In The Know: Reuters special report examines the 'lavish and leveraged life' of Chesapeake CEO

In The KnowIn The Know is a daily synopsis of Oklahoma policy-related news and blogs. Inclusion of a story does not necessarily mean endorsement by the Oklahoma Policy Institute. E-mail your suggestions for In The Know items to You can sign up here to receive In The Know by e-mail.

Today you should know that Reuters released a special report on the “lavish and leveraged life” of Chesapeake CEO Aubrey McClendon. Businessweek examines the more than $300 million of Oklahoma City real estate owned by Chesapeake. American Airlines is expected to announce soon a new series of management layoffs at its Tulsa facility.

The chemicals company Tronox Inc., which is mired in pollution disputes, will move its headquarters from Oklahoma City to Connecticut with $3 million in incentives from the state. High E. coli bacteria levels in the Oklahoma River caused a wakeboarding competition to be moved from OKC to Guthrie.

State officials posted online the private educational records of students who were appealing for exemptions from high-stakes testing requirements. A graduate of Tulsa’s Street School writes in the Tulsa World that the program saved her life. The OK Policy Blog examines the effects of a flat education budget this year.

David Blatt’s column in the Journal Record discusses why we should reduce barriers to employment for ex-felons. A blogger for National Geographic predicts that Oklahoma City or Tulsa will be the next Austin for live music.

The Number of the Day is the percentage of Oklahoma’s babies and toddlers who live in low-income families. In today’s Policy Note, Demos explains why 401(k) retirement plans have been a failure that could push millions of middle class boomers into poverty.

In The News

Special Report: The lavish and leveraged life of Aubrey McClendon

In an annex at the headquarters of Chesapeake Energy Corp, a unit informally known as AKM Operations manages a top company priority: the personal business of its namesake, Chief Executive Aubrey K. McClendon. According to internal documents reviewed by Reuters, the unit’s accountants, engineers and supervisors handled about $3 million of personal work for McClendon in 2010 alone. Among other tasks, the unit’s controller once helped coordinate the repair of a McClendon house that was damaged by hailstones. Fourteen miles south, at Will Rogers World Airport, Chesapeake leases a fleet of planes that shuttle executives to oil and gas fields — and the McClendon family to holiday destinations. On one trip, the clan took flights to Amsterdam and Paris that cost $108,000; McClendon counted the trip as a business expense. In another case, Chesapeake logs show, nine female friends of McClendon’s wife flew to Bermuda in 2010 without any McClendons aboard. The cost: $23,000.

Read more from Reuters.

Chesapeake developed shopping centers as gas prices fell

Chesapeake Energy Corp., under fire from investor Carl Icahn for focusing on “non-core assets,” has amassed more than $300 million of real estate in its home- town Oklahoma City area, including shopping centers. The exact size of Chesapeake Land Development Co.’s holdings, valued according to county tax records, is unclear from public filings. The empire, which has built at least two retail developments from scratch, has also included a church, houses and a grocery store. The real estate subsidiary is “absolutely” an example of costs that Chesapeake will have to rein in, said Fadel Gheit, an analyst at Oppenheimer & Co. Chesapeake’s home-town development projects illustrate how it can be difficult to distinguish between the personal interests of Chief Executive Officer Aubrey McClendon, who once said he might have been a developer in another life, and those of the company he leads.

Read more from Businessweek.

American Airline managers face job cuts

While American Airlines executives are discussing restructured labor contracts with the company’s unionized mechanics, pilots and flight attendants, the bankrupt company is preparing for further reductions in its management ranks, company sources and court documents say. Some of the management cuts are expected at American’s Maintenance & Engineering Center, which employs 7,000 people at Tulsa International Airport, sources said. American, the principal subsidiary of bankrupt AMR Corp., could announce a new series of management layoffs as soon as Wednesday, sources said. The reductions in the management ranks are part of the company’s overall goal of reducing employee costs by 20 percent in each group – management and support staff, non-union employees, mechanics & related workers, pilots, flight attendants and ground workers, company executives said.

