Boards and commissions; repealing certain boards and commissions. Emergency.

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SENATE FLOOR VERSION
February 17, 2026
AS AMENDED

SENATE BILL NO. 1639 By: Paxton of the Senate

and

Hill of the House

An Act relating to boards and commissions; amending
68 O.S. 2021, Section 2357.7, which relates to credit
for investments in qualified venture capital
companies; removing certain authority for the
Oklahoma Capital Investment Board; amending 74 O.S.
2021, Section 85.42, as amended by Section 9, Chapter
336, O.S.L. 2025 (74 O.S. Supp. 2025, Section 85.42),
which relates to the exceptions on the one-year
limitation on entering contracts with certain
persons; removing certain reference; amending 74 O.S.
2021, Section 3601.1, as last amended by Section 36,
Chapter 29, O.S.L. 2023 (74 O.S. Supp. 2025, Section
3601.1), which relates to employees; deleting
reference to the Oklahoma Capital Investment Board
allowable employees; updating statutory language;
updating statutory reference; repealing 63 O.S. 2021,
Sections 1-236, 1-237, 1-237.1, and 1-238, which
relate to definitions used in the Joint Legislative
Committee for Review of Coordination of Efforts for
Prevention of Adolescent Pregnancy and Sexually
Transmitted Diseases, the coordinating council for
the joint committee, the Postponing Sexual
Involvement for Young Teens program, and the state
plan for the committee; repealing 70 O.S. 2021,
Sections 3-117.1, 3-117.2, and 3-117.3, which relate
to the School Finance Review Commission Act, creation
of the School Finance Review Commission, and duties
of the Commission; providing an effective date; and
declaring an emergency.

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BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Section 2357.7, is
amended to read as follows:
Section 2357.7. A. For taxable years beginning after December
31, 1986, and before January 1, 2009, there shall be allowed a
credit against the tax imposed by Section 2355 of this title or
Section 624 of Title 36 of the Oklahoma Statutes for investments in
qualified venture capital companies whose purpose is to establish or
expand the development of business and industry within Oklahoma.
Provided, tax credits against liabilities imposed pursuant to
Section 624 of Title 36 of the Oklahoma Statutes shall be limited to
the amount that would otherwise be collected and allocated to the
General Revenue Fund of the State Treasury.
B. For purposes of this section:
1. “Qualified venture capital company” means a C corporation,
as defined by the Internal Revenue Code of 1986, as amended,
incorporated pursuant to the laws of Oklahoma or a registered
business partnership with a certificate of partnership filed as
required by law if such corporation or partnership is organized to
provide the direct investment of debt and equity funds to companies
within this state, with its principal place of business located
within this state and which meets the following criteria:
a. capitalization of not less than Five Million Dollars
($5,000,000.00),

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b. having a purpose and objective of investing at least
seventy-five percent (75%) of its capitalization in
Oklahoma business ventures. The temporary investment
of funds by a qualified venture capital company in
obligations of the United States, state and municipal
bonds, bank certificates of deposit, or money market
securities pending investment in Oklahoma business
ventures is hereby authorized, and
c. investment of not more than ten percent (10%) of its
funds in any one company;
2. “Oklahoma business venture” means a business, incorporated
or unincorporated, which:
a. has or will have, within one hundred eighty (180) days
after an investment is made by a qualified venture
capital company, at least fifty percent (50%) of its
employees or assets located in Oklahoma,
b. needs financial assistance in order to commence or
expand such business which provides or intends to
provide goods or services,
c. is not engaged in oil and gas exploration, real estate
development, real estate sales, retail sales of food
or clothing, farming, ranching, banking, or lending or
investing funds in other businesses. Provided,
however, businesses which provide or intend to provide

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goods or services, including, but not limited to,
goods or services involving new technology, equipment,
or techniques to such businesses listed in this
subparagraph, and investments in the development of
tourism facilities in the form of amusement parks,
entertainment parks, theme parks, golf courses, or
museums shall not be subject to said such prohibition,
and
d. expends within eighteen (18) months after the date of
the investment at least fifty percent (50%) of the
proceeds of the investment for the acquisition of
tangible or intangible assets which are used in the
active conduct of the trade or business of the
Oklahoma business venture or to provide working
capital for the active conduct of such trade or
business. For purposes of this subparagraph, “working
capital” shall not include consulting, brokerage or
transaction fees. Provided, that the Oklahoma Tax
Commission, upon request and demonstration of need by
a qualified venture capital company or an Oklahoma
business venture, may extend the eighteen-month period
otherwise required by this subparagraph for a period
not to exceed six (6) months. Provided, the
expenditure of the invested funds by the Oklahoma

