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ENGROSSED HOUSE
BILL NO. 4003 By: Caldwell (Trey) of the
House
and
Hall of the Senate
An Act relating to the Tobacco Settlement Endowment
Trust; creating the Funding the Future of Oklahoma –
TSET Modernization Act; amending 62 O.S. 2021,
Section 2302, which relates to the purpose of the
Tobacco Settlement Endowment Trust Fund; eliminating
reference to the Tobacco Settlement Endowment Trust
Fund Board of Directors; expanding duties of the
Tobacco Settlement Endowment Trust Fund Board of
Investors; amending 62 O.S. 2021, Section 2304, which
relates to the Appointments of the Board of Investors
and Directors of the Tobacco Settlement Endowment
Trust Fund; eliminating reference and appointment
process of the Board of Directors; amending 62 O.S.
2021, Section 2306, which relates to the duties of
the Board of Investors of the Tobacco Settlement
Endowment Trust Fund; limiting investment in certain
asset type; eliminating certain duties; establishing
duty to distribute trust fund earnings under
referenced methodologies; amending 62 O.S. 2021,
Section 2307, which relates to determination of
earnings of the Tobacco Settlement Endowment Trust
Fund; eliminating certain consideration; adding
certain consideration; creating the TSET Legacy
Effort Revolving Fund; placing the fund under the
State Department of Health; establishing revolving
fund characteristics; requiring and limiting
expenditure for certain purpose; providing
expenditure and budgeting procedures; providing for
Legacy Effort Grants; establishing eligibility;
exempting awards from the Oklahoma Central Purchasing
Act; requiring the development and implementation of
certain processes; providing for confidential
treatment of applications and proposals during
certain periods; establishing applicability of the
Oklahoma Open Records Act and the Oklahoma Open
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Meeting Act under certain conditions; limiting total
amount of awards; authorizing the promulgation of
rules; repealing 62 O.S. 2021, Sections 2308, 2309,
and 2310, which relate to the Board of Directors of
the Tobacco Settlement Endowment Trust Fund and the
Board's powers and budget; providing for
noncodification; providing for codification; and
providing a conditional effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. NEW LAW A new section of law not to be
codified in the Oklahoma Statutes reads as follows:
This act shall be known and may be cited as the "Funding the
Future of Oklahoma – TSET Modernization Act".
SECTION 2. AMENDATORY 62 O.S. 2021, Section 2302, is
amended to read as follows:
Section 2302. The purpose of the Tobacco Settlement Endowment
Trust Fund Act is to further implement the provisions of Section 40
of Article X of the Oklahoma Constitution that:
1. Created the Tobacco Settlement Endowment Trust Fund, and the
Board of Investors of the Tobacco Settlement Endowment Trust Fund,
and the Board of Directors of the Tobacco Settlement Endowment Trust
Fund;
2. Directs the apportionment of revenues from settlements with
or judgments against tobacco companies between the Tobacco
Settlement Endowment Trust Fund and a special fund established for
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the purpose of receiving tobacco settlement payments not deposited
to the trust fund; and
3. Authorizes the Board of Directors Investors of the Tobacco
Settlement Endowment Trust Fund to expend administer and transfer
trust fund earnings for specific purposes.
SECTION 3. AMENDATORY 62 O.S. 2021, Section 2304, is
amended to read as follows:
Section 2304. A. Appointments to the Board of Investors of the
Tobacco Settlement Endowment Trust Fund shall be staggered as
provided in this section, pursuant to the provisions of Section 40
of Article X of the Oklahoma Constitution. The initial staggered
terms of office of persons appointed prior to April 10, 2001, or
persons appointed to fill the remainder of an initial term of office
shall be as follows:
1. The term of office of the person appointed by the Speaker of
the House of Representatives shall expire June 30, 2001;
2. The term of office of the person appointed by the President
Pro Tempore of the Senate shall expire June 30, 2002;
3. The term of office of the person appointed by the Governor
shall expire June 30, 2003; and
4. The term of office of the person appointed by the State
Auditor and Inspector shall expire June 30, 2004.
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Thereafter, persons shall be appointed for terms of four (4)
years beginning July 1. Any vacancy shall be filled by the
appointing authority for the remainder of the unexpired term.