Read more from The Tulsa World.

With $3 million, Connecticut lures Oklahoma chemical firm mired in pollution disputes

When Tronox Inc. emerged from bankruptcy in February 2011, it said it would keep its headquarters in Oklahoma City, though with half as many employees as it had there when the company was spun off from Kerr-McGee Corp. in 2005, according to story in the Oklahoman. On Tuesday, Gov. Dannel P. Malloy announced the state of Connecticut would lend the mining and chemical company $3 million at a discounted rate to help move its headquarters — and 100 jobs — to Stamford. The first $2 million would be forgiven if 60 full-time jobs were established in the first year, and the entire loan would be forgiven if the company sustained 100 jobs for three years. A Stamford headquarters will put Tronox CEO Tom Casey much closer to Manhattan, the location of a complex bankruptcy trial that pits Tronox and the U.S. Environmental Protection Agency against the new owner of Kerr-McGee. Tronox filed for bankruptcy in 2009, unable to cover environmental liabilities that included cleanup costs for Superfund sites, abandoned uranium mines, the Savannah, Ga., pigment processing plant it shuttered three years ago and other locations — in all, 2,772 polluted sites around the country, according to news accounts. News reports, including an account in Environmental Policy Alert, said the U.S. Department of Justice alleged that Kerr-McGee “hatched a plan to spin off Tronox as a way of unloading huge liabilities.”

Read more from The Hartford Courant.

Bacteria in Oklahoma River prompts move for Oklahoma City wakeboarding event

Heavy rains last week are blamed for dumping runoff water with an elevated level of bacteria into the Oklahoma River, prompting organizers to move a wakeboarding competition to Guthrie. The E. coli bacteria level in the Oklahoma River on May 30 was nearly 23 times higher than the level the Oklahoma City allows for events in the river that require body contact with the water, according to testing documents provided by the city. Roger Skeen, who organized the USA Collegiate Nationals wakeboarding event, said he has held an event on the Oklahoma River almost every year since 2006, and hopes to do so again. The strict water testing on the river and official guidelines on what is an acceptable level of bacteria stem from a triathlon in 2009, during which about four dozen athletes became ill because of E. coli in the water.

Read more from NewsOK.

Tulsa students’ private records released on Board of Education website

Hours after the state Board of Education deliberated behind closed doors over seven students’ appeals for exemptions from high-stakes testing requirements, state officials posted the private educational records of each of those students on the state website. All seven students were denied an exemption from the law that requires high school seniors to pass at least four of seven end-of-instruction tests to earn a diploma. The Internet posting includes names, grade-point averages, school districts, learning disabilities, test scores and other information. Addresses and phone numbers were redacted. It prompted an outcry Wednesday from Tulsa-area educators and attorneys who said the state Education Department’s action violates state and federal educational privacy laws.

Read more from NewsOK.

Student: ‘Street School has saved our lives’

Close your eyes and imagine being a teenager in high school having problems getting through each school day and not being able to help yourself. The problem could be drugs, bullying, pregnancy, emotional issues, problems at home, your parents or no parents. Imagine finding a school that understood your plight and was committed to helping you reach your goal of becoming a high school graduate. Imagine attending that school and having teachers, counselors and an administration that truly cared for you. Imagine them helping you through the hurdles (personal or educational) that you faced, day after day, week after week. Finally, imagine walking across a stage and reaching that goal of becoming a high school graduate. A goal that at one time seemed impossible. Now open your eyes and imagine being a student at Tulsa’s Street School. All of us in the graduating class of 2012 have our own life story, each with a beginning and each with a hero called Street School.

Read more from The Tulsa World.

