales contract purchased by or assigned to the bank. In the case of a retail installment sales contract, the debt cancellation contract may be offered by the bank through a nonexclusive, unaffiliated agent contingent upon the bank purchasing or taking assignment of the indirect loan. The agreement may be separate from or a part of other loan documents. A debt cancellation contract may be offered and purchased at the time the loan is made or subsequently.

(5) "Debt suspension agreement" means a loan term or contractual arrangement modifying loan terms under which a bank agrees, for a fee, to suspend all or part of a customer's obligation to repay an extension of credit from that bank upon the occurrence of a specified event. The agreement must specify the extension of credit to which it pertains. The extension of credit may be a direct loan made by the bank or an indirect loan in the form of a retail installment sales contract purchased by or assigned to the bank. In the case of a retail installment sales contract, the debt suspension agreement may be offered by the bank through a nonexclusive, unaffiliated agent contingent upon the bank purchasing or taking assignment of the indirect loan. The agreement may be separate from or a part of other loan documents. The term "debt suspension agreement" does not include loan payment deferral arrangements in which the triggering event is the borrower's unilateral election to defer repayment or the bank's unilateral decision to allow a deferral of repayment.

(6) "Guaranteed asset protection (GAP) waiver or agreement" means a contractual arrangement modifying the terms of an extension of credit for the purchase of titled personal property under which a bank agrees to cancel the customer's obligation to repay the portion of the extension of credit that exceeds the amount paid by the primary insurer of the titled personal property upon the insurer's declaration that the titled personal property is a total loss or determination that the titled personal property is stolen and not recoverable.

(7) "Loan" or "extension of credit" means a direct or indirect advance of funds to a customer made on the basis of any obligation of that customer to repay the funds or that is repayable from specific property pledged by or on the customer's behalf. The term also includes any liability of a bank to advance funds to or on behalf of a customer pursuant to a contractual commitment.

(8) "Residential mortgage loan" means a loan for personal, family, or household purposes secured by a one- to four-family residential property.

History

Authorizing statute(s): 32-1-218, 32-1-429, MCA
Implementing statute(s): 32-1-429, MCA
History: NEW, 2011 MAR p. 2801, Eff. 12/23/11; AMD, 2025 MAR, Notice No. 2025-900, Eff. 9/13/25.

Mont. Admin. R. 2.59.117 Debt Cancellation and Debt Suspension Programs – Requirements

(1) A bank offering debt cancellation contracts and/or debt suspension agreements shall:

(a) manage the risks associated with debt cancellation contracts and debt suspension agreements in accordance with bank safety and soundness principles by establishing and maintaining effective risk management and control processes over its debt cancellation contracts and debt suspension agreements to include:

(i) appropriate recognition and financial reporting of income, expenses, assets, and liabilities;

(ii) appropriate treatment of all expected and unexpected losses associated with the contracts; and

(iii) assessment of the adequacy of its internal control and risk mitigation activities in view of the nature and scope of the bank's debt cancellation and debt suspension program; and

(b) obtain and maintain in effect insurance from an insurer authorized or otherwise registered with the State Auditor and Commissioner of Insurance (State Auditor) to do business in Montana, except as provided in (2). The insurance must cover 100% of the at-risk loan balances to which the bank's debt cancellation contracts pertain.

(2) An insurer authorized by the insurance regulator in an out-of-state bank's home state that has issued a policy to the out-of-state bank covering all of its debt cancellation contractual liabilities need not be authorized or otherwise registered with the State Auditor.

History

Authorizing statute(s): 32-1-218, MCA
Implementing statute(s): 32-1-429, MCA
History: NEW, 2011 MAR p. 2801, Eff. 12/23/11.

Mont. Admin. R. 2.59.118 Required Disclosures

(1) A bank shall provide the following disclosures to the bank's customer:

(a) notice of the prohibited acts or practices contained in ARM 2.59.119;

(b) the fee applicable to the contract and any payment options;

(d) whether the customer is barred from using the credit line to which it pertains if the debt cancellation contract or debt suspension agreement is activated;

(e) eligibility requirements, conditions, and exclusions;

(f) that a debt suspension agreement, if activated, does not cancel the debt, but only suspends payment requirements; and

(g) notice that cancellation of debt may result in a tax liability to the customer if activated.

(2) The requirements for the timing and method of disclosure are:

(a) the bank shall make the disclosures in (1) and the short-form disclosures under ARM 2.59.123 orally at the time the bank first solicits the purchase of a contract;

(b) the bank shall make the long-form disclosures under ARM 2.59.123 in writing before the customer completes the purchase of the contract. If the initial solicitation occurs in person, the bank shall provide the long-form disclosure in writing at that time;

(c) if the contract is solicited by telephone, the bank shall provide the disclosures in (1) and the short-form disclosures under ARM 2.59.123 orally and shall mail the long-form disclosures, and, if appropriate, a copy of the contract to the customer within three business days beginning on the first business day after the telephone solicitation; and

(d) if the contract is solicited through written materials such as mail inserts or "take one" applications, the bank may provide only the disclosures in (1) and the short-form disclosure under ARM 2.59.123 to the customer within three business days beginning on the first business day after the customer contacts the bank in response to the solicitation, subject to the requirements of ARM 2.59.122(3)(b).

(3) The disclosures required by these rules must be conspicuous, simple, direct, readily understandable, and designed to call attention to the nature and significance of the information provided. The methods may include use of plain language headings, easily readable typeface and size, wide margins and ample line spacing, boldface or italics for key words, and/or distinctive type style or graphic devices.

(4) The disclosures in the short-form disclosure under ARM 2.59.123 are required in advertisements and promotional material for contracts unless the advertisements and promotional materials are of a general nature describing or listing the services or products offered by the bank.

(5) The disclosures described in these rules may be provided through electronic media in a manner consistent with the requirements of the Electronic Signatures in Global and National Commerce Act, 15 USC 7001 et seq. or the Uniform Electronic Transaction Act, Title 30, chapter 18, part 1, MCA.

History

Authorizing statute(s): 32-1-218, MCA
Implementing statute(s): 32-1-429, MCA
History: NEW, 2011 MAR p. 2801, Eff. 12/23/11.

Mont. Admin. R. 2.59.119 Prohibited Acts or Practices

(1) A bank is prohibited from engaging in any of the following acts or practices:

(a) extending credit or altering the terms or conditions of an extension of credit conditioned upon the customer entering into a debt cancellation agreement or debt suspension agreement with the bank. The prohibition is commonly referred in the regulatory context as the anti-tying provision;

(b) engaging in any practice or using any advertisement that could mislead or otherwise cause a reasonable person to reach an erroneous belief with respect to information that must be disclosed under ARM 2.59.118, including what is being offered, the cost, and/or the terms of the contract;

(i) giving the bank the right unilaterally to modify the contract unless:

(A) the modification is favorable to the customer and is made without additional charge to the customer; or

(B) the customer is notified of any proposed change and is provided a reasonable opportunity to cancel the contract without penalty before the change goes into effect; or

(ii) requiring an up-front, lump-sum single payment for the contract if the extension of credit to which the contract pertains is a residential mortgage loan.

History

Authorizing statute(s): 32-1-218, MCA
Implementing statute(s): 32-1-429, MCA
History: NEW, 2011 MAR p. 2801, Eff. 12/23/11.

Mont. Admin. R. 2.59.120 Refunds of Fees Upon Termination or Prepayment of Covered Loan

(1) If a debt cancellation contract or debt suspension agreement is terminated, including, for example, when the customer prepays the covered loan, a bank shall refund to the customer any unearned fees paid for the contract unless the contract provides otherwise.

(2) A bank may offer a customer a contract that does not provide for a refund only if the bank also offers that customer a bona fide option to purchase a comparable contract that provides for a refund.

(3) A bank shall calculate the amount of a refund using a method at least as favorable to the customer as the actuarial method.

History

Authorizing statute(s): 32-1-218, MCA
Implementing statute(s): 32-1-429, MCA
History: NEW, 2011 MAR p. 2801, Eff. 12/23/11.

Mont. Admin. R. 2.59.121 Method of Payment of Fees

(1) Except as provided in ARM 2.59.119(1)(c)(ii), a bank may offer a customer the option of paying the fee for a debt cancellation contract or a debt suspension agreement in a single payment, provided the bank also offers the customer a bona fide option of paying the fee for that contract in periodic installment payments.

(2) If a bank offers the customer the option to finance the single payment by adding it to the loan principal, the bank must also disclose, in accordance with ARM 2.59.120, whether the customer may cancel the agreement and receive a refund, and, if so, the time period during which the customer may do so.

History

Authorizing statute(s): 32-1-218, MCA
Implementing statute(s): 32-1-429, MCA
History: NEW, 2011 MAR p. 2801, Eff. 12/23/11.

Mont. Admin. R. 2.59.122 Affirmative Election to Purchase and Acknowledgment of Receipt of Disclosures

(1) Before entering into a debt cancellation contract or debt suspension agreement, a bank shall obtain the customer's written affirmative election to purchase the contract and a written acknowledgment of receipt of the disclosures required under ARM 2.59.118.

(2) The election and acknowledgment information must be conspicuous, simple, direct, readily understandable, and designed to call attention to its significance.

(3) The election and acknowledgment information satisfies these standards if it conforms to the following requirements:

(a) if the sale of a contract occurs by telephone, the customer's affirmative election to purchase may be made orally, provided that the bank:

(i) maintains sufficient documentation to show that the customer received the short-form disclosures substantially similar to ARM 2.59.123(1) and then affirmatively elected to purchase the contract;

(ii) mails to the customer the affirmative written election and written acknowledgment together with a long-form disclosure substantially similar to ARM 2.59.123(2), within three business days after the telephone solicitation, and maintains sufficient documentation to show it made reasonable efforts to obtain the documents from the customer; and

(iii) permits the customer to cancel the purchase of the contract without penalty within 30 days after the bank has mailed the long-form disclosures to the customer.

(b) if the contract is solicited through written materials such as mail inserts or "take one" applications and a bank provides only the short-form disclosures in the written materials, then the bank shall mail the acknowledgment of receipt of disclosures, together with a long-form disclosure as provided under ARM 2.59.123(2), to the customer within three business days, beginning on the first business day after the customer contacts the bank or otherwise responds to the solicitation. A bank may not obligate the customer to pay for the contract until after the bank has received the customer's written acknowledgment of receipt of disclosures unless the bank:

(i) maintains sufficient documentation to show that the bank provided the acknowledgment of receipt of disclosures to the customer;

(ii) maintains sufficient documentation to show that the bank made reasonable efforts to obtain from the customer a written acknowledgment of receipt of the long-form disclosures; and

(iii) permits the customer to cancel the purchase of the contract without penalty within 30 days after the bank has mailed the long-form disclosures to the customer.

(4) The affirmative election and acknowledgment may be made electronically in a manner consistent with the requirements of the Electronic Signatures in Global and National Commerce Act, 15 USC 7001 et seq. or the Uniform Electronic Transaction Act, Title 30, chapter 18, part 1, MCA.

History

Authorizing statute(s): 32-1-218, MCA
Implementing statute(s): 32-1-429, MCA
History: NEW, 2011 MAR p. 2801, Eff. 12/23/11.

Mont. Admin. R. 2.59.123 Disclosure Forms

(1) The department adopts as a model, but not as a requirement, the Comptroller of the Currency's model short form disclosure at 12 CFR 37 App A revised as of January 1, 2010. The form must be adapted by the bank to include the disclosures required under ARM 2.59.118(1)(a) and (g).

(2) The department adopts as a model, but not as a requirement, the Comptroller of the Currency's model long-form disclosure at 12 CFR 37 App B revised as of January 1, 2010. The form must be adapted by the bank to include the disclosures required under ARM 2.59.118(1)(a) and (g).

(3) The model forms in (1) and (2), which are available at Title 12, Volume I, Part 37, Appendices A and B in the Code of Federal Regulations, are not mandatory, but a bank that provides disclosures in a form substantially similar to the adapted model forms will be deemed to have satisfied the disclosure requirements applicable to the bank concerning its debt cancellation and/or debt suspension program.

History

Authorizing statute(s): 32-1-218, MCA
Implementing statute(s): 32-1-429, MCA
History: NEW, 2011 MAR p. 2801, Eff. 12/23/11.

Mont. Admin. R. 2.59.124 Guaranteed Asset Protection (gap) Feature

(1) A GAP waiver or agreement is a type of debt cancellation contract. A debt cancellation contract with a GAP feature offered in connection with an extension of credit for the purchase of titled personal property for personal, family, or household use is a single product. A bank offering a debt cancellation contract with a GAP feature may do so through nonexclusive, unaffiliated agents such as automobile dealers. The fee arrangement between a bank and a nonexclusive, unaffiliated agent through which the debt cancellation product is offered does not create a separate contract that violates the anti-tying provision of ARM 2.59.119(1)(a).

History

Authorizing statute(s): 32-1-218, MCA
Implementing statute(s): 32-1-429, MCA
History: NEW, 2011 MAR p. 2801, Eff. 12/23/11.

Mont. Admin. R. 2.59.125 Definitions Applicable to Derivative Transactions and Securities Financing Transactions

The following definitions apply to rules within this subchapter:

(1) "Bank" or "state bank" has the same meaning as "eligible state bank" in (10).

(2) "Borrower" means:

(a) a person who is named as a borrower or debtor in a loan or extension of credit;

(b) a person to whom a bank has credit exposure arising from a derivative transaction or securities financing transaction entered by the bank; or

(c) any other person, including a drawer, endorser, or guarantor, who is deemed to be a borrower under the direct benefit or common enterprise tests in 12 CFR 32.5 and ARM 2.59.138 through 2.59.143.

(3) "Contractual commitment to advance funds" means:

(a) a bank's obligation to:

(i) make payment directly or indirectly to a third person contingent upon default by a customer of the bank in performing an obligation and to make such payment in keeping with the agreed-upon terms of the customer's contract with the third person, or to make payments upon some other stated condition;

(ii) guarantee or act as surety for the benefit of a person;

(iii) advance funds under a qualifying commitment to lend, as defined in 12 CFR 32.2(t); or

(iv) advance funds under a standby letter of credit, as defined in 12 CFR 32.2(ee) and 12 CFR 208.24, a put, or other similar arrangement.

(b) The term does not include commercial letters of credit and similar instruments:

(i) under which the issuing bank expects the beneficiary to draw on the issuer;

(ii) that do not guarantee payment; and

(iii) that do not provide payment if a third party defaults.

(4) "Credit derivative" means a financial contract executed under standard industry credit derivative documentation that allows one party (the protection purchaser) to transfer the credit risk of one or more exposures to another party (the protection provider).

(5) "Derivative transaction" includes any transaction that is a contract, agreement, swap, warrant, note, or option that is based, in whole or in part, on the value of, any interest in, or any quantitative measure or the occurrence of any event relating to one or more commodities, securities, currencies, interest, or other rates, indices, or other assets. The term includes a securities financing transaction.

(6) "Effective margining arrangement" means a master legal agreement governing derivative transactions between a bank and a counterparty that requires the counterparty to post, on a daily basis, variation margin to fully collateralize that amount of the bank's net credit exposure to the counterparty that exceeds $25 million created by the derivative transactions covered by the agreement.

(7) "Eligible credit derivative" means a single-name credit derivative or a standard, non-tranched index credit derivative provided that:

(a) the derivative contract meets the requirements of an eligible guarantee as defined in (8) and has been confirmed by the protection purchaser and the protection provider;

(b) any assignment of the derivative contract has been confirmed by all relevant parties;

(i) failure to pay any amount due under the terms of the reference exposure, subject to any applicable minimal payment threshold that is consistent with standard market practice and with a grace period that is closely in line with the grace period of the reference exposure; and

(ii) bankruptcy, insolvency, or inability of the obligor on the reference exposure to pay its debts, or its failure or admission in writing of its inability generally to pay its debts as they become due, and similar events;

(d) the terms and conditions dictating the manner in which the derivative contract is to be settled are incorporated into the contract;

(e) if the derivative contract allows for cash settlement, the contract incorporates a robust valuation process to reliably estimate loss with respect to the derivative and specifies a reasonable period for obtaining post-credit event valuations of the reference exposure;

(f) if the derivative contract requires the protection purchaser to transfer an exposure to the protection provider at settlement, the terms of at least one of the exposures that is permitted to be transferred under the contract provide that any required consent to transfer may not be unreasonably withheld; and

(g) if the credit derivative is a credit default swap, the derivative contract:

(i) identifies the parties responsible for determining whether a credit event has occurred;

(ii) specifies that the determination is not the sole responsibility of the protection provider; and

(iii) gives the protection purchaser the right to notify the protection provider of the occurrence of a credit event.

(8) "Eligible guarantee" means a guarantee that:

(a) is written and unconditional;

(b) covers all or a pro rata portion of all contractual payments of the obligor on the reference exposure;

(d) is not unilaterally cancelable by the protection provider for reasons other than the beneficiary's breach of contract;

(e) is legally enforceable against the protection provider in a jurisdiction where the protection provider has sufficient assets against which a judgment may be attached and enforced;

(f) requires the protection provider to make payment to the beneficiary on the occurrence of a default (as defined in the guarantee) of the obligor on the reference exposure in a timely manner without the beneficiary first having to take legal action to pursue the obligor for payment;

(g) does not increase the beneficiary's cost of credit protection on the guarantee in response to deterioration in the credit quality of the reference exposure; and

(h) is not provided by an affiliate of the bank, unless the affiliate is an insured depository institution, bank, securities broker or dealer, or insurance company that:

(i) does not control the bank; and

(ii) is subject to consolidated supervision and regulation comparable to that imposed on U.S. depository institutions, securities broker-dealers, or insurance companies as applicable.

(9) "Eligible protection provider" means:

(a) a sovereign entity (a central government, including the U.S. government, an agency, department, ministry, or central bank);

(b) the Bank for International Settlements, the International Monetary Fund, the European Central Bank, the European Commission, or a multilateral development bank;

(d) the Federal Agricultural Mortgage Corporation;

(e) a depository institution, as defined in section 3 of the Federal Deposit Insurance Act, 12 USC 1813(c);

(f) a bank holding company, as defined in section 2 of the Bank Holding Company Act, as amended, 12 USC 1841;

(g) a savings and loan holding company, as defined in section 10 of the Home Owners' Loan Act, 12 USC 1467a;

(h) a securities broker or dealer registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934, 15 USC 78o, et seq.;

(i) an insurance company that is subject to the supervision of a state insurance regulator;

(j) a foreign banking organization;

(k) a non-U.S.-based securities firm or a non-U.S.-based insurance company that is subject to consolidated supervision and regulation comparable to that imposed on U.S. depository institutions, securities broker-dealers, or insurance companies; and

(l) a qualifying central counterparty.

(10) "Eligible state bank" means a bank organized under Montana laws that:

(a) is well-capitalized as defined in the prompt corrective action rules applicable to the bank; and

(b) has a composite rating of 1 or 2 under the Uniform Financial Institutions Rating System in connection with the bank's most recent examination or subsequent review.

(11) "Loans," "extensions of credit," or "obligations" have the meaning in 32-1-432, MCA, and any credit exposure determined under ARM 2.59.129 arising from a derivative transaction or a securities financing transaction.

(a) The terms include:

(i) a contractual commitment to advance funds;

(ii) a maker or endorser's obligation arising from a bank's discount of commercial paper;

(iii) a bank's purchase of third-party paper subject to an agreement that the seller will repurchase the paper upon default or at the end of a stated period. The amount of the bank's loan is the total unpaid balance of the paper owned by the bank less any applicable dealer reserves retained by the bank and held by the bank as collateral security. Where the seller's obligation to repurchase is limited, the bank's loan is measured by the total amount of the paper the seller may ultimately be obligated to repurchase. A bank's purchase of third-party paper without direct or indirect recourse to the seller is not a loan or extension of credit to the seller;

(iv) an overdraft, whether or not prearranged, but not an intraday overdraft for which payment is received before the close of business of the bank that makes the funds available;

(v) the sale of federal funds with a maturity of more than one business day, but not federal funds with a maturity of one day or less or federal funds sold under a continuing contract;

(vi) loans or extensions of credit that have been charged off on the books of the bank in whole or in part unless the loan or extension of credit is:

(A) unenforceable by reason of discharge in bankruptcy;

(B) no longer legally enforceable because of expiration of the statute of limitations or a judicial decision; or

(C) no longer legally enforceable for other reasons provided that the bank maintains sufficient records to demonstrate that the loan is unenforceable; and

(vii) a bank's purchase of securities subject to an agreement that the seller will repurchase the securities at the end of a stated period, but does not include a bank's purchase of Type I securities, as defined in (15), subject to a repurchase agreement, where the purchasing bank has assured control over or has established its rights to the Type I securities as collateral.

(b) The terms do not include:

(i) additional funds advanced for a borrower's benefit by a bank for payment of taxes, insurance, utilities, security, and maintenance and operating expenses necessary to preserve the value of real property securing the loan, consistent with safe and sound banking practices, but only if the advance is for the protection of the bank's interest in the collateral, and provided that such amounts must be treated as an extension of credit if a new loan or extension of credit is made to the borrower;

(ii) accrued and discounted interest on an existing loan or extension of credit, including interest that has been capitalized from prior notes and interest that has been advanced under terms and conditions of a loan agreement;

(iii) financed sales of a bank's own assets, including other real estate owned, if the financing does not put the bank in a worse position than when the bank held title to the assets;

(iv) a renewal or restructuring of a loan as a new "loan or extension of credit," following the exercise by a bank of reasonable efforts, consistent with safe and sound banking practices, to bring the loan into conformance with the lending limit, unless new funds are advanced by the bank to the borrower (except in circumstances permitted under 12 CFR 32.3(b)(5)), a new borrower replaces the original borrower, or unless the department singly or in collaboration with the appropriate federal banking agency determines that a renewal or restructuring was undertaken as a means to evade the bank's lending limit;

(v) amounts paid against uncollected funds in the normal process of collection;

(vi) with regard to participations:

(A) that portion of a loan or extension of credit sold as a participation by a bank on a nonrecourse basis, provided that the participation results in a pro rata sharing of credit risk proportionate to the respective interests of the originating and participating lenders. Where a participation agreement provides that repayment must be applied first to the portions sold, a pro rata sharing will be deemed to exist only if the agreement also provides that, in the event of a default or comparable event defined in the agreement, participants must share in all subsequent repayments and collections in proportion to their percentage participation at the time of the occurrence of the event;

(B) when an originating bank funds the entire loan, it must receive funding from the participants before the close of business of its next business day. If the participating portions are not received within that period, then the portions funded will be treated as a loan by the originating bank to the borrower. If the portions so attributed to the borrower exceed the originating bank's lending limit, the loan may be treated as nonconforming subject to the circumstances included in 12 CFR 32.2(q)(2)(vi)(B) rather than a violation if:

(I) the originating bank had a valid and unconditional participation agreement with one or more participants that was sufficient to reduce the loan to within the originating bank's lending limit;

(II) the participant reconfirmed its participation and the originating bank had no knowledge of information that would permit the participant to withhold its participation; and

(III) the participation was to be funded by close of business of the originating bank's next business day.

(12) "Qualifying central counterparty" has the same meaning as the term has in 12 CFR Part 3, Appendix C, Section 2.

(13) "Qualifying master netting agreement" means any written, legally enforceable bilateral agreement, provided that:

(a) the agreement creates a single legal obligation for all individual transactions covered by the agreement upon an event of default, including bankruptcy, insolvency, or similar proceeding of the counterparty;

(b) the agreement provides the bank the right to accelerate, terminate, and close-out on a net basis all transactions under the agreement and to liquidate or set off collateral promptly upon an event of default of the counterparty, including upon an event of bankruptcy, insolvency, or similar proceeding, provided that, in any such case, any exercise of rights under the agreement will not be stayed or avoided under applicable law in the relevant jurisdictions;

(c) the bank has conducted sufficient legal review to conclude with a well-founded basis (and maintains sufficient documentation of that legal review) that:

(i) the agreement meets the requirements of (13)(b); and

(ii) in the event of a legal challenge (including one resulting from default or from bankruptcy, insolvency, or similar proceedings), the relevant court and administrative authorities would find the agreement to be legal, valid, binding, and enforceable under the law of the relevant jurisdictions;

(d) the bank establishes and maintains procedures to monitor possible changes in relevant law and to ensure that the agreement continues to satisfy the requirements of this definition; and

(e) the agreement does not contain a walkaway clause (that is, a provision that permits a non-defaulting counterparty to make a lower payment than it would make otherwise under the agreement, or no payment at all, to a defaulter or the estate of a defaulter, even if the defaulter or the estate of the defaulter is a net creditor under the agreement).

(14) "Securities financing transaction" means a repurchase agreement, reverse repurchase agreement, securities lending transaction, or securities borrowing transaction.

(15) "Type I securities" means:

(a) obligations of the United States;

(b) obligations issued, insured, or guaranteed by a department or an agency of the United States government, if the obligation, insurance, or guarantee commits the full faith and credit of the United States for the repayment of the obligation;

(c) obligations issued by a department or agency of the United States government or an agency or political subdivision of a state of the United States, that represent an interest in a loan or a pool of loans made to third parties, if the full faith and credit of the United States have been validly pledged for the full and timely payment of interest on, and principal of, the loans in the event of nonpayment by the third party obligor(s); and

(d) general obligations of a state of the United States or any political subdivision thereof; and

(e) municipal bonds if the bank is well capitalized.

History

Authorizing statute(s): 32-1-211, 32-1-218, 32-1-432, MCA
Implementing statute(s): 32-1-211, 32-1-432, MCA
History: NEW, 2014 MAR p. 675, Eff. 4/11/14; AMD, 2016 MAR p. 2326, Eff. 12/10/16; AMD, 2025 MAR, Notice No. 2025-900, Eff. 9/13/25.

Mont. Admin. R. 2.59.126 Eligible State Bank's Permissible Derivative Transactions

(1) An eligible state bank as defined in ARM 2.59.125 may engage in any derivative transaction if the bank has a written policy approved by its board of directors that:

(a) identifies the types of derivative transactions in which the bank is authorized to engage;

(b) establishes an exposure limit for each type of authorized derivative transaction and an aggregate exposure limit for all of the bank's authorized derivative transactions expressed in relation to the bank's lending limit;

(d) requires the designation of an employee to be in charge of the bank's derivatives program who:

(i) has demonstrable expertise and understanding of derivative transactions; and

(ii) is responsible for periodic testing of the model(s) used to measure credit exposure against actual outcomes.

History

Authorizing statute(s): 32-1-432, MCA
Implementing statute(s): 32-1-432, MCA
History: NEW, 2014 MAR p. 675, Eff. 4/11/14.

Mont. Admin. R. 2.59.127 Lending Limits Applicable to Derivative Transactions

(1) For purposes of 32-1-432, MCA, derivative transactions and securities financing transactions must be included in the calculation of lending limits.

(2) The calculation of credit exposure arising from derivative transactions and securities financing transactions for lending limit purposes under 32-1-432, MCA, must be determined pursuant to Appendix A to ARM 2.59.129 dated April 20, 2015.

(3) Loans not subject to lending limits of 32-1-432, MCA, and this regulation are:

(a) credit exposures arising from transactions financing certain government securities. Credit exposures arising from securities financing transactions in which the securities financed are Type I securities, as defined in ARM 2.59.125 and 12 CFR 1.2(j);

(b) intraday credit exposures arising from derivative transactions or securities financing transactions; and

History

Authorizing statute(s): 32-1-432, MCA
Implementing statute(s): 32-1-432, MCA
History: NEW, 2014 MAR p. 675, Eff. 4/11/14; AMD, 2015 MAR p. 814, Eff. 6/26/15.

Mont. Admin. R. 2.59.128 Nonconforming Loans and Extensions of Credit

(1) A loan or extension of credit within a bank's legal lending limit when made will not be deemed a violation but will be treated as nonconforming if the loan or extension of credit is no longer in conformity with the bank's lending limit because:

(a) the bank's capital has declined, borrowers have subsequently merged or formed a common enterprise, lenders have merged, or the lending limit or capital rules changed;

(b) collateral securing the loan to satisfy the requirements of a lending limit exception has declined in value; or

(c) in the case of a credit exposure arising from a derivative transaction or a securities financing transaction and measured by either the Current Exposure Method or the Basel Collateral Haircut Method specified in ARM 2.59.129 and Appendix A to ARM 2.59.129 dated April 20, 2015, the credit exposure subject to the lending limits of 32-1-432, MCA, or this rule increases after execution of the transaction.

(2) A bank shall use reasonable efforts to bring a loan or extension of credit that is nonconforming as a result of (1)(a) or (1)(c) into conformity with the bank's lending limit unless to do so would be inconsistent with safe and sound banking practices.

(3) A bank shall bring a loan that is nonconforming as a result of circumstances described in (1)(b) into conformity with the bank's lending limit within 30 calendar days, except when judicial proceedings, regulatory actions or other extraordinary circumstances beyond the bank's control prevent it from taking action.

History

Authorizing statute(s): 32-1-432, MCA
Implementing statute(s): 32-1-432, MCA
History: NEW, 2014 MAR p. 675, Eff. 4/11/14; AMD, 2015 MAR p. 814, Eff. 6/26/15.

Mont. Admin. R. 2.59.129 Credit Exposure Arising from Derivatives and Securities Financing Transactions

(1) For purposes of determining a bank's lending limit under 32-1-432, MCA, the bank's credit exposure arising from a derivatives transaction or a securities financing transaction entered by a bank must be calculated in accordance with the methods and models contained in Appendix A to ARM 2.59.129, April 20, 2015, version, which is adopted and incorporated by reference. Appendix A to ARM 2.59.129, April 20, 2015, version, may be found on the department's website at banking.mt.gov.

