Old	New	Differences
1	1	RBH No. 5078
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28	28	STATE OF OKLAHOMA
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30	30	1st Session of the 59th Legislature (2023)
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32	32	HOUSE BILL 1617 By: Lepak
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38	38	AS INTRODUCED
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40	40	An Act relating to public finance; enacting the
41	41	Oklahoma Public Finance Protection Act ; defining
42	42	terms; providing fiduciary's standard of care;
43	43	prohibiting consideration of non -pecuniary factors;
44	44	providing who has authority to vot e on certain
45	45	shares; providing for delegation of authority;
46	46	providing that proxy votes be reported annual ly;
47	47	authorizing Attorney General to en force act and
48	48	examine certain persons and reco rds; providing for
49	49	codification; and providing an effective date .
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56	56	BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
57	57	SECTION 1. NEW LAW A new section of law to be codified
58	58	in the Oklahoma Statutes as Section 9101 of Title 62, unless there
59	59	is created a duplication in numbering, reads as follows:
60	60	This act shall be known and may be cited as the "Oklahoma Public
61	61	Finance Protection Act".
62	62	SECTION 2. NEW LAW A new s ection of law to be codified
63	63	in the Oklahoma Statutes as Section 9102 of Title 62, unless there
64	64	is created a duplication in numbering, reads as follows:
65	65	As used in the Oklahoma Public Finance Protection Act: RBH No. 5078
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67	67	Req. No. 5078 Page 2 1
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92	92	1. "Pension benefit plan" or "plan" shall mean any plan, fund,
93	93	or program which was hereto fore or is hereafter established,
94	94	maintained, or offered by the State of Oklahoma or any subdivision,
95	95	county, municipality, agency , or instrumentality thereof, or any
96	96	school, college, university, administration, a uthority, or other
97	97	enterprise operated by the State of Oklahoma, to the extent that by
98	98	its terms or as a result of surrounding circumstances :
99	99	a. provides retirement income or other retirement
100	100	benefits to employees or former employees, or
101	101	b. results in a deferral of income by such employees for
102	102	period extending to the termination of covered
103	103	employment or beyond ;
104	104	2. "Fiduciary" means a person who, with respect to a pension
105	105	benefit plan:
106	106	a. exercises any discretionary authority or discretionary
107	107	control respecting management of such plan or
108	108	exercises any authority or control respecting
109	109	management or disposition of its assets,
110	110	b. renders investment advice for a fee or other
111	111	compensation, direct or indirect, with respect to any
112	112	moneys or other property of such pl an, or has any
113	113	authority or responsibility to do so, or
114	114	c. has any discretionary authority or discretionary
115	115	responsibility in the administration of such plan, RBH No. 5078
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142	142	including making recommendations or voting a plan 's
143	143	shares or proxies;
144	144	3. "Material", when used to qualify a risk or return:
145	145	a. means a risk or return regarding which there is a
146	146	substantial likelihood that a reasonable investor
147	147	would attach importance when :
148	148	(1) evaluating the potential financial return and
149	149	financial risks of an existing or prospectiv e
150	150	investment, or
151	151	(2) exercising, or declining to exercise, any rights
152	152	appurtenant to securities , and
153	153	b. does not include:
154	154	(1) furthering non-pecuniary, environmental, social,
155	155	political, ideological, or other goals or
156	156	objectives, or
157	157	(2) any portion of a ris k or return that primarily
158	158	relates to events that involve a high degree of
159	159	uncertainty regarding what may or may not occur
160	160	in the distant future and are systemic, general,
161	161	or not investment-specific in nature;
162	162	4. "Pecuniary factor" means a factor that has a material effect
163	163	on the financial risk or financial return of an investment based on
164	164	appropriate investment horizons consistent with the plan 's RBH No. 5078
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191	191	investment objectives and the funding policy. The term excludes non -
192	192	pecuniary factors;
193	193	5. "Non-pecuniary" includes any action taken or factor
194	194	considered by a fiduciary with any purpose to further environmental,
195	195	social, or political goals. A fiduciary purpose may be reasonably
196	196	determined by evidence, including, but not limited to, a fiduciary 's
197	197	statements indicating its purpose in selecting investments, engaging
198	198	with portfolio companies, or voting shares or proxies, or any such
199	199	statements by any coalition, initiative, or organization that the
200	200	fiduciary has joined, participated in, or become a signatory to, in
201	201	its capacity as a fiduciary.
