Motivated by the theories of Hecke algebras and Schur algebras, we consider in this paper the algebra ރ M G of G-invariants of a finite monoid M with unit group G. If M is a regular ''balanced'' monoid, we show that ރ M G is a quasi-hereditary algebra. In such a case, we find the blocks of ރ M G to be the ''sections'' of the blocks of ރ M. We go on to develop a theory of cuspidal representations for balanced monoids. We then apply our results to the full transformation semigroup and the multiplicative monoid of triangular matrices over a finite field. ᮊ 1999 Academic Press w x e associated with the Young diagram as in 5; Section 28 , let J s S eS n n and Ä 4 M s S j J j 0 . Ž . n Ž . Then M is a monoid and all idempotents of J are conjugate, a special property shared by reductive monoids. Because the theory of complex representations of finite groups is so well w x developed, we are motivated in 17, 18 to begin a systematic study of complex representations of finite monoids. Let M be a finite monoid with unit group G. By classical semigroup representation theory, the irreducible characters of M are in 1-1 correspondence with those of the maximal subgroups H of regular J J-classes J of M. The irreducible characters of J the groups H thus serve as ''weights'' for the irreducible characters of M J in much the same way as in the representation theory of algebraic groups or Lie algebras. For an irreducible character of H we constructed in J w x q y 17 , left induced, right induced, and semigroup induced characters , ,˜q yand of G and we showed that is a summand of l . Although the characters q and y of G can be expressed explicitly as sums of somẽ induced group characters, the character is quite mysterious.For an algebra A with group G of automorphisms, the algebra A G of w x G-invariants is a natural and classical object of study, cf. 12 . In this paper we study the algebra ރ M G where M is a finite monoid with unit group G. We show that the invariant algebra ރ M G of the local monoid M is a J J quasi-hereditary algebra if and only if J is G-balanced; i.e., every [ JgU U Ž . Ž . For J g U U M , choose e g E J . Let H denote the H H-class of e , that is J J J w x the unit group of e Me . By semigroup representation theory 3; Chap. 5 , J J the irreducible characters of M are in 1-1 correspondence with the weights Irr H , J g U U. We write this as J Irr M ( " Irr H . 1 Ž . J JgU U Correspondingly for J g U U, ރ J s ރ J , 2 Ž . [ gIrr H J Ž . with each ރ J being an ideal of ރ M and a ރ M, ރ M -bimodule. If 0 J g Irr H , then we denote by the character of G obtained by restricting J to G the irreducible character of M associated with . Let ⑀ be a primitive idempotent of ރ H corresponding to . Then J ⌬ s ރ J и ⑀ , ٌ s ⑀ и ރ J * 3 J ރ M and ރ M are quasi-hereditary algebras. J 0 J Let M be a finite regular monoid J, JЈ g U U, JЈ ) J, g Irr H . Let J J follows. Assume without loss of generality that 1 s e ) e ) иии ) e s J J J 0 1 t e . Let s . Having obtained g char H , i ) 0, let s g J t i...