B. Appointments to the Board of Directors of the Tobacco
Settlement Endowment Trust Fund shall be staggered as provided in
this section, pursuant to the provisions of Section 40 of Article X
of the Oklahoma Constitution. The initial staggered terms of office
of persons appointed prior to April 10, 2001, or persons appointed
to fill the remainder of an initial term of office shall be as
follows:
1. The term of office of the person appointed by the Speaker of
the House of Representatives shall expire June 30, 2001;
2. The term of office of the person appointed by the President
Pro Tempore of the Senate shall expire June 30, 2002;
3. The term of office of the person appointed by the Governor
shall expire June 30, 2003;
4. The term of office of the person appointed by the Attorney
General shall expire June 30, 2004;
5. The term of office of the person appointed by the State
Treasurer shall expire June 30, 2005;
6. The term of office of the person appointed by the State
Auditor and Inspector shall expire June 30, 2006; and
7. The term of office of the person appointed by the State
Superintendent of Public Instruction shall expire June 30, 2007.
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Thereafter, persons shall be appointed for terms of seven (7)
years beginning July 1. Any vacancy shall be filled by the
appointing authority for the remainder of the unexpired term.
SECTION 4. AMENDATORY 62 O.S. 2021, Section 2306, is
amended to read as follows:
Section 2306. A. The Board of Investors of the Tobacco
Settlement Endowment Trust Fund shall discharge their duties as
trustees of the Tobacco Settlement Endowment Trust Fund:
1. With the care, skill, prudence, and diligence, under the
circumstances then prevailing, that a prudent person acting in a
like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims;
2. By diversifying the investments in the trust fund so as to
minimize the risk of large losses, unless, under the circumstances,
it is clearly prudent not to do so; and
3. In accordance with the laws, documents, and instruments
governing the trust fund.
B. The Board of Investors shall retain qualified investment
managers to provide for the investment of the monies of the trust
fund. The investment managers shall be chosen by a solicitation of
proposals on a competitive basis pursuant to standards set by the
Board of Investors. The investment managers shall manage those
monies of the trust fund allocated to the investment managers in
compliance with the overall investment guidelines set by the Board
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of Investors. The monies of the trust fund allocated to the
investment managers shall be managed by the investment managers in
accordance with the investment guidelines and other directions of
the Board of Investors. The investment managers may sell
investments and realize losses if such action is considered
advantageous to longer-term return maximization. Because of the
total return objective, no distinction shall be made for management
and performance evaluation purposes between realized and unrealized
capital gains and losses. The Board of Investors may have the State
Treasurer manage those monies not specifically allocated to the
investment managers.
C. The trust fund may be invested in the manner in which a
prudent person would invest it and consistent with the manner that
state retirement funds are invested, provided that total investment
amounts directed toward venture capital opportunities shall not
aggregate to an amount greater than ten percent (10%) of the value
of the trust at the time of investment.
D. The Board of Investors shall select a custodial bank to
settle transactions involving the investment of funds in the trust
fund and to hold custody of the securities in the trust fund
portfolio. The custodian shall be a bank or trust company offering
pension fund master trustee and master custodial services. The
custodian shall be chosen by a solicitation of proposals on a
competitive basis pursuant to standards set by the Board of
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Investors. The Board of Investors may also select professional
investment consultants, auditors, and actuaries to assist the Board
of Investors in carrying out its fiduciary responsibilities. All
these professionals shall be selected by a solicitation of proposals
on a competitive basis pursuant to standards set by the Board of
Investors.
E. The Board of Investors shall choose the professional
custodians and managers of the assets of the trust fund, shall
establish investment and fund management guidelines, and shall adopt
an investment policy. The selection of investment managers,
investment consultants, auditors, and actuaries, and a custodian
bank shall be exempt from the provisions of the Oklahoma Central
Purchasing Act.
F. The Board of Investors shall set aside cash reserves from
the earnings of the Tobacco Settlement Endowment Trust Fund if
requested by the Board of Directors of the Tobacco Settlement
Endowment Trust Fund pursuant to subsection B of Section 10 of this
act distribute trust fund earnings as required pursuant to
subsections E and F of Section 40 of Article X of the Oklahoma
Constitution. The additional amount required for distribution
necessary to fully fund awards allowed pursuant to the Oklahoma
Higher Learning Access Act shall be the amount calculated annually
pursuant to subparagraph b of paragraph 1 of Section 34.87 of Title
62 of the Oklahoma Statutes.
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G. The State Treasurer shall provide any necessary staff
support to the Board of Investors. The cost of up to two full-time-
equivalent employees for the Office of the State Treasurer may be
considered as an administrative expense of the trust fund. However,
the amount provided to the State Treasurer for this purpose shall be
determined by the Board of Directors of the Tobacco Settlement
Endowment Trust Fund.
