In The Know: Stockholder pushing Chesapeake to reincorporate in Delaware

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 a Chesapeake stockholder is pushing a measure to reincorporate the company in Delaware in order to get around an Oklahoma law that prevents annual elections of the entire board. The law requiring staggered terms was passed last year in Oklahoma at the urging of Chesapeake. Another investor is calling on the Chesapeake board to fire CEO Aubrey McClendon. Chesapeake took out a $3 billion dollar loan to buy time until it can find a buyer for assets it’s trying to auction.

Republican legislators from Enid say they do not believe tax cuts will happen this year. The Tulsa World writes that there are many reasons why it’s the wrong time for tax cuts. SoonerPoll finds that Oklahomans do not support a tax cut that would mean less money for social programs, roads and bridges, and education. Soonerpoll’s findings are similar to an earlier poll released by the Oklahoma Advocacy Project.

The Tulsa World reports that declining revenues for education are primarily the result of a shrinking overall state budget. Educators spoke with the World about the consequences of more budget cuts. Among the programs at risk is the Webster High School band.

A new headquarters for the state medical examiner’s office, which was approved by lawmakers and signed into law two years ago, is in jeopardy due to lack of funding. Federal officials are threatening Oklahoma with a loss of millions of dollars if the state continues to make public the histories of children killed or nearly killed by child abuse or neglect. Corrections officials are facing a lawsuit for letting incarcerated mothers decide who will care for the babies born in prison.

Advocates for expanded gun rights in Oklahoma are claiming success in the 2012 legislative session, and a lawmaker said the ultimate goal is to allow anyone to publicly carry a firearm without a license. The Sierra Club argued in court that a delay — sought by Oklahoma’s attorney general and a utility — of a plan to cut air pollution would cause premature deaths and increased heart attacks for Oklahomans.

The Number of the Day is the proportion of Oklahoma families that claim the Earned Income Tax Credit on their state returns. In today’s Policy Note, Atlantic Cities examines what House Republicans’ attempt to kill the American Community Survey would actually mean.

In The News

Chesapeake pushed to reincorporate in Delaware

One of the earliest critics of Chesapeake Energy Corp is a 70-year-old Denver investor with no patience for e-mail. Armed instead with just a telephone and a fax machine, Gerald Armstrong pushed for corporate governance changes at the Oklahoma energy company long before the recent attention on the oversight of its founder and Chief Executive Officer, Aubrey McClendon. In 2008 and 2009, Armstrong convinced a majority of Chesapeake shareholders to back proposals for annual elections of directors, something he said would make them more accountable. After those votes, Oklahoma adopted a law that effectively undermined his victories. Now, Armstrong is at it again, asking company stockholders to approve in June a measure to reincorporate Chesapeake in Delaware, which would render the Oklahoma law irrelevant.

Read more from Reuters.

Previously: Oklahoma board rule benefits Chesapeake from The Wall Street Journal.

Investor calls on Chesapeake board to fire CEO McClendon

A leading fund manager called on the board of Chesapeake Energy to fire its chief executive on Monday after it revelations that he had taken $1.1 billion in personal loans against his stakes in the energy company. In an open letter to the board of directors, Pedro de Noronha, managing partner and portfolio manager at Noster Capital, said Aubrey McClendon should be fired with immediate effect and that other CEOs would have been removed for “far lesser infraction[s]”. The pay package received by McClendon over the last five years—amounting to $303.6 million—made him the second highest paid CEO in the U.S. during a period in which the energy company’s share price had fallen 23 percent de Noronha said.

Read more from CNBC.

Chesapeake takes out $3 billion loan

Chesapeake Energy Corp. (CHK)’s $3 billion lifeline from New York banks increases the pressure on Chief Executive Officer Aubrey McClendon to sell Texas oilfields and find deep-pocketed drilling partners. Chesapeake, the worst-performing U.S. oil and natural-gas stock this year, can’t afford to delay $14 billion in asset sales that it warned investors may hurt its ability to comply with earlier loan agreements. The company is trying to cope with a cash crunch caused by low natural-gas prices. Chesapeake told investors on May 11 that it may be forced to postpone oilfield sales and joint-venture agreements to conserve cash flow needed to comply with bank covenants. Within hours, the company announced a $3 billion short-term loan from Goldman Sachs Group Inc. (GS) and Jefferies Group Inc. (JEF) to tide it over until it can find buyers for assets it’s trying to auction.

Read more from Bloomberg.