History

Authorizing statute(s): 32-1-218, 32-1-432, 32-1-433, MCA
Implementing statute(s): 32-1-432, 32-1-433, MCA
History: NEW, 2014 MAR p. 675, Eff. 4/11/14; AMD, 2015 MAR p. 814, Eff. 6/26/15; AMD, 2025 MAR, Notice No. 2025-900, Eff. 9/13/25.

Mont. Admin. R. 2.59.130 Change in Control

(1) An applicant filing under 32-1-378(1)(b), MCA, must use the Application for Change in Control form, April 30, 2025, version, which is located at banking.mt.gov.

(2) An applicant or other person subject to this rule must notify the department immediately of any material changes relevant to a notice or application submitted to the department, including changes in financial or other conditions.

(3) The department may require a person who is obligated to file an application under 32-1-378, MCA, to appoint a registered agent in this state for service of process upon the filing of such notice or as a condition to the acceptance of such application for review.

History

Authorizing statute(s): 32-1-211, 32-1-378, MCA
Implementing statute(s): 32-1-211, 32-1-378, MCA
History: NEW, 2020 MAR p. 1698, Eff. 9/12/20; AMD, 2025 MAR, Notice No. 2025-900, Eff. 9/13/25.

Mont. Admin. R. 2.59.132 Conflicts of Interest

For purposes of 32-1-212, MCA, the following definitions apply:

(1) "Interested in" means the commissioner or deputy commissioner:

(a) is an officer, director, or employee of a supervised entity or an individual or person owning or controlling a supervised entity;

(b) owns or deals in, directly or indirectly, the shares or obligations of a supervised entity or a person that owns or controls the supervised entity;

(c) receives, directly or indirectly, any salary, fee, or compensation from a supervised entity or any officer, director, or employee of a supervised entity; or

(d) is married to an individual who is employed by a supervised entity.

(2) "Supervised entity" means any entity chartered or supervised by the department.

(3) An investment in a mutual fund, even a proprietary mutual fund, serviced or advised by a supervised entity, does not constitute having an interest in the supervised entity.

(4) Any indebtedness incurred under 32-1-212, MCA, shall be disclosed in writing annually to the commissioner. The commissioner shall disclose any indebtedness incurred under 32-1-212, MCA, in writing annually to the director of the department.

(5) Any employee of the department who cannot timely pay any sum due to a supervised entity must immediately disclose that fact to the commissioner. If the commissioner cannot timely pay any sum due to a supervised entity, the commissioner must immediately disclose that fact to the director of the department.

History

Authorizing statute(s): 32-1-211, 32-1-212, MCA
Implementing statute(s): 32-1-211, 32-1-212, MCA
History: NEW, 2020 MAR p. 1698, Eff. 9/12/20.

Mont. Admin. R. 2.59.134 Conversion of a National Bank to a State Bank

(1) Upon conversion:

(a) the resulting state bank has all the rights and property of the converted bank and all the debts and liabilities of the converted bank in the same manner as if the resulting state bank itself had incurred them;

(b) all rights of creditors of the converted bank and all liens upon the converted bank's property are unimpaired by the transfer, provided that the liens are limited to the affected property immediately prior to the time when the conversion became effective;

(c) title to all real, personal, and mixed property owned by the converted bank is vested in the resulting state bank without reversion or impairment and without the necessity of any instrument of transfer;

(d) the resulting state bank has all the liabilities, duties, and obligations of the converted bank, including obligations as fiduciary, personal representative, administrator, trustee, or guardian; and

(e) any pending action or other judicial proceeding to which the converted bank was a party may continue to be prosecuted to final judgment, order, or decree as if the conversion had not occurred, or the resulting bank may be substituted as a party to the action or proceeding.

(2) Upon conversion, a resulting bank that is organized under the laws of this state:

(a) must designate and operate a location of the converted bank as its main banking house; and

(b) may maintain the branch banks and other offices previously maintained by the converted bank.

(3) A bank that desires to convert from a national bank to a state bank must use the Application for Conversion of an Existing National-Chartered Bank to a State-Chartered Bank form, April 30, 2025, version, which is located on the department's website at banking.mt.gov.

(4) A nonrefundable application fee of $1,500 must be paid to the department at the time of application.

History

Authorizing statute(s): 32-1-218, MCA
Implementing statute(s): 32-1-374, MCA
History: NEW, 2020 MAR p. 1698, Eff. 9/12/20; AMD, 2021 MAR p. 328, Eff. 3/27/21; AMD, 2025 MAR, Notice No. 2025-900, Eff. 9/13/25.

Mont. Admin. R. 2.59.135 Form to Report Directors and Officers

(1) Banks must file the List of Officers and Directors form, June 29, 2020, version, located on the department's website at banking.mt.gov to report the directors and officers elected at the annual meeting and the board meeting to the department.

History

Authorizing statute(s): 32-1-211, 32-1-218, MCA
Implementing statute(s): 32-1-211, 32-1-218, 32-1-322, 32-1-325, MCA
History: NEW, 2020 MAR p. 1698, Eff. 9/12/20; AMD, 2025 MAR, Notice No. 2025-900, Eff. 9/13/25.

Mont. Admin. R. 2.59.138 Definitions

For purposes of 32-1-432, MCA, the following definitions apply:

(1) "Commitment to lend or extend credit" includes, but is not limited to:

(a) undisbursed portions of operating, construction or other lines of credit, up to limits established by a written agreement between the lender and the borrower;

(b) undisbursed portions of credit lines established to cover overdrafts;

(d) standby letters of credit.

(2) "Loan or extension of credit" includes, but is not limited to:

(a) direct loans, whether on the bank's books or charged off the bank's books, subject to the exclusions in ARM 2.59.143.

(b) loans, extensions of credit, or participation in loans or extensions of credit sold with recourse to or guaranteed by the bank;

(d) overdrafts, excluding intra-day overdrafts for which the bank receives payment prior to its close of business; and

(e) any credit exposure of a bank to a counterparty arising from a derivative transaction or a securities financing transaction as defined in ARM 2.59.125.

(3) "Person" means an individual, a corporation, a government, governmental subdivision or agency, a business trust, an estate, a trust, a partnership or association, a limited liability company, two or more persons having a joint or common interest, or any other legal or commercial entity.

History

Authorizing statute(s): 32-1-211, 32-1-432, MCA
Implementing statute(s): 32-1-211, 32-1-432, MCA
History: NEW, 2020 MAR p. 1698, Eff. 9/12/20; AMD, 2022 MAR p. 1791, Eff. 9/24/22.

Mont. Admin. R. 2.59.139 Legal Lending Limit

(1) If no direct benefit is received or no common enterprise exists, the combined loans or extensions of credit to a commonly owned or controlled group of borrowers shall not exceed three times the bank's lending limit.

History

Authorizing statute(s): 32-1-211, 32-1-432, MCA
Implementing statute(s): 32-1-211, 32-1-432, MCA
History: NEW, 2020 MAR p. 1698, Eff. 9/12/20.

Mont. Admin. R. 2.59.140 Combinations or Guarantees

(1) Loans or extensions of credit to a person will be combined with loans or extensions of credit to one or more other persons when:

(a) proceeds of a loan or extension of credit are to be used for the direct benefit of the other person; or

(b) a common enterprise is deemed to exist between the persons, to the extent that loan proceeds are used for the benefit of the common enterprise and repayment is dependent upon the common enterprise.

(2) A loan or extension of credit guaranteed by a person shall be aggregated with the person's other loans and extensions of credit only to the extent that the person receives direct benefit from the loan.

History

Authorizing statute(s): 32-1-211, 32-1-432, MCA
Implementing statute(s): 32-1-211, 32-1-432, MCA
History: NEW, 2020 MAR p. 1698, Eff. 9/12/20.

Mont. Admin. R. 2.59.141 Direct Benefit

(1) A direct benefit exists when the proceeds of a loan or extension of credit to a person are deemed to be used to the advantage of another person. The amount of the loan will be attributed to the other person when the proceeds, or assets purchased with the proceeds, are transferred to the other person. If the proceeds are used to acquire property, goods, or services through a bona fide arm's length transaction, a direct benefit does not exist regarding the seller of the property, goods, or services. A bona fide arm's length transaction is an actual transaction, performed in good faith, between two or more parties, with each party acting in their own self-interest.

History

Authorizing statute(s): 32-1-211, 32-1-432, MCA
Implementing statute(s): 32-1-211, 32-1-432, MCA
History: NEW, 2020 MAR p. 1698, Eff. 9/12/20.

Mont. Admin. R. 2.59.142 Common Enterprise

(1) A common enterprise occurs when two or more persons combine to acquire, operate, or control a business enterprise or property interest.

(2) Credit to a common enterprise includes:

(a) loans or extensions of credit to two or more persons when the loans or extensions of credit are used for a common purpose; the expected source of repayment for each loan or extension of credit is the same for two or more of the persons, and those persons lack another source of income from which the loans or extensions of credit, together with the person's other liabilities, may be fully repaid; and

(b) loans or extensions of credit made to persons who are related directly or indirectly through common control, including where one person is directly or indirectly controlled by another person; and if substantial financial interdependence exists between or among the persons. Substantial financial interdependence is deemed to exist when 50% or more of one person's gross receipts or gross expenditures, on an annual basis, are derived from transactions with the other person.

History

Authorizing statute(s): 32-1-211, 32-1-432, MCA
Implementing statute(s): 32-1-211, 32-1-432, MCA
History: NEW, 2020 MAR p. 1698, Eff. 9/12/20.

Mont. Admin. R. 2.59.143 Exclusions

(1) The following items will be excluded when calculating the amount of a person's total loans and extensions of credit:

(a) loans or extensions of credit, and participation in loans and extensions of credit, that have been sold, if:

(i) the loan, extension of credit, or the portion of the loan or extension of credit sold as a participation is sold without recourse to the selling bank; or

(ii) the participation agreement provides for a pro rata sharing of credit risk proportionate to the respective interests of the originating and participating lenders. Where a participation agreement provides that repayment must be applied first to the portions sold, a pro rata sharing will be deemed to exist only if the agreement also provides that, in the event of a default or comparable event defined in the agreement, participants must share in all subsequent repayments and collections in proportion to their percentage participation at the time of the occurrence of the event.

(b) loans, or extensions of credit, including portions thereof, that have been charged off the books of the bank in whole or in part, provided that the amounts charged off are:

(i) unenforceable by reason of discharge in bankruptcy;

(ii) no longer legally enforceable because of expiration of the statute of limitations or a judicial decision; or no longer legally enforceable for other reasons, provided that the bank maintains sufficient records to demonstrate that the loan is unenforceable;

(iii) credit exposures arising from securities financing transactions in which the securities financed are Type I securities, as defined in 12 CFR 1.2(j);

(iv) intraday credit exposures arising from a derivative transaction; or

(v) all other loans or portions of loans specifically exempted by provisions of 32-1-432, MCA, or other applicable laws.

History

Authorizing statute(s): 32-1-211, 32-1-432, MCA
Implementing statute(s): 32-1-211, 32-1-432, MCA
History: NEW, 2020 MAR p. 1698, Eff. 9/12/20.

Mont. Admin. R. 2.59.144 Report of Service and Technology Providers

(1) A state-chartered bank must file with the department a Report of Service and Technology Providers form, April 30, 2025, version, located at banking.mt.gov.

History

Authorizing statute(s): 32-1-218, 32-1-233, MCA
Implementing statute(s): 32-1-233, MCA
History: NEW, 2025 MAR, Notice No. 2025-900, Eff. 9/13/25.

Subchapter 2.59.3 Consumer Loan Companies

Mont. Admin. R. 2.59.301 Advertising

(1) "Advertising" or "advertisement" means any written or oral statement or depiction that includes terms or availability of loans or that is designed to create interest in a consumer loan product and is conveyed in any manner or medium including but not limited to radio, television, telemarketing script and materials, on-hold script, upsell script, infomercials, the Internet, web pages, cellular network, film, slide, audio program transmitted over a telephone system, label, brochure, newspaper, magazine, pamphlet, leaflet, circular, mailer, letter, catalogue, poster, chart, billboard display, and promotional materials and items.

(2) A licensee shall maintain copies or images of all of the licensee's advertising as defined in (1) for a period of at least 12 months after the last date of the advertisement's use or until an examination of the licensee, including review of the advertising, has been accomplished by the department, whichever occurs first. Advertising may be maintained in an electronic format that is capable of being reproduced in or converted to hard copy form. All advertising copy records must have the following information noted thereon:

(a) the name or names of all advertising media used and the dates when the advertising publicly appeared; and

(b) the full text of audio and video advertising.

(3) A licensee may not use so-called blind advertisements as, for example, an advertisement giving only a telephone number, post office box or newspaper box number, or a name other than that of the licensee.

(4) A licensee may not use any advertising that is inconsistent with the Montana Unfair Trade Practices and Consumer Protection Act, Title 30, chapter 14, parts 1 and 2, MCA, or with federal laws including 15 USC 45(a)(1) or the rules promulgated thereunder.

(5) An unlicensed person may not directly or indirectly advertise terms or availability of consumer loans targeted at deriving profits from Montana markets. The prohibition against advertising by unlicensed persons is not dependent upon whether a loan application is submitted or whether a consumer loan is consummated as a result of the advertising. This section does not apply to media outlets and may not be construed to impose a duty on media outlets to verify licensure of advertisers.

History

Authorizing statute(s): 32-5-401, MCA
Implementing statute(s): 32-5-309, MCA
History: Eff. 12/31/72; AMD, 1986 MAR p. 793, Eff. 5/16/86; AMD, 1992 MAR p. 137, Eff. 1/31/92; TRANS, from Commerce, 2001 MAR p. 1178; AMD, 2014 MAR p. 498, Eff. 3/14/14; AMD, 2016 MAR p. 2327, Eff. 12/10/16.

Mont. Admin. R. 2.59.302 Fee Disclosures – Computation of Interest

(1) At the time of filing an application for initial license or a renewal license under the Montana Consumer Loan Act, the applicant shall file with the department a fee disclosure statement and a failure- or inability-to-pay disclosure statement, collectively referred to as "disclosure statements," unless otherwise specified.

(a) The fee disclosure statement must contain:

(i) the interest rate or range of interest rates that the licensee charges for each type of loan product offered not to exceed the maximum allowed under 32-5-301(1), MCA;

(ii) known third-party fees and reasonable estimates of unknown third-party fees allowed under 32-5-301, MCA. Consumers may not be charged more than the third party's actual fee; and

(iii) examples of the total cost to the consumer for each type of loan product offered as follows:

(A) an example using the lowest available interest rate for the loan type including all third-party fees typically charged for that loan type; and

(B) an example using the highest interest rate chargeable for the loan type including all third-party fees typically charged for that loan type.

(b) The failure- or inability-to-pay disclosure statement must contain information about fees that may be charged during the term of the loan and afterwards arising from the consumer's failure or inability to pay as agreed under the terms of the loan agreement. The fee information that must be disclosed is:

(i) insufficient funds/dishonored check or check equivalent fee under 32-5-407, MCA;

(ii) past-due fee under 32-5-301, MCA, if provided for in the contract;

(iii) deferral/extension fee under 32-5-301, MCA, if provided for in the contract; and

(iv) reasonable attorney fees under 32-5-407, MCA, if provided for in the contract and if the licensee sues the consumer in a judicial action on the loan agreement and wins.

(2) The disclosure statements must be printed in black letters and numbers on a white background using a font style and size, type face, or similar graphics to call the consumer's attention to the information.

(3) The disclosure statements may, but need not, be combined in one document.

(4) A licensee shall maintain on file with the department current disclosure statement(s) and shall not charge fees or rate(s) of interest in excess of those contained in the disclosure statements on file with the department or in excess of those authorized under Title 32, chapter 5, MCA. Currently dated, amended disclosure statements may be filed with the department at any time. Amended disclosure statements have only prospective application from the date of filing with the department. The disclosure statements in effect at the time a loan is made remain in effect for that loan until termination of the loan agreement unless:

(a) the loan is refinanced; or

(b) an express provision allowing modification of interest rate or fees during the term of the loan is contained in the loan agreement and authorized by law.

(5) A licensee shall conspicuously display the licensee's current disclosure statements at its business location(s) where loans to persons residing in Montana are negotiated or made, so as to be readily visible to prospective loan applicants before completion of a loan application begins.

(6) If a licensee conducts business through the Internet, the following information must be displayed to all online loan applicants residing in Montana on a web page that cannot be circumvented and must be viewed before completion of the loan application can begin:

(a) the licensee's name and license number (sometimes referred to as credential number or unique ID) exactly as they appear on the license; and

(b) the current disclosure statements that are filed with the department as required under this rule.

(7) A licensee shall observe the following procedures in computing interest:

(a) interest must be computed at the applicable rate on the balance of the loan from the date of the previous payment to the date of the following payment; and

(b) interest must be computed using a 365-day year, or in the case of a leap year a 366-day year, and by counting the actual number of days from one payment to the next.

(8) For purposes of implementing 32-5-301, MCA, the phrase "only once" means on the same default. A borrower who defaults in one or more installment payments may be subject to one past-due fee as specified in 32-5-301, MCA, for each installment payment on which the borrower defaulted.

History

Authorizing statute(s): 32-5-401, MCA
Implementing statute(s): 32-5-301, MCA
History: Eff. 12/31/72; TRANS, from Commerce, 2001 MAR p. 1178; AMD, 2010 MAR p. 213, Eff. 1/29/10; AMD, 2013 MAR p. 666, Eff. 4/26/13; AMD, 2014 MAR p. 498, Eff. 3/14/14.

Mont. Admin. R. 2.59.303 Credit Insurance

(1) A consumer loan licensee may not sell, solicit, or negotiate insurance or act as an insurance producer or insurance agency in this state unless licensed under Title 33, chapter 17, MCA. A consumer loan licensee holding an insurance producer or insurance agency license shall conspicuously display the insurance license in its main consumer loan office and shall comply with all applicable provisions of the Montana Insurance Code, Title 33, MCA.

(2) A licensee may not require any borrower or prospective borrower to purchase or contract for credit life insurance, credit disability insurance, or loss of income insurance as a condition precedent to granting any loan.

(3) A licensee may advise borrowers or prospective borrowers or advertise generally and publicly that credit life insurance, credit disability insurance, and loss of income insurance are available at additional cost to the borrower on loans meeting the requirements of (4).

(4) A licensee may not place credit life insurance, credit disability insurance, or loss of income insurance on any loan of $300 or less in principal amount exclusive of charges for insurance premiums.

(5) The amount and term of credit life insurance, credit disability insurance, or loss of income insurance placed by a licensee must conform to the provisions of 33-21-202 and 33-21-203, MCA.

(6) The individual insurance policy, the certificate of group insurance, the copy of the application for insurance, or the notice of proposed insurance, must be delivered to the borrower at the time the indebtedness is incurred and statements concerning the coverage provided must comply with 33-21-204, MCA.

(7) A licensee must have on file for each credit life insurance, credit disability insurance, and loss of income insurance transaction a signed statement from the borrower that procurement of the insurance was not made a condition precedent to the granting of the loan. The statement may be a part of the loan statement, certificate of group insurance, or application for insurance, if the document is retained in the borrower's loan file for the two-year period required by 32-5-307, MCA. If a separate signed statement is used, the statement must be retained in the borrower's loan file for the same period.

(8) Refunds of unearned premiums for credit life insurance, credit disability insurance, and loss of income insurance must be made in accordance with the Montana Insurance Code (33-21-206, MCA).

(9) A licensee shall enter on each borrower's loan account record the amount of credit life, credit disability, or loss of income insurance premium charged in connection with the loan.

(10) Before any credit life insurance, credit disability insurance, or loss of income insurance premium is placed by a consumer loan licensee on any loan contract, the licensee must file with the department a statement containing the following information:

(a) the name and home address of the insurer or insurers with whom licensee intends to place such insurance;

(b) the rate of charge for premiums on the insurance to be collected from the borrower, expressed in terms of dollars and cents per month (or per year) per one hundred dollars of original balance of the loan;

(c) borrower eligibility criteria for credit life insurance, credit disability insurance, and loss of income insurance; and

(d) the basis or schedule upon which refunds to borrowers of unearned premiums are to be computed consistent with the refund formula filed with and approved by the Commissioner of Insurance under 33-21-206(2), MCA.

(11) For the purpose of providing adequate information for the annual report required by 32-5-308, MCA, a licensee shall keep accurate accounts to reflect the following:

(a) total net charges to borrowers for credit life, credit disability, and loss of income insurance placed by the licensee;

(b) total premiums remitted to insurers for the coverage;

(d) total of loans and loan balances paid by insurers under credit life policies upon death of borrowers;

(e) total of loans and payments received from insurers on loans under credit disability policies; and

(f) total of loans and payments received from insurers on loans under loss of income policies.

(12) The insurance information required under (11) must be reported in the aggregate in the licensee's annual report and must also be broken down by loan and maintained in each individual loan file.

History

Authorizing statute(s): 32-5-401, MCA
Implementing statute(s): 32-5-306, 32-5-307, 32-5-308, MCA
History: Eff. 12/31/72; TRANS, from Commerce, 2001 MAR p. 1178; AMD, 2014 MAR p. 498, Eff. 3/14/14; AMD, 2015 MAR p. 2246, Eff. 12/25/15.

Mont. Admin. R. 2.59.304 Fees Paid to Public Officials

(1) A licensee who collects a fee to be paid to a public official for filing or recording any instrument used to secure a loan shall file or record the security instrument. A licensee who has filed or recorded a security instrument shall release the security instrument from the public record within ten business days after the obligation has been satisfied whether or not a fee was collected for the filing or recording of the security instrument in the first instance or for the filing or recording of the release.

(2) Licensees shall record on the borrower's ledger card or electronic payment record each amount collected as a fee for recording, filing, or releasing any instrument executed by a borrower to secure a loan. The electronic record must be capable of being reproduced in or converted to hard copy form.

(3) Licensees may not charge a fee to notarize any instrument tendered by a borrower as security for the consumer loan. The prohibition does not affect the authority of a licensee to finance the fee charged by a third party for notary services under 32-5-301(2), MCA.

History

Authorizing statute(s): 32-5-401, MCA
Implementing statute(s): 32-5-301, MCA
History: Eff. 12/31/72; TRANS, from Commerce, 2001 MAR p. 1178; AMD, 2014 MAR p. 498, Eff. 3/14/14.

Mont. Admin. R. 2.59.305 Receipt Form

(1) Licensees shall give to the borrower or mail to the borrower's address a plain and complete receipt for each payment made.

(2) Licensees receipt forms shall contain the following minimum information:

(a) name of borrower;

(b) account number;

(d) past-due amount collected, if any;

(e) balance remaining on loan; and

(f) amount of refund.

(3) Licensees shall indelibly record on the borrower's loan card, or electronically maintain, as separate items the amount of each installment payment, refund, or collection. An electronic record must be capable of being reproduced in or converted to hard copy form.

History

Authorizing statute(s): 32-5-401, MCA
Implementing statute(s): 32-5-304, 32-5-307, MCA
History: Eff. 12/31/72; TRANS, from Commerce, 2001 MAR p. 1178; AMD, 2014 MAR p. 498, Eff. 3/14/14.

Mont. Admin. R. 2.59.306 Records of Licensee

(1) Each licensee shall continuously maintain a record of the current total of Montana consumer loan notes receivable that were originated at or from each of the licensee's licensed business locations. The original source documents supporting the total must be available for examination by the department at that licensed business location or submitted to the department at the department's direction.

History

Authorizing statute(s): 32-5-401, MCA
Implementing statute(s): 32-5-307, 32-5-403, MCA
History: Eff. 12/31/72; TRANS, from Commerce, 2001 MAR p. 1178; AMD, 2014 MAR p. 498, Eff. 3/14/14.

Mont. Admin. R. 2.59.308 Examination Fees

(1) The examination fee charged by the department to the examinee must be in an amount sufficient to recover all of the department's actual costs for its supervision program related to the subject examination.

(2) The term "actual costs" means the "hourly cost of employee" for each examiner performing the examination plus actual travel expenses incurred in conjunction with the examination.

(3) The term "hourly cost of employee" means the cost incurred by the department for each hour that an employee is performing the examination; the cost includes the employee's wages and benefits.

(4) The term "performance of an examination" or "performing an examination" means pre-examination preparation, travel time, examination, examination report writing, review of a licensee's response to the examination report, and, if appropriate, amending the report based on the licensee's response.

(5) The term "travel expenses" means the "hourly cost of employee" for each examiner's travel time; motor pool and fuel charges; airfare, cab, or other public transportation fare; lodging; per diem; and, if approved by the department in advance, charge for rental vehicle for use at the examination site. The term also includes mileage paid to an examiner under 2-18-503, MCA, for use of personal vehicle for examination travel if use of the personal vehicle was approved by the department in advance.

History

Authorizing statute(s): 32-5-401, 32-5-403, MCA
Implementing statute(s): 32-5-402, 32-5-403, MCA
History: NEW, 2003 MAR p. 1802, Eff. 8/15/03; AMD, 2010 MAR p. 63, Eff. 1/15/10; AMD, 2015 MAR p. 2246, Eff. 12/25/15.

Mont. Admin. R. 2.59.309 Service of Process

(1) The written notice required under 32-5-207(1), MCA, constitutes process under the Montana Administrative Procedure Act, Title 2, chapter 4, part 6, MCA. The mailing of the notice to a person by certified mail under 32-5-207(2), MCA, constitutes effective "service of process" if a return receipt signed by the recipient, who need not be the same person as the addressee, has been returned to and retained by the department as proof of service.

(2) If a certified mail item mailed to a person other than an individual is returned to the department marked "unclaimed" after two notices to claim the item have been given by the United States Postal Service in accordance with established procedures for certified mail, the department shall have a sheriff or other process server attempt personal service upon the person at the same address for which the certified mail item went unclaimed. If that is unsuccessful, the department may, but is not required to, attempt personal service at any other address at which the department reasonably believes the person may be found. If personal service fails, the person is deemed to have been effectively served by operation of law under 32-5-207, MCA.

(3) If a certified mail item mailed to an individual is returned to the department marked "unclaimed," then the department may attempt service on the individual at the same address by regular mail with enclosed notice and acknowledgment of service under Rule 4(d)(3), Montana Rules of Civil Procedure (M.R.Civ.P.)

(4) If a certified mail item mailed to a person is returned to the department marked "undeliverable," "left no forwarding address," "forwarding address expired," or similar basis for nondelivery, the department shall use best efforts to locate another address for the person to be served and attempt service by certified mail there. If the certified mail item mailed to a person other than an individual is returned marked "unclaimed," the procedures in (2) apply. If a certified mail item mailed to an individual is returned marked "unclaimed," the procedures in (3) apply. If the certified mail item to a person other than an individual or a certified mail item to an individual is returned marked "undeliverable," "left no forwarding address," "forwarding address expired," or similar basis for nondelivery, the person or individual is deemed to have been effectively served by operation of law under 32-5-207, MCA.

(5) For purposes of this rule, "best efforts" means efforts that are reasonable under the totality of circumstances, i.e., reasonably calculated to give actual notice to the person being served. The term does not mean that heroic or extraordinary efforts must be made or that only actual notice by perfected Rule 4, M.R.Civ.P. service must ultimately be accomplished.

(6) Where there is no proof of perfected service under this rule, the department shall consider the following circumstances in determining whether to enter a person's default:

(a) what attempts were made to perfect service;

(b) whether and to what extent perfected service is practical in any given case;

(d) whether the department knows that the person is located at a particular place other than the address(es) at which attempted service was made; and

(e) whether the person has actual or imputed knowledge of the notice or the process or pendency of the administrative action without service having been perfected.

History

Authorizing statute(s): 2-4-106, 32-5-401, MCA
Implementing statute(s): 2-4-106, 32-5-207, MCA
History: NEW, 2014 MAR p. 498, Eff. 3/14/14.

Mont. Admin. R. 2.59.310 Adoption of Standardized Forms and Procedures of the Nmls

(1) The NMLS Policy Guidebook dated September 27, 2021, is adopted by reference and available on the NMLS website at mortgage.nationwidelicensingsystem.org/slr/common/policy/Pages/default.aspx .

(2) Except as provided in ARM 2.59.312, the NMLS deadlines, policies, procedures, and processes for all licensing-related actions, changes, and reports are adopted and available at mortgage.nationwidelicensingsystem.org/ .

(3) Members of the public can look up the current license status, license number, states of licensure, contact information, and regulatory history of any consumer loan licensee at nmls.consumeraccess.org. If an entity is not listed on NMLS consumer access, it does not hold a consumer loan license issued by the department.

(4) All applicants for a consumer loan license shall use the NMLS-approved forms and checklists for all licensing-related activities, including but not limited to initial applications, renewals, amendments, surrenders, and reports.

History

Authorizing statute(s): 32-5-209, 32-5-401, MCA
Implementing statute(s): 32-5-201, 32-5-209, MCA
History: NEW, 2014 MAR p. 2447, Eff. 10/10/14; AMD, 2016 MAR p. 2327, Eff. 12/10/16; AMD, 2018 MAR p. 822, Eff. 4/28/18; AMD, 2022 MAR p. 228, Eff. 2/12/22.

Mont. Admin. R. 2.59.312 License Renewals

(1) The renewal period begins November 1. Every renewal applicant shall apply for renewal through the NMLS. Licensees shall use the NMLS renewal process to request renewal of their license.

(2) Licensees shall submit their renewal applications by December 1 of each year to ensure issuance of the license to qualified renewal applicants by January 1 of the following year.

(3) The holder of an expired license may not conduct any business in Montana until becoming properly licensed.

History

Authorizing statute(s): 32-5-209, MCA
Implementing statute(s): 32-5-201, MCA
History: NEW, 2014 MAR p. 2447, Eff. 10/10/14.