SECTION 5. AMENDATORY 62 O.S. 2021, Section 2307, is
amended to read as follows:
Section 2307. A. On or before September 1 of each year, the
Board of Investors of the Tobacco Settlement Endowment Trust Fund
shall determine the earnings of the trust fund for the previous
fiscal year ending June 30. In determining earnings, the Board of
Investors shall certify an amount which is prudent under the
standard set forth in paragraph C of this section. The earnings so
determined and certified by the Board of Investors for each fiscal
year shall constitute the earnings of the Tobacco Settlement
Endowment Trust Fund for the purposes of Section 40 of Article X of
the Oklahoma Constitution.
B. "Earnings" consist of dividends and interest, less fees to
manage the fund.
C. In the administration of the powers to determine earnings,
to make and retain investments, and to delegate investment
management of institutional funds, the Board of Investors shall
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exercise ordinary business care and prudence under the facts and
circumstances prevailing at the time of the action or decision. In
so doing, the Board of Investors shall consider:
1. Long- and short-term needs of the trust fund in carrying out
its purposes including the funding of awards allowed pursuant to the
Oklahoma Higher Learning Access Act;
2. The present and anticipated financial requirements for
programs funded by the Board of Directors of the Tobacco Settlement
Endowment Trust Fund;
3. Expected total return on its investments;
4. 3. Price level and inflation trends; and
5. 4. General economic conditions.
SECTION 6. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 1-105d.1 of Title 63, unless
there is created a duplication in numbering, reads as follows:
A. There is hereby created in the State Treasury a revolving
fund for the State Department of Health to be designated the "TSET
Legacy Effort Revolving Fund". The fund shall be a continuing fund,
not subject to fiscal year limitations, and shall consist of all
monies directed to the fund by law. All monies accruing to the
credit of said fund are hereby appropriated and may be budgeted and
expended by the State Department of Health as provided in subsection
B of this section. Expenditures from said fund shall be made upon
warrants issued by the State Treasurer against claims filed as
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prescribed by law with the Director of the Office of Management and
Enterprise Services for approval and payment.
B. 1. The State Department of Health shall utilize the funds
of the TSET Legacy Effort Revolving Fund to fund Legacy Effort
Grants.
2. Eligibility for Legacy Effort Grants shall be limited to
private, nonprofit, and public entities who were receiving a grant
award from the Tobacco Settlement Endowment Trust Fund during the
2025 calendar year.
3. The selection and awarding of grants, whether in the form of
professional service contracts or any other funding mechanism
developed by the State Department of Health, awarded pursuant to the
Legacy Effort Grants program developed under this subsection, shall
be exempt from the requirements of the Oklahoma Central Purchasing
Act.
4. The State Department of Health shall develop competitive
processes for awarding Legacy Effort Grants under this subsection.
5. The terms of any request for proposals, request for
applications, invitations for bid, bid notice, grant proposal, or
any other solicitation issued by the State Department of Health to
solicit or invite applications, proposals, bids, or responses to
obtain funding under the Legacy Effort Grants program developed
under this subsection shall be confidential until the date and time
at which the solicitation is to be made equally and uniformly known
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to all prospective applicants and the public, at which point all
such documents and information shall be uniformly known to all
prospective applicants and the public, and shall be subject to the
Oklahoma Open Records Act and Oklahoma Open Meeting Act. Any
application, proposal, bid, or any other document to obtain funding
in response to any solicitation of the State Department of Health
under the Legacy Effort Grants program developed under this
subsection shall be confidential until the date and time of award of
the grant or contract, at which point all such documents and
information shall be subject to the Oklahoma Open Records Act and
Oklahoma Open Meeting Act. Any unsolicited application, proposal,
bid, or any other document to obtain funding shall not be considered
confidential and shall be subject to the Oklahoma Open Records Act
and Oklahoma Open Meeting Act at all times.
6. The total cost of Legacy Effort Grant awards shall not
exceed the monies available in the TSET Legacy Effort Revolving Fund
created in subsection A of this section.
C. The State Department of Health may promulgate rules as
required to implement the provisions of this section.
SECTION 7. REPEALER 62 O.S. 2021, Sections 2308, 2309,
and 2310, are hereby repealed.
SECTION 8. This act shall become effective only upon the
adoption by the People of Oklahoma of the State Question created
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pursuant to Enrolled HJR 1077 or HJR 1076 of the 2nd Session of the
60th Oklahoma Legislature.
Passed the House of Representatives the 25th day of March, 2026.
Presiding Officer of the House
of Representatives
Passed the Senate the ___ day of __________, 2026.
Presiding Officer of the Senate