Enid legislators say tax cuts unlikely

As the Legislative session starts the final two weeks before constitutional adjournment, Enid-area legislators say don’t expect those tax cuts. State Sen. Patrick Anderson, R-Enid, said tax cuts probably are dead in his half of the Legislature. The tax cuts originally were to be paid for through elimination of tax credits. Dumping those tax credits did not occur, and the Senate is concerned about the price of natural gas and its impact on the budget. “I think the state senate has become very concerned about the state budget with reference to natural gas prices,” Anderson said. “They are down to about $2, and at the beginning of the session, when we were told how much money we would have, the price was about $3.63. “That’s about $100 million less in state revenue than anticipated. That’s a big problem.”

Read more from the Enid News and Eagle.

See also: Tax cuts can wait from The Tulsa World

Income tax cut support ‘depends’

Whether Oklahomans want a state income tax cut depends, it appears, on how they are asked. When asked 504 likely voters last week whether they would support such a cut, 61 percent said yes. That support faded quickly, however, when the question was changed to whether they would support a cut if it “meant less money” for social programs, roads and bridges and education. Of the 305 who said they’d support an income tax cut, 58 percent changed their answer when less money for “state-funded Medicaid and similar programs” was added to the question. Sixty-four percent changed their minds if a tax cut meant less money for “roads and bridges,” and 67 percent backed off if the cut impacted education.

Read more from The Tulsa World.

Previously: New poll shows Oklahomans oppose income tax proposals from the OK Policy Blog

Education funding cut from smaller pie

Oklahoma’s Department of Education has the same problem as other state agencies, according to an analyst: The state budget is smaller than it used to be. “What we’re seeing is the overall pie is shrinking,” said Gene Perry, a policy analyst at the Oklahoma Policy Institute. “So every agency is facing the cost of that, including education.” The Department of Education received $253.5 million less in state appropriations in fiscal year 2012 than in its most recent funding peak of fiscal year 2009, Oklahoma Office of State Finance data show. The 10 percent drop in department appropriations occurred while inflation rose nearly 3 percent in southern urban areas, according to the Bureau of Labor Statistics. Although total dollars have declined, the percentage of funds that the education department receives from the state budget has remained relatively constant over the past decade – ranging from 35 to 38 percent of total appropriations, data show.

Read more from The Tulsa World.

Educators fear consequences of more budget cuts

Less than one year after finding a new school home, Brian Banfield is seeing his professional future go into limbo because of the budget cuts affecting public schools across Oklahoma. Banfield’s previous school closed as part of a 2011 district consolidation effort. Now, evaporating federal funds will force Tulsa’s Eliot Elementary to do without this young science teacher. “We have some budding scientists here because the science teacher before me was excellent. It’s such a shame because you form these bonds with the kids, parents and faculty, and then you have to leave that,” he said. A Tulsa World analysis of data from the Office of State Finance shows a staggering string of lower state aid allocations for public schools since revenue collections plummeted in 2009 – $300 million less in 2010, $295.7 million less in 2011 and $253.5 million less in 2012. In Tulsa-area schools this year, that meant $237 to $387 – or 13 to 20 percent – less in state aid for every child compared to three years ago.

Read more from The Tulsa World.

See also: Budget cuts endangering Tulsa school’s band program from The Tulsa World

Funding for Oklahoma medical examiners’ office is at risk

A new headquarters for the state medical examiner’s office in Edmond — a concept approved by lawmakers and signed into law two years ago — is in jeopardy. Sen. Clark Jolley, chairman of the Senate Appropriations Committee, said the project has come “under a petty political attack” instead of truly questioning its validity. Budget negotiators still are debating whether to appropriate extra money to the medical examiner’s office to pay the debt service payments for the $42 million project, which consists of constructing and equipping a building on the University of Central Oklahoma campus. The legislatively appropriated budget of about $6.6 billion has to be finalized in two weeks; an agreement is expected this week. Complicating matters is a request for an attorney general’s opinion on the process being used to pay for the building. Sen. Patrick Anderson, R-Enid, wants an opinion on whether it is legal to include the medical examiner building in a program used by colleges and universities to pay for various projects.

Read more from NewsOK.

Oklahoma threatened with loss of federal funding over release of child abuse histories

Federal officials are threatening Oklahoma with a loss of millions of dollars if the state continues to make public the histories of children killed or nearly killed by child abuse or neglect. Complying would mean Oklahomans would no longer have access to the types of reports that in the past have revealed massive failures in Oklahoma’s child welfare system that contributed to deaths of children like Kelsey Smith-Briggs and Serenity Deal. However, ignoring the demand would place Oklahoma’s Department of Human Services at risk of losing more than $50 million in federal funds, officials say. State and national child welfare reformers are incensed — calling the threat “irresponsible” and “unfathomable.”