Mont. Admin. R. 2.59.315 License Surrender

(1) The department may decline to accept a licensee's offer to surrender a license under the following circumstances:

(a) the licensee has not fully complied with ARM 2.59.319;

(b) the licensee has not made a succession plan that adequately protects consumers related to the continued servicing of the licensee's active loan files;

(c) the licensee has not fully complied with a final order issued by the department in an enforcement action even though compliance is not yet due;

(d) the department has an outstanding complaint or a pending enforcement action against the licensee; or

(e) the licensee has not submitted an annual report covering the final calendar year or partial year that the licensee was in business irrespective of whether the licensee had any Montana loan activity during that reporting period.

(2) Once the department accepts an offer to surrender a license, the license may not be reinstated but the former licensee may reapply for a new license at any time.

History

Authorizing statute(s): 32-5-205, 32-5-209, MCA
Implementing statute(s): 32-5-205, 32-5-209, MCA
History: NEW, 2014 MAR p. 2447, Eff. 10/10/14; AMD, 2015 MAR p. 2246, Eff. 12/25/15; AMD, 2022 MAR p. 228, Eff. 2/12/22.

Mont. Admin. R. 2.59.317 Reinstatement of Expired Licenses

(1) Upon expiration of a license issued under 32-5-201, MCA, due to nonrenewal by the renewal date, the former licensee shall immediately cease from engaging in the activities for which the license was issued. The department may reinstate an expired license, provided that by the last day of February following expiration of the license, the following are submitted through the NMLS:

(a) a properly completed license renewal application;

(b) the license renewal fee as set forth in 32-5-201, MCA;

(d) proof that the licensee continues to meet standards for licensure under 32-5-202, MCA.

(2) An expired license that is not reinstated by the last day of February under (1) is "terminated-expired" and may not be reinstated. The holder of a "terminated-expired" license may reapply as a new license applicant.

History

Authorizing statute(s): 32-5-201, 32-5-202, 32-5-209, MCA
Implementing statute(s): 32-5-201, 32-5-202, 32-5-209, MCA
History: NEW, 2014 MAR p. 2447, Eff. 10/10/14.

Mont. Admin. R. 2.59.318 Adoption of Annual Report and Due Date

(1) An entity holding a consumer loan license for any period during a calendar year reporting period shall complete and file with the department by February 15 of the following calendar year a Consumer Loan Annual Report of Licensee (annual report). The annual report must be filed whether any loans were originated during the reporting period and whether the licensee renewed its license at the end of the reporting period or held a license when the report came due the following February 15.

(2) A completed annual report must be e-mailed to mortgagelicensing@mt.gov.

(3) The annual report, January 25, 2018, edition, is adopted and incorporated by reference and available on the division's website at banking.mt.gov .

History

Authorizing statute(s): 32-5-209, 32-5-401, MCA
Implementing statute(s): 32-5-308, MCA
History: NEW, 2014 MAR p. 2827, Eff. 11/21/14; AMD, 2015 MAR p. 2246, Eff. 12/25/15; AMD, 2016 MAR p. 2327, Eff. 12/10/16; AMD, 2018 MAR p. 822, Eff. 4/28/18.

Mont. Admin. R. 2.59.319 Required Procedure for Closing a Consumer Loan Business

(1) At least 60 days before the intended closure date of a consumer loan business, the licensee shall provide the following to the department:

(a) a copy of a notification to all consumers with outstanding loans containing:

(i) a current outstanding loan balance including an itemization of unpaid principal, accrued interest, and allowable fees;

(ii) notice of intended closure date of the business which date shall not be sooner than 60 days from the date of mailing the notice;

(iii) the licensee's succession plan, e.g., sale or assignment of the loan, and the successor's contact information and assumption letter;

(iv) any alternatives to the licensee's succession plan that are available to the consumer;

(v) contact information for borrower use in obtaining collateral/lien releases; and

(vi) the department's name, address, phone number, and e-mail address where any complaints arising from the intended closure may be filed;

(b) the name, physical address, mailing address, e-mail address, and phone numbers of the licensee's post-closure, designated custodian of the licensee's inactive loan files, and the physical address where the records will be maintained for the period required under 32-5-307, MCA; and

(i) name, address, and loan number of all active borrowers;

(ii) loan origination date;

(iii) original principal amount of loan;

(iv) current interest rate;

(v) current principal balance;

(vi) maturity date; and

(vii) summary of special provisions related to taxes and insurance reserves, funded maintenance reserves, etc.

(2) The department may conduct a final examination of the consumer loan business at the licensee's expense as provided in 32-5-403, MCA, and ARM 2.59.308 before accepting the surrender of license. The department may, in lieu of an examination, accept an audit report prepared in accordance with generally accepted accounting principles (GAAP) and/or United States generally accepted audit standards (GAAS) by an independent auditor retained by the licensee for the disclosed purpose of closing or selling the business, as applicable.

History

Authorizing statute(s): 32-5-401, MCA
Implementing statute(s): 32-5-103, MCA
History: NEW, 2015 MAR p. 2246, Eff. 12/25/15.

Mont. Admin. R. 2.59.320 Department Costs in Bringing an Administrative Action

(1) The department's "costs in bringing an administrative action" as used in 32-5-207, MCA, for which reimbursement may be ordered by the department are:

(a) administrative law judge charges;

(b) court reporter fees;

(d) the cost of a deposition if the deposition was used at the hearing;

(e) fees, if any, for service of subpoenas;

(f) transcription cost as provided in 2-4-614, MCA;

(g) witness fees and mileage for the department's lay/fact witnesses; and

(h) mileage for the department's expert witness if the expert appears personally and testifies at the hearing.

History

Authorizing statute(s): 2-4-104, 2-18-503, 25-10-201, 26-2-501, 32-5-207, 32-5-401, MCA
Implementing statute(s): 32-5-207, MCA
History: NEW, 2015 MAR p. 2246, Eff. 12/25/15.

Subchapter 2.59.4 Credit Unions

Mont. Admin. R. 2.59.401 Credit Unions - Supervisory Fee

(1) The division invoices credit unions for semiannual assessments. The assessment is based on each credit union's total assets provided in its previous March and September financial performance reports.

(2) The fee is calculated based on the total assets of the credit union multiplied by .0000375, plus the flat fee listed in the table below.

Example: Credit Union A reports total assets of $36,169,980 x .0000375 plus $0 equals $1,356.37.

(3) The assessment is due 30 days after each invoice date, or July 31 and January 31, whichever is later.

(4) The assessment billed in December 2022 and collected in January 2023 is waived.

History

Authorizing statute(s): 32-3-201, MCA
Implementing statute(s): 32-3-201, MCA
History: Eff. 11/3/75; AMD, 1991 MAR p. 442, Eff. 3/15/91; TRANS, from Commerce, 2001 MAR p. 1178; AMD, 2007 MAR p. 1928, Eff. 11/22/07; AMD, 2008 MAR p. 2620, Eff. 12/25/08; AMD, 2016 MAR p. 2325, Eff. 12/10/16; AMD, 2020 MAR p. 2133, Eff. 11/21/20; AMD, 2021 MAR p. 1319, Eff. 10/9/21; AMD, 2022 MAR p. 1656, Eff. 8/6/22.

Mont. Admin. R. 2.59.402 Credit Unions - Limited Income Persons, Definition

(1) A limited income person is defined as an individual whose annual income is less than that specified below based upon family size:

For family/household units with more than eight members, add $4,160 for each additional member.

(2) For purposes of this rule, the term "income" must include before-tax income of the following types:

(a) earnings (wages, tips, and salary);

(b) unemployment compensation;

(d) social security;

(e) supplemental security income;

(f) survivor benefits;

(g) pension or retirement income; and

(h) self-employment earnings computed in accordance with the credit union's written policies.

(3) Other forms of income that may, at the credit union's discretion and in accordance with the credit union's written policies, be included within the definition of income for purposes of this rule are:

(a) cash public assistance benefits;

(b) veterans' payments;

(d) dividend income;

(e) rents;

(f) royalties;

(g) income from estates or trusts;

(h) educational assistance such as work-study earnings and grants, but not student loans;

(i) spousal maintenance (formerly known as alimony);

(j) child support;

(k) assistance from outside the household; and

(l) other miscellaneous sources.

(4) The term "income" does not include:

(a) capital gains or losses; and

(b) noncash benefits such as food stamps and housing subsidies.

(5) Credit union membership for immediate family members of persons within the credit union's field of membership under 32-3-304(2), MCA, does not extend to immediate family members of limited income persons who become members under 32-3-307, MCA. Nothing in this rule prevents immediate family members of limited income persons from independently qualifying for membership in their own right under either 32-3-304 or 32-3-307, MCA.

Family Size | Annual Income 1 | $ 11,880 2 | 16,020 3 | 20,160 4 | 24,300 5 | 28,440 6 | 32,580 7 | 36,730 8 | 40,890

History

Authorizing statute(s): 32-3-201, MCA
Implementing statute(s): 32-3-307, MCA
History: Eff. 11/3/75; AMD, 1991 MAR p. 292, Eff. 3/15/91; TRANS, from Commerce, 2001 MAR p. 1178; AMD, 2014 MAR p. 2445, Eff. 10/10/14; AMD, 2016 MAR p. 2325, Eff. 12/10/16.

Mont. Admin. R. 2.59.403 Credit Unions - Surety Bond and Hazard Insurance Coverage

(1) Each credit union shall provide surety bond coverage for each of its employees, board members, or committee members whose duties include the handling of cash, cash equivalents, negotiable instruments of any kind, credit cards, debit cards, or who act as bookkeepers or who are able to make entries to accounts affecting the credit union or its members.

(2) Each credit union shall obtain casualty insurance, fire insurance, liability insurance or such other types of insurance as may be appropriate to the credit union's needs.

(3) Surety bond coverage and insurance coverage shall be in amounts appropriate to the total assets of the credit union, the nature of its business, and the value of its insured property. In no case shall the amounts of coverage be less than those required of federal credit unions by the National Credit Union Administration.

History

Authorizing statute(s): 32-3-201, MCA
Implementing statute(s): 32-3-201, MCA
History: NEW, 1992 MAR p. 2465, Eff. 11/13/92; TRANS, from Commerce, 2001 MAR p. 1178.

Mont. Admin. R. 2.59.405 Retention of Credit Union Records

(1) Credit unions are required to retain records of member accounts, as defined in (7), for at least eight years after January 1 of the year following the time that the records are made; however, records showing unpaid balances in favor of members may not be destroyed.

(2) The publication Montana Credit Union Records Retention Schedule, Appendix A to ARM 2.59.405 (Appendix A), establishes the minimum retention period for records other than member account records for all state-chartered credit unions. Appendix A is maintained by the Commissioner of Banking and Financial Institutions, and may be updated not more than once a year by the commissioner. The August 11, 2014, edition of Appendix A is incorporated by reference as part of this rule. A copy of Appendix A can be obtained from the Division of Banking and Financial Institutions, Department of Administration, P.O. Box 200546, Helena, MT 59620-0546 or found on the department's website at banking.mt.gov.

(3) When a credit union reproduces records in any manner in the regular course of business, the retention period of the reproduced records is the same as specified in Appendix A.

(4) Credit unions must comply with all applicable federal laws and regulations concerning credit union records retention requirements. In the event that an applicable federal law or regulation conflicts with a retention period contained in this rule or in Appendix A, a credit union must comply with whichever retention period is longer. Credit unions must comply with other applicable state laws governing retention of personnel records, corporation records, etc.

(5) If a credit union does not maintain records set forth in Appendix A, but maintains similar records with equivalent information, the credit union's similar records must be retained for the time specified within Appendix A.

(6) Records not covered by this rule, Appendix A, or applicable federal laws and regulations must be retained for a period of time determined appropriate by the credit union's board of directors. The board's minutes must reflect the record retention periods determined appropriate and be maintained as a permanent part of the board's minutes.

(7) "Member accounts" for record retention purposes means member deposit accounts including share savings accounts, share draft accounts, share certificates, safety deposit boxes, trust accounts, negotiable orders of withdrawal (NOW) accounts, and money market deposit accounts.

History

Authorizing statute(s): 32-3-201, MCA
Implementing statute(s): 32-3-204, MCA
History: NEW, 2006 MAR p. 3068, Eff. 12/22/06; AMD, 2014 MAR p. 2445, Eff. 10/10/14; AMD, 2025 MAR, Notice No. 2025-450, Eff. 10/11/25.

Mont. Admin. R. 2.59.406 Definitions Applicable to Debt Cancellation and Debt Suspension by a Credit Union

The following definitions apply in ARM 2.59.407 through 2.59.414:

(2) "Contract" means a debt cancellation contract or a debt suspension agreement.

(3) "Debt cancellation contract" means a loan term or contractual arrangement modifying loan terms under which a credit union agrees, for a fee, to cancel all or part of a member's obligation to repay an extension of credit from that credit union upon the occurrence of a specified event. The agreement must specify the extension of credit to which it pertains. The agreement may be separate from or a part of other loan documents. A debt cancellation contract may be offered and purchased either contemporaneously with the other terms of the loan agreement or subsequently. The extension of credit to which it pertains may be a direct loan made by the credit union or an indirect loan in the form of a retail installment sales contract purchased by or assigned to the credit union. In the case of an indirect loan in the form of a retail installment sales contract, the debt cancellation contract may be offered by the credit union through a nonexclusive, unaffiliated agent contingent upon the credit union purchasing or taking assignment of the indirect loan.

(4) "Debt suspension agreement" means a loan term or contractual arrangement modifying loan terms under which a credit union agrees, for a fee, to suspend all or part of a member's obligation to repay an extension of credit from that credit union upon the occurrence of a specified event. The agreement must specify the extension of credit to which it pertains. The agreement may be separate from or a part of other loan documents. The term "debt suspension agreement" does not include loan payment deferral arrangements in which the triggering event is the member's unilateral election to defer repayment or the credit union's unilateral decision to allow a deferral of repayment. The extension of credit may be a direct loan made by the credit union or an indirect loan in the form of a retail installment sales contract purchased by or assigned to the credit union. In the case of an indirect loan in the form of a retail installment sales contract, the debt suspension agreement may be offered by the credit union through a nonexclusive, unaffiliated agent contingent upon the credit union purchasing or taking assignment of the indirect loan.

(5) "Guaranteed asset protection (GAP) waiver or agreement" means a term of an extension of credit or contractual arrangement modifying terms of an extension of credit for the purchase of titled personal property under which a credit union agrees to cancel the member's obligation to repay the portion of the extension of credit that exceeds the amount paid by the primary insurer of the titled personal property upon the insurer's declaration that the titled personal property is a total loss or determination that the titled personal property is stolen and not recoverable.

(6) "Loan" or "extension of credit" means a direct or indirect advance of funds to a member made on the basis of any obligation of that member to repay the funds or that is repayable from specific property pledged by or on the member's behalf. The term also includes any liability of a credit union to advance funds to or on behalf of any member under a contractual commitment.

(7) "Member" means an individual who obtains from a credit union an extension of credit that is primarily for personal, family, or household purposes. In the case of a credit union serving low income individuals, a qualifying nonmember is considered a "member." For purposes of this subchapter, the term means the same thing as borrower.

(8) "Residential mortgage loan" means a loan for personal, family, or household purposes secured by a one- to four-family residential property.

History

Authorizing statute(s): 32-3-201, MCA
Implementing statute(s): 32-3-609, MCA
History: NEW, 2011 MAR p. 2816, Eff. 12/23/11; AMD, 2019 MAR p. 290, Eff. 3/16/19.

Mont. Admin. R. 2.59.407 Debt Cancellation and Debt Suspension Programs – Requirements

(1) A credit union offering debt cancellation contracts and/or debt suspension agreements shall:

(a) manage the risks associated with debt cancellation contracts and debt suspension agreements in accordance with credit union safety and soundness principles by establishing and maintaining effective risk management and control processes over its debt cancellation contracts and debt suspension agreements to include:

(i) appropriate recognition and financial reporting of income, expenses, assets, and liabilities;

(ii) appropriate treatment of all expected and unexpected losses associated with the contracts; and

(iii) assessment of the adequacy of its internal control and risk mitigation activities in view of the nature and scope of the credit union's debt cancellation and debt suspension program; and

(2) An insurer authorized by the insurance regulator in an out-of-state credit union's home state that has issued a policy to the out-of-state credit union covering all of its debt cancellation contractual liabilities need not be authorized or otherwise registered with the State Auditor.

History

Authorizing statute(s): 32-3-201, MCA
Implementing statute(s): 32-3-609, MCA
History: NEW, 2011 MAR p. 2816, Eff. 12/23/11; AMD, 2014 MAR p. 2445, Eff. 10/10/14.

Mont. Admin. R. 2.59.408 Required Disclosures

(1) A credit union shall provide the following disclosures to the credit union's member:

(a) notice of the prohibited acts or practices contained in ARM 2.59.409;

(b) the fee applicable to the contract and any payment options;

(d) whether the member is barred from using the credit line to which it pertains if the debt cancellation contract or debt suspension agreement is activated;

(e) eligibility requirements, conditions, and exclusions;

(f) that a debt suspension agreement, if activated, does not cancel the debt, but only suspends payment requirements; and

(g) notice that cancellation of debt may result in a tax liability to the member if activated.

(2) The requirements for the timing and method of disclosure are:

(a) the credit union shall make the disclosures in (1) and the short-form disclosures under ARM 2.59.413 orally at the time the credit union first solicits the purchase of a contract;

(b) the credit union shall make the long-form disclosures under ARM 2.59.413 in writing before the member completes the purchase of the contract. If the initial solicitation occurs in person, the credit union shall provide the long-form disclosure in writing at that time;

(c) if the contract is solicited by telephone, the credit union shall provide the disclosures in (1) and the short-form disclosures under ARM 2.59.413 orally and shall mail the long-form disclosures, and if appropriate, a copy of the contract, to the member within three business days beginning on the first business day after the telephone solicitation; and

(d) if the contract is solicited through written materials such as mail inserts or "take one" applications, the credit union may provide only the disclosures in (1) and the short-form disclosure under ARM 2.59.413 to the member within three business days beginning on the first business day after the member contacts the credit union in response to the solicitation, subject to the requirements of ARM 2.59.412(3)(b).

(4) The disclosures in the short-form disclosure under ARM 2.59.413 are required in advertisements and promotional material for contracts unless the advertisements and promotional materials are of a general nature describing or listing the services or products offered by the credit union.

History

Authorizing statute(s): 32-3-201, MCA
Implementing statute(s): 32-3-609, MCA
History: NEW, 2011 MAR p. 2816, Eff. 12/23/11.

Mont. Admin. R. 2.59.409 Prohibited Acts or Practices

(1) A credit union is prohibited from engaging in any of the following acts or practices:

(a) extending credit or altering the terms or conditions of an extension of credit conditioned upon the member entering into a debt cancellation contract or debt suspension agreement with the credit union. The prohibition is commonly referred to in the regulatory context as the anti-tying provision;

(b) engaging in any practice or using any advertisement that could mislead or otherwise cause a reasonable person to reach an erroneous belief with respect to information that must be disclosed under ARM 2.59.408, including what is being offered, the cost, and/or the terms of the contract;

(i) giving the credit union the right unilaterally to modify the contract unless:

(A) the modification is favorable to the member and is made without additional charge to the member; or

(B) the member is notified of any proposed change and is provided a reasonable opportunity to cancel the contract without penalty before the change goes into effect; or

(ii) requiring an up-front, lump-sum single payment for the contract if the extension of credit to which the contract pertains is a residential mortgage loan.

History

Authorizing statute(s): 32-3-201, MCA
Implementing statute(s): 32-3-609, MCA
History: NEW, 2011 MAR p. 2816, Eff. 12/23/11.

Mont. Admin. R. 2.59.410 Refunds of Fees Upon Termination or Prepayment of Covered Loan

(1) If a debt cancellation contract or debt suspension agreement is terminated, including, for example, when the member prepays the covered loan, a credit union shall refund to the member any unearned fees paid for the contract unless the contract provides otherwise.

(2) A credit union may offer a member a contract that does not provide for a refund only if the credit union also offers that member a bona fide option to purchase a comparable contract that provides for a refund.

(3) A credit union shall calculate the amount of a refund using a method at least as favorable to the member as the actuarial method.

History

Authorizing statute(s): 32-3-201, MCA
Implementing statute(s): 32-3-609, MCA
History: NEW, 2011 MAR p. 2816, Eff. 12/23/11.

Mont. Admin. R. 2.59.411 Method of Payment of Fees

(1) Except as provided in ARM 2.59.409(1)(c)(ii), a credit union may offer a member the option of paying the fee for a debt cancellation contract or a debt suspension agreement in a single payment, provided the credit union also offers the member a bona fide option of paying the fee for that contract in periodic installment payments.

(2) If a credit union offers the member the option to finance the single payment by adding it to the loan principal, the credit union must also disclose, in accordance with ARM 2.59.410, whether the member may cancel the agreement and receive a refund, and, if so, the time period during which the member may do so.

History

Authorizing statute(s): 32-3-201, MCA
Implementing statute(s): 32-3-609, MCA
History: NEW, 2011 MAR p. 2816, Eff. 12/23/11.

Mont. Admin. R. 2.59.412 Affirmative Election to Purchase and Acknowledgment of Receipt of Disclosures

(1) Before entering into a debt cancellation contract or debt suspension agreement, a credit union shall obtain the member's written affirmative election to purchase the contract and a written acknowledgment of receipt of the disclosures required under ARM 2.59.408.

(2) The election and acknowledgment information must be conspicuous, simple, direct, readily understandable, and designed to call attention to its significance.

(3) The election and acknowledgment information satisfies these standards if it conforms to the following requirements:

(a) if the sale of a contract occurs by telephone, the member's affirmative election to purchase may be made orally, provided that the credit union:

(i) maintains sufficient documentation to show that the member received the short-form disclosures substantially similar to ARM 2.59.413(1) and then affirmatively elected to purchase the contract;

(ii) mails to the member the affirmative written election and written acknowledgment together with a long-form disclosure substantially similar to ARM 2.59.413(2), within three business days after the telephone solicitation, and maintains sufficient documentation to show it made reasonable efforts to obtain the documents from the member; and

(iii) permits the member to cancel the purchase of the contract without penalty within 30 days after the credit union has mailed the long-form disclosures to the member; or

(b) if the contract is solicited through written materials such as mail inserts or "take one" applications and a credit union provides only the short-form disclosures in the written materials, then the credit union shall mail the acknowledgment of receipt of disclosures, together with a long-form disclosure as provided under ARM 2.59.413(2), to the member within three business days, beginning on the first business day after the member contacts the credit union or otherwise responds to the solicitation. A credit union may not obligate the member to pay for the contract until after the credit union has received the member's written acknowledgment of receipt of disclosures unless the credit union:

(i) maintains sufficient documentation to show that the credit union provided the acknowledgment of receipt of disclosures to the member;

(ii) maintains sufficient documentation to show that the credit union made reasonable efforts to obtain from the member a written acknowledgment of receipt of the long-form disclosures; and

(iii) permits the member to cancel the purchase of the contract without penalty within 30 days after the credit union has mailed the long-form disclosures to the member.

History

Authorizing statute(s): 32-3-201, MCA
Implementing statute(s): 32-3-609, MCA
History: NEW, 2011 MAR p. 2816, Eff. 12/23/11.

Mont. Admin. R. 2.59.413 Disclosure Forms

(1) The department adopts as a model, but not as a requirement, the Comptroller of the Currency's model short-form disclosure at 12 CFR 37 Appendix A revised as of January 1, 2010. The form must be adapted by the credit union to include the disclosures required under ARM 2.59.408(1)(a) and (g).

(2) The department adopts as a model, but not as a requirement, the Comptroller of the Currency's model long-form disclosure at 12 CFR 37 Appendix B revised as of January 1, 2010. The form must be adapted by the credit union to include the disclosures required under ARM 2.59.408(1)(a) and (g).

(3) The model forms in (1) and (2), which are available at Title 12, Volume I, Part 37, Appendices A and B in the Code of Federal Regulations, are not mandatory, but a credit union that provides disclosures in a form substantially similar to the adapted model forms will be deemed to have satisfied the disclosure requirements applicable to the credit union concerning its debt cancellation and/or debt suspension program.

History

Authorizing statute(s): 32-3-201, MCA
Implementing statute(s): 32-3-609, MCA
History: NEW, 2011 MAR p. 2816, Eff. 12/23/11.

Mont. Admin. R. 2.59.414 Guaranteed Asset Protection (gap) Feature

(1) A GAP waiver or agreement is a type of debt cancellation contract. A debt cancellation contract with a GAP feature offered in connection with an extension of credit for the purchase of titled personal property for personal, family, or household use is a single product. A credit union offering a debt cancellation contract with a GAP feature may do so through nonexclusive, unaffiliated agents such as automobile dealers. The fee arrangement between a credit union and a nonexclusive, unaffiliated agent through which the debt cancellation product is offered does not create a separate contract that violates the anti-tying provision of ARM 2.59.409(1)(a).

History

Authorizing statute(s): 32-3-201, MCA
Implementing statute(s): 32-3-609, MCA
History: NEW, 2011 MAR p. 2816, Eff. 12/23/11.

Mont. Admin. R. 2.59.415 Duties of the Supervisory Committee

(1) The supervisory committee shall:

(a) verify that adequate internal controls are established and maintained to safeguard the credit union's assets;

(b) oversee the inspection of securities, cash, and accounts of the credit union;

(d) review the actions of the board of directors, officers, and committees to ensure that the individuals and entities:

(i) exercise firm control over the credit union's affairs;

(ii) understand their role; and

(iii) promote the credit union for its intended purposes;

(e) ensure that the credit union complies with all applicable laws and regulations;

(f) review all new policies and changes to credit union procedures and assess their effects on the safety of members' funds; and

(g) understand, support, and monitor compliance programs related to the Bank Secrecy Act of 1970 and the Money Laundering Control Act of 1986.

History

Authorizing statute(s): 32-3-403, MCA
Implementing statute(s): 32-3-403, MCA
History: NEW, 2015 MAR p. 2247, Eff. 12/25/15.

Mont. Admin. R. 2.59.416 Net Worth Definition – Calculation – Determination

(1) For purposes of ARM 2.59.417, 2.59.418, and 2.59.422, "net worth" means the sum of regular reserves and undivided earnings. Net worth excludes the allowance for loan and lease losses. Net worth is calculated quarterly based on data from the previous call report.

(2) The department shall determine compliance with ARM 2.59.417, 2.59.418, and 2.59.422 using quarterly net worth for the period in which the security is purchased.

(3) A security that complies with ARM 2.59.417, 2.59.418, and 2.59.422 at the time of purchase is not in violation of ARM 2.59.417, 2.59.418, and 2.59.422 at a later date due to a subsequent decline in net worth.

History

Authorizing statute(s): 32-3-701, MCA
Implementing statute(s): 32-3-701, MCA
History: NEW, 2015 MAR p. 2247, Eff. 12/25/15; AMD, 2016 MAR p. 720, Eff. 4/23/16.

Mont. Admin. R. 2.59.417 Investment Rule – Certain Quasi-Government Securities

(1) Certain other securities are approved for credit union investment. There is no dollar limit on a credit union's investment in:

(a) General Services Administration (participation certificates);

(b) Maritime Administration (bonds and notes); and

(2) A credit union's investment is limited to 50 percent of its net worth in:

(a) Asian Development Bank (bonds and notes);

(b) Financing Corporation (FICO) (bonds);

(d) Resolution Funding Corporation (REFCORP) (bonds);

(e) Tennessee Valley Authority (TVA) (bonds); and

(f) World Bank (bonds and notes).

History

Authorizing statute(s): 32-3-701, MCA
Implementing statute(s): 32-3-701, MCA
History: NEW, 2015 MAR p. 2247, Eff. 12/25/15.

Mont. Admin. R. 2.59.418 Investment Rule – Corporate Bonds

(1) A credit union may invest up to 20 percent of its net worth, per issuer, in corporate bonds.

(2) These bonds must be investment grade, i.e., rated in one of the four highest grades by a recognized national investment rating organization.

(3) Other rating services may be used if the gradations are equivalent to those above, and the rating services are identified by the credit union's investment policy.

(4) Corporate bonds must be reviewed as necessary to assure the credit union's board of directors that bond quality has not fallen below investment grade.

History

Authorizing statute(s): 32-3-701, MCA
Implementing statute(s): 32-3-701, MCA
History: NEW, 2015 MAR p. 2247, Eff. 12/25/15.

Mont. Admin. R. 2.59.419 Investment Rule – Mutual Funds

(1) Under the authority of 32-3-701, MCA, and subject to its restrictions, a credit union may invest in mutual funds whose shares represent only those United States obligations listed in ARM 2.59.417.

(2) Shareholders must have a proportionate undivided interest in any mutual fund utilized under this rule.

(3) Shareholders must be shielded from personal liability for acts or obligations of the mutual fund.

(4) The credit union's investment policy, as formally approved by its board of directors, must specifically provide for such investments. Prior approval of the board of directors must be obtained for initial investments in specific mutual funds and recorded in the official board minutes. Procedures, standards, and controls for managing such investments must be implemented prior to the investment being made.

History

Authorizing statute(s): 32-3-701, MCA
Implementing statute(s): 32-3-701, MCA
History: NEW, 2015 MAR p. 2247, Eff. 12/25/15.