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business venture shall otherwise comply with the
requirements applicable to the usage of tax credits
for investment in the Oklahoma business venture. As
used in this subparagraph, “tangible assets” shall
include the acquisition of real property and the
construction of improvements upon real property if
such acquisition and construction otherwise complies
with the requirements applicable to the usage of tax
credits for investment in the Oklahoma business
venture and “intangible assets” shall be limited to
computer software, licenses, patents, copyrights, and
similar items;
3. “Direct investment” means the purchase of securities of a
private company, or securities of a public company if the securities
constitute a new issue of a public company and such public company
had previous year sales of less than Ten Million Dollars
($10,000,000.00); and
4. “Debt and equity funds” means investments in debt
securities; including unsecured, undersecured, subordinated or
convertible loans or debt securities; and/or equity securities,
including common and preferred stock, royalty rights, limited
partnership interest, and any other securities or rights that
evidence ownership in businesses; provided such investment of debt

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and equity funds shall not have a repayment schedule that is faster
than a level principal amortization over five (5) years.
C. The credit provided for in subsection A of this section
shall be twenty percent (20%) of the cash amount invested in
qualified venture capital companies which is subsequently invested
in an Oklahoma business venture by the qualified venture capital
company and may only be claimed for a taxable year during which the
qualified venture capital company makes an investment in an Oklahoma
business venture. The credit shall be allowed for the amount of the
investment in an Oklahoma business venture if the funds are used in
pursuit of a legitimate business purpose of the Oklahoma business
venture consistent with its organizational instrument, bylaws or
other agreement responsible for the governance of the business
venture. The qualified venture capital company shall issue such
reports as the Oklahoma Tax Commission may require attributing the
source of funds of each investment it makes in an Oklahoma business
venture. The Oklahoma Capital Investment Board shall have the
authority to certify an entity as a qualified venture capital
company and to certify an investment to be a qualifying Oklahoma
business venture for purposes of complying with subsection B of this
section. Such certification shall be binding on the Oklahoma Tax
Commission. Such certification shall not be mandatory but may be
requested by any entity that desires to be certified. A reasonable
certification fee may be charged by the Oklahoma Capital Investment

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Board for this service. If the tax credit allowed pursuant to
subsection A of this section exceeds the amount of taxes due or if
there are no state taxes due of the taxpayer, the amount of the
claim not used as an offset against the taxes of a taxable year may
be carried forward as a credit against subsequent tax liability for
a period not to exceed three (3) years. No investor in a venture
capital company organized after July 1, 1992, may claim tax credits
under the provisions of this section.
D. No taxpayer may claim the credit provided for in subsection
A of this section for investments in qualified venture capital
companies made prior to January 1, 1987.
E. No investor whose capital is guaranteed by the Oklahoma
Capital Investment Board may claim or transfer the credit provided
for in subsection A of this section for investments in such
guaranteed portfolio.
F. The credit provided for in subsection A of this section, to
the extent not previously utilized, shall be freely transferable to
and by subsequent transferees for a period of three (3) years from
the date of investment in the Oklahoma business venture.
G. F. If a pass-through entity is entitled to a credit under
this section, the pass-through entity shall allocate such credit to
one or more of the shareholders, partners or members of the pass-
through entity; provided, the total of all credits allocated shall
not exceed the amount of the credit to which the pass-through entity

