(1) (a) Except as otherwise provided in subsection (1)(b) of this section, the board of directors of a district shall distribute all of the funding the district receives from the department of local affairs to areas that are socially or economically impacted, either directly or indirectly, by the development, processing, or energy conversion of fuels and minerals leased under the federal act; except that the board of directors may elect to invest up to fifty percent of the funding as specified in subsection (5) of this section.

(b) The board of directors may use up to ten percent of the annual funding for any administrative costs of the district; except that any investment-related expenses are excluded from the calculation of the district's administration costs.

(c) Notwithstanding any other provision of this part 13, the board of directors of a district may reserve, or invest as specified in subsection (5) of this section, all or a portion of the funding for use in subsequent years.

(2) The board of directors may review any reports or studies made and may seek any additional reports or studies it deems necessary regarding the distribution of funding in the district.

(3) The board of directors may cooperate or contract with any other district to provide any function or service lawfully authorized to each of the cooperating or contracting districts, including the sharing of costs, only if the cooperation or contracts are authorized by each district with the approval of each district's board of directors. Any contract providing for the sharing of costs may be entered into for any period, not to exceed the existence of the district and notwithstanding any provision of law limiting the length of any financial contracts or obligations of governments. Any such contract shall set forth fully the purposes, powers, rights, obligations, and responsibilities, financial and otherwise, of the contracting parties. Where other provisions of law provide requirements for special types of intergovernmental contracting or cooperation, those special provisions shall control.

(4) The board of directors may exercise any of the powers set forth in section 30-20-1305.5.

(5) If the board of directors elects to invest the portion of the funding as allowed in subsection (1)(a) of this section:

(a) The portion of the funding to be invested shall be held in a fund established by a resolution enacted by the district;

(b) The board of directors shall make investments pursuant to the investment policy described in subsection (6) of this section and in a manner that complies with the "Uniform Prudent Investor Act", article 1.1 of title 15;

(c) The board of directors may invest the portion of the funding in any investment in which the board of trustees of the public employees' retirement association may invest the funds of the association pursuant to section 24-51-206;

(d) The board of directors may engage the services of investment advisors. The selection of investment advisors must be made following an open and competitive process.

(e) The board of directors may appropriate and disburse any part of the invested funding and all sums in excess thereof, including interest, dividends, or similar appreciated values, but shall do so only upon the enactment of a resolution identifying the reason for the appropriation and disbursement;

(f) The board of directors shall ensure that, at all times, liquid investment assets or other funding not invested remain at a level sufficient to pay for all budgeted and outstanding obligations of the district in any fiscal year; and

(g) The board of directors, individually or as a group, shall not engage in any activities that might result in a conflict of interest with respect to their fiduciary responsibility for the district.

(6) The board of directors shall adopt an investment policy resolution and shall review the investment policy annually. The investment policy must include:

(a) An acknowledgment of the board of director's fiduciary responsibility with respect to oversight of the district's investment policy;

(b) Performance benchmarks for all investments and for all investment advisors who may be hired by the board of directors;

(c) A requirement for the preparation and publication of annual financial statements that must include, at minimum, information regarding starting balances, contributions, investment income, and losses, if any, and any investment fees incurred;

(d) Careful consideration of investment fees or other brokerage costs which might reduce investment returns; and

(e) A requirement that the board of directors annually review the investments and annually set appropriations to be included in the trust fund.