Mont. Admin. R. 2.59.420 General Obligation Bonds

(1) A credit union may invest, without dollar limitation, in the general obligations of:

(a) any state of the United States if the obligations are fully guaranteed as to the repayment of principal and interest. Evidence of a full guarantee includes, but is not limited to, the pledge of the full faith and credit of the state responsible for repayment of the general obligation; and

(b) any Montana political subdivision if:

(i) the obligations are issued pursuant to the Constitution, statute, or the charter or ordinances of the respective county or city;

(ii) the obligations are fully guaranteed as to the repayment of principal and interest. Evidence of a full guarantee includes, but is not limited to, the pledge of the full faith and credit of the Montana political subdivision responsible for repayment of the general obligation; and

(iii) the issuing body has not been in default regarding the payment of principal or interest on any of its obligations within five years preceding the date of the investment.

History

Authorizing statute(s): 32-3-701, MCA
Implementing statute(s): 32-3-701, MCA
History: NEW, 2015 MAR p. 2247, Eff. 12/25/15.

Mont. Admin. R. 2.59.421 Director Training

(TRANSFERRED)

History

Authorizing statute(s): 32-3-412, MCA
Implementing statute(s): 32-3-412, MCA
History: NEW, 2015 MAR p. 2247, Eff. 12/25/15; TRANS to 2.59.430, 2016 MAR p. 720, Eff. 4/23/16.

Mont. Admin. R. 2.59.422 Investment Rule – Revenue Bonds

(1) Credit unions may invest, without limitation, in revenue bonds issued by the state of Montana or its political subdivisions.

(2) Credit unions may invest up to 40 percent of their net worth, per issuer, in revenue bonds issued by any other state or its political subdivisions whereby the obligations are payable from pledged fee or tax revenue from designated sources.

(a) The issuing body must not have been in default regarding the payment of principal or interest on any of its obligations within five years preceding the date of the investment.

(b) The obligations must be rated investment grade or higher by a recognized national investment rating organization. Other rating services may be used if the gradations are equivalent to those above, and the rating services are identified by the credit union's investment policy.

(3) Credit unions may invest up to 20 percent of their net worth, per issuer, in industrial development revenue obligations issued by a Montana political subdivision when repayment is dependent upon a nongovernmental obligor and when such issues are consistent with the commercial lending policy of the credit union.

History

Authorizing statute(s): 32-3-401, 32-3-422, MCA
Implementing statute(s): 32-3-401, 32-3-422, MCA
History: NEW, 2016 MAR p. 720, Eff. 4/23/16.

Mont. Admin. R. 2.59.429 Adoption of Model Bylaws and Statutory Reference for Credit Unions

(1) The department adopts by reference the model bylaws of credit unions dated April 2023 and the model credit union bylaws statutory reference dated April 2023, to be used by incorporators when they want to start a new credit union. Both can be found on the department's website at banking.mt.gov.

History

Authorizing statute(s): 32-3-201, MCA
Implementing statute(s): 32-3-302, MCA
History: NEW, 2016 MAR p. 2325, Eff. 12/10/16; AMD, 2020 MAR p. 1704, Eff. 9/12/20; AMD, 2025 MAR, Notice No. 2025-450, Eff. 10/11/25.

Mont. Admin. R. 2.59.430 Director Training

(1) Training topics and course selection for directors' training must reflect the size and complexity of the business model of the credit union that the directors serve and the depth of understanding needed by the directors to effectively manage the credit union. The training must ensure directors achieve at least the minimum level of competency to enable the directors to exercise appropriate independent business judgment to complement the expertise and business judgment of the credit union's executive officers in matters within the board's authority.

History

Authorizing statute(s): 32-3-422, MCA
Implementing statute(s): 32-3-422, MCA
History: NEW, 2015 MAR p. 2247, Eff. 12/25/15; TRANS from 2.59.421 & AMD, 2016 MAR p. 720, Eff. 4/23/16.

Mont. Admin. R. 2.59.435 Private Share Insurance

(1) All Montana state-chartered credit unions insured by a private share insurance plan pursuant to 32-3-611, MCA, are regulated the same as Montana state-chartered credit unions insured under the provisions of Title II of the Federal Credit Union Act.

History

Authorizing statute(s): 32-3-201, MCA
Implementing statute(s): 32-3-611, MCA
History: NEW, 2018 MAR p. 628, Eff. 3/31/18.

Mont. Admin. R. 2.59.436 Organizing a New Credit Union

(1) An applicant seeking to organize a new state-chartered credit union shall complete the Application for a Certificate of Approval to Organize a New Montana Credit Union dated June 13, 2025, which is adopted and incorporated by reference and available on the department's website at banking.mt.gov.

History

Authorizing statute(s): 32-3-201, MCA
Implementing statute(s): 32-3-201, 32-3-301, MCA
History: NEW, 2021 MAR p. 275, Eff. 3/13/21; AMD, 2025 MAR, Notice No. 2025-450, Eff. 10/11/25.

Mont. Admin. R. 2.59.437 Annual Reports

(1) The Report of Credit Union Management form dated June 13, 2025, is adopted and incorporated by reference and available on the department's website at banking.mt.gov.

(2) The Liabilities of Directors and Committee Members form dated June 13, 2025, is adopted and incorporated by reference and available on the department's website at banking.mt.gov.

History

Authorizing statute(s): 32-3-201, MCA
Implementing statute(s): 32-3-201, 32-3-202, 32-3-404, MCA
History: NEW, 2021 MAR p. 275, Eff. 3/13/21; AMD, 2025 MAR, Notice No. 2025-450, Eff. 10/11/25.

Subchapter 2.59.6 Agriculture Credit Corporations

Mont. Admin. R. 2.59.601 Conditions of Investment

(1) A bank organized under the laws of Montana may invest in a wholly-owned agricultural credit corporation under the following conditions:

(a) The investment in shares of or loans to the agricultural credit corporation by a bank shall be limited to two times the legal lending limit of the bank, i.e., 40% of the bank's unimpaired capital and surplus plus 40% of the outstanding debentures or capital notes issued under the authority of 32-1-413 , MCA.

(b) Any loan or series of loans made to one borrower by the agriculture credit corporation (corporation) shall not exceed the lending limit of the bank.

(c) The directors of the corporation shall execute a resolution or adopt a bylaw which makes available all of the records of the corporation to the commissioner of financial institutions of Montana and his examining personnel without restriction.

(2) A bank operating under the laws of Montana may invest in an agricultural credit corporation owned by two or more investors under the same conditions listed in (1) if the bank owns 80% or more of the outstanding stock of the corporation. A bank owning less than 80% of the stock of the corporation must limit its investment to its statutory lending limit under the Montana Code Annotated and must follow the conditions in (b) (c) above.

(3) Any bank operating under the laws of Montana shall notify the commissioner of financial institutions of its intentions to invest in an agriculture credit corporation. If the bank does not receive from the commissioner within 30 days after he has received the above notice, a statement disapproving the investment for stated reasons, the bank may proceed with the investment in the agriculture credit corporation.

(4) For the purpose of this rule, an agricultural credit corporation is defined as a corporation organized to make available to banks the right to sell or rediscount loans available through the federal intermediate credit bank or any government agricultural lender.

(5) For the purpose of this rule, a loan means extensions of credit to agricultural producers or agribusinesses which are eligible for rediscount or sale to the federal intermediate credit bank or other government agency.

History

Authorizing statute(s): Sec. 32-1-362, MCA
Implementing statute(s): Sec. 32-1-362, MCA
History: NEW, 1981 MAR p. 1185, Eff. 10/16/81; TRANS, from Commerce, 2001 MAR p. 1181.

Subchapter 2.59.7 Escrow Businesses

Mont. Admin. R. 2.59.701 Application Procedure for Authorization to Engage in the Escrow Business

(1) In addition to the statutory qualifications found in Title 32, chapter 7, MCA, officers and managers of proposed escrow businesses shall demonstrate the character and fitness to operate their proposed escrow businesses in compliance with all applicable state and local laws.

(2) The director, the commissioner of banking and financial institutions, and examining personnel of the banking and financial institutions division may gather all available information relative to applications and conduct such investigations as they may determine are warranted to verify the qualifications of the applicant.

(3) An application fee of $350 shall be paid to the state of Montana at the time of application, and thereafter shall not be refundable either in whole or in part.

History

Authorizing statute(s): 32-7-108, MCA
Implementing statute(s): 32-7-109, MCA
History: NEW, 1990 MAR p. 929, Eff. 5/18/90; TRANS, from Commerce, 2001 MAR p. 1181; AMD, 2016 MAR p. 2410, Eff. 12/24/16.

Mont. Admin. R. 2.59.702 Change of Ownership in Escrow Business

(1) In the event of a change of ownership of an escrow business, the buyer(s) shall file with the department of administration, a new application for a license. For the purpose of this rule, a change in ownership will be deemed to occur when a 25% or more partnership interest of 25% or more of the outstanding voting stock in a corporation is transferred to a new owner.

History

Authorizing statute(s): Sec. 32-7-108, MCA
Implementing statute(s): Sec. 32-7-111, MCA
History: NEW, 1990 MAR p. 929, Eff. 5/18/90; TRANS, from Commerce, 2001 MAR p. 1178.

Mont. Admin. R. 2.59.703 Examination of Escrow Business

(1) Examinations of escrow businesses may be conducted by the department of administration, division banking and financial institutions, when requested by the licensee or when, in the judgment of the director, they are necessary. Licensees shall be charged for examinations at a rate equal to the department's actual costs for examiner wages and travel expenses. Examination fees shall be paid to the state of Montana within 10 days of completion of the examination. Failure to pay the examination fee will result in an order from the director that licensee cease and desist from doing business as an escrow business until the examination fee is paid. If necessary, the director may apply to the district court of the first judicial district court of Lewis and Clark County to enforce compliance.

History

Authorizing statute(s): Sec. 32-7-108, MCA
Implementing statute(s): Sec. 32-7-108, 32-7-122, MCA
History: NEW, 1990 MAR p. 929, Eff. 5/18/90; TRANS, from Commerce, 2001 MAR p. 1178.

Mont. Admin. R. 2.59.704 Escrow Business Bonding

(1) An applicant for an escrow business license shall file with the division of banking and financial institutions a bond in the amount of $100,000 along with the application for licensure.

History

Authorizing statute(s): Sec. 32-7-108, MCA
Implementing statute(s): Sec. 32-7-109, MCA
History: NEW, 2004 MAR p. 2276, Eff. 8/20/04.

Mont. Admin. R. 2.59.705 Adoption of Standardized Forms and Procedures of the Nmls

(1) The NMLS Policy Guidebook dated September 27, 2021, is adopted by reference and available on the NMLS website at mortgage.nationwidelicensingsystem.org/slr/common/policy/Pages/default.aspx .

(2) Except as provided in ARM 2.59.707, the NMLS deadlines, policies, procedures, and processes for all licensing-related actions, changes, and reports are adopted and available at mortgage.nationwidelicensingsystem.org/ .

(3) Members of the public can look up the current license status, license number, states of licensure, contact information, and regulatory history of any escrow business licensee at nmls.consumeraccess.org. If an entity is not listed on NMLS consumer access, it does not hold an escrow business license issued by the department.

(4) All applicants for an escrow business license shall use the NMLS-approved forms and checklists for all licensing-related activities, including but not limited to initial applications, renewals, amendments, surrenders, and reports.

History

Authorizing statute(s): 32-7-108, 32-7-112, MCA
Implementing statute(s): 32-7-109, 32-7-112, MCA
History: NEW, 2015 MAR p. 368, Eff. 10/10/14; AMD, 2016 MAR p. 2410, Eff. 12/24/16; AMD, 2018 MAR p. 822, Eff. 4/28/18; AMD, 2022 MAR p. 228, Eff. 2/12/22.

Mont. Admin. R. 2.59.707 License Renewals

(1) The renewal period begins November 1. Every renewal applicant shall apply for renewal through the NMLS. Licensees shall use the NMLS renewal process to request renewal of their license.

(2) Licensees shall submit their renewal applications by December 1 of each year to ensure issuance of the license to qualified renewal applicants by January 1 of the following year.

(3) The holder of an expired license may not conduct any business in Montana until becoming properly licensed.

History

Authorizing statute(s): 32-7-109, 32-7-110, 32-7-112, MCA
Implementing statute(s): 32-7-109, 32-7-110, 32-7-112, MCA
History: NEW, 2014 MAR p. 2448, Eff. 10/10/14.

Mont. Admin. R. 2.59.712 Reinstatement of Expired Licenses

(1) Upon expiration of a license issued under 32-7-110, MCA, due to nonrenewal by the renewal date, the former licensee shall immediately cease from engaging in the activities for which the license was issued. The department may reinstate an expired license, provided that by the last day of February following expiration of the license, the following are submitted through the NMLS:

(a) a properly completed license renewal application;

(b) the license renewal fee as set forth in 32-7-110, MCA;

(d) proof that the licensee continues to meet standards for licensure under 32-7-109, MCA.

History

Authorizing statute(s): 32-7-109, 32-7-110, 32-7-112, MCA
Implementing statute(s): 32-7-109, 32-7-110, 32-7-112, MCA
History: NEW, 2014 MAR p. 2448, Eff. 10/10/14.

Mont. Admin. R. 2.59.713 Annual Financial Statement and Escrow Activities Report and Due Date

(1) The Montana Escrow Business Annual Financial Statement and Escrow Activities Report form, May 9, 2017, edition, is adopted and incorporated by reference. The form is available on the division's website, https://banking.mt.gov/Home/Forms .

(2) By April 30 each year, persons licensed under the Montana Regulation of Escrow Businesses Act shall file the Montana Escrow Business Annual Financial Statement and Escrow Activities Report as of December 31 of the preceding calendar year.

History

Authorizing statute(s): 32-7-108, MCA
Implementing statute(s): 32-7-115, MCA
History: NEW, 2017 MAR p. 1141, Eff. 7/22/17.

Subchapter 2.59.9 Branch Banks and Loan Production Offices

Mont. Admin. R. 2.59.902 Definitions

For purposes of this subchapter, the following definitions apply:

(1) "Consolidate" means a combination of two or more office locations within the same immediate neighborhood that does not substantially affect the nature of the business or customers served. For example, a consolidation of two branches on the same block following a merger would not constitute a branch closing. Banks that are in doubt about whether a consolidation or a closing has occurred should consult the department. A consolidation is considered a relocation for purposes of ARM 2.59.903 and 2.59.907.

(2) "Customer" means a person who opened an account at the branch location in question, is currently associated with that branch, or whose address is within the same municipal area as the branch, as the bank determines is appropriate.

(3) "Principal city" means an area designated as a "principal city" by the federal Office of Management and Budget.

(4) "Relocate" means a movement within the same immediate neighborhood that does not substantially affect the nature of the business or customers served. Generally, relocations involve movement over a short distance.

(5) "Short distance" means:

(a) within a 1,000-foot radius of the current location of the branch or loan production office if it is located within the principal city of a metropolitan statistical area (MSA);

(b) within a one-mile radius of the current location of the branch or loan production office if the branch or loan production office is not located within a principal city, but is within an MSA; or

History

Authorizing statute(s): 32-1-211, 32-1-218, 32-1-222, 32-1-372, MCA
Implementing statute(s): 32-1-211, 32-1-218, 32-1-222, 32-1-372, MCA
History: NEW, 2020 MAR p. 1698, Eff. 9/12/20; AMD, 2025 MAR, Notice No. 2025-900, Eff. 9/13/25.

Mont. Admin. R. 2.59.903 Loan Production Office

(1) A bank that desires to establish a new loan production office in this state must obtain prior approval from the department.

(2) A bank must file an application with the department prior to opening a loan production office using the Application to Establish a Loan Production Office form, April 30, 2025, version, located at banking.mt.gov. If an application is incomplete, the department must notify the applicant by e-mail. An application will not be considered to have been received until it is in a complete form. An application is complete when all information required by the application form has been submitted and received. The department may request additional information from an applicant even if the application is considered complete.

(3) The department must approve or deny the application within 45 days of:

(a) the date of the last publication of the notice of intent to establish a new loan production office; or

(b) the date on which a complete application is received, whichever is later.

(4) The 45-day deadline may be extended by the department when review of the complete application raises questions or concerns that require additional information from the applicant or any other entity or person. The applicant or other entity or person shall have 60 days to provide the requested information to the department. Following the receipt of all requested additional information and a complete application, the department may extend its review by a one-time 14- calendar day period.

(5) A bank organized under the laws of Montana that intends to open a loan production office in another state must submit copies of all required regulatory filings or notices required by the host state and federal agencies along with the items required in the Application of Intent to Establish a Loan Production Office form, if they are not already included in the form, to the department.

(6) A Montana state-chartered bank that desires to relocate or close a loan production office temporarily or permanently must give notice to its customers using the Notice of Relocation of Loan Production Office form, April 30, 2025, version, or Notice of Closure of Loan Production Office form, April 30, 2025, version, located at banking.mt.gov.

(7) The relocation or closure form must be posted at the loan production office at least thirty days before the relocation or closure of the office. The relocation or closure form must be provided to the department at the same time.

(8) The department reserves the right to request additional information regarding opening, closing, or relocation of a loan production office.

(9) If the loan production office will be using an assumed name, compliance with 32-1-402, MCA, is required.

(10) Each loan production office is subject to examination and supervision by the department in the same manner and to the same extent as the bank.

History

Authorizing statute(s): 32-1-211, 32-1-218, 32-1-222, MCA
Implementing statute(s): 32-1-211, 32-1-222, 32-1-561, 32-1-562, 32-1-563, 32-1-564, 32-1-565, MCA
History: NEW, 2020 MAR p. 1698, Eff. 9/12/20; AMD, 2025 MAR, Notice No. 2025-900, Eff. 9/13/25.

Mont. Admin. R. 2.59.904 Branch Banks

(1) A bank organized under the laws of this state that is a qualifying institution, as set forth in (2), may establish a branch in Montana upon summary notice and approval by the department. The notice must be given using the Request for Summary Approval of Branch form, April 30, 2025, version, which is located at banking.mt.gov.

(2) In order to qualify for summary notice, the bank must:

(a) have operated a bank charter in good standing for at least five years prior to making the request;

(b) be well-capitalized as defined in 12 CFR Part 324 by the Federal Deposit Insurance Corporation, if the bank is a nonmember bank; or as defined in 12 CFR 208.43(b)(1) by the Federal Reserve Board of Governors, if the bank is a member bank of the Federal Reserve System;

(c) have received a CAMELS composite rating of one or two on its most recent state or federal regulatory safety and soundness examination;

(d) have received a management rating of one or two on its most recent state or federal regulatory examination; and

(e) not be a party to any formal or informal enforcement action initiated by a state or federal regulatory agency.

(3) The bank must certify that it is a qualifying institution as of the date of the request.

(4) A bank that is not a qualifying institution as of the date of the request must comply with ARM 2.59.1101 and 2.59.1103.

(5) The department must approve or deny a summary notice and application within 15 business days of receipt of a complete notice and application.

History

Authorizing statute(s): 32-1-211, 32-1-218, 32-1-372, MCA
Implementing statute(s): 32-1-211, 32-1-218, 32-1-372, MCA
History: NEW, 2020 MAR p. 1698, Eff. 9/12/20; AMD, 2025 MAR, Notice No. 2025-900, Eff. 9/13/25.

Mont. Admin. R. 2.59.905 Montana Banks Branching Outside Montana

(1) In order for a bank organized under the laws of this state to request approval for a branch outside of Montana, the bank must submit copies of all required regulatory filings or notices required by the host state and federal agencies and comply with ARM 2.59.904 and the branching requirements of the state into which it seeks to branch.

History

Authorizing statute(s): 32-1-211, 32-1-218, 32-1-372, MCA
Implementing statute(s): 32-1-211, 32-1-218, 32-1-372, MCA
History: NEW, 2020 MAR p. 1698, Eff. 9/12/20.

Mont. Admin. R. 2.59.906 Banks Organized Outside of Montana Branching Into Montana

(1) Banks organized under the laws of a state other than Montana and national banks must submit copies of all required regulatory filings or notices required by the home state and federal agencies to the department and comply with ARM 2.59.1101 and 2.59.1103 in order to branch into Montana.

History

Authorizing statute(s): 32-1-211, 32-1-218, 32-1-372, MCA
Implementing statute(s): 32-1-211, 32-1-218, 32-1-372, MCA
History: NEW, 2020 MAR p. 1698, Eff. 9/12/20; AMD, 2025 MAR, Notice No. 2025-900, Eff. 9/13/25.

Mont. Admin. R. 2.59.907 Closing or Relocating a Branch Bank

(1) A Montana state-chartered bank that desires to relocate or close a branch temporarily or permanently must give notice to its customers using the Notice of Relocation of Bank Branch form, April 30, 2025, version, or Notice of Closure of Bank Branch form, June 29, 2020, version. The forms are located on the department’s website at banking.mt.gov. A bank may amend the form as needed or include additional information in the form as appropriate.

(2) The relocation or closure form must be posted at the branch at least thirty days before the relocation or closure of the branch. The relocation or closure form must be provided to the department at the same time. The bank must also notify its customers at least thirty days before the relocation or closure by any effective method.

(3) The department reserves the right to request additional information regarding the closure or relocation of a branch.

History

Authorizing statute(s): 32-1-211, 32-1-218, 32-1-372, MCA
Implementing statute(s): 32-1-211, 32-1-218, 32-1-372, MCA
History: NEW, 2020 MAR p. 1698, Eff. 9/12/20; AMD, 2025 MAR, Notice No. 2025-900, Eff. 9/13/25.

Mont. Admin. R. 2.59.910 Loan Production Office Activities

(1) A loan production office may conduct any of the following activities, which shall not, individually or collectively, cause the loan production office to be considered a branch, as defined in 32-1-109, MCA:

(a) solicit loans on behalf of the bank or a branch of the bank;

(b) assemble credit information;

(d) secure title information;

(e) prepare applications for loans, including making recommendations with respect to action; and

(f) solicit investors to purchase loans from the bank and to contract with the bank for servicing of such loans.

(2) A bank shall not accept deposits or loan payments, originate deposits or savings or checking accounts, approve loans, or disburse loan funds at a loan production office established pursuant to this rule.

History

Authorizing statute(s): 32-1-211, 32-1-218, 32-1-222, MCA
Implementing statute(s): 32-1-109, 32-1-222, MCA
History: NEW, 2021 MAR p. 328, Eff. 3/27/21.

Subchapter 2.59.10 Bank Mergers

Mont. Admin. R. 2.59.1001 Merger Application

(1) The application to merge one or more banks located in Montana or to merge two or more banks doing business in this state must be in the following form:

BANK MERGER APPLICATION

Any individual or entity desiring confidential treatment of specific portions of the application shall specifically identify the information for which they request confidentiality, separately bind it, and label it "Confidential." The individual or entity shall follow the same procedure for a request for confidential treatment for the subsequent filing of supplemental information to the application. Inquiries concerning the preparation and filing of this or any other application with the department should be directed to the Montana Division of Banking and Financial Institutions, P.O. Box 200546, Helena, MT 59620-0546.

State the exact corporate name and address of each bank and holding company participating in the merger, the name and address of every bank whose stock is owned by a participating bank holding company, the percentage of total voting stock which that holding represents, and the proposed names of the resultant bank and holding company.
State the name and address of, and the dates of publication in, the newspapers in which the required notice is published.
For the resultant bank, a list of the names of the directors and principal executive officers, their titles, and shares owned in the participating institutions and the resultant bank, including a brief resume of the educational background, banking experience, and other qualifications of each and explanation of the extent of common ownership, direct or indirect, or common management of the participating institution and the length of time such common ownership or management has existed.
The date on which the proposed merger is to occur.
Attach the following documents:

(a) the resolution or an authentic copy of the resolution, authorizing the merger adopted by a majority of the board of directors and ratified by the consent in writing of the shareholders of each bank owning at least two-thirds of its capital stock outstanding;

(b) a year-end financial statement for each participating bank and/or a consolidated statement for multi-bank holding company;

(c) a pro forma financial statement showing projected assets and liabilities, and first-year earnings for the consolidated organization; and

(d) the proposed articles of merger and plan of merger.

(2) An application fee of $2,000 plus $200 for each bank involved in the merger must be paid to the department at the time of application and may not be refunded in whole or in part.

(3) If an application is incomplete in any respect, or if additional information is required, the department shall notify the applicant and the applicant will be allowed up to 30 days in which to perfect the application or provide additional information. An extension of this 30-day period may be obtained from the department by showing good cause why it should be extended. The department may delay processing, including extending the comment period for good cause.

(4) The application must be in letter form addressed to the commissioner of the division.

(5) The department will approve or deny merger applications within 30 days of receiving a completed application.

History

Authorizing statute(s): 32-1-218, MCA
Implementing statute(s): 32-1-370, 32-1-371, MCA
History: Eff. 12/6/73; TRANS & AMD, 1998 MAR p. 2480, Eff. 9/11/98; TRANS, from Commerce, 2001 MAR p. 1178; AMD, 2010 MAR p. 213, Eff. 1/29/10; AMD, 2013 MAR p. 1817, Eff. 10/18/13; AMD, 2021 MAR p. 328, Eff. 3/27/21.

Mont. Admin. R. 2.59.1002 Merger Application Procedures

(1) An application to merge one or more banks located in Montana pursuant to 32-1-370, MCA, must be on the form in ARM 2.59.1001.

(2) An application to merge any two or more banks doing business in this state pursuant to 32-1-371, MCA, must be on the form in ARM 2.59.1001.

(3) The application to merge must be filed with the Montana Division of Banking and Financial Institutions (division).

(4) An applicant for approval of a merger transaction shall publish notice of the proposed transaction on at least three occasions at approximately equal intervals in a newspaper of general circulation in the community or communities where the main offices of the merging institutions are located; or, if there is no such newspaper in the community, then in the newspaper of general circulation published nearest to the community.

(a) The first publication of the notice must be as close as practicable to the date on which the application is filed with the division, but no more than five days before the filing date.

(b) The last publication of the notice must be on the 25th day after the first publication; or, if the newspaper does not publish on the 25th day, on the publication date closest to the 25th day.

(5) The text of the public notice must include the following information:

(a) that an application for merger has been made to the Montana Commissioner of Banking;

(b) the name and address of all the parties to the merger;

(d) that the public may submit comments to the Commissioner, Montana Division of Banking and Financial Institutions, P.O. Box 200546, Helena, Montana 59620-0546;

(e) the closing date of the public comment period; and

(f) that the nonconfidential portions of the application are on file with the division and are available for public inspection during regular business hours.

(6) The comment period must be 30 days.

(7) The notice may be combined with any notice of an applicable state or federal regulator and published jointly.

(8) Where public notice is required, the division may determine on a case-by-case basis that unusual circumstances surrounding a particular filing warrant modification of the publication requirements.

(9) The applicant(s) shall provide the affidavit(s) of publication to the division after it is received.

History

Authorizing statute(s): 32-1-218, MCA
Implementing statute(s): 32-1-370, 32-1-371, MCA
History: NEW, 2013 MAR p.1817, Eff. 10/18/13; AMD, 2017 MAR p. 1295, Eff. 8/5/17.

Subchapter 2.59.11 New Branch Banks

Mont. Admin. R. 2.59.1101 Application Procedure for Approval to Establish a New Branch Bank

(1) An existing state-chartered bank that does not meet the criteria in ARM 2.59.904(2) must file with the department an application for approval to establish and operate a new branch bank.

(2) Applications must be submitted to the department using the Uniform Interstate Application/Notice form. Electronic submission of applications to banking@mt.gov is preferred.

(3) The applicant must publish its notice of intent to establish a new branch bank using the following procedure:

(a) if the application for a new branch bank also requires the approval of either the Federal Reserve System or the Federal Deposit Insurance Corporation, the notice must be published at the times and in the format required by the federal agency, except that the notice must include the following information which may be rephrased as needed: "Comments regarding this application should be forwarded in writing via email to banking@mt.gov. Comments will also be accepted by mail addressed to the Division of Banking and Financial Institutions, Department of Administration, P.O. Box 200546, Helena, MT 59620-0546. The application may be reviewed, during the comment period, at the above address by calling the department at (406) 841-2920 and requesting an appointment";

(b) if the applicant does not fall under the regulatory jurisdiction of either the Federal Reserve System or the Federal Deposit Insurance Corporation, or if the publication requirement of the federal regulator has been eliminated, the notice must be published, following a format obtained from the department, in a newspaper of general circulation in the community or communities where the main office of the bank and proposed branch bank are located. If there is no such newspaper in the community, then the notice must be published in the closest major newspaper of general circulation. Publication must be made at least once a week on the same day for two consecutive weeks.

(4) All written comments concerning the application must be received by the department no later than 15 calendar days following the date of the last publication of the notice of intent. Comments received more than 15 calendar days after the date of the last publication will not be considered in the decision to approve or deny the application.

(5) The application must be emailed or delivered to the department not more than ten days subsequent to the first publication of notice.

History

Authorizing statute(s): 32-1-218, 32-1-372, MCA
Implementing statute(s): 32-1-218, 32-1-372, MCA
History: NEW, 1989 MAR p. 2201, Eff. 12/22/89; AMD, 1994 MAR p. 1146, Eff. 4/29/94; AMD, 1997 MAR p. 1454, Eff. 8/19/97; TRANS, 1998 MAR p. 2480, Eff. 9/11/98; TRANS, from Commerce, 2001 MAR p. 1178; AMD, 2016 MAR p. 2326, Eff. 12/10/16; AMD, 2020 MAR p. 1698, Eff. 9/12/20; AMD, 2025 MAR, Notice No. 2025-900, Eff. 9/13/25.

Mont. Admin. R. 2.59.1102 Review Procedure for Applications for Approval to Establish a New Branch Bank

(1) The department must process applications for new branch banks in the order in which they are received. If an application is incomplete, the department will notify the applicant by e-mail. An application will not be considered to have been received until it is in a complete form. An application is complete when all information required by the application form has been submitted and received. The department may request additional information from an applicant even if the application is considered complete.