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is entitled. The credit may also be claimed for funds borrowed by
the pass-through entity to make a qualified investment if a
shareholder, partner or member to whom the credit is allocated has
an unlimited and continuing legal obligation to repay the borrowed
funds but the allocation may not exceed such shareholder’s,
partner’s or member’s pro-rata equity share of the pass-through
entity even if the taxpayer’s legal obligation to repay the borrowed
funds is in excess of such pro-rata share of such borrowed funds.
For purposes of this act the Oklahoma Income Tax Act, “pass-through
entity” means a corporation that for the applicable tax years is
treated as an S corporation under the Internal Revenue Code of 1986,
as amended, general partnership, limited partnership, limited
liability partnership, trust or limited liability company that for
the applicable tax year is not taxed as a corporation for federal
income tax purposes.
SECTION 2. AMENDATORY 74 O.S. 2021, Section 85.42, as
amended by Section 9, Chapter 336, O.S.L. 2025 (74 O.S. Supp. 2025,
Section 85.42), is amended to read as follows:
Section 85.42. A. 1. Except as otherwise provided for in this
section or other applicable law, any agency, whether or not such
agency is subject to the Oklahoma Central Purchasing Act, shall be
prohibited from entering into a sole-source contract or agreement or
a contract or agreement for professional services with or for the
services of any person who has terminated employment with or who has

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been terminated by that agency for one (1) year after the
termination date of the employee from the agency. Any contract or
agreement entered into in violation of this subsection shall be
void. Any person found to have violated this subsection shall be
prohibited from entering into any state contract for a period of
five (5) years from the date of the execution of the contract or
agreement. The provisions of this subsection shall not prohibit an
agency from hiring or rehiring such person as a state employee.
2. Any chief administrative officer of an agency, whether or
not such agency is subject to the Oklahoma Central Purchasing Act,
shall not enter into any contract for nonprofessional or
professional services for the purpose of or which would result in
the circumvention of the full-time-equivalent employee limitation
established by law for such agency.
B. Each contract, including change orders, extensions,
renewals, or amendments, entered into by any person or firm with the
State of Oklahoma this state shall include a statement certifying
that no person who has been involved in any manner in the
development, approval, or negotiation of such contract while
employed by the state shall be employed or given anything of value
to fulfill any of the services provided for under the contract.
Each contract, including change orders, extensions, renewals, or
amendments, shall include a statement from the chief executive
officer or head of the contracting state agency certifying that no

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known officer or employee of the contracting state agency who has
any direct or indirect financial, pecuniary, or other personal
interest in the contract has been involved in any manner in the
development, approval, or negotiation of the contract through
influence, decision, recommendation, or otherwise. This subsection
shall not preclude faculty and staff of the institutions within The
Oklahoma State System of Higher Education from negotiating and
participating in research grants and educational contracts. This
subsection shall not apply to Oklahoma Department of Commerce
personnel who contract to provide services to the Oklahoma Capital
Investment Board.
C. As used in this section, “person” means any state official
or employee of a department, board, bureau, commission, agency,
trusteeship, authority, council, committee, trust, school district,
fair board, court, executive office, advisory group, task force,
study group, supported in whole or in part by public funds or
entrusted with the expenditure of public funds or administering or
operating public property, and all committees, or subcommittees
thereof, judges, justices and state legislators.
D. Notwithstanding anything to the contrary in this section,
the following sole-source or professional services contracts are
allowed at any time:
1. A contract for professional services at any time with a
person who is a qualified interpreter for the deaf; and

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2. A contract between a business entity that is a part-time
certified court reporter and the Administrative Office of the
Courts, on behalf of the district courts, or the Office of the
Attorney General.
E. Provided the provisions specified in subsection B of this
section are satisfied, the following professional services contracts
are allowed:
1. The Department of Transportation, Oklahoma Water Resources
Board, Department of Environmental Quality, Oklahoma Tourism and
Recreation Department, the Oklahoma Turnpike Authority and the
Oklahoma Department of Agriculture, Food, and Forestry may contract
with a person who has retired from state service;
2. To maintain public health infrastructure and preparedness,
the State Department of Health and city-county health departments
may contract with a physician assistant, Registered Nurse, advanced
practice nurse, Nurse-Midwife, registered dietician, occupational
therapist, physical therapist or speech-language pathologist who has
retired from state service; and
3. The Department of Mental Health and Substance Abuse Services
may contract with a physician, Registered Nurse, registered
pharmacist or person meeting the definition of a licensed mental
health professional, as defined in Title 43A of the Oklahoma
Statutes, who has separated and/or retired from state service.