Read more from NewsOK.

Lawsuit filed over letting mothers decide who will care for babies born in prison

More than 200 babies have been born to women in Oklahoma prisons in the last six years, and prison officials are facing a lawsuit for letting incarcerated mothers decide who will care for the babies. The ongoing federal lawsuit centers on the murder of a 3-year-old girl who was known as “Precious Doe” until her body was identified. The lawsuit contends the Oklahoma Corrections Department should contact the Oklahoma Department of Human Services whenever pregnant inmates give birth. Corrections officials are fighting the lawsuit. “We don’t have any control or authority of the child because they’re not in our custody,” spokesman Jerry Massie said. The girl’s father complains she would still be alive if prison officials had just notified DHS after she was born.

Read more from NewsOK.

Gun advocates claim victory in legislature

Advocates for expanded gun rights in Oklahoma are claiming success in the 2012 legislative session after the passage of several pro-gun measures, including one that allows permit holders to openly carry firearms. Gov. Mary Fallin already has signed a bill allowing gun owners from other states to carry concealed weapons in Oklahoma, and another bill approved by the Legislature and sent to Fallin would prohibit the governor or any other state or local official from confiscating or banning firearms during a state of emergency. Democratic Gov. Brad Henry vetoed an open-carry bill two years ago amid opposition from law enforcement, but even after Fallin was elected, a similar bill was derailed in a House committee last year after some Republicans expressed concern it could send a negative message to out-of-state businesses looking to locate here. The most ardent gun rights supporters, like Sen. Steve Russell, R-Oklahoma City, maintain the Second Amendment to the U.S. Constitution guarantees any law-abiding adult should be able to publicly carry their weapon. Spencer said so-called “constitutional carry,” which doesn’t require a license, is the group’s ultimate goal.

Read more from the Enid News and Eagle.

Sierra Club, EPA seek to deny Oklahoma AG’s delay of pollution rule

An environmental group claims a delay — sought by Oklahoma’s attorney general and a utility — of a plan to cut air pollution would cause premature deaths and increased heart attacks for Oklahomans. The Sierra Club joined the Environmental Protection Agency in asking an appeals court to deny requests by Attorney General Scott Pruitt and Oklahoma Gas and Electric Co. to block the plan. Pruitt and the utility want the 10th U.S. Circuit Court of Appeals to grant a stay on the pollution-reduction requirement, known as a “final rule,” that the EPA imposed in December. The requirement affects three power plants. Two are operated near Pawnee and Muskogee by OG&E, and one is operated near Oologah by American Electric Power-Public Service Co. of Oklahoma. Pruitt and OG&E asked the court in April to delay the requirement until the judges decide whether to overturn it, as requested by the attorney general and utility. Judges are not expected to decide until late this year or early next year whether to overturn the requirement.

Read more from NewsOK.

Quote of the Day

I would counter this statement with a reminder that DHS would have never been sued if things were just fine, our prisons would not have staffing ratios of 1 officer for every 160 inmates, we would not have 6th grade classrooms with 39 students and our Medical Examiners office would be back on track for accreditation.

Rep. Emily Virgin, D-Norman, responding to House Speaker Kris Steele’s remark that previous tax cuts have not harmed core government services

Number of the Day

1 in 4

Proportion of Oklahoma families that claim the Earned Income Tax Credit on their state returns, 2009

Source: Oklahoma Policy Institute

See previous Numbers of the Day here.

Policy Note

What killing the American Community Survey would actually mean

So the Republican-led House of Representatives this week voted 232-190 to eliminate the American Community Survey, the annual survey of about 3 million randomly chosen U.S. households that’s like the Census only much more detailed. It collects demographic details such as what sort of fuel a household uses for heating, the cost of rent or mortgage payments, and what time residents leave home to go to work. While the elimination of the ACS would take a slight nibble out of the roughly $3.8 trillion in government expenditures proposed in the 2013 federal budget, its negative impacts could be much greater. William Frey, a demographer at Brookings, says the elimination of the information collected by the ACS would be like steering blind. “Here we would be, the most developed country in the world, the richest country in the world with absolutely no information to make decisions,” Frey says. If there were no collection of such detailed information on the characteristics of neighborhoods and communities, Frey says it would be much more difficult to allocate the money needed to site and open schools, hospitals, police and fire stations, and many other services and amenities. “We’re still going to have to make decisions about those different institutions, but we would make them with very little information, which means that a lot of money would be wasted,” says Frey.

Read more from Atlantic Cities.

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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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