(2) Factors that will be considered when determining whether to approve an application to establish a new branch bank include, but are not limited to, the following:

(a) the financial history and condition of the applicant;

(b) the capital levels and capital structure of the applicant;

(d) the convenience and needs of the community to be served at the proposed location of the new branch bank as evidenced by a brief statement provided by the applicant;

(e) earnings prospects of the applicant after establishing the new branch bank; and

(f) any other factors that could adversely affect the safety and soundness of the applicant or the viability of the new branch bank.

(3) The department must approve or deny the application within 45 days of:

(a) the date of the last publication of the notice of intent to establish a new branch bank; or

(b) the date on which a complete application is received, whichever is later.

(5) When the department approves an application to establish a new branch bank, it will provide written notification to the applicant and the appropriate federal regulatory agency(s). The notification will include any conditions subject to the approval. Summary notification of the decision will be mailed to all persons or entities that have submitted written comment to the application.

(6) When the department denies an application to establish a new branch bank it will provide written notification to the applicant, the appropriate federal regulator(s), and all persons or entities that have submitted written comment to the application. The written notification to the applicant will include the reasons for the denial.

(7) If an administrative hearing is requested under MAPA on the denial of an application, the time for the filing of a request for a hearing must occur within 14 calendar days following the department's decision.

History

Authorizing statute(s): 32-1-218, 32-1-372, MCA
Implementing statute(s): 32-1-218, 32-1-372, MCA
History: NEW, 1997 MAR p. 1454, Eff. 8/19/97; TRANS, 1998 MAR p. 2480, Eff. 9/11/98; TRANS, from Commerce, 2001 MAR p. 1178; AMD, 2016 MAR p. 2326, Eff. 12/10/16; AMD, 2020 MAR p. 1698, Eff. 9/12/20; AMD, 2025 MAR, Notice No. 2025-900, Eff. 9/13/25.

Mont. Admin. R. 2.59.1103 Procedure Following Approval of an Application to Establish a New Branch Bank

(1) A bank must open an approved branch within 18 months of the date of branch bank approval. Upon written request by the applicant and a finding of good cause by the department, the 18-month period may be extended by the department for a maximum of an additional six months.

(2) During the formation and establishment of the new branch bank, the applicant must inform the department of significant changes affecting any of the commitments, representations or projections contained in the original application. Significant changes include, but are not limited to, the location of the new branch bank, the services to be offered by the new branch bank, and the staffing or management of the new branch bank. Significant changes may be sufficient to void the department's approval.

History

Authorizing statute(s): 32-1-218, 32-1-372, MCA
Implementing statute(s): 32-1-218, 32-1-372, MCA
History: NEW, 1997 MAR p. 1454, Eff. 8/19/97; TRANS, 1998 MAR p. 2480, Eff. 9/11/98; TRANS, from Commerce, 2001 MAR p. 1178; AMD, 2020 MAR p. 1698, Eff. 9/12/20.

Subchapter 2.59.12 Sales Finance Companies

Mont. Admin. R. 2.59.1201 Adoption of Standardized Forms and Procedures of the Nmls

(1) The NMLS Policy Guidebook dated September 27, 2021, is adopted by reference and available on the NMLS website at mortgage.nationwidelicensingsystem.org/slr/common/policy/Pages/default.aspx .

(2) Except as provided in ARM 2.59.1203, the NMLS deadlines, policies, procedures, and processes for all licensing-related actions, changes, and reports are adopted and available at mortgage.nationwidelicensingsystem.org/ .

(3) Members of the public can look up the current license status, license number, states of licensure, contact information, and regulatory history of any sales finance company licensee at nmls.consumeraccess.org. If an entity is not listed on NMLS consumer access, it does not hold a sales finance company license issued by the department.

(4) All applicants for a sales finance company license shall use the NMLS-approved forms and checklists for all licensing-related activities, including but not limited to initial applications, renewals, amendments, surrenders, and reports.

History

Authorizing statute(s): 31-1-211, 31-1-223, MCA
Implementing statute(s): 31-1-223, MCA
History: NEW, 2015 MAR p. 366, Eff. 10/10/14; AMD, 2016 MAR p. 2411, Eff. 12/24/16; AMD, 2022 MAR p. 228, Eff. 2/12/22.

Mont. Admin. R. 2.59.1203 License Renewals

(1) The renewal period begins November 1. Every renewal applicant shall apply for renewal through the NMLS. Licensees shall use the NMLS renewal process to request renewal of their license.

(2) Licensees shall submit their renewal applications by December 1 of each year to ensure issuance of the license to qualified renewal applicants by January 1 of the following year.

(3) The holder of an expired license may not conduct any business in Montana until becoming properly licensed.

History

Authorizing statute(s): 31-1-221, 31-1-223, MCA
Implementing statute(s): 31-1-221, 31-1-223, MCA
History: NEW, 2014 MAR p. 2446, Eff. 10/10/14.

Mont. Admin. R. 2.59.1208 Reinstatement of Expired Licenses

(1) Upon expiration of a license issued under 31-1-221, MCA, due to nonrenewal by the renewal date, the former licensee shall immediately cease from engaging in the activities for which the license was issued. The department may reinstate an expired license, provided that by the last day of February following expiration of the license, the following are submitted through the NMLS:

(a) a properly completed license renewal application;

(b) the license renewal fee as set forth in 31-1-221, MCA;

(d) proof that the licensee continues to meet standards for licensure under 31-1-222, MCA.

History

Authorizing statute(s): 31-1-221, 31-1-223, MCA
Implementing statute(s): 31-1-221, 31-1-223, MCA
History: NEW, 2014 MAR p. 2446, Eff. 10/10/14.

Subchapter 2.59.15 Deferred Deposit Lenders

Mont. Admin. R. 2.59.1501 Definitions

For the purposes of this subchapter, the following definitions apply:

(1) "Commissioner" means the Commissioner of Banking and Financial Institutions provided for in 32-1-211 , MCA.

(2) "Department" means the Department of Administration established in 2-15-1001 , MCA, and includes the Commissioner of the Division of Banking and Financial Institutions and the Division of Banking and Financial Institutions.

(3) "Fraud or financial dishonesty or civil judgments involving fraudulent or dishonest financial dealings" means embezzlement, money laundering, identity theft, theft, and other financial related crimes and judgments.

(4) "Manager" means a person employed by a deferred deposit lender as the person responsible for operating the business at the location where the person is employed.

(5) "Monthly net income" means gross salary minus taxes and voluntary deductions. This term includes income from public assistance, child support, alimony, unemployment insurance payments, workers' compensation, and other verifiable sources.

History

Authorizing statute(s): 31-1-702, MCA
Implementing statute(s): 31-1-702, 31-1-705, 31-1-711, 31-1-713, 31-1-722, MCA
History: NEW, 2000 MAR p. 71, Eff. 11/5/99; TRANS, from Commerce, 2001 MAR p. 1178; AMD, 2007 MAR p. 184, Eff. 6/2/06.

Mont. Admin. R. 2.59.1503 Unencumbered Assets as Additional Surety

(1) The statutorily required $25,000 in unencumbered assets shall serve as additional surety for the licensee's operations. These assets shall remain unencumbered.

History

Authorizing statute(s): 31-1-702, MCA
Implementing statute(s): 31-1-702, 31-1-705, MCA
History: NEW, 2000 MAR p. 71, Eff. 11/5/99; TRANS, from Commerce, 2001 MAR p. 1178.

Mont. Admin. R. 2.59.1504 Ownership Change in the Deferred Deposit Lender

(1) In the event there is a change of ownership in a licensee, the owner(s) shall file with the department an application for a new license. For purposes of this rule, a change in ownership includes circumstances when 25% or more of the ownership is transferred to a new owner.

History

Authorizing statute(s): 31-1-702, MCA
Implementing statute(s): 31-1-702, 31-1-705, MCA
History: NEW, 2000 MAR p. 71, Eff. 11/5/99; TRANS, from Commerce, 2001 MAR p. 1178.

Mont. Admin. R. 2.59.1505 Examination of Deferred Deposit Lenders

(1) An examination of a licensee's lending operations conducted by the department to verify compliance with Title 31, chapter 1, part 7, MCA, and these rules, must consist of a comprehensive review of the records, operations, and affairs of the licensee. The review must include inquiry into:

(a) accounting and financial records;

(b) records of the borrowers' files including:

(i) evidence of required disclosures; and

(ii) use of a department-approved loan agreement form; and

History

Authorizing statute(s): 31-1-702, MCA
Implementing statute(s): 31-1-711, MCA
History: NEW, 2000 MAR p. 71, Eff. 11/5/99; TRANS, from Commerce, 2001 MAR p. 1178; AMD, 2011 MAR p. 1365, Eff. 7/29/11.

Mont. Admin. R. 2.59.1506 Procedural Rules for Hearings and Discovery

(1) In the case of hearings concerning the issuance, suspension, revocation, or other enforcement actions pertaining to a licensee:

(a) hearings and related discovery must be conducted under the Montana Administrative Procedure Act implementing the Attorney General's model rules in effect October 17, 2016.

(2) The division adopts and incorporates by reference the Attorney General's model rules in effect October 17, 2016 found in ARM 1.3.101, 1.3.102, 1.3.202, 1.3.211 through 1.3.224, and 1.3.226 through 1.3.233, along with the accompanying forms. The Attorney General's rules may be found at http://www.mtrules.org .

History

Authorizing statute(s): 31-1-702, MCA
Implementing statute(s): 31-1-702, 31-1-713, MCA
History: NEW, 2000 MAR p. 71, Eff. 11/5/99; TRANS, from Commerce, 2001 MAR p. 1178; AMD, 2016 MAR p. 2412, Eff. 12/24/16.

Mont. Admin. R. 2.59.1507 Reports

(1) The following must be reported to the department:

(a) any instances of theft from the deferred deposit loan business within ten days of discovery of the theft;

(b) any change in managers within ten days of each occurrence; and

History

Authorizing statute(s): 31-1-702, MCA
Implementing statute(s): 31-1-702, MCA
History: NEW, 2006 MAR p. 1373, Eff. 6/2/06.

Mont. Admin. R. 2.59.1508 Schedule of Charges

(1) Every licensee under the Montana Deferred Deposit Loan Act shall file with the commissioner in duplicate, at the time of filing application for such license or license renewal, a full and accurate schedule of all charges, fees, and costs as follows:

(a) interest rate;

(b) nonsufficient fund fees; and

(2) Licensees shall display such schedule prominently in each licensed place of business where loans are made or negotiated so as to be easily readable by borrowers and prospective borrowers.

History

Authorizing statute(s): 31-1-702, MCA
Implementing statute(s): 31-1-721, MCA
History: NEW, 2006 MAR p. 1373, Eff. 6/2/06.

Mont. Admin. R. 2.59.1510 Employees' Character and Fitness

(1) Licensees are responsible for conducting appropriate background checks on new employees hired after July 1, 2006. At a minimum, each licensee shall:

(a) require completion of employee criminal background questionnaire;

(b) verify and document employment and personal references; and

(c) within ten days of start of employment, request a Montana criminal records check from the Montana Department of Justice.

(2) If the background check demonstrates any criminal convictions involving fraud or financial dishonesty or civil judgments involving fraudulent or dishonest financial dealings, the licensee cannot employ such person, or if already employed, must terminate employment.

(3) Verification of compliance with this rule shall occur during annual exams. Licensees are required to keep accurate employment records on each employee to ensure that the department is able to verify compliance.

(4) A criminal records check conducted by another agency or private company may be used by licensees as a substitute for the records check by the Montana Department of Justice as long as the information provided by the substitute records check contains the same information as the check conducted by the Montana Department of Justice.

History

Authorizing statute(s): 31-1-702, MCA
Implementing statute(s): 31-1-705, MCA
History: NEW, 2006 MAR p. 1373, Eff. 6/2/06.

Mont. Admin. R. 2.59.1512 Electronic Deductions

(1) An electronic deduction for nonsufficient funds may be authorized by the borrower only on the original loan agreement.

(2) An electronic deduction for nonsufficient funds shall be separate and apart from an electronic deduction for the amount of the loan, interest, or any fees.

(3) An electronic deduction for nonsufficient funds authorized by the borrower under (1) may not be presented to the borrower's financial institution until the licensee has presented the check for payment.

History

Authorizing statute(s): 31-1-702, MCA
Implementing statute(s): 31-1-703, MCA
History: NEW, 2006 MAR p. 1373, Eff. 6/2/06.

Mont. Admin. R. 2.59.1513 Income Verification

(1) Licensees shall verify a borrower's income prior to issuing any deferred deposit loan.

(2) Verification of income shall be in a form of most recent pay stubs for employment, or other official documents for public assistance, child support, alimony, unemployment insurance, and workers' compensation.

History

Authorizing statute(s): 31-1-702, MCA
Implementing statute(s): 31-1-723, MCA
History: NEW, 2006 MAR p. 1373, Eff. 6/2/06.

Mont. Admin. R. 2.59.1514 Department Approval of Loan Agreement Form

(1) For purposes of 31-1-721(2), MCA, department approval of a deferred deposit loan agreement form submitted for review by a licensee or license applicant means the department has verified that the form contains the provisions required under 31-1-721(2) and 31-1-715(5), MCA, and that it does not contain the provisions prohibited under 31-1-723(20), MCA. Department approval of a loan agreement form does not preclude the department from bringing an administrative action against a licensee for an alleged violation of 31-1-723(7), MCA, based in whole or in part on other terms of the loan agreement form. Department approval of a loan agreement form does not constitute a legal opinion concerning the enforceability of the loan agreement in any legal action between the parties to the agreement.

History

Authorizing statute(s): 31-1-702, MCA
Implementing statute(s): 31-1-715, 31-1-721, 31-1-723, MCA
History: NEW, 2011 MAR p. 1365, Eff. 7/29/11.

Mont. Admin. R. 2.59.1515 Adoption of Standardized Forms and Procedures of the Nmls

(1) The NMLS Policy Guidebook dated September 27, 2021, is adopted by reference and available on the NMLS website at mortgage.nationwidelicensingsystem.org/slr/common/policy/Pages/default.aspx .

(2) Except as provided in ARM 2.59.1516, the NMLS deadlines, policies, procedures, and processes for all licensing-related actions, changes, and reports are adopted and available at mortgage.nationwidelicensingsystem.org/ .

(3) Members of the public can look up the current license status, license number, states of licensure, contact information, and regulatory history of any deferred deposit lender licensee at nmls.consumeraccess.org. If an entity is not listed on NMLS consumer access, it does not hold a deferred deposit lender license issued by the department.

(4) All applicants for a deferred deposit lender license shall use the NMLS-approved forms and checklists for all licensing-related activities, including but not limited to initial applications, renewals, amendments, surrenders, and reports.

History

Authorizing statute(s): 31-1-702, 31-1-710, MCA
Implementing statute(s): 31-1-705, 31-1-710, MCA
History: NEW, 2014 MAR p. 2449, Eff. 10/10/14; AMD, 2016 MAR p. 2412, Eff. 12/24/16; AMD, 2022 MAR p. 228, Eff. 2/12/22.

Mont. Admin. R. 2.59.1516 License Renewals

(1) The renewal period begins November 1. Every renewal applicant shall apply for renewal through the NMLS. Licensees shall use the NMLS renewal process to request renewal of their license.

(2) Licensees shall submit their renewal applications by December 1 of each year to ensure issuance of the license to qualified renewal applicants by January 1 of the following year.

(3) The holder of an expired license may not conduct any business in Montana until becoming properly licensed.

History

Authorizing statute(s): 31-1-706, 31-1-710, MCA
Implementing statute(s): 31-1-706, 31-1-710, MCA
History: NEW, 2014 MAR p. 2449, Eff. 10/10/14.

Mont. Admin. R. 2.59.1521 Reinstatement of Expired Licenses

(1) Upon expiration of a license issued under 31-1-705, MCA, due to nonrenewal by the renewal date, the former licensee shall immediately cease from engaging in the activities for which the license was issued. The department may reinstate an expired license, provided that by the last day of February following expiration of the license, the following are submitted through the NMLS:

(a) a properly completed license renewal application;

(b) the license renewal fee as set forth in 31-1-706, MCA;

(d) proof that the licensee continues to meet standards for licensure under 31-1-707, MCA.

History

Authorizing statute(s): 31-1-223, MCA
Implementing statute(s): 31-1-221, 31-1-223, MCA
History: NEW, 2014 MAR p. 2449, Eff. 10/10/14.

Mont. Admin. R. 2.59.1522 Adoption of Annual Reporting Form and Due Date

(1) An entity holding a deferred deposit lender license for any period of time during a calendar year reporting period shall complete and file with the department by April 15 of the following calendar year a Deferred Deposit Lender Annual Report of Licensee. The annual report must be filed whether or not any loans were originated during the reporting period and whether or not the licensee renewed its license at the end of the reporting period or held a license when the report came due the following April 15.

(2) A completed annual report may be mailed to the Division of Banking and Financial Institutions, 301 S. Park Ave., Suite 316, P.O. Box 200546, Helena, MT 59620-0546; faxed to (406) 841-2930; or e-mailed to banking@mt.gov.

(3) The Deferred Deposit Lender Annual Report of Licensee form, July 13, 2016, edition, is adopted and incorporated by reference.

(4) Copies of the form are available on the division's web site, https://banking.mt.gov/Home/Forms .

History

Authorizing statute(s): 31-1-714, MCA
Implementing statute(s): 31-1-714, MCA
History: NEW, 2014 MAR p. 2826, Eff. 11/21/14; AMD, 2016 MAR p. 2412, Eff. 12/24/16.

Subchapter 2.59.16 Approved Investments

Mont. Admin. R. 2.59.1601 U.s. Treasury and U.s. Government Agency Issues

(1) There is no dollar limit on a bank's investment in the following U.S. treasury securities:

(a) bonds;

(b) notes; or

(2) There is no dollar limit on a bank's investment in U.S. treasury bonds and notes in the form of separate trading of registered interest and principal of securities (STRIPS) .

(3) There is no dollar limit on a bank's investment in the following U.S. government agency ordinary debt issues:

(a) farm credit system (FCS) :

(i) consolidated FCS bonds;

(ii) federal land bank bonds (FLB) ;

(iii) federal intermediate credit bank bonds (FICB) ;

(iv) banks for cooperatives bonds (BC) ; and

(v) federal agricultural mortgage corporation (FAMC) ;

(b) farmers home administration (FmHA) ;

(d) federal home loan banks (FHLB) ;

(e) federal home loan mortgage corporation (FHLMC) ;

(f) federal national mortgage association (FNMA) ;

(g) student loan marketing association (SLMA) ; and

(h) United States postal service (USPS) .

(4) There is no dollar limit on a bank's investment in the following U.S. government agency mortgage-backed securities (MBS) , collateralized mortgage obligations (CMOs) and real estate mortgage investment conduits (REMICs) :

(a) instruments issued by the federal home loan mortgage association (FHLMC) ;

(b) instruments issued by the federal national mortgage association (FNMA) ;

(d) instruments issued by the federal agricultural mortgage corporation (FAMC) ;

(e) FHLMC MBS pass through securities (PCs) ;

(f) GNMA I, single issuer pass through PCs; and

(g) GNMA II, single and multiple issuer pass through PCs.

History

Authorizing statute(s): Sec. 32-1-433, MCA
Implementing statute(s): Sec. 32-1-424, 32-1-433, MCA
History: NEW, 2002 MAR p. 166, Eff. 2/1/02.

Mont. Admin. R. 2.59.1602 Other Approved Quasi-Government Securities

(1) Certain other securities are approved for bank investment. There is no dollar limit on a bank's investment in:

(a) general services administration (participation certificates) ;

(b) maritime administration (bonds and notes) ; and

(2) A bank's investment is limited to 50% of capital and surplus in:

(a) Asian development bank (bonds and notes) ;

(b) financing corporation (FICO) (bonds) ;

(d) resolution funding corporation (REFCORP) (bonds) ;

(e) Tennessee valley authority (TVA) (bonds) ; and

(f) world bank (bonds and notes) .

History

Authorizing statute(s): Sec. 32-1-433, MCA
Implementing statute(s): Sec. 32-1-424, 32-1-433, MCA
History: NEW, 2002 MAR p. 166, Eff. 2/1/02.

Mont. Admin. R. 2.59.1603 State, County, and Municipal Issues

(1) Banks may invest, without dollar limitation, in the general obligation of any state which is part of the United States of America.

(a) Such obligations must be fully guaranteed as to the repayment of principal and interest. Evidence of such a full guarantee includes, but is not limited to, the pledge of the full faith and credit of the state responsible for repayment of the general obligation.

(2) Banks may invest, without dollar limitation, in the general obligations of any Montana political subdivision.

(a) Such obligations must be issued pursuant to the Constitution or statutes of the state of Montana or the charter or ordinances of the respective county or city within the state of Montana.

(b) Such obligations must be fully guaranteed as to the repayment of principal and interest. Evidence of such a full guarantee includes, but is not limited to, the pledge of the full faith and credit of the Montana political subdivision responsible for repayment of the general obligation.

(c) The issuing body must not have been in default with respect to the payment of principal or interest on any of its obligations within five years preceding the date of the investment.

(3) Banks may invest up to 40% of their capital and surplus, per issuer, in the general obligations of any out-of-state political subdivision.

(a) Such obligations must be fully guaranteed as to the repayment of principal and interest. Evidence of such a full guarantee includes, but is not limited to, the pledge of the full faith and credit of the out-of-state political subdivision responsible for repayment of the general obligation.

(b) The default requirements of (2)(c) must be met, and the obligations must have been rated in one of the four highest grades by a recognized national investment rating organization. Other rating services may be used if the gradations are equivalent to those above, and the rating services are identified by the bank's investment policy.

(c) Banks that have branch banks in other states, as that term is defined in 32-1-109, MCA, may also invest without limitation in general obligations of the political subdivisions of the states in which the offices are located.

(4) Banks may invest, without limitation, in revenue bonds issued by the state of Montana or its political subdivisions.

(a) Banks that have branch banks in other states may also invest without limitation in revenue bonds issued by those states or their political subdivisions.

(5) Banks may invest up to 40% of their capital and surplus, per issuer, in revenue bonds issued by any other state or its political subdivisions whereby the obligations are payable from pledged fee or tax revenue from designated sources.

(a) The default requirements of (2)(c) must be met, and the obligations must have been rated in one of the four highest grades by a recognized national investment rating organization. Other rating services may be used if the gradations are equivalent to those above, and the rating services are identified by the bank's investment policy.

(6) Banks may invest up to 20% of their capital and surplus, per issuer, in industrial development revenue obligations issued by a political subdivision of the state of Montana, when repayment is dependent upon a nongovernmental obligor and when such issues are in general accord with the commercial lending policy of the bank.

History

Authorizing statute(s): 32-1-433, MCA
Implementing statute(s): 32-1-424, 32-1-433, MCA
History: NEW, 2002 MAR p. 166, Eff. 2/1/02; AMD, 2010 MAR p. 214, Eff. 1/29/10; AMD, 2016 MAR p. 2326, Eff. 12/10/16.

Mont. Admin. R. 2.59.1604 Corporate Bonds

(1) Banks may invest up to 20% of their capital and surplus, per issuer, in corporate bonds.

(2) These bonds must be investment grade, i.e., rated in one of the four highest grades by a recognized national investment rating organization. Other rating services may be used if the gradations are equivalent to those above, and the rating services are identified by the bank's investment policy. Corporate bonds should be reviewed as necessary to assure the bank's board of directors that bond quality has not fallen below investment grade.

History

Authorizing statute(s): 32-1-433, MCA
Implementing statute(s): 32-1-424, 32-1-433, MCA
History: NEW, 2002 MAR p. 166, Eff. 2/1/02; AMD, 2010 MAR p. 214, Eff. 1/29/10.

Mont. Admin. R. 2.59.1605 Mutual Funds

(1) Under the authority of 32-1-424(1) (b) , MCA, and subject to its restrictions, banks may invest in mutual funds whose shares represent only those United States obligations listed in ARM 2.59.1601.

(2) Shareholders must have a proportionate undivided interest in any mutual fund utilized under this rule.

(3) Shareholders must be shielded from personal liability for acts or obligations of the mutual fund.

(4) The bank's investment policy, as formally approved by its board of directors, must specifically provide for such investments. Prior approval of the board of directors must be obtained for initial investments in specific mutual funds and recorded in the official board minutes. Procedures, standards and controls for managing such investments must be implemented prior to the investment being made.

History

Authorizing statute(s): Sec. 32-1-433, MCA
Implementing statute(s): Sec. 32-1-424, 32-1-433, MCA
History: NEW, 2002 MAR p. 166, Eff. 2/1/02.

Mont. Admin. R. 2.59.1606 Other Approved Investments

(1) Certain other instruments which may have investment characteristics are approved for state-chartered banks. They are the following:

(a) banks may invest up to 100% of their capital and surplus, per accepting bank, in bankers acceptances;

(b) banks may invest, on a per issuer basis, in certificates of deposit (CDs) or deposit notes from insured financial institutions up to the greater of 20% of their unimpaired capital and surplus or the maximum amount of federal deposit insurance available for deposits. This limitation applies to the deposit and any accrued interest;

(c) banks may invest up to 20% of their capital and surplus, per issuer, in commercial paper provided the commercial paper is rated A1 or P1, at the time of purchase, by a recognized national investment rating organization. Equivalent ratings from other established and generally recognized national rating organizations may be substituted;

(d) banks may invest up to 20% of their capital and surplus, per issue, in privately issued CMOs and REMICs;

(e) privately issued CMOs and REMICs will not represent more than 40% of a bank's investment portfolio, or more than 400% of a bank's unimpaired capital and surplus, whichever is the lesser; and

(f) banks may invest up to 20% of their capital and surplus, per issuer, in trust preferred securities. These bonds must be investment grade, i.e., rated in one of the four highest grades by a recognized national investment rating organization. Other rating services may be used if the gradations are equivalent to those above, and the rating services are identified by the bank's investment policy.

History

Authorizing statute(s): 32-1-433, MCA
Implementing statute(s): 32-1-424, 32-1-433, MCA
History: NEW, 2002 MAR p. 166, Eff. 2/1/02; AMD, 2010 MAR p. 214, Eff. 1/29/10.

Mont. Admin. R. 2.59.1607 Debt Securities for Debts Previously Contracted

(1) Debt securities received by a bank in good faith, in satisfaction of debts previously contracted, are not subject to the limitations of applicable sections of ARM 2.59.1601 through 2.59.1606, if the book value of such obligations in excess of the limitations of the rule is reduced to the amount allowed within six months after the date the obligations are acquired.

History

Authorizing statute(s): Sec. 32-1-433, MCA
Implementing statute(s): Sec. 32-1-424, 32-1-433, MCA
History: NEW, 2002 MAR p. 166, Eff. 2/1/02.

Subchapter 2.59.17 Mortgage Brokers, Lenders, Servicers, and Loan Originators

Mont. Admin. R. 2.59.1701 Definitions

For purposes of the Montana Mortgage Act and this subchapter, the following definitions apply:

(1) "Breach of trust" means:

(a) a wrongful act, use, misappropriation, or omission with respect to any property or fund that has been committed to a person in a fiduciary or official capacity; or

(b) the misuse of a person's official or fiduciary position to engage in a wrongful act, use, misappropriation, or omission.

(2) "Dishonesty" means:

(a) to cheat or defraud directly or indirectly;

(b) to cheat or defraud for monetary gain or its equivalent; or

(d) Dishonesty includes acts involving want of integrity, lack of probity, or a disposition to distort, cheat, or act deceitfully or fraudulently, and may include crimes which federal, state, or local laws define as dishonest.

(3) "Employing" means the entity for whom the individual works is liable for withholding payroll taxes pursuant to Title 26 of the United States Code.

(4) "Extant" means currently or actually existing; still existing; not destroyed or lost.

(5) "Initiation of an investigation" means any administrative, civil, or criminal proceeding initiated by a state, municipal or federal governmental entity, the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Agency and such proceeding is evidenced by a written formal complaint or charge filed by the investigating agency.

(6) "Material change" means:

(a) a change in the board of directors or the principal officers;

(b) the acquisition or disposition of another company; or

(7) "Personal information" means: an individual's name, signature, address, or telephone number, in combination with one or more additional pieces of information about the individual, consisting of the individual's passport number, driver's license, or state identification number, insurance policy number, bank account number, credit card number, debit card number, password, or personal identification number required to obtain access to the individual's finances. A social security number, in and of itself, constitutes personal information.

(8) "Restitution" may include, but is not limited to, refunds of any or all the fees paid directly or indirectly by the borrower.

(9) "Safeguard" means to prevent unauthorized access, use, disclosure, or dissemination.

(10) "Termination" means separation from employment for any reason. The term includes the circumstance of a loan originator when the employing entity's Montana license is suspended, revoked, or surrendered even though the loan originator may continue to be employed by the entity in another capacity or in another state.

(11) "Work in a related field" or "in a related field" means three years of experience as a:

(a) mortgage broker or a branch office manager of a mortgage broker business;

(b) mortgage banker, responsible individual, or branch manager of a mortgage banking business;

(d) branch manager of a mortgage broker or lender;

(e) mortgage loan originator; or

(f) state or federal regulator who examines compliance of residential mortgages of state or federally chartered financial institutions.

History

Authorizing statute(s): 32-9-109, 32-9-121, 32-9-130, MCA
Implementing statute(s): 32-9-109, 32-9-116, 32-9-120, 32-9-121, 32-9-122, 32-9-123, 32-9-133, 32-9-166, MCA
History: NEW, 2004 MAR p. 1133, Eff. 5/7/04; AMD, 2005 MAR p. 320, Eff. 2/25/05; AMD, 2008 MAR p. 2034, Eff. 9/26/08; AMD, 2010 MAR p. 307, Eff. 2/12/10; AMD, 2010 MAR p. 1480, Eff. 6/25/10; AMD, 2012 MAR p. 1762, Eff. 9/7/12; AMD, 2013 p. 2417, Eff. 12/27/13; AMD, 2018 MAR p. 822, Eff. 4/28/18; AMD, 2022 MAR p. 228, Eff. 2/12/22.