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SECTION 3. AMENDATORY 74 O.S. 2021, Section 3601.1, as
last amended by Section 36, Chapter 29, O.S.L. 2023 (74 O.S. Supp.
2025, Section 3601.1), is amended to read as follows:
Section 3601.1. A. For purposes of Sections 3601.1 through
3603 of this title, the term “employee” means a full-time employee
or any number of part-time employees whose combined weekly hours of
employment equal those of a full-time employee, but shall not
include temporary employees working on a seasonal basis between May
1 and October 31.
B. Beginning July 1, 2008, the maximum number of full-time-
equivalent employees for each of the following agencies, boards,
commissions, departments, or programs shall not exceed the numbers
specified in this section, except as may be authorized pursuant to
the provisions of Section 3603 of this title.
MAXIMUM NUMBER OF
FULL-TIME-EQUIVALENT
EMPLOYEES
Oklahoma Employment Security Commission 1150
Oklahoma Accountancy Board 11
Board of Governors of the Licensed Architects,
Landscape Architects and Registered Commercial
Licensed Interior Designers of Oklahoma 4
Board of Chiropractic Examiners 3
State Board of Cosmetology and Barbering 16

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Board of Dentistry 10
Oklahoma Funeral Board 5
State Board of Licensure for Professional
Engineers and Land Surveyors 10
State Board of Medical Licensure and Supervision/
Board of Podiatric Medical Examiners/State
Board of Examiners of Perfusionists 29
Oklahoma Energy Resources Board 5
Oklahoma New Motor Vehicle Commission 6
Oklahoma Board of Nursing 35
Oklahoma State Board of Examiners for Long-Term
Care Administrators 4
Board of Examiners in Optometry 3
State Board of Osteopathic Examiners 7
State Board of Pharmacy 15
State Board of Examiners of Psychologists 2
Oklahoma Real Estate Commission 26
Board of Examiners for Speech-Language Pathology
and Audiology 2
Oklahoma Used Motor Vehicle, Dismantler, and
Manufactured Housing Commission 15
State Board of Veterinary Medical Examiners 6
Oklahoma Firefighters Pension and Retirement
System 13

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Oklahoma Police Pension and Retirement System 12
Teachers’ Retirement System of Oklahoma 52
Oklahoma Public Employees Retirement System 63
Oklahoma Student Loan Authority 85
Oklahoma Industrial Finance Authority/Oklahoma
Development Finance Authority 10
State and Education Employees Group Insurance
Board 178
Oklahoma Capital Investment Board 4
State Board of Licensed Social Workers 1
Oklahoma State Employees Benefits Council 38
Banking Department 46
Liquefied Petroleum Gas Administration 10
C. The duties and compensation of employees, not otherwise
prescribed by law, necessary to perform the duties imposed upon the
Oklahoma Public Employees Retirement System Board of Trustees by law
shall be set by the Board of Trustees.
D. Temporary employees of the Oklahoma Used Motor Vehicle,
Dismantler, and Manufactured Housing Commission between the dates of
November 1 and January 31 annually shall not be counted toward the
maximum number of full-time-equivalent employees provided for in
this section.
SECTION 4. REPEALER 63 O.S. 2021, Section 1-236, is
hereby repealed.

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SECTION 5. REPEALER 63 O.S. 2021, Section 1-237, is
hereby repealed.
SECTION 6. REPEALER 63 O.S. 2021, Section 1-237.1, is
hereby repealed.
SECTION 7. REPEALER 63 O.S. 2021, Section 1-238, is
hereby repealed.
SECTION 8. REPEALER 70 O.S. 2021, Section 3-117.1, is
hereby repealed.
SECTION 9. REPEALER 70 O.S. 2021, Section 3-117.2, is
hereby repealed.
SECTION 10. REPEALER 70 O.S. 2021, Section 3-117.3, is
hereby repealed.
SECTION 11. This act shall become effective July 1, 2026.
SECTION 12. It being immediately necessary for the preservation
of the public peace, health or safety, an emergency is hereby
declared to exist, by reason whereof this act shall take effect and
be in full force from and after its passage and approval.
COMMITTEE REPORT BY: COMMITTEE ON RETIREMENT AND GOVERNMENT
RESOURCES
February 17, 2026 - DO PASS AS AMENDED