Charles McCall removes 2 from pension board after vote on anti-oil and gas banking law

Oklahoma House Speaker Charles McCall is replacing two of his appointees to a state pension system. The move follows a board vote in August to use an exemption from a new state law forbidding the state from doing business with financial firms perceived to be hostile to the oil and gas industry.

The board replacements came as the state Senate held an interim study Wednesday morning over the implementation of the Oklahoma Energy Discrimination Elimination Act. The law, passed as House Bill 2034 in 2022, has caused confusion for cities and counties and sown disagreement between Treasurer Todd Russ and some board members and staff for the state’s pension systems.

McCall decided not to keep Quyen Do and Tracey Ritz as his appointees on the board for the Oklahoma Public Employees Retirement System. Their four-year terms expired in January, although they had been serving on an interim basis for six meetings this year.

The board voted 9-1 in August to exercise a financial responsibility exemption to the law so it wouldn’t have to divest $6 billion in pension assets managed by BlackRock Inc. That firm and five others are on the latest version of the restricted companies list put out by Russ’ office. Staff for the pension system said it could cost an estimated $10 million to divest holdings from BlackRock.

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Do, who works for the House, referred questions to the speaker’s office. Ritz said Wednesday afternoon she had not yet heard from House staff about not being reappointed. The Oklahoma Public Employees Association recommended her to the speaker for the board appointment in 2019.

“I took my position on that board very seriously,” Ritz said of her vote to take the exemption. “I just looked at all the information the (OPERS) staff had given us as well as the costs involved in changing the portfolio. My fiduciary responsibilities led me to that conclusion. I voted my own conscience as I felt what was needed to protect my own retirement system. If we’re going to have to take a lot of money out because we have to change things on the portfolio, that’s a hit to my pocket as well as every other state employee out there.”

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McCall spokesman Daniel Seitz said the speaker did not have any conversations with Do and Ritz about the Oklahoma Public Employees Retirement System board vote to take the exemption. He had no timeline on naming replacements to the board. The next board meeting is scheduled for Oct. 19.

“We routinely replace expired positions, especially where many people could serve, so as to give more citizens the opportunity to participate,” Seitz said in a statement.

Russ chairs the Oklahoma State Pension Commission that oversees policies for all the state’s pension systems. At his urging, the commission sent a letter to the Oklahoma Public Employees Retirement System board last month outlining opposition to the exemption vote. Russ, who also serves on the Oklahoma Public Employees Retirement System board, was the lone no vote at the board’s exemption vote in August.

In his letter, Russ said the board’s request for proposals for new fund managers came in a compressed time frame and its analysis of the bids and an analysis by an independent consultant favored the status quo. He also said the exemption taken was so broad it effectively negates the law.

“The board should immediately begin a new RFP process that addresses the issues raised above, and after reviewing those bids, hold another hearing at which the board can make a decision that complies with the EDEA and its fiduciary duties,” Russ said in the letter.

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The energy discrimination law may be tweaked in the upcoming regular session that begins in February, several senators said during Wednesday’s interim study.

“There is confusion in this bill,” said Sen. Dave Rader, R-Tulsa. “We have good people disagreeing. We have people trying to do their jobs. We have pension managers and their boards not agreeing with the treasurer.”

Sen. Kristen Thompson, R-Edmond, said it appears the law gives the treasurer a lot of leeway in determining how financial firms are discriminating against the oil and gas industry. She asked how companies can get off the list.

“It seems like this could be very, very subjective,” Thompson said.

Russ said his office used advice from other states to develop a questionnaire to financial companies doing business with the state. The first version of the restricted list incorrectly included several private companies because they failed to respond to the questionnaire. Russ said the list included companies with fossil fuel investments that had also signed on to climate-related pledges for their investments.

“While they still held hundreds of millions or billions, it was clear they were walking away from that (oil and gas) industry,” Russ said. “It was the trend that was my concern.”

Russ told senators the law needs to be clarified on how exemptions can be taken and if divestment costs can be traced to the value of the underlying assets rather than the typical transaction costs in administration of pension assets.

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“If the bill is important to the state of Oklahoma, it’s got to be clear enough that it’s defensible, otherwise we won’t change one penny of our financial position in the state as it relates to the pensions themselves,” Russ said.

Apart from OPERS, the Oklahoma Firefighters Pension and Retirement Board may have to find a new custodian bank for its $3.5 billion system as State Street remains on the treasurer’s restricted company list. Custodian banks provide a wide range of services for pension systems, including moving money around from a system’s various investments and portfolios. State Street has been the system’s custodian banker for more than 40 years.

Russ said he understood some of the pushback from state pension systems over the law.

“It’s disruptive,” Russ said. “It’s uncomfortable. You’ve got years of relationships with investment advisers. Hopefully we can walk through this together and make that a successful transition.”

Corporation Commissioner Kim David, who sponsored the bill as a senator before winning a seat in November on the Oklahoma Corporation Commission, said she talks frequently with large investment firms in her role as a utility regulator. David said the law is helping change the conversation over some of those companies’ environmental, social and governance policies.

“It is having an effect,” David said. “It’s having a positive effect for Oklahoma. Not on a wide scale with your big investment companies that are worldwide; they are still insisting they are not going to invest in oil and gas. But it is with the banking community as a whole. You’re starting to see some changes.”

David said the law included ways for Oklahoma cities, counties and state pension systems to take exemptions if they could show proof that divesting or canceling contracts would damage their financial positions.

“We did not want to do any damage to the political subdivisions or our retirement systems,” David said of the legislative intent behind the law.

Russ agreed with several senators that any updates to the law should take out the provision that applies to cities and counties that have contracts in excess of $100,000 with banks on the restricted list. The city of Stillwater put a project on hold after Bank of America was placed on the list.

A Kansas-based nonprofit, the State Financial Officers Foundation, has been providing Russ and other Republican state treasurers and financial officials with talking points and opinion columns targeting what they perceive to be out-of-control climate policies approved by shareholders of publicly traded banks and financial companies.

The State Financial Officers Foundation does not list its donors or sponsors, but according to the emails obtained by Oklahoma Watch, much of its media outreach includes Fox News, Newsmax and other conservative-leaning outlets like The Daily Signal, Brietbart and the Free Beacon.

Oklahoma Watch, at, is a nonprofit, nonpartisan news organization that covers public-policy issues facing the state.

This article originally appeared on Oklahoman: Oklahoma pension system board members removed after vote on bank ban

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