Mont. Admin. R. 2.59.1702 Proof of Experience

(1) Satisfactory proof of experience for a designated manager demonstrates three years of experience by providing:

(a) copies of W-2 or 1099 tax forms verifying employment; or

(b) verification of active licensure as a mortgage loan originator in another state through the Nationwide Mortgage Licensing System (NMLS).

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-109, MCA
History: NEW, 2004 MAR p. 1133, Eff. 5/7/04; AMD, 2008 MAR p. 2034, Eff. 9/26/08; AMD, 2013 p. 2417, Eff. 12/27/13.

Mont. Admin. R. 2.59.1703 Transfer of Loan Originator License

(1) Transfer of an individual mortgage loan originator license from one entity to another must be approved by the department. To transfer an individual mortgage loan originator license, the individual mortgage loan originator shall request sponsorship through the Nationwide Mortgage Licensing System (NMLS) by the new entity. The new entity must accept sponsorship of the individual through the NMLS. The request for sponsorship must be accompanied by a nonrefundable processing fee of $50.

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-116, 32-9-117, MCA
History: NEW, 2004 MAR p. 1133, Eff. 5/7/04; AMD, 2008 MAR p. 2034, Eff. 9/26/08; AMD, 2010 MAR p. 307, Eff. 2/12/10; AMD, 2012 MAR p. 1762, Eff. 9/7/12.

Mont. Admin. R. 2.59.1706 Surety Bond

(1) The surety bond must be issued by a surety company authorized to do business in the state of Montana. The bond, including any and all riders and endorsements executed subsequent to the effective date of the bond, must be placed on file with the NMLS. The entity name on the application and on the surety bond must match exactly. The bond must be continuous. Whether or not the bond is renewed, continued, reinstated, reissued, or otherwise extended, replaced, or modified, including increases or decreases in the penal sum, it is deemed one continuous obligation, and the surety upon the bond is not liable in an aggregate or cumulative amount exceeding the penal sum set forth on the face of the bond.

(2) Remedies relating to the bond are cumulative and nonexclusive and do not affect any other remedy available at law.

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-123, MCA
History: NEW, 2004 MAR p. 1133, Eff. 5/7/04; AMD, 2010 MAR p. 307, Eff. 2/12/10; AMD, 2012 MAR p. 1762, Eff. 9/7/12; AMD, 2017 MAR p. 1049, Eff. 7/8/17.

Mont. Admin. R. 2.59.1707 Revocation, Suspension, or Surrender of License

(1) The department may suspend or revoke a license for a violation of the Montana Mortgage Act, this subchapter, or for any other violation of state or federal law pertaining to licensees or residential mortgage loans.

(2) A licensee may offer to surrender a license by submitting an offer of surrender or withdrawal of a license through the NMLS. An offer of surrender or accepted surrender does not affect the licensee's civil or criminal liability for acts initiated or committed while licensed.

(3) A licensee who surrenders a license while not in compliance with a conditional agreement cannot reinstate the license or obtain a new license for a period of three years after the surrender, unless the conditions that led to the conditional license have been fully resolved.

(4) A revocation, suspension, or surrender of a license does not impair or affect the obligation of a preexisting lawful contract between the licensee and any person, including a borrower.

(5) In the event of a revoked, suspended, or surrendered mortgage broker, mortgage lender, or loan originator license, no fees will be refunded by the department.

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-126, 32-9-130, MCA
History: NEW, 2004 MAR p. 1133, Eff. 5/7/04; AMD, 2010 MAR p. 307, Eff. 2/12/10; AMD, 2012 MAR p. 1762, Eff. 9/7/12; AMD, 2021 MAR p. 715, Eff. 6/12/21; AMD, 2022 MAR p. 228, Eff. 2/12/22.

Mont. Admin. R. 2.59.1709 Complaint Process

(1) A complaint form must be submitted in writing to the department. If the basis of the complaint relates to the Montana Mortgage Act, it will be investigated by the department.

(2) The Complaint Form dated January 23, 2020, is adopted and incorporated by reference and available on the department's website at banking.mt.gov .

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-130, MCA
History: NEW, 2004 MAR p. 1133, Eff. 5/7/04; AMD, 2010 MAR p. 307, Eff. 2/12/10; AMD, 2012 MAR p. 1762, Eff. 9/7/12; AMD, 2021 MAR p. 715, Eff. 6/12/21.

Mont. Admin. R. 2.59.1710 Records to Be Maintained by Mortgage Brokers

(1) A mortgage broker shall create and retain a residential mortgage file. The residential mortgage file shall contain:

(a) a record of all cash, checks, or other monetary instruments received in connection with each mortgage loan application showing the identity of the payor, date received, amount, and purpose;

(b) applicant's name, date, name of person taking the application, HUD-1 Settlement Statement, copies of all agreements or contracts with the applicant, including any commitment and lock-in agreements, and all disclosures required by state and federal law signed and dated by the borrower, and where applicable, signed and dated by the individual mortgage broker or loan originator;

(c) copies of the loan estimate and closing disclosures required by the Truth in Lending Act – Real Estate Settlement Practices Act (TILA-RESPA) Integrated Disclosure (TRID) rule, which must be signed and dated by the borrowers;

(d) a record of any and all contact between the mortgage broker or loan originator and the borrower relating to the rate, terms, or conditions of the loan;

(e) a copy of the evidence of insurance or insurance binder as required by the lender;

(f) a copy of the statement from the investor authorizing the loan;

(g) a copy of the appraisal;

(h) a copy of the borrower's credit report;

(i) a copy of all documentation used to support the borrower's income as required by the lender;

(j) a copy of all documentation used to support the borrower's assets as required by the lender;

(k) a copy of the promissory note;

(l) a copy of the policy of title insurance commitment on the property securing the loan;

(m) a copy of the first three pages of the deed of trust and final Truth in Lending disclosure signed by the borrower; and

(n) copies of all uniform residential loan applications.

(2) A mortgage broker shall maintain a spreadsheet of all residential mortgage applications taken, including all applications that are pending, closed, withdrawn, denied, or cancelled. The spreadsheet shall contain, at a minimum:

(a) the first and last name of the borrower(s);

(b) the property address (street, city, state, and zip code);

(d) the initial application date;

(e) the date the credit report was requested for the borrower(s);

(f) the loan amount;

(g) the status of the loan (pending, closed, withdrawn, cancelled, denied);

(h) the total fees received indirectly or directly by the mortgage broker at the closing of the loan;

(i) the total adjusted origination charges received by the mortgage broker at the closing of the loan;

(j) the name of the individual mortgage loan originator who originated the loan; and

(k) the names of all individuals who received compensation for originating or assisting in the origination of the loan.

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-121, 32-9-124, MCA
History: NEW, 2006 MAR p. 2104, Eff. 9/8/06; AMD, 2008 MAR p. 2034, Eff. 9/26/08; AMD, 2010 MAR p. 307, Eff. 2/12/10; AMD, 2015 MAR p. 2249, Eff. 12/25/15.

Mont. Admin. R. 2.59.1714 Failure to Correct Deficiencies

(1) In addition to all other enforcement actions allowed by Montana law, the department may suspend or revoke a license pursuant to Title 2, chapter 4, part 6, MCA, of an entity that does not correct the deficiencies found by the department after an examination and within the time granted by the department.

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-130, 32-9-133, MCA
History: NEW, 2008 MAR p. 2034, Eff. 9/26/08.

Mont. Admin. R. 2.59.1716 Costs in Bringing the Administrative Action

(1) Costs in bringing the administrative action as used in 32-9-133, MCA, include:

(a) administrative law judge charges;

(b) court reporter fees;

(d) exhibit preparation cost if the exhibit was admitted into evidence at the hearing;

(e) deposition cost if the deposition was used at the hearing;

(f) fees, if any, for service of subpoenas;

(g) witness fees and mileage for the department's lay/fact witnesses; and

(h) mileage for the department's expert witness if the expert appears personally and testifies at the hearing.

(2) Nothing in this rule limits the department's authority under 32-9-130, MCA, to charge for a special examination performed before a department decision to initiate a contested case under the Montana Administrative Procedure Act and upon which the decision is based in whole or in part. The manner of calculating the charge for a special examination is the same as for a regularly scheduled compliance examination under 32-9-130(7), MCA.

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-133, MCA
History: NEW, 2008 MAR p. 2034, Eff. 9/26/08; AMD, 2015 MAR p. 923, Eff. 7/17/15.

Mont. Admin. R. 2.59.1717 Scheme to Defraud or Mislead

(1) For purposes of 32-9-124, MCA, a scheme to defraud or mislead a borrower, a lender, or any other person shall include but is not limited to:

(a) misstating a borrower's income, assets, obligations, employment status, credit history, or financial resources, or the borrower's equity in the dwelling which secures repayment of the loan to a lender;

(b) stating to a lender, or more than one lender, that a borrower intends to use more than one property as a primary residence;

(d) failing to disburse funds in accordance with any commitment or agreement with the borrower.

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-124, MCA
History: NEW, 2008 MAR p. 2034, Eff. 9/26/08.

Mont. Admin. R. 2.59.1724 Records to Be Maintained by Mortgage Lenders

(1) All licensees shall maintain and preserve financial records concerning business operations, transactions with customers, and escrow account transactions.

(2) Any books, accounts, or records required to be maintained by the department may be maintained in paper, electronic, or digital format approved by the department provided the records shall be made available to the department as required by the statutes and rules, and at the request of the department, the records shall be printed or transferred to a format that is usable by the department.

(3) A mortgage lender shall create and maintain the following records:

(a) copies of all disclosures required by 32-9-148, MCA;

(b) copies of all payroll records, including federal and state withholding tax forms, W-2s, and 1099 forms filed with the Internal Revenue Service by the licensee or its agent on behalf of individuals employed by the licensee or on behalf of individuals acting as independent contractors in the mortgage lending business;

(c) a general ledger and subsidiary records sufficient to produce, when requested by the department, an accurate monthly statement of assets and liabilities, and a cumulative profit and loss statement for the current operating year;

(d) all checkbooks, bank statements, deposit slips, and cancelled checks that pertain to the mortgage lending business of the licensee;

(e) supporting documentation for all expenses and fees paid by the mortgage lender on behalf of the customer; and

(f) copies of all credit report bills received from all credit reporting agencies for the most recent five-year period.

(4) Mortgage lenders shall maintain an employee file for each employee that contains all documents related to the hiring of the employee, including name, date of birth, position or title and responsibilities, starting date, and date and reason for termination of employees. For purposes of this rule, employee shall include employees, independent contractors, and consultants who are involved in loan origination, loan servicing, loan negotiations, investor solicitation, or who transact business with borrowers or lenders.

(5) Financial records must include, at a minimum:

(a) a record of all monies received from borrowers, such as a cash receipts journal, showing at least:

(i) name of payor;

(ii) date of receipt;

(iii) amount received;

(iv) purpose of receipt including identification of the loan to which it relates, if any; and

(v) disposition of all monies received including the date and place of deposit or, if not deposited, the date, name of the person who received the monies, and the manner in which the monies were transmitted;

(b) a sequential listing of all checks written for each bank account relating to the licensee's business, such as a cash disbursement journal, showing at least:

(i) name of the payee;

(ii) date of payment;

(iii) amount of the payment; and

(iv) purpose of the payment including identification of the loan to which it relates, if any;

(i) receipted deposit tickets and if "less cash deposits" are made, an explanation of the use of the cash;

(ii) paid checks if available and if these items are truncated, a copy of a document authorizing the department to request and receive copies of processed items from the financial institution;

(iii) bank advices, including, but not limited to, debit and credit notices and overdraft notices; and

(iv) monthly or periodic statements;

(d) detail on wire transfers into or out of the account(s) including:

(i) the name of the person who is the payor or payee;

(ii) date;

(iii) amount;

(iv) purpose of receipt or payment; and

(v) identification of the loan to which it relates, if any; and

(e) a record or file of all monies owed by the licensee, such as an accounts payable journal.

(6) Mortgage lenders shall maintain all borrower and investor complaints except complaints unrelated to borrower or investor transactions. Complaint files shall include:

(a) copies or originals of all written complaints by borrowers and investors maintained in a separate complaint file by the individual's name in alphabetical order;

(b) a copy of the response;

(d) a written disposition of the complaint.

(7) Mortgage lenders shall maintain residential borrower files that must include:

(a) a copy of each loan application form;

(b) a copy of each executed fee agreement, if prepared;

(c) in the case of residential or single family loans, a borrower acknowledged statement that a loan interest rate will float;

(d) a copy of the executed lock agreement, if used. The lock agreement must specify at a minimum:

(i) the date of the agreement;

(ii) the file identification and property address;

(iii) the lock-in rate;

(iv) the lock expiration date;

(v) a disclosure that the lock may be subject to change if any of the loan factors change;

(vi) the loan type (fixed, adjustable rate mortgage, other); and

(vii) a disclosure that if the lock expires, the rate and points are subject to change;

(e) the term of the loan;

(f) the loan fee and discount, if any;

(g) copies of all good faith estimates prepared pursuant to Regulation X (24 CFR 3500);

(h) a copy of the executed authorization to release credit information form;

(i) a copy of final credit report, or the report relied upon for the loan decision, if other than the final credit report, received on the borrower including documentation of borrower payment history;

(j) all documents relating to the credit, underwriting, and pricing decisions of each loan file irrespective of whether the application has been denied, approved, or withdrawn;

(k) all notes and comments by anyone working on the loan file;

(l) a copy of the truth in lending disclosure statements made pursuant to Regulation Z (12 CFR 226);

(m) a copy of the final U.S. Housing and Urban Development (HUD) settlement statement;

(n) a copy of all denial letters;

(o) a copy of all appraisals;

(p) a copy of all disclosures, handbooks, and pamphlets required by federal law; and

(q) copies of the loan estimate and closing disclosures required by the TILA-RESPA Integrated Disclosure rule, which must be signed and dated by the borrowers (12 CFR 1024 and 1026).

(8) Advertising records must be maintained for five years following the last date of publication of the advertisement. All licensees shall maintain copies of:

(a) all printed advertising published in newspapers, magazines, newsletters, or other media designed for mass distribution; and

(b) scripts, or audio- and videotapes, for advertising broadcast on radio or television.

(9) Escrow account records must be maintained as follows:

(a) a licensee shall deposit all trust funds received from a client into the escrow depository and shall keep such funds in the escrow depository until the written escrow instructions agreed to by all parties have been fulfilled;

(b) a licensee shall not comingle any monies received from a client for deposit into an escrow account with personal funds of the licensee. For purposes of this rule, the following shall not constitute commingling of trust funds with personal funds provided the funds are removed from the trust account within 30 days:

(i) earned, but untransferred, interest income accruing to the licensee pursuant to a written agreement with the client; or

(ii) earned, but untransferred, fees due the licensee;

(c) every deposit into a neutral escrow depository shall be accompanied by a letter of transmittal that shall include a written notation of the file identification assigned to the transaction on whose behalf the deposit is made. Compliance with this rule may be satisfied when a licensee has attached a copy of the client's check to the letter of transmittal.

(10) With respect to mortgage loans for which a commitment has been issued but the loan has not yet closed and funded, each mortgage lender shall maintain a pipeline report or reports, updated on a monthly basis, that provides the following information, both by state and in the aggregate:

(a) total number and dollar amount of such loans;

(b) type of loan (i.e., purchase money, refinance, etc.);

(c) total number and dollar amount of all such loans having a locked-in interest rate and total number and dollar amount of such loans whose interest rate is not locked in;

(d) the date the commitment was issued; and

(e) any fees collected from the borrower up to the date of commitment by any party to the mortgage transaction.

(11) For each line of credit to the lender, a mortgage lender shall maintain a report, or equivalent documentation, updated monthly, listing:

(a) each advancement of funds from the line of credit that reflects the date of the advancement;

(b) the name of the borrower;

(d) the date the funds were forwarded to satisfy its obligation for the advancement from the line of credit.

(12) Each mortgage lender shall maintain a list, by state, of the closing agents or attorneys that it uses that contains, at a minimum, the name, address, and telephone number of the closing agent or attorney.

(13) Mortgage lenders shall maintain a mortgage loan application log showing:

(a) the first and last name of the borrower(s);

(b) the property address (street, city, state, and zip code);

(d) the initial application date;

(e) the date the credit report was requested for the borrower(s);

(f) the loan amount;

(g) the status of the loan (pending, closed, withdrawn, cancelled, denied);

(h) the total fees received indirectly or directly by the mortgage lender at the closing of the loan;

(i) the total fees paid to the mortgage loan originator;

(j) the loan funding source;

(k) the service release premium; and

(l) the name of the individual mortgage loan originator who originated the loan.

(14) For borrower loans that are funded directly or indirectly by investors who are individuals, the following must be maintained by the lender:

(a) a copy of the written evidence of obligation and the instrument creating the investor's lien or assignment of the lien;

(b) a copy of documents evidencing that the instrument creating the lien or assignment has been recorded; and

(c) copies of guarantees, surety agreements, any recourse agreements or guarantees, and correspondence related to any statements made to the investor or any investment made by the investor.

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-121, 32-9-145, MCA
History: NEW, 2010 MAR p. 307, Eff. 2/12/10; AMD, 2015 MAR p. 2249, Eff. 12/25/15.

Mont. Admin. R. 2.59.1726 Request for Correction or Amendment of Department-Generated Record in the Nmls

(1) For purposes of accuracy or completeness, a person about whom the department has generated a record in the NMLS may make a written request to the department that it correct or amend the record. The written request must not exceed one side of an 8x11 sheet of paper in length and must concisely set out the basis for the person's contention that the record is either inaccurate or incomplete. At the time of making the written request for correction or amendment, the person shall provide a copy of any documentation that the person wishes the department to consider supporting the contention that the department's record is inaccurate or incomplete.

(2) As promptly as required by the circumstances after receiving a request as provided in (1), the department shall:

(a) make the requested correction or amendment; or

(b) inform the person in writing of the department's refusal to correct or amend the record and the reason for the refusal.

(3) A copy of the person's concise written statement as provided for in (1), the department's written refusal to correct or amend the record, and the reason for the refusal must be made available to any person requesting it from the department.

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-155, MCA
History: NEW, 2010 MAR p. 1480, Eff. 6/25/10.

Mont. Admin. R. 2.59.1730 Confidentiality – Agreements and Sharing Arrangements

(1) In addition to the trade associations specifically named in 32-9-160(3), MCA, the department may enter into agreements or sharing arrangements allowing the sharing of information and material with the following governmental agencies and associations representing governmental agencies:

(a) State Regulatory Registry, LLC;

(b) Multi-State Mortgage Committee;

(d) Consumer Financial Protection Bureau;

(e) United States Department of Housing and Urban Development;

(f) Federal Trade Commission; and

(g) Financial Crimes Enforcement Network (FinCEN).

History

Authorizing statute(s): 32-9-130, 32-9-160, MCA
Implementing statute(s): 32-9-160, MCA
History: NEW, 2010 MAR p. 1480, Eff. 6/25/10; AMD, 2012 MAR p. 1762, Eff. 9/7/12; AMD, 2021 MAR p. 715, Eff. 6/12/21.

Mont. Admin. R. 2.59.1731 Reinstatement of Expired or Suspended Licenses

(1) Upon expiration of a license under 32-9-134, MCA, due to nonrenewal by the renewal date, the licensee shall immediately cease from engaging in the activities for which the license was issued. Except as provided in (3), the department may reinstate an expired license, provided that by the last day of February following expiration of the license, the following are submitted:

(a) a properly completed license renewal application through NMLS;

(b) the renewal fee;

(d) a late renewal fee of $250;

(e) proof that the licensee continues to meet standards for licensure under 32-9-120, MCA; and

(f) proof of continuing education compliance.

(2) An expired license that is not reinstated by the last day of February in accordance with (1) is "Terminated-Expired" and may not be reinstated except as provided in (3). The holder of a "Terminated-Expired" license may reapply as a new license applicant.

(3) If a "Terminated-Expired" status of the license of a military member or reservist was the result of the licensee being on active duty status at the time of renewal, the license may be reinstated, if within 30 days of the licensee's discharge from active duty status, the department receives through NMLS an acceptable sponsorship request from the licensee's employing mortgage broker or mortgage lender and it receives outside of the NMLS renewal process within that 30-day period, the following:

(a) a properly completed Mortgage Loan Originator License Renewal or Reinstatement Form available on the department's website at banking.mt.gov ;

(b) a full year renewal fee;

(d) copies of the federal government orders by which the licensee was placed on active duty status and discharged from active duty status; and

(e) proof that the licensee continues to meet standards for licensure under 32-9-120, MCA.

(4) Upon suspension of a license under 32-9-126, MCA, the licensee shall immediately cease from engaging in the activities for which the license was issued. The department may lift the suspension and reinstate the license upon its determination that the suspended licensee has complied with the terms and conditions of the final order by which the license was suspended and there is no fact or condition then existing that disqualifies the suspended licensee from being licensed. The department on its own or at the suspended licensee's request may initiate a review of a suspended licensee's compliance with the terms and conditions of the order suspending the license.

History

Authorizing statute(s): 32-9-130, 32-9-134, MCA
Implementing statute(s): 32-9-120, 32-9-126, 32-9-134, MCA
History: NEW, 2010 MAR p. 1480, Eff. 6/25/10; AMD, 2012 MAR p. 1762, Eff. 9/7/12; AMD, 2013 MAR p. 2417, Eff. 12/27/13; AMD, 2021 MAR p. 715, Eff. 6/12/21.

Mont. Admin. R. 2.59.1733 Expungement of Felony Record

(1) An individual is ineligible for a mortgage loan originator license or license renewal, even if the record of the individual's felony conviction of the type referred to in 32-9-120, MCA, has been expunged.

(2) Ineligibility for licensure is triggered by the conviction and not by an extant record of the conviction.

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-120, MCA
History: NEW, 2010 MAR p. 1480, Eff. 6/25/10.

Mont. Admin. R. 2.59.1734 Availability of Exemptions to Entities and Individuals

(1) The exemptions in 32-9-104, MCA, addressing entities are available and apply only to business organizations, including sole proprietorships. An individual is not an entity for purposes of 32-9-104, MCA.

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-103, 32-9-104, MCA
History: NEW, 2010 MAR p. 2956, Eff. 12/24/10.

Mont. Admin. R. 2.59.1735 Determining the Amount of Surety Bond for a New Mortgage Broker or Mortgage Lender

(1) An entity applying for a license as a mortgage broker or mortgage lender for the first time in Montana shall submit with its application the total combined annual loan production volume for the year preceding the year of application as required by 32-9-123(2)(b), MCA.

(2) An entity having no prior business history, or a business history of less than one year at the time of application, shall purchase a surety bond in the amount of $25,000.

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-123, MCA
History: NEW, 2010 MAR p. 2956, Eff. 12/24/10; AMD, 2016 MAR p. 1052, Eff. 6/18/16.

Mont. Admin. R. 2.59.1737 Montana Mortgage Loan Origination Disclosure Form

(1) Licensees shall use a form that is substantially similar to the Mortgage Loan Origination Disclosure form dated September 23, 2011, which is available on the department's website at banking.mt.gov . Licensees may customize the form to meet their individual needs.

(2) The disclosure must include the address, phone number, facsimile number, e-mail address, and website of the department.

(3) The disclosure must include the unique identifier issued by the NMLS for the employing entity and mortgage loan originator.

(4) The disclosure must be signed by the borrower and co-borrower, if any, and the mortgage loan originator.

History

Authorizing statute(s): 32-9-124, 32-9-130, MCA
Implementing statute(s): 32-9-124, MCA
History: NEW, 2011 MAR p. 2021, Eff. 9/23/11; AMD, 2021 MAR p. 715, Eff. 6/12/21.

Mont. Admin. R. 2.59.1738 Renewal Fees

(1) Licenses issued under Title 32, chapter 9, part 1, MCA, expire December 31. Licensees shall submit their renewal applications by December 1 of each year to ensure issuance of the license to qualified renewal applicants by January 1 of the following year. The renewal fees for the license period after January 1 2022, are:

(a) Mortgage Broker Entity, $125.00;

(b) Mortgage Broker Branch, $62.50;

(d) Mortgage Lender Branch, $62.50;

(e) Mortgage Loan Originator, $100.00;

(f) Mortgage Servicer Entity, $750.00;

(g) Mortgage Servicer Branch, $62.50.

History

Authorizing statute(s): 32-9-117, 32-9-130, 32-9-134, MCA
Implementing statute(s): 32-9-117, 32-9-130, 32-9-134, MCA
History: NEW, 2011 MAR p. 2392, Eff. 11/11/11; AMD, 2014 MAR p. 2771, Eff. 11/7/14; AMD, 2015 MAR p.1478, Eff. 9/25/15; AMD, 2016 MAR p. 1845, Eff. 10/15/16; AMD, 2018 MAR p. 822, Eff. 4/28/18; AMD, 2019 MAR p. 2017, Eff. 11/9/19; AMD, 2020 MAR p. 1836, Eff. 10/10/20; AMD, 2021 MAR p. 1320, Eff. 10/9/21; AMD, 2022 MAR p. 1690, Eff. 8/27/22; AMD, 2023 MAR p. 870, Eff. 8/26/23.

Mont. Admin. R. 2.59.1739 Application of Financial Standards

(1) Section 32-9-120(1)(c) and 32-9-113, MCA, require mortgage loan originators, as well as ultimate equity owners and control persons of entities, to meet financial responsibility standards. These persons are referenced in ARM 2.59.1739 through 2.59.1742 as "individuals."

(2) Financial responsibility, character, and general fitness are continuing requirements for individuals and must be met at all times including upon initial licensure and renewal.

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-113, 32-9-117, 32-9-120, MCA
History: NEW, 2012 MAR p. 183, Eff. 1/27/12; AMD, 2017 MAR p. 1049, Eff. 7/8/17.

Mont. Admin. R. 2.59.1740 Standards for Determining Financial Responsibility

(1) The department shall find an individual lacks the required financial responsibility if a pattern of disregard is shown regarding the management of the individual's personal financial affairs.

(2) In determining whether an individual has shown a pattern of disregard regarding their own personal financial affairs, the department shall consider the following factors:

(a) the existence of outstanding judgment(s), excluding judgments resulting solely from medical expenses;

(b) the existence of outstanding tax liens or other government liens or filings;

(d) the existence of outstanding collection actions against the individual unless solely as a result of medical expenses;

(e) the existence of outstanding charged-off accounts with a remaining past due balance owed unless solely as a result of medical expenses;

(f) the existence of three or more accounts currently 90 days or more past due; and

(g) a foreclosure within the past three years.

(3) The department may not consider a bankruptcy as the sole basis for a finding that an individual lacks the required financial responsibility; however, the department may consider the factors that lead to the bankruptcy.

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-113, 32-9-117, 32-9-120, MCA
History: NEW, 2012 MAR p. 183, Eff. 1/27/12.

Mont. Admin. R. 2.59.1741 Procedures for Determining Financial Responsibility

(1) If an individual's credit report or response to any application disclosure question contains adverse information, the department shall:

(a) notify the individual in writing of the specific items that must be addressed; and

(b) specify the documentation that must be provided for the department's consideration and review.

(2) Examples of the type of documentation that the department may request include, but are not limited to, the following:

(a) a written explanation of the circumstances surrounding the adverse information reported; and

(b) documents that the department finds necessary for its review of the adverse information including, but not limited to, copies of:

(i) satisfactions of judgment;

(ii) bankruptcy discharge orders, schedules, or dismissal documents;

(iii) satisfactions of outstanding tax liens or other governmental liens;

(iv) court documents showing the factual basis underlying the adverse information being reviewed by the department and how the matter was resolved or adjudicated; and

(v) account statements or letters from the individual's creditors, or lien or judgment holders, explaining and verifying the current status of any past due accounts, including documentation of any repayment plans and agreements, as well as any temporary or permanent modifications to such accounts.

(3) Any document provided must be legible and complete. Incomplete documents may not be accepted.

(4) If the individual is unable to obtain the documents the department requests, the individual shall support that fact with documentation from the source of the unavailable documents consisting of a written statement from the agency or creditor who holds or held the records. The statement must be:

(a) written on the agency's or creditor's letterhead indicating that:

(i) the agency or creditor does not have any record of the matter;

(ii) the record was lost, damaged, or destroyed, or cannot otherwise be produced; and

(iii) the reason why the information is not available;

(b) signed by the agency's or creditor's records custodian; and

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-113, 32-9-117, 32-9-120, MCA
History: NEW, 2012 MAR p. 1253, Eff. 1/27/12; AMD, 2015 MAR p. 923, Eff. 7/17/15.

Mont. Admin. R. 2.59.1742 Reviewing Adverse Credit History and Other Information

(1) In making a determination whether an applicant has demonstrated financial responsibility, character, and general fitness, the department shall consider the following:

(a) the individual's credit history reflected in a credit report;

(b) supplemental information and documentation requested from and provided by the individual as determined necessary by the department;

(d) previous and current license history with the department, to include any regulatory actions that have occurred;

(e) other information that reflects upon the financial responsibility, character, and general fitness, whether favorably or adversely;

(f) the timing and context of the information reviewed;

(g) patterns of conduct; and

(h) factors indicating that financially adverse information may be the result of the involuntary loss of job or income, divorce, or health issues. Under such circumstances, the individual shall provide documents showing attempted workout arrangements with creditors or other factors indicating the individual has made an attempt to correct his or her financial difficulties.