202	202	SECTION 3. NEW LAW A new section of law to be codified
203	203	in the Oklahoma Statutes as Section 9103 of Title 62, unless there
204	204	is created a duplication in numbering, reads as follows:
205	205	A. A fiduciary shall dischar ge his duties with respect to a
206	206	plan solely in the pecuniary interest of the par ticipants and
207	207	beneficiaries:
208	208	1. for the exclusive purpose of providing pecuniary benefits to
209	209	participants and their beneficiaries and defraying reasonable
210	210	expenses of administ ering the plan;
211	211	2. with the care, skill, prudence, and diligence under the
212	212	circumstances then prevailing that a prudent man acting in a like
213	213	capacity and familiar with such matters would use in the conduct of
214	214	an enterprise of a like character and with lik e aims; RBH No. 5078
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241	241	3. by diversifying the investments of the plan so as to
242	242	minimize the risk of large losses, unless under the circumstances it
243	243	is clearly prudent not to do so; and
244	244	4. in accordance with the documents and instruments governing
245	245	the plan insofar as su ch documents and instruments are consistent
246	246	with the provisions of this act.
247	247	SECTION 4. NEW LAW A new section of law to be codified
248	248	in the Oklahoma Statutes as Section 9104 of Title 62, unless there
249	249	is created a duplication in numbe ring, reads as follows:
250	250	A fiduciary's evaluation of an investment, or evaluation or
251	251	exercise of any right appurtenant to an investment, must take into
252	252	account only pecuniary factors. Plan fiduciaries are not permitted
253	253	to promote non-pecuniary benefits or any other non-pecuniary goals.
254	254	Environmental, social, corporate governance, or other similarly
255	255	oriented considerations are pecuniary factors only if they present
256	256	economic risks or opportunities that qualified investment
257	257	professionals would treat as materia l economic considerations under
258	258	generally accepted investment theories. The weight given to those
259	259	factors should solely reflect a prudent assessment of their impact
260	260	on risk and return. Fiduciaries considering environmental, social,
261	261	corporate governance, or other similarly oriented factors as
262	262	pecuniary factors are also required to examine the level of
263	263	diversification, degree of liquidity, and the potential risk -return
264	264	in comparison with other available alternative investments that RBH No. 5078
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291	291	would play a similar role in their plans' portfolios. Any pecuniary
292	292	consideration of environmental, social, or governance fac tors must
293	293	necessarily include evaluating whether greater returns can be
294	294	achieved through investments that rank poorly on such factors.
295	295	SECTION 5. NEW LAW A new section of law to be codified
296	296	in the Oklahoma Statutes as Section 9105 of Title 62, unless there
297	297	is created a duplication in numbering, reads as follows:
298	298	A. All shares held direct ly or indirectly by or on behalf of a
299	299	pension benefit plan or the beneficiaries thereof shall be voted
300	300	solely in the pecuniary interest of plan participants. Voting to
301	301	further non-pecuniary, environmental, social, political, ideological
302	302	or other benefits or goals is prohibited.
303	303	B. Unless no economically practicable alternative is available,
304	304	a fiduciary may not adopt a practice of following the
305	305	recommendations of a proxy advisory firm or other service provider
306	306	unless such firm or service provider has a practice of, and in
307	307	writing commits to, follow ing proxy voting guidelines that are
308	308	consistent with the fiduciary 's obligation to act based only on
309	309	pecuniary factors.