Still stuck in a hole: Funding for public education falls flat

The FY 2013 budget negotiated by legislative leaders and Governor Fallin had some encouraging aspects. Overall appropriations increased by $253 million, or 3.8 percent, and there was additional funding for targeted priorities in human services, health care, transportation and public safety. However, despite a grassroots lobbying campaign by concerned parents and strong statements from school officials about the deepening school funding crisis, education ended up as odd-man-out when it came time to allocate new dollars. Total appropriations to the Department of Education in FY 2013 will be $2,347.2 million. This is an increase of just $16.7 million, or 0.7 percent, compared to FY 2012 and a decrease of $184 million, or 7.3 percent, compared to peak levels in FY 2009.Common education remains the largest single source of state appropriations, but its share of total appropriations in 2013 will have fallen to 34.1 percent, the lowest level since at least FY 2000 and likely the lowest since the Education Reform Act (HB 1017) was implemented in the early 1990s.

Read more from the OK Policy Blog.

David Blatt: Give ex-felons a chance

Last year, Chris Linder won the most votes in the election for mayor of Pawnee. He was well-qualified for the office – a restaurant owner, a volunteer with the chamber of commerce and as a baseball coach, and an active church member. Nevertheless, he was not allowed to serve. In 2000, Linder had been convicted of a felony in Arizona. The felony became public during the campaign, but a plurality of voters believed he was the right person to lead the city anyway. What they didn’t know was that Oklahoma law prohibits anyone convicted of a felony from holding public office for 15 years after their sentence is completed. Oklahoma law prevents ex-felons from pursuing a long list of professions. For any job requiring a state license, a board can deny those with a felony conviction, regardless of what their crime was or how long ago it was committed.

Read more from The Journal Record.

Is the “next Austin” in Oklahoma?

At the risk of cheap rent increasing and a Pinkberry being on every corner, I’m going to go ahead and say it — one of Oklahoma’s two main towns (Oklahoma City and Tulsa) is going to be the next Austin. Granted, I don’t have all the fancy numbers to back this claim up, but fancy numbers are not what Okies are all about. They’re good folks who love their live music, and anyone who begs to differ should spend an evening catching a show at Tulsa’s iconic Cain’s Ballroom. So which is it? Well, I’d say three things: 1. People. As I mentioned, Okies are hungry for entertainment. Years of hearing you all call us a drive-thru state and immediately launching into the song — with more than enough emphasis on the OOOOOOO, thank you — has worn us thin (and we hate anything thin), and has created a monster when it comes to grasping at ways to entertain ourselves.

Read more from The Good Traveler.

Quote of the Day

This is exposing confidential test information, by name, of students who hadn’t anticipated such a thing. I’m just kind of appalled. We would never do this. It’s just common professionalism.
-Union Superintendent Cathy Burden, after school records of students who were appealing for exemptions from high-stakes testing requirements were posted online by the state Board of Education

Number of the Day

55 percent

Percentage of Oklahoma’s babies and toddlers who live in low-income families, compared to 46 percent nationally, 2011

Source: Zero to Three

See previous Numbers of the Day here.

Policy Note

The 401(k) is a failure

The big stock market slide of the past month has been bad news for the over 50 million Americans with 401(k) plans. Many of these investors have yet to recover from the 2008 crash and have been counting on a market upswing to make up for lost ground. Yet even if stocks do rebound, the truth is that most 401(k) holders will never accumulate enough money in these accounts for a secure retirement. Few workers and their employers contribute at the level needed to build up a serious nest egg, and the median balance in a 401(k) for people approaching 65 is under $100,000, according to recent study by my colleague at Demos, Robert Hiltonsmith. On top of that, 401(k)s have been battered by two major stock market crashes in the past 12 years and, further, many Americans have withdrawn money from their 401(k)s to cover emergency expenses. Experts on retirement forecast that millions of middle class baby boomers will fall into poverty, or near poverty, in old age – thanks to the failure of the 401(k) experiment. Why has the 401(k) been such a flop? Five reasons stand out.

Read more from Demos.

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Gene Perry worked for OK Policy from 2011 to 2019. He is a native Oklahoman and a citizen of the Cherokee Nation. He graduated from the University of Oklahoma with a B.A. in history and an M.A. in journalism.

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