(2) The department may not base a license application denial solely on a license applicant's credit score.

(3) In determining financial responsibility, the department shall consider the totality of the applicant's credit history, and surrounding circumstances, in exercising its discretion under 32-9-120(1)(c), MCA.

(4) Although the following is not an exclusive list, the department may consider the following factors, or a combination thereof, in determining whether to deny, condition, suspend, or revoke a license. The individual:

(a) has failed to fully provide any documentation required by the department;

(b) has made a false attestation associated with a filing related to an application for a license or a license renewal;

(c) has failed to pay in full any past due account, lien, judgment, or charged-off balance either as of the date of the issuance of a credit report to the department, or at time of initial licensure, designation as a control person or ultimate equity owner, or at renewal of any license. In reviewing this factor, the department shall make an exception for any account, lien, judgment, or charged-off balance that is solely due to medical expenses;

(d) is in arrears or has failed to comply with the terms of a repayment plan or

agreement entered into with a creditor;

(e) has failed to make timely payments under a plan or agreement with any state or federal tax or other regulatory agency; and

(f) has any of the factors listed in ARM 2.59.1740(2).

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-113, 32-9-117, 32-9-120, MCA
History: NEW, 2012 MAR p. 183, Eff. 1/27/12.

Mont. Admin. R. 2.59.1743 Reporting Forms for Mortgage Servicers

(1) A mortgage servicer licensee shall compile and submit a report to the department 45 days after the end of each quarter. The quarter end dates are March 31, June 30, September 30, and December 31.

(2) At the servicer's election, each servicer shall submit either the expanded mortgage call report through the NMLS or the Quarterly Statement for Mortgage Servicing Activity dated May 31, 2016, for every quarter during which it held a license.

(3) The Quarterly Statement for Mortgage Servicing Activity dated May 31, 2016, which is adopted and incorporated by reference, is available on the division's web site at https://banking.mt.gov/Home/Forms .

(4) The deadline for submitting the reports listed in (1) is extended by 30 days to allow reports to be submitted within a total of 75 days after the end of each quarter for the quarters ending June 30, 2020, September 30, 2020, December 31, 2020, and March 31, 2021. This section sunsets on June 1, 2021.

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-170, MCA
History: NEW, 2012 MAR p. 1762, Eff. 9/7/12; AMD, 2013 MAR p. 2417, Eff. 12/27/13; AMD, 2015 MAR p. 2249, Eff. 12/25/15; AMD, 2017 MAR p. 1049, Eff. 7/8/17; AMD, 2020 MAR p. 1615, Eff. 8/29/20.

Mont. Admin. R. 2.59.1744 Records to Be Maintained by Mortgage Servicers

(1) A mortgage servicer shall create and retain a file for each Montana residential mortgage loan which it services. The file must contain, if applicable:

(a) the borrower (or borrowers) name(s);

(b) a copy of the original note and deed of trust or mortgage;

(c) a copy of any disclosures or notifications provided to the borrower required by state or federal law or rule or regulation;

(d) a copy of all written requests for information received from the borrower and the mortgage servicer's response to such requests as required by state or federal law;

(e) a record of all payments received from the borrower containing all information required to be provided to a borrower upon request under 32-9-169(1), MCA;

(f) a copy of any bankruptcy plan approved in a proceeding filed by the borrower or a co-owner of the property subject to the mortgage;

(g) a communications log documenting all verbal communication with the borrower or the borrower's representative;

(h) a record of all efforts by the mortgage servicer to comply with the duties required under 32-9-170(7), MCA, including all information utilized in the mortgage servicer's determination regarding loss-mitigation proposals offered to the borrower;

(i) a copy of all notices sent to the borrower related to any foreclosure proceeding filed against the encumbered property;

(j) records regarding the final disposition of the loan including a copy of any collateral-release document, records of servicing transfers, charge-off information, or real estate owned (REO) disposition; and

(k) copies of all contracts, agreements, and escrow instructions to or with any depository institution, any mortgage lender, mortgage servicer, or mortgage broker, any warehouse lender or other funding facility, any servicer of mortgage loans, and any investor, for a period of not less than five years after expiration of any such contract or agreement.

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-121, 32-9-170, MCA
History: NEW, 2012 MAR p. 1762, Eff. 9/7/12.

Mont. Admin. R. 2.59.1745 Deadline for Renewal Applications

(1) Applications for renewal of licenses may be submitted to the department through the NMLS during the annual renewal period from November 1 to December 31.

(2) The department shall process all completed renewal applications submitted to it in the order received.

(3) The holder of an expired license may not conduct any business in Montana until becoming properly licensed.

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-117, MCA
History: NEW, 2012 MAR p. 1762, Eff. 9/7/12.

Mont. Admin. R. 2.59.1746 Record Maintenance, Storage, Transfer, and Destruction

(1) Records may be maintained electronically if the storage system complies with the Fair and Accurate Credit Transactions Act of 2003 (15 USC 1681 et seq.), the Gramm-Leach-Bliley Act (15 USC 6801 et seq.), and the regulations adopted thereunder (16 CFR 314).

(2) A licensed entity shall make all records available to the department in a usable format pursuant to 32-9-121 and 32-9-130, MCA.

(3) An individual who terminates sponsorship with an entity shall relinquish to the entity any records in the individual's possession at the time of termination.

(4) A person who disposes of records at the end of the retention period shall destroy personal information by shredding, burning, erasing, or otherwise making the information indecipherable as required by 30-14-1703, MCA, the Fair and Accurate Credit Transactions Act of 2003 (15 USC 1681 et seq.), and the regulations adopted thereunder (16 CFR 682).

(5) A licensed entity that becomes aware of an instance of unauthorized access to customer information shall comply with 30-14-1704, MCA.

History

Authorizing statute(s): 32-9-121, 32-9-130, MCA
Implementing statute(s): 32-9-121, 32-9-124, 30-14-1703, 30-14-1704, MCA
History: NEW, 2012 MAR p. 1762, Eff. 9/7/12.

Mont. Admin. R. 2.59.1747 Responsible Party for Records

(1) If a licensed entity is actively engaged in the business of residential mortgage loans, the entity's designated manager is responsible for proper retention, maintenance, safeguarding, and disposal of records for the whole entity. The designated manager of each branch is responsible for proper retention, maintenance, safeguarding, and disposal of records for the branch managed.

(2) If a licensed entity ceases doing business in Montana, the entity's designated manager, as of the entity's last day of operation as designated on the NMLS Company Form, is responsible for proper retention, maintenance, safeguarding, and disposal of records as set forth in ARM 2.59.1746. The designated manager's failure to properly fulfill this duty may result in revocation or suspension of their license or civil penalties.

History

Authorizing statute(s): 32-9-121, 32-9-130, MCA
Implementing statute(s): 32-9-121, MCA
History: NEW, 2012 MAR p. 1762, Eff. 9/7/12.

Mont. Admin. R. 2.59.1748 Montana-Specific Escrow Fund

(1) A mortgage servicer or lender shall:

(a) establish an escrow fund specifically for Montana residential mortgage loans being serviced. The escrow fund must contain only money related to Montana residential mortgage loans; or

(b) elect to provide to the department loan account histories of the residential mortgage loans located in Montana along with the escrow account statements or reports showing how, when, and where those payments were held, applied, and distributed for the period the servicer has serviced the loan.

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-145, MCA
History: NEW, 2012 MAR p. 1762, Eff. 9/7/12; AMD, 2018 MAR p. 822, Eff. 4/28/18.

Mont. Admin. R. 2.59.1751 Certificate of Bona Fide Not-for-Profit Entity

(1) A bona fide not-for-profit entity shall certify that it meets the exemption in 32-9-104(1)(f), MCA, and shall file with the department the Bona Fide Not-For "BFNP" Certification form, to make its certification both initially and annually.

(2) The Bona Fide Not-For-Profit "BNFP" Certification form dated December 4, 2020, is adopted and incorporated by reference and available on the department's website at banking.mt.gov .

History

Authorizing statute(s): 32-9-104, MCA
Implementing statute(s): 32-9-103, 32-9-104, MCA
History: NEW, 2013 MAR p. 2417, Eff. 12/27/13; AMD, 2021 MAR p. 715, Eff. 6/12/21.

Mont. Admin. R. 2.59.1752 State-Specific Prelicensing Education

(1) An individual seeking a mortgage loan originator's license shall complete two hours of prelicensing education specific to Montana residential mortgage statutes and rules.

(2) This rule will become effective on March 1, 2014.

History

Authorizing statute(s): 32-9-107, MCA
Implementing statute(s): 32-9-107, MCA
History: NEW, 2013 MAR p. 2417, Eff. 12/27/13.

Mont. Admin. R. 2.59.1753 Applications for Initial License Near Year-End; When Application for Initial License May Be Deemed Abandoned

(1) An application for initial license submitted to the department through NMLS during the period of November 1 through December 31 is deemed an application for licensure for the next calendar year unless the following conditions are met:

(a) the applicant requests expedited processing of the application and issuance of a license for the remainder of the calendar year in which the application is submitted;

(b) the application is complete and contains no deficiencies; and

(c) the department has sufficient time and staff resources to accommodate the applicant's request during the period November 1 through December 31, which coincides with the renewal period for current licensees. Current licensees' renewal applications are given administrative priority over applications for initial licensure.

(2) If an applicant is approved for licensure during the license renewal period of November 1 through December 31 and requests issuance of a license immediately, the applicant must submit the following renewal application, as appropriate:

(a) Mortgage Loan Originator License Renewal or Reinstatement Application dated December 9, 2020; or

(b) Mortgage Company/Branch Renewal Form dated December 9, 2020.

(3) All licenses expire on December 31 regardless of issuance date. A person whose license has expired may not engage in the activities for which the license was issued. Reinstatement of an expired license is governed by ARM 2.59.1731.

(4) An application for initial license shall be deemed abandoned if the applicant fails to provide the documents or information requested by the department within 60 days of notification to the applicant of the deficiencies.

(a) If the 60-day period following notification of deficiencies has not elapsed by December 31, the application is deemed an application for the next calendar year and will be processed without submission of a new application and fee.

(b) The application shall be deemed abandoned if the requested documents or information are not provided within the remainder of the 60-day period in the new year.

(c) Upon abandonment, the licensing process may be started anew with the submission of a new license application and fee.

(5) The 60-day period for providing documents or information requested by the department applies to persons applying for initial licensure and not to renewal applicants.

(6) The period for applicants to provide documents or information requested by the department listed in (3) is extended by 60 days to allow additional documents or information to be submitted within a total of 120 days of notification to the applicant of deficiencies. This section sunsets on June 1, 2021.

History

Authorizing statute(s): 32-9-120, MCA
Implementing statute(s): 32-9-120, MCA
History: NEW, 2013 MAR p. 2417, Eff. 12/27/13; AMD, 2015 MAR p. 923, Eff. 7/17/15; AMD, 2020 MAR p. 1615, Eff. 8/29/20; AMD, 2021 MAR p. 715, Eff. 6/12/21.

Mont. Admin. R. 2.59.1754 Clarification of Definition of "regularly Engage"

(1) A person who advertises in any manner is holding themselves out to the public as being able to act as a mortgage loan originator, mortgage broker, mortgage lender, or mortgage servicer in Montana. By so doing, the person expects to engage in the business of a mortgage loan originator, mortgage broker, mortgage lender, or mortgage servicer in Montana within the meaning of 32-9-103(39), MCA.

(2) If a person licensed through the NMLS as a mortgage loan originator, mortgage broker, mortgage lender, mortgage servicer, or similar person in another state acts as a mortgage loan originator, mortgage broker, mortgage lender, or mortgage servicer in Montana, they are regularly engaging in business in Montana within the meaning of 32-9-103(39), MCA.

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-103(39), MCA
History: NEW, 2016 MAR p. 1845, Eff. 10/15/16.

Mont. Admin. R. 2.59.1755 Definition of "alter" for Mortgage Licensees

(1) The word "alter" as used in 32-9-124(1)(l), MCA, means that loan documents may not be revised by:

(a) using correction fluid, correction tape, or any other means of changing or covering over a date or signature not on the original;

(b) inserting a signature or date not on the original; or

(2) To correct an error in a loan document, the licensee shall either:

(a) reprint the document, have it re-signed, and retain the original document noting in the file why the document was reprinted and re-signed; or

(b) strike out the error, put the correct text beside it, and initial and date the change.

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-124, MCA
History: NEW, 2017 MAR p. 1516, Eff. 9/9/17.

Mont. Admin. R. 2.59.1756 Government Sponsored Enterprises

(1) The government-sponsored enterprises for the mortgage servicer capital requirements in the Montana Mortgage Act are:

(a) Federal Home Loan Mortgage Corporation (Freddie Mac);

(b) Federal National Mortgage Association (Fannie Mae); or

History

Authorizing statute(s): 32-9-171, MCA
Implementing statute(s): 32-9-171, MCA
History: NEW, 2019 MAR p. 2338, Eff. 12/28/19.

Mont. Admin. R. 2.59.1757 Designated Manager Supervisory Requirements

(1) If a designated manager supervises more than one location, a mortgage broker or mortgage lender must have a written policy which addresses supervision of multiple licensed locations.

(2) The policy must include the frequency of:

(a) communication between the designated manager and employees in remote locations;

(b) onsite visits by the designated manager to other licensed locations; and

(3) The policy must include the use of training, technology, and risk assessments by a mortgage broker or mortgage lender in respect to origination activities at licensed locations. A designated manager's role in training, if applicable, must be identified in the policy.

(4) A mortgage broker or mortgage lender must submit a copy of the policy to the department at the time a designated manager is assigned to supervise multiple locations. A mortgage broker or mortgage lender should resubmit a copy of the policy to the department within 30 days of amendments.

(5) The designated manager must attest that he or she has read the policy. This attestation must be signed by the designated manager and included whenever the policy is submitted to the department. The designated manager and all mortgage loan originators and employees of the mortgage broker or mortgage lender at each licensed location subject to the policy shall comply with the policy.

(6) A mortgage broker or lender may submit the information and the policy referenced in (1) through (5) in any format they choose or may use the Designated Manager Supervision Plan form dated July 8, 2020, available on the department's website at www.banking.mt.gov to submit the information.

History

Authorizing statute(s): 32-9-122, 32-9-130, MCA
Implementing statute(s): 32-9-122, MCA
History: NEW, 2019 MAR p. 2338, Eff. 12/28/19; AMD, 2020 MAR p. 1835, Eff. 10/10/20.

Mont. Admin. R. 2.59.1758 False, Deceptive, or Misleading Advertising

(1) False, deceptive, or misleading advertising includes but is not limited to advertising or marketing that:

(a) is defined by this rule as false, deceptive, or misleading;

(b) violates 32-9-149, MCA, or this rule;

(c) violates any applicable state or federal unfair, deceptive, or abusive acts or practices laws or other laws applicable to advertising services authorized by or conducted under the Montana Mortgage Act.

(2) An advertisement is false, deceptive, or misleading, if it:

(a) describes rates or fees as "lowest," "best," or other similar words unless the statement is objectively true;

(b) uses the term "free," or any other similar term or phrase that implies there is no cost to the applicant;

(c) offers to procure, arrange, or otherwise assist a borrower to obtain a mortgage loan on terms which the person cannot, does not intend, or does not want to provide, or which the person knows or should know cannot be reasonably provided;

(d) suggests or represents that all or most borrowers may or will qualify for a loan or that persons with bad credit histories or no credit histories may or will qualify for this loan unless the person can demonstrate that borrowers with bad credit or no credit have been routinely and successfully qualified for loans by that licensee; or

(e) fails to disclose that a loan has the potential for negative amortization. If a loan has the potential for negative amortization, the advertisement shall clearly identify that potential and shall prominently disclose the:

(i) market or fully indexed rate;

(ii) term of the reduced payments;

(iii) term of the entire loan; and

(iv) annual percentage rate (APR).

(3) A licensee shall not use advertising materials for the purpose of conveying, or in a manner reasonably calculated to convey, a false impression of sponsorship or approval by a federal, state, or local government agency or in a manner that suggests any affiliation that does not exist. Such advertising is considered false, deceptive, or misleading. Prohibited advertising materials include but are not limited to advertisements that include:

(a) an official-looking emblem, logo, crest, or seal that resembles one used by any state or federal government agency. Such emblems may include an eagle, flag, the Statue of Liberty, or a crest or seal used by any state or the United States or used by any government agency or political subdivision;

(b) images, including those in electronic format, designed to resemble official government communications, such as communications from the Internal Revenue Service or U.S. Treasury, a state taxing authority, or other government agencies;

(c) warnings or notices citing government codes or form numbers not required by the United States Postal Service to be shown on the mailing;

(d) the term "official business," or similar language implying official or government business, without also including the name of the sender;

(e) any suggestion or representation that the solicitor is affiliated with any state or federal agency, municipality, federally insured financial institution, trust company, building and loan association, or other entity that it does not actually represent;

(f) any suggestion or representation that the solicitor is any entity other than the sender itself; or

(g) any other materials that violate state or federal laws pertaining to advertising or unfair, deceptive, or abusive acts or practices.

(4) When an advertisement includes information about a borrower's current loan that the licensee did not obtain from a solicitation, application, or loan, a licensee must provide the borrower with the following information, in the same size type font as the rest of the information in the advertisement:

(a) the name of the source of the information; and

(b) a statement that:

(i) this is an advertisement;

(ii) this is an offer for a new loan;

(iii) the licensee is not affiliated with the borrower's lender; and

(iv) this offer is not related to the consumer's existing mortgage lender or holder of the loan.

(5) A licensee shall not advertise an interest rate unless that rate is actually available at the time of the advertisement. Whenever a specific interest rate is advertised, the mortgage broker must retain a copy of the lender's rate sheet, or other supporting rate information, and the APR calculation for the advertised interest rate.

(6) Licensees are responsible for the legality, accuracy, and reliability of their advertising.

History

Authorizing statute(s): 32-9-130, 32-9-149, MCA
Implementing statute(s): 32-9-124, 32-9-149, MCA
History: NEW, 2019 MAR p. 2338, Eff. 12/28/19.

Mont. Admin. R. 2.59.1759 Internet or Electronic Advertising

(1) For the purpose of this rule, "Internet" means the Internet, the World Wide Web, or Internet-based electronic information distribution networks, and any derivative delivery systems or evolutions of such delivery systems that may be connected to individual computers, terminals, and other consumer electronic interface devices through which information is delivered via computer servers connected via phone lines or other cable, wire, fiber, wireless, or other analogous linkages to a computer, computer network or networks including, but not limited to, websites, e-mail, text messaging, multimedia advertising, social media, and/or banner advertisements.

(2) Licensees who engage in any form of Internet or electronic advertising shall comply with the requirements of this rule. This rule does not apply to traditional forms of advertising or promotion, such as newspaper, television, or radio advertisements, or direct mailings.

(3) A licensee must provide the following in any Internet or electronic advertising:

(a) the licensee's name as entered into NMLS and NMLS unique identifier; and

(b) if loan originators are named, their NMLS unique identifier must closely follow the names.

(4) A licensee must provide a link to their own NMLS Consumer Access webpage on any of its websites.

(5) If a loan originator maintains a separate website used in any way for or related to mortgage origination activity, the sponsoring licensee's name and NMLS unique identifier must appear on the website.

(6) All web addresses used by licensees must be disclosed by the entity in their NMLS record.

(7) Internet or electronic advertising content used to solicit Montana consumers must comply with all relevant Montana state and federal statutes for specific services and products advertised.

History

Authorizing statute(s): 32-9-149, MCA
Implementing statute(s): 32-9-124, 32-9-149, MCA
History: NEW, 2019 MAR p. 2338, Eff. 12/28/19.

Mont. Admin. R. 2.59.1760 Examination Fees

(1) A mortgage lender, broker, or servicer shall pay to the department the actual cost of any examination or investigation which must include expenses for necessary travel for the purposes of conducting the examination or investigation.

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-130, MCA
History: NEW, 2021 MAR p. 715, Eff. 6/12/21.

Mont. Admin. R. 2.59.1761 Activities Requiring a License

(1) For purposes of 32-9-124(1)(h), MCA, the department adopts by reference Appendices A through D of 12 CFR 1008 (Regulation H) (July 1, 2022). The appendices may be found on the department's website at banking.mt.gov .

History

Authorizing statute(s): 32-9-130, MCA
Implementing statute(s): 32-9-124, MCA
History: NEW, 2022 MAR p. 1790, Eff. 9/24/22.

Subchapter 2.59.20 Mutual Savings and Loan Associations

Mont. Admin. R. 2.59.2001 Application Procedure for a Certificate of Authorization for a State-Chartered Mutual Association

(1) One or more individual incorporators desiring to organize a mutual association shall file with the department, an application for a certificate of authorization for a state-chartered mutual association. The department adopts and incorporates by reference:

(a) the Interagency Charter and Federal Deposit Insurance Application dated July 2021, as the form that shall be completed when applying for a certificate of authorization; and

(b) the Interagency Biographical and Financial Report dated August 2021, for use by individuals in conjunction with the Interagency Charter and Federal Deposit Insurance Application. The application and biographical and financial report are available at the department's website at banking.mt.gov .

(2) An application fee of $10,000 shall be paid to the department at the time of application and thereafter shall not be refundable in whole or in part.

(3) With the application, the applicant must submit:

(a) the proposed articles of incorporation and bylaws set forth in 32-2-805 through 32-2-807, MCA;

(b) an application for reservation of a name in accordance with 35-14-402, MCA, if reservation is desired by the incorporators and has not been previously filed; and

(i) a persuasive showing that there is a reasonable public necessity and demand for a new mutual association at the proposed location;

(ii) that the mutual association will be managed by persons of good moral character and financial integrity who have sufficient management experience to ensure that the mutual association will be operated safely and soundly;

(iii) a persuasive showing that the new mutual association will have sufficient volume of business to ensure solvency and that establishment of the new mutual association organized under the laws of this state will be in the public interest; and

(iv) the proposed minimum amount of initial capital contribution to be deposited, which must be set by the commissioner.

(4) In the event that an application is incomplete in any respect or if additional information is required, the applicants will be so notified by the department and allowed up to 60 days in which to perfect the application or provide additional information. An extension of this 60-day period may be obtained from the department by showing good cause why it should be extended.

(5) The department may request additional information from an applicant if, in its discretion, additional information is needed to reach a decision on the application.

History

Authorizing statute(s): 32-2-201, MCA
Implementing statute(s): 32-2-201, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2002 Persuasive Showing of Reasonable Public Necessity and Demand

(1) In determining whether a reasonable public necessity and demand is established in any case, the department requires that these words be given a meaning which will promote the public interest of the community as a whole in having a sound banking structure, reasonably competitive and adequate for the needs of the community.

(2) In making this determination the following are among the factors which the department may consider:

(a) the number of mutual associations already serving the area in which the proposed mutual association would locate;

(b) the size of the area;

(d) the wealth of residents of the area;

(e) the commercial and industrial development of the area;

(f) the socioeconomic trends of the area;

(g) the adequacy of the services being provided by existing mutual associations compared to the needs of residents and the services to be offered by the proposed mutual association, including a detailed list of banking services that will be offered the community to be served by the new mutual association;

(h) the capability of existing mutual associations to handle potential growth of the area;

(i) the convenience of the location of existing mutual associations to residents of the area as compared to convenience of the proposed mutual association;

(j) the size of financial institutions in the area;

(k) the history of financial institutions in the area;

(l) an indication of the support the proposed mutual association could reasonably expect to receive from representative segments of the businesses and residents of the area; and

(m) the probability of the success of the proposed mutual association.

History

Authorizing statute(s): 32-2-801, MCA
Implementing statute(s): 32-2-801, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2003 Management of Proposed Mutual Association

(1) To establish reasonable assurance that the mutual association will be safely and soundly operated as required by 32-2-801, MCA, and recognizing that the ultimate responsibility for management of a mutual association reposes in its board of directors, the department will not issue a certificate of authority to a proposed mutual association if the department finds that any one or more of the proposed directors of the new mutual association has questionable moral character or lack of financial integrity and, therefore, does not command the confidence of the community in which the proposed mutual association is to be located.

(2) In the event that the application for a state mutual association charter does not include the name and qualifications of the proposed managing officer, the department will direct that if a charter is to be issued for the proposed mutual association it shall be conditioned upon the submission of the name and qualifications of a proposed managing officer to the department at least 60 days prior to the opening of the mutual association and that the department find the proposed managing officer unobjectionable.

History

Authorizing statute(s): 32-2-801, MCA
Implementing statute(s): 32-2-801, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2004 Capital Adequacy of Proposed New Mutual Associations

(1) The applicant must provide a reasonable assurance that the proposed new mutual association will have adequate initial paid-in capital sufficient to:

(a) absorb initial operating losses under foreseeable business conditions;

(b) permit the proposed investment in building, land, furniture, and fixtures within the limitation of 100% of capital and surplus as imposed by 32-2-933, MCA;

(c) provide protection for depositors' funds to the same extent that the average of all insured mutual associations in the proposed mutual association's peer group provides capital protection, measured by the most current peer group data available on total capital accounts as a percentage of total assets. The proposed mutual association's reasonably estimated total assets at the end of its first three years of operation shall be the basis upon which this standard shall be projected; and

(d) enable the mutual association to furnish competitive services that will ensure an amount of business sufficient to assure its success.

History

Authorizing statute(s): 32-2-801, MCA
Implementing statute(s): 32-2-801, 32-2-808, 32-2-933, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2005 Mutual Associations - Fdic Insurance Required

(1) To comply with 32-2-801 and 32-2-809, MCA, it has been determined by the department that it is in the public interest to require all mutual associations to be accepted by the Federal Deposit Insurance Corporation (FDIC) for the insurance of deposits. The department will not issue a certificate of authorization to a proposed new mutual association unless:

(a) the department has received official notice that the proposed mutual association has been accepted for insurance of deposits; or

(b) the department has received satisfactory assurance from the FDIC that the proposed mutual association will be accepted for insurance when the proponents comply with certain stated minor requirements imposed by the FDIC. Such "minor requirements" must be of a type and character which the department determines can be promptly complied with by the proponents without serious difficulty.

History

Authorizing statute(s): 32-2-801, MCA
Implementing statute(s): 32-2-801, 32-2-809, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2006 Pro Forma Statement

(1) An operational projection shall be submitted as part of the application for new mutual association charters, in order to show that the new mutual association will remain solvent while meeting the requirements set forth in ARM 2.59.2004. The pro forma statement will include, at a minimum:

(a) a projected three-year comparative balance sheet and income projection;

(b) information on start-up costs, including legal fees, and other costs that may be amortized; and

(2) The statement will reasonably estimate the volume of business the new mutual association anticipates in the first three-year period, and will show its reasons for believing it will develop such business aggregates.

History

Authorizing statute(s): 32-2-801, MCA
Implementing statute(s): 32-2-801, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2009 Conversion of a National Mutual Association to a State Mutual Association

(1) Upon conversion:

(a) the resulting state mutual association succeeds, without other transfer, to all the rights and property of the converted mutual association and is subject to all the debts and liabilities of the converted mutual association in the same manner as if the resulting state mutual association itself had incurred them;

(b) all rights of creditors of the converted mutual association and all liens upon the converted mutual association's property are unimpaired by the transfer, provided that the liens are limited to the affected property immediately prior to the time when the conversion became effective;

(c) title to all real, personal, and mixed property owned by the converted mutual association is vested in the resulting state mutual association without reversion or impairment and without the necessity of any instrument of transfer;

(d) the resulting state mutual association has all the liabilities, duties, and obligations of the converted mutual association, including obligations as fiduciary, personal representative, administrator, trustee, or guardian; and

(e) any pending action or other judicial proceeding to which the converted mutual association was a party may continue to be prosecuted to final judgment, order, or decree as if the conversion had not occurred, or the resulting mutual association may be substituted as a party to the action or proceeding.

(2) Upon conversion, a resulting mutual association that is organized under the laws of this state:

(a) shall designate and operate a location of the converted mutual association as its main banking house; and

(b) may maintain the branch mutual associations and other offices previously maintained by the converted mutual association.

History

Authorizing statute(s): 32-2-704, MCA
Implementing statute(s): 32-2-816, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2010 Fee for Conversion of a National Mutual Association to a State Mutual Association

(1) The fee for conversion of a federal mutual savings association to a state mutual savings association is $1,500.00.

History

Authorizing statute(s): 32-2-704, MCA
Implementing statute(s): 32-2-816, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2013 Semiannual Assessment

(1) The department invoices mutual associations for semiannual assessments every June and December. The assessment is based on each institution's total assets provided in its previous March and September call reports.

(2) The fee is calculated based on the total assets of the mutual association multiplied by .0000375, plus the flat fee listed below.

Example: Mutual association A reports total assets of $58,873,000 x .0000375 plus $3,000 equals $5,207.74.

(3) The assessment is due 30 days after each invoice date, or July 31 and January 31, whichever is later.

(4) The fee shall not exceed $300,000 for each semiannual assessment.

(5) In the event of a merger between Montana state-chartered mutual associations during the second or fourth quarter of the year, the assessment fee for the acquired institution must be paid by the surviving institution.

History

Authorizing statute(s): 32-2-702, 32-2-704, MCA
Implementing statute(s): 32-2-702, 32-2-704, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2014 Adoption of Examination Procedure

History

Authorizing statute(s): 32-2-704, MCA
Implementing statute(s): 32-2-701, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2017 Merger Application

(1) The application to merge one or more mutual associations located in Montana or to merge two or more mutual associations doing business in this state must be in the following form:

(a) the resolution or an authentic copy of the resolution, authorizing the merger adopted by a majority of the board of directors;

(b) the terms and conditions of the proposed merger;

(d) a statement of any changes in the articles of incorporation of the surviving association to be effected by the merger;

(e) other provisions with respect to the proposed merger deemed necessary or desirable; and

(f) the proposed articles of merger and plan of merger.