310	310	C. Unless no economically practicable alternative is available,
311	311	plan assets shall not be e ntrusted to a fiduciary, unless that
312	312	fiduciary has a practice of, and in writing commits to, follow ing
313	313	guidelines, when engaging with portfolio companies and voting shares RBH No. 5078
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315	315	Req. No. 5078 Page 7 1
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340	340	or proxies, that match the plan's obligation to act based only on
341	341	pecuniary factors.
342	342	D. Authority to vote such shares should be in t he hands of a
343	343	State official politically accountable to the people of the State of
344	344	Oklahoma. As such, all current proxy voting authority with respect
345	345	to any and all shares held directly or indirectly by or on behalf of
346	346	a pension benefit plan or the plan participants is hereby revoked.
347	347	With respect to the pension benefit plans, a ll such voting authority
348	348	shall reside with the respective Board of Trustees, except that the
349	349	Board of Trustees may delegate such author ity to a person who has a
350	350	practice of, and in writing commits to, following guidelines that
351	351	match the plan's obligation to act based only on pecuniary factors .
352	352	E. All proxy votes shall be tabulated and reported annually to
353	353	the respective Board of Trustees . For each vote, the report shall
354	354	contain a vote caption, the plan's vote, the recommendation of
355	355	company management, and, if applicable, the proxy advisor 's
356	356	recommendation. These reports shall be posted on a publicly
357	357	available webpage.
358	358	SECTION 6. NEW LAW A new section of law to be codified
359	359	in the Oklahoma Statutes as Section 9106 of Title 62, unless there
360	360	is created a duplication in numbering, re ads as follows:
361	361	A. This act may be enforced by the Attorney General. RBH No. 5078
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388	388	B. If the Attorney General has reasonable cause to believe tha t
389	389	a person has engaged in, is engaging in, or is about to engage in, a
390	390	violation of this article, he or she may:
391	391	1. require such person to file on such forms as he or she
392	392	prescribes a statement or report in writing, under oath, as to all
393	393	the facts and circumstances concerning the violation, and such other
394	394	data and information as he or she may deem necessary,
395	395	2. examine under oath any person in c onnection with the
396	396	violation,
397	397	3. examine any record, book, document, account, or paper as he
398	398	or she may deem necessary, and
399	399	4. pursuant to an order of the Supreme Court of Oklahoma,
400	400	impound any record, book, document, account, paper, or sample or
401	401	material relating to such practice and retain the same in his or her
402	402	possession until the completion of all proceedings undertaken under
403	403	this article or in the courts.
404	404	SECTION 7. NEW LAW A new section of law to be codif ied
405	405	in the Oklahoma Statutes as Section 9107 of Title 62, unless there
406	406	is created a duplication in numbering, reads as follows:
407	407	Should a court of competent jurisdiction hold any provision(s)
408	408	of this chapter to be invalid, such action will not affect any ot her
409	409	provision of this chapter. RBH No. 5078
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436	436	SECTION 8. This act shall become effective November 1, 2023.
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438	438	59-1-5078 CMA 01/17/23
439	439
440	440	THOMAS E. CUMMINS CONSULTING ACTUARY, INC.
441	441	2512 E. 71
442	442	st
443	443	Street , Suite D ∙ Tulsa, Oklahoma 74136
444	444	(918) 492-9658 ∙ (918) 492- 9659
445	445
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449	449
450	450	January 18, 2023
451	451
452	452
453	453
454	454	Representative Mark Lepak
455	455	Room 543
456	456
457	457
458	458	Re: RBH No. 5078
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461	461	RBH No. 5078 defines the fiduciary’s duties for the retirement
462	462	systems.
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468	468	RBH No. 5078 is a nonfiscal bill as defined by OPLAAA .
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471	471	I am a member of the American Academy of Actuaries and meet the
472	472	Qualification Standards of the American Academy of Actuaries to
473	473	render the actuarial opinion herein.
474	474
475	475
476	476	Thomas E. Cummins
477	477
478	478	Thomas E. Cummins, MAAA
479	479
480	480

Oklahoma 2023 Regular Session

Oklahoma House Bill HB1617 Compare Versions