(2) An application fee of $2,000 plus $200 for each mutual association involved in the merger must be paid to the department at the time of application and may not be refunded in whole or in part.

(3) If an application is incomplete in any respect, or if additional information is required, the department shall notify the applicant and the applicant will be allowed up to 30 days in which to perfect the application or to provide additional information. An extension of this 30-day period may be obtained from the department by showing good cause why it should be extended. The department may delay processing, including extending the comment period for good cause.

(4) The application must be in letter form addressed to the commissioner of the department.

(5) The department will preliminarily approve or deny merger applications within 30 days of receiving a completed application.

(6) Within 90 days of the preliminary approval, the board of directors of the merging association shall submit the proposed merger to a vote of the members at any regular meeting or at any special meetings called for that purpose, after notice of the proposed merger has been given to all members entitled to vote thereon, in the manner provided in the bylaws. The notice of the meeting shall be in writing stating the purpose or purposes of the meeting and include or be accompanied by a copy or summary of the plan of merger. At the meeting, members may vote upon the proposed merger in person, or by written proxy, or by mailed ballot. The affirmative vote of the majority of the members voting thereon, shall be required for approval of the plan of merger. If the total vote of the association upon the proposed merger shall be less than 25% of the total membership of such association, the merger shall not be approved.

(7) Within 10 days of the membership vote, the board of directors shall certify the result to the department.

(8) Within 10 days after receipt of the certification, the department shall issue its final approval or denial of the application, based on the result of the membership vote.

MUTUAL ASSOCIATION MERGER APPLICATION

State the exact corporate name and address of each mutual association participating in the merger, and the proposed names of the resultant mutual association.
State the name and address of, and the dates of publication in, the newspapers in which the required notice is published.
For the resultant mutual association, a list of the names of the directors and principal executive officers, their titles, including a brief resume of the educational background, banking experience, and other qualifications of each and an explanation of the extent of common management of the participating institution and the length of time such common ownership or management has existed.
The date on which the proposed merger is to occur.
Attach the following documents:

History

Authorizing statute(s): 32-2-704, MCA
Implementing statute(s): 32-2-827, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2018 Merger Application Procedures

(1) An application to merge one or more mutual associations located in Montana pursuant to 32-2-827, MCA, must be on the form in ARM 2.59.2017.

(2) The application to merge must be filed with the department.

(3) The election and acknowledgment information satisfies these standards if it conforms to the following requirements:

(a) if the sale of a contract occurs by telephone, the customer's affirmative election to purchase may be made orally, provided that the mutual association:

(i) maintains sufficient documentation to show that the customer received the short-form disclosures substantially similar to ARM 2.59.2047(1) and then affirmatively elected to purchase the contract;

(ii) mails to the customer the affirmative written election and written acknowledgment together with a long-form disclosure substantially similar to ARM 2.59.2047(2), within three business days after the telephone solicitation, and maintains sufficient documentation to show it made reasonable efforts to obtain the documents from the customer; and

(iii) permits the customer to cancel the purchase of the contract without penalty within 30 days after the mutual association has mailed the long-form disclosures to the customer;

(b) if the contract is solicited through written materials such as mail inserts or "take one" applications and a mutual association provides only the short-form disclosures in the written materials, then the mutual association shall mail the acknowledgment of receipt of disclosures, together with a long-form disclosure as provided under ARM 2.59.2047(2), to the customer within three business days, beginning on the first business day after the customer contacts the mutual association or otherwise responds to the solicitation. A mutual association may not obligate the customer to pay for the contract until after the mutual association has received the customer's written acknowledgment of receipt of disclosures unless the mutual association:

(i) maintains sufficient documentation to show that the mutual association provided the acknowledgment of receipt of disclosures to the customer;

(ii) maintains sufficient documentation to show that the mutual association made reasonable efforts to obtain from the customer a written acknowledgment of receipt of the long-form disclosures; and

(iii) permits the customer to cancel the purchase of the contract without penalty within 30 days after the mutual association has mailed the long-form disclosures to the customer.

(a) The first publication of the notice must be as close as practicable to the date on which the application is filed with the department, but no more than five days before the filing date.

(b) The last publication of the notice must be on the 25th day after the first publication; or, if the newspaper does not publish on the 25th day, on the publication date closest to the 25th day.

(5) The text of the public notice must include the following information:

(a) that an application for merger has been made to the Montana Commissioner of Banking and Financial Institutions;

(b) the name and address of all the parties to the merger;

(d) that the public may submit comments to the Commissioner, Montana Division of Banking and Financial Institutions, P.O. Box 200546, Helena, Montana 59620-0546;

(e) the closing date of the public comment period; and

(f) that the nonconfidential portions of the application are on file with the department and are available for public inspection during regular business hours.

(6) The comment period must be 30 days.

(7) The notice may be combined with any notice of an applicable state or federal regulator and published jointly.

(8) Where public notice is required, the department may determine on a case-by-case basis that unusual circumstances surrounding a particular filing warrant modification of the publication requirements.

(9) The applicant(s) shall provide the affidavit(s) of publication to the department after it is received.

History

Authorizing statute(s): 32-2-704, MCA
Implementing statute(s): 32-2-827, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2021 Mutual Associations - Direct Leasing of Personal Property

(1) Under authority granted by 32-2-824, MCA, the department permits state mutual associations to engage in the business of direct leasing of personal property under the following regulations:

(a) A mutual association may purchase personal property to be leased only after it has a valid and binding commitment from the prospective lessee to lease the specific property under terms acceptable to the mutual association.

(b) Lease agreements with any one lessee may not exceed 10% of the assets of the mutual association. If the lessee is also a borrower from the mutual association, this 10% must be reduced by the balance of loans to the lessee.

(c) Every lease agreement must provide for full payout to the mutual association of its full acquisition cost of the lease property during the initial term of the lease.

(d) Residual value of the property at the end of a lease agreement's original term may be considered by the mutual association to constitute partial recovery of its cost of acquisition if such residual value is not more than 25% of the cost of acquisition.

(e) No lease agreement shall extend for an initial period of more than ten years or the leased property's normal useful life, whichever is less, unless the mutual association receives from the department prior written approval of each lease agreement of longer term.

(f) Each lease agreement must include provisions whereby the lessee disclaims any liability of the mutual association for the condition of the leased property or its quality; and whereby the lessee assumes full responsibility for protection and maintenance of the leased property.

(2) Any formerly leased personal property returned to the mutual association by default, completion of the lease, or otherwise, must be disposed of by the mutual association by sale or lease within one year after gaining legal possession.

History

Authorizing statute(s): 32-2-824, MCA
Implementing statute(s): 32-2-824, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2022 Retention of Mutual Association Records

(1) Records of customer accounts, as defined in (7), must be held in accordance with 32-2-950, MCA.

(2) The publication "Mutual Savings and Loan Association Record Retention Periods - Appendix A to ARM 2.59.2022" (Appendix A) establishes the minimum period for retention of mutual association records other than those specified in 32-2-950, MCA. Appendix A is maintained by the department and may be updated not more than once a year. The July 9, 2021, edition of Appendix A is incorporated by reference as part of this rule. A copy of Appendix A can be obtained from the department's website at banking.mt.gov .

(3) When a mutual association reproduces records in any manner in the regular course of business as permitted by 32-2-951 through 32-2-953, MCA, the retention period of the reproduced records is the same as specified in Appendix A.

(4) Mutual associations shall comply with all applicable federal mutual association laws and regulations requiring specific retention periods for the records enumerated in those laws or regulations. If an applicable federal mutual association law or regulation concerning record retention conflicts with a retention period contained in 32-2-950, MCA, this rule, or Appendix A, a mutual association shall comply with whichever retention period is longer. Mutual associations shall comply with other applicable state laws governing retention of personnel records, corporation records, etc.

(5) If a mutual association does not maintain records set forth in Appendix A, but maintains similar records with equivalent information, the mutual association's similar records must be retained for the time set forth for records in Appendix A.

(6) Records not covered by this rule or 32-2-950, MCA, must be retained for a period of time determined appropriate by the mutual association's board of directors. Retention periods determined appropriate by the board must be maintained as a permanent part of the board's minutes.

(7) "Customer accounts," for record retention purposes under 32-2-950, MCA, and this rule, means customer deposit accounts including savings deposit accounts, checking accounts, demand deposit accounts, certificates of deposit, safety deposit boxes, trust accounts, Negotiable Order of Withdrawal (NOW) accounts, and money market deposit accounts.

History

Authorizing statute(s): 32-2-950, MCA
Implementing statute(s): 32-2-704, 32-2-950, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2023 Form to Report Directors and Officers

(1) Mutual associations shall use the List of Officers and Directors form dated July 9, 2021, which is located on the department's website at banking.mt.gov to report the directors and officers elected at the annual meeting and the board meeting to the department. The form shall be submitted to the department within 30 days of the date of the last meeting at which an election of officers or directors was held.

History

Authorizing statute(s): 32-2-701, 32-2-704, MCA
Implementing statute(s): 32-2-701, 32-2-704, 32-2-820, 32-2-821, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2026 Definitions

For purposes of this subchapter, the following definitions apply:

(1) "Branch" means a banking house, other than the main banking house, maintained and operated by a mutual association doing business in the state and at which deposits are received, checks are paid, or money is lent. The term does not include a satellite terminal, as defined in 32-6-103, MCA, a loan production office, or the office of an affiliated depository institution acting as an agent under 12 U.S.C. 1828.

(2) "Consolidate" means a combination of two or more office locations within the same immediate neighborhood that does not substantially affect the nature of the business or customers served. Thus, for example, a consolidation of two branches on the same block following a merger would not constitute a branch closure. Mutual associations that are in doubt about whether a consolidation or a closure has occurred should consult the department. A consolidation is considered a relocation for purposes of ARM 2.59.2033 and 2.59.2037.

(3) "Customer" means a person who opened an account at the branch location in question, is currently associated with that branch, or whose address is within the same municipal area as the branch, as the mutual association determines is appropriate.

(4) "Loan production office" means a staffed facility, other than a branch, that provides lending-related services to the public, including loan information and applications.

(5) "Principal city" means an area designated as a "principal city" by the federal Office of Management and Budget.

(6) "Relocate" means a movement within the same immediate neighborhood that does not substantially affect the nature of the business or customers served. Generally, relocations involve movement over a short distance.

(7) "Short distance" means:

(a) within a 1,000-foot radius of the current location of the branch if it is located within the principal city of a metropolitan statistical area (MSA);

(b) within a one-mile radius of the current location of the branch if the branch is not located within a principal city, but is within an MSA; or

History

Authorizing statute(s): 32-2-701, 32-2-704, 32-2-830, MCA
Implementing statute(s): 32-2-701, 32-2-704, 32-2-828, 32-2-830, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2027 Application Procedure for Approval to Establish a New Branch

(1) An existing state-chartered mutual association that does not meet the criteria in shall file with the department an application for approval to establish and operate a new branch.

(2) Applications shall be submitted to the department using the Uniform Interstate Application/Notice form dated July 9, 2021, which can be found on the department's website at banking.mt.gov . Electronic submission of applications to banking@mt.gov is preferred.

(3) The applicant shall publish its notice of intent to establish a new branch using the following procedure:

(a) if the application for a new branch also requires the approval of either the federal reserve system or the federal deposit insurance corporation, the notice shall be published at the times and in the format required by the federal agency, except that the notice shall include the following information which may be rephrased as needed: "Comments regarding this application should be forwarded in writing via email to banking@mt.gov. Comments will also be accepted by mail addressed to the Commissioner of Banking and Financial Institutions, Department of Administration, P.O. Box 200546, Helena, MT 59620-0546. The application may be reviewed, during the comment period, at the above address by calling the commissioner's office at (406) 841-2920 and requesting an appointment";

(b) if the applicant does not fall under the regulatory jurisdiction of either the federal reserve system or the federal deposit insurance corporation, or if the publication requirement of the federal regulator has been eliminated, the notice shall be published, following a format obtained from the department, in a newspaper of general circulation in the community or communities where the main office of the mutual association and proposed branch are located. If there is no such newspaper in the community, then the notice shall be published in the nearest newspaper of general circulation. Publication shall be made at least once a week on the same day for two consecutive weeks.

(5) The application shall be emailed or delivered to the department not more than ten days subsequent to the first publication of notice.

History

Authorizing statute(s): 32-2-704, MCA
Implementing statute(s): 32-2-704, 32-2-828, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2028 Review Procedure for Applications for Approval to Establish a New Branch

(1) The department shall process applications for new branches in the order in which they are received. If an application is incomplete, the department shall notify the applicant by e-mail. An application will not be considered to have been received until it is in a complete form. An application is complete when all information required by the application form has been submitted and received. The department may request additional information from an applicant even if the application is considered complete.

(2) Factors that will be considered when determining whether to approve an application to establish a new branch include, but are not limited to, the following:

(a) the financial history and condition of the applicant;

(b) the capital levels and capital structure of the applicant;

(d) the convenience and needs of the community to be served at the proposed location of the new branch as evidenced by a brief statement provided by the applicant;

(e) earnings prospects of the applicant after establishing the new branch; and

(f) any other factors the department considers that could adversely affect the safety and soundness of the applicant or the viability of the new branch.

(3) The department shall issue its order approving or denying the application within 45 days after:

(a) the date of the last publication of the notice of intent to establish a new branch; or

(b) the date on which a complete application is received, whichever is later;

(4) The 45-day deadline may be extended by the department when review of the complete application raises questions or concerns that require additional information from the applicant or any other entity or person. Once the additional information is received by the department, the 45-day deadline may be extended by no further than 14 calendar days.

(5) When the department approves an application to establish a new branch, it will provide written notification to the applicant and the appropriate federal regulatory agency(s). The notification will include any conditions subject to the approval. Summary notification of the decision will be mailed to all persons or entities that have submitted written comment to the application.

(6) When the department denies an application to establish a new branch, it will provide written notification to the applicant, the appropriate federal regulator(s), and all persons or entities that have submitted written comment to the application. The written notification to the applicant will include the reasons for the denial.

History

Authorizing statute(s): 32-2-704, MCA
Implementing statute(s): 32-2-704, 32-2-828, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2029 Procedure Following Approval of an Application to Establish a New Branch

(1) A mutual association must open an approved branch within 18 months of the date of branch approval. Upon written request by the applicant and a finding of good cause by the department, the 18-month period may be extended by the department for a maximum of an additional six months.

(2) During the formation and establishment of the new branch, the applicant must inform the department of significant changes affecting any of the commitments, representations, or projections contained in the original application. Significant changes include, but are not limited to, the location of the new branch, the services to be offered by the new branch, and the staffing or management of the new branch. Significant changes may be sufficient to void the department's approval.

History

Authorizing statute(s): 32-2-704, MCA
Implementing statute(s): 32-2-704, 32-2-828, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2030 Branches

(1) A mutual association organized under the laws of this state that is a qualifying institution, as set forth in (2), may establish a branch in Montana upon summary notice and approval by the department. The notice shall be given using the Request for Summary Approval of Branch form dated July 9, 2021, which is located on the department's website at banking.mt.gov .

(2) In order to qualify for summary notice, the mutual association shall:

(a) have received its mutual association charter at least five years prior to making the request;

(b) be well-capitalized as defined in 12 CFR Part 324 by the Federal Deposit Insurance Corporation, if the mutual association is a nonmember mutual association; or as defined in 12 CFR 208.43(b)(1) by the Federal Reserve Board of Governors, if the mutual association is a member mutual association of the Federal Reserve System;

(c) have received a CAMELS composite rating of one or two on its most recent state or federal safety and soundness examination;

(d) have received a management rating of one or two on its most recent state or federal regulatory examination; and

(e) not be a party to any formal or informal enforcement action initiated by a state or federal regulatory agency.

(3) The mutual association shall certify that it is a qualifying institution as of the date of the request.

(4) A mutual association that is not a qualifying institution as of the date of the request shall comply with ARM 2.59.2027 and 2.59.2029.

(5) The department shall approve or deny a summary notice and application within 15 business days of receipt of a complete notice and application.

History

Authorizing statute(s): 32-2-701, 32-2-704, MCA
Implementing statute(s): 32-2-701, 32-2-704, 32-2-828, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2031 Montana Mutual Associations Branching Outside Montana

(1) In order for a mutual association organized under the laws of this state to request approval for a branch outside of Montana, the mutual association must submit copies of all required regulatory filings or notices required by the host state and federal agencies and comply with ARM 2.59.2030 and the branching requirements of the state into which it seeks to branch.

History

Authorizing statute(s): 32-2-701, 32-2-704, MCA
Implementing statute(s): 32-2-701, 32-2-704, 32-2-828, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2032 Mutual Associations Organized Outside of Montana Branching Into Montana

(1) Mutual associations organized under the laws of a state other than Montana or of a national mutual association must submit copies of all required regulatory filings or notices required by the home state and federal agencies and comply with ARM 2.59.2030 in order to branch into Montana.

History

Authorizing statute(s): 32-2-701, 32-2-704, MCA
Implementing statute(s): 32-2-701, 32-2-704, 32-2-828, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2033 Closure or Relocation of a Branch

(1) A Montana state-chartered mutual association that desires to relocate or close a branch temporarily or permanently shall give notice to its customers using the customer Notice of Relocation of Mutual Association Branch form (relocation form) dated July 9, 2021, or customer Notice of Closure of Mutual Association Branch form (closure form) dated July 9, 2021. The forms are located on the department's website at banking.mt.gov . A mutual association may amend the form as needed or include additional information in the form as appropriate.

(2) The relocation or closure form shall be provided to customers of the branch by posting it at the branch at least 30 days before the relocation or closure of the branch. The relocation or closure form shall be provided to the department at the same time. The mutual association shall also notify its customers at least 30 days before the relocation or closure, by any effective method.

(3) The department reserves the right to request additional information regarding closure or relocation of a branch.

History

Authorizing statute(s): 32-2-701, 32-2-704, MCA
Implementing statute(s): 32-2-701, 32-2-704, 32-2-828, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2034 Temporary Emergency Closure of Branch

(1) A mutual association that closes a branch under the authority of 32-2-1032(1), MCA, for 48 hours or less shall notify the department using the Temporary Emergency Branch Closure form dated July 9, 2021, located on the department's website at banking.mt.gov .

History

Authorizing statute(s): 32-2-701, 32-2-704, MCA
Implementing statute(s): 32-2-701, 32-2-704, 32-2-1030, 32-2-1031, 32-2-1032, 32-2-1033, 32-2-1034, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2035 Emergency Closure of Branch

(1) A mutual association that closes a branch under the authority of 32-2-1032, MCA, for more than 48 hours shall notify the department using the Emergency Branch Closure form dated July 9, 2021, located on the department's website at banking.mt.gov .

History

Authorizing statute(s): 32-2-701, 32-2-704, MCA
Implementing statute(s): 32-2-701, 32-2-704, 32-2-1030, 32-2-1031, 32-2-1032, 32-2-1033, 32-2-1034, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2036 Loan Production Office Activities

(1) A loan production office may conduct any of the following activities, which shall not, individually or collectively, cause the loan production office to be considered a branch:

(a) solicit loans on behalf of the mutual association or a branch of the mutual association;

(b) assemble credit information;

(d) secure title information;

(e) prepare applications for loans, including making recommendations with respect to action; and

(f) solicit investors to purchase loans from the mutual association and to contract with the mutual association for servicing of such loans.

(2) A mutual association shall not accept deposits or loan payments, originate deposits or savings or checking accounts, approve loans, or disburse loan funds at a loan production office established pursuant to this rule.

History

Authorizing statute(s): 32-2-701, 32-2-704, 32-2-830, MCA
Implementing statute(s): 32-2-701, 32-2-704, 32-2-830, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2037 Loan Production Office

(1) A mutual association that desires to establish a loan production office in this state shall provide written notice to the department of its intent to do so at least 30 days prior to opening the loan production office using the Notice of Intent to Establish a Loan Production Office form dated July 9, 2021, located on the department's website at banking.mt.gov .

(2) A mutual association organized under the laws of Montana that intends to open a loan production office in another state shall submit copies of all required regulatory filings or notices required by the host state and federal agencies along with the items required in the Notice of Intent to Establish a Loan Production Office form, if they are not already included in the form, to the department.

(3) A Montana state-chartered mutual association that desires to relocate or close a loan production office temporarily or permanently shall give notice to its customers using the customer Notice of Relocation form (relocation form) dated July 9, 2021, or customer Notice of Closure form (closure form) dated July 9, 2021, located on the department's website at banking.mt.gov .

(4) The relocation or closure form shall be provided to customers of the loan production office by posting it at the loan production office at least fifteen days before the relocation or closure of the office. The relocation or closure form shall be provided to the department at the same time.

(5) The department reserves the right to request additional information regarding the opening, closure, or relocation of a loan production office.

(6) If the loan production office will be using an assumed name, compliance with 32-2-902, MCA, is required.

(7) Each loan production office shall be subject to examination and supervision by the department in the same manner and to the same extent as the mutual association.

History

Authorizing statute(s): 32-2-701, 32-2-830, MCA
Implementing statute(s): 32-2-701, 32-2-830, 32-2-1030, 32-2-1031, 32-2-1032, 32-2-1033, 32-2-1034, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2040 Definitions

(2) "Contract" means a debt cancellation contract or a debt suspension agreement.

(3) "Customer" means an individual who obtains from a mutual association an extension of credit that is primarily for personal, family, or household purposes. For purposes of this subchapter, the term means the same thing as "borrower."

(4) "Debt cancellation contract" means a loan term or contractual arrangement modifying loan terms under which a mutual association agrees, for a fee, to suspend all or part of a customer's obligation to repay an extension of credit from that mutual association upon the occurrence of a specified event. The agreement must specify the extension of credit to which it pertains. The extension of credit to which it pertains may be a direct loan made by the mutual association or an indirect loan in the form of a retail installment sales contract purchased by or assigned to the mutual association. In the case of an indirect loan in the form of a retail installment sales contract, the debt cancellation contract may be offered by the mutual association through a nonexclusive, unaffiliated agent contingent upon the mutual association purchasing or taking assignment of the indirect loan. The agreement may be separate from or a part of other loan documents. A debt cancellation contract may be offered and purchased either contemporaneously with the other terms of the loan agreement or subsequently.

(5) "Debt suspension agreement" means a loan term or contractual arrangement modifying loan terms under which a mutual association agrees, for a fee, to suspend all or part of a customer's obligation to repay an extension of credit from that mutual association upon the occurrence of a specified event. The agreement must specify the extension of credit to which it pertains. The extension of credit may be a direct loan made by the mutual association or an indirect loan in the form of a retail installment sales contract purchased by or assigned to the mutual association. In the case of an indirect loan in the form of a retail installment sales contract, the debt suspension agreement may be offered by the mutual association through a nonexclusive, unaffiliated agent contingent upon the mutual association purchasing or taking assignment of the indirect loan. The agreement may be separate from or a part of other loan documents. The term "debt suspension agreement" does not include loan payment deferral arrangements in which the triggering event is the borrower's unilateral election to defer repayment or the mutual association's unilateral decision to allow a deferral of repayment.

(6) "Guaranteed asset protection (GAP) waiver or agreement" means a term of an extension of credit or contractual arrangement modifying terms of an extension of credit for the purchase of titled personal property under which a mutual association agrees to cancel the customer's obligation to repay the portion of the extension of credit that exceeds the amount paid by the primary insurer of the titled personal property upon the insurer's declaration that the titled personal property is a total loss or determination that the titled personal property is stolen and not recoverable.

(7) "Loan or extension of credit" means a direct or indirect advance of funds to a customer made on the basis of any obligation of that customer to repay the funds or that is repayable from specific property pledged by or on the customer's behalf. The term also includes any liability of a mutual association to advance funds to or on behalf of a customer pursuant to a contractual commitment.

(8) "Residential mortgage loan" means a loan for personal, family, or household purposes secured by a one- to four-family residential property.

History

Authorizing statute(s): 32-2-704, MCA
Implementing statute(s): 32-2-909, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2041 Debt Cancellation and Debt Suspension Programs – Requirements

(1) A mutual association offering debt cancellation contracts and/or debt suspension agreements shall:

(a) manage the risks associated with debt cancellation contracts and debt suspension agreements in accordance with mutual association safety and soundness principles by establishing and maintaining effective risk management and control processes over its debt cancellation contracts and debt suspension agreements to include:

(i) appropriate recognition and financial reporting of income, expenses, assets, and liabilities;

(ii) appropriate treatment of all expected and unexpected losses associated with the contracts; and

(iii) assessment of the adequacy of its internal control and risk mitigation activities in view of the nature and scope of the mutual association's debt cancellation and debt suspension program; and

(b) obtain and maintain in effect insurance from an insurer authorized or otherwise registered with the State Auditor and Commissioner of Insurance (State Auditor) to do business in Montana. The insurance must cover 100% of the at-risk loan balances to which the mutual association's debt cancellation contracts pertain.

History

Authorizing statute(s): 32-2-704, MCA
Implementing statute(s): 32-2-909, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2042 Required Disclosures

(1) A mutual association shall provide the following disclosures to the mutual association's customer:

(a) notice of the prohibited acts or practices contained in ARM 2.59.2043;

(b) the fee applicable to the contract and any payment options;

(d) whether the customer is barred from using the credit line to which it pertains if the debt cancellation contract or debt suspension agreement is activated;

(e) eligibility requirements, conditions, and exclusions;

(f) that a debt suspension agreement, if activated, does not cancel the debt, but only suspends payment requirements; and

(g) notice that cancellation of debt may result in a tax liability to the customer if activated.

(2) The requirements for the timing and method of disclosure are:

(a) the mutual association shall make the disclosures in (1) and the short-form disclosures under ARM 2.59.2047 orally at the time the mutual association first solicits the purchase of a contract;

(b) the mutual association shall make the long-form disclosures under ARM 2.59.2047 in writing before the customer completes the purchase of the contract. If the initial solicitation occurs in person, the mutual association shall provide the long-form disclosure in writing at that time;

(c) if the contract is solicited by telephone, the mutual association shall provide the disclosures in (1) and the short-form disclosures under ARM 2.59.2047 orally and shall mail the long-form disclosures, and, if appropriate, a copy of the contract to the customer within three business days beginning on the first business day after the telephone solicitation; and

(d) if the contract is solicited through written materials such as mail inserts or "take one" applications, the mutual association may provide only the disclosures in (1) and the short-form disclosure under ARM 2.59.2047 to the customer within three business days beginning on the first business day after the customer contacts the mutual association in response to the solicitation, subject to the requirements of ARM 2.59.2046(3)(b).

(4) The disclosures in the short-form disclosure under ARM 2.59.2047 are required in advertisements and promotional material for contracts unless the advertisements and promotional materials are of a general nature describing or listing the services or products offered by the mutual association.

History

Authorizing statute(s): 32-2-704, MCA
Implementing statute(s): 32-2-909, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2043 Prohibited Acts or Practices

(1) A mutual association is prohibited from engaging in any of the following acts or practices:

(a) extending credit or altering the terms or conditions of an extension of credit conditioned upon the customer entering into a debt cancellation contract or debt suspension agreement with the mutual association. The prohibition is commonly referred to in the regulatory context as the anti-tying provision;

(b) engaging in any practice or using any advertisement that could mislead or otherwise cause a reasonable person to reach an erroneous belief with respect to information that must be disclosed under ARM 2.59.2042, including what is being offered, the cost, and/or the terms of the contract;

(i) giving the mutual association the right unilaterally to modify the contract unless:

(A) the modification is favorable to the customer and is made without additional charge to the customer; or

(B) the customer is notified of any proposed change and is provided a reasonable opportunity to cancel the contract without penalty before the change goes into effect; or

(ii) requiring an up-front, lump-sum single payment for the contract if the extension of credit to which the contract pertains is a residential mortgage loan.

History

Authorizing statute(s): 32-2-704, MCA
Implementing statute(s): 32-2-909, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2044 Refunds of Fees Upon Termination or Prepayment of Covered Loan

(1) If a debt cancellation contract or debt suspension agreement is terminated, including, for example, when the customer prepays the covered loan, a mutual association shall refund to the customer any unearned fees paid for the contract unless the contract provides otherwise.

(2) A mutual association may offer a customer a contract that does not provide for a refund only if the mutual association also offers that customer a bona fide option to purchase a comparable contract that provides for a refund.

(3) A mutual association shall calculate the amount of a refund using a method at least as favorable to the customer as the actuarial method.

History

Authorizing statute(s): 32-2-704, MCA
Implementing statute(s): 32-2-909, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2045 Method of Payment of Fees

(1) Except as provided in ARM 2.59.2043(1)(c)(ii), a mutual association may offer a customer the option of paying the fee for a debt cancellation contract or a debt suspension agreement in a single payment, provided the mutual association also offers the customer a bona fide option of paying the fee for that contract in periodic installment payments.

(2) If a mutual association offers the customer the option to finance the single payment by adding it to the loan principal, the mutual association must also disclose, in accordance with ARM 2.59.2044, whether the customer may cancel the agreement and receive a refund, and, if so, the time period during which the customer may do so.

History

Authorizing statute(s): 32-2-704, MCA
Implementing statute(s): 32-2-909, MCA
History: NEW, 2022 MAR p. 230, Eff. 2/12/22.

Mont. Admin. R. 2.59.2046 Affirmative Election to Purchase and Acknowledgment of Receipt of Disclosures

(1) Before entering into a debt cancellation contract or debt suspension agreement, a mutual association shall obtain the customer's written affirmative election to purchase the contract and a written acknowledgment of receipt of the disclosures required under ARM 2.59.2042.