Oklahoma House advances renewed plan to restructure TSET governance and redirect earnings toward scholarships

Legislative proposals revive a long-running dispute over a voter-created health endowment

Oklahoma House lawmakers advanced a new set of measures this week aimed at reshaping how the state’s Tobacco Settlement Endowment Trust (TSET) is governed and how its investment earnings are distributed. The proposals cleared the House Rules Committee on Thursday, March 5, 2026, making them eligible for consideration by the full House.

TSET was established through a constitutional amendment approved by voters in 2000 after the national Master Settlement Agreement with tobacco companies. The trust is structured to preserve its principal while using investment earnings for programs intended to improve Oklahomans’ health. A seven-member Board of Directors oversees spending decisions, while a separate Board of Investors manages investments.

Three measures, two distinct approaches

The committee action involved three measures that would move major changes to voters, if they are ultimately approved by the Legislature.

• House Bill 4003 would dissolve the TSET Board of Directors and transfer management, investment, and administrative authority to the Board of Investors. The bill is tied to a constitutional change and would take effect only if that change is approved by voters.

• House Joint Resolution 1077 would send a constitutional amendment to the ballot that would redirect TSET investment earnings in a prescribed order: first to fund the Oklahoma Higher Learning Access Program (Oklahoma’s Promise) scholarships, then to the Education Reform Revolving Fund (often referred to as the 1017 Fund). The resolution also contemplates eliminating the TSET Board of Directors as part of the restructuring.

• House Joint Resolution 1050 would ask voters to revise Board of Directors terms and removal rules, including shortening terms from seven years to four years and allowing appointing authorities to remove their appointees.

Supreme Court ruling frames the 2026 strategy

This year’s push follows a January 13, 2026 Oklahoma Supreme Court decision that struck down a 2025 law changing TSET board member removal and term provisions without a vote of the people. The court held that the constitutional language establishing fixed, staggered seven-year terms could not be altered by statute and that at-will removal conflicted with the constitutional design.

What changes could mean for health programs and education funding

Supporters of restructuring have argued for making TSET spending more directly accountable and for prioritizing education-related uses of investment earnings. Critics and public health advocates have warned that redirecting earnings could constrain long-standing health initiatives financed through TSET returns, including tobacco prevention and cessation efforts and other health-improvement grants.

The measures now set up a choice point for lawmakers: whether to keep TSET’s current governance model intact or to place fundamental changes before voters again.

Next steps

With committee approval secured, the proposals can be scheduled for House floor debate. Any constitutional changes would require legislative approval and then a statewide vote. If placed on a ballot and approved by voters, the changes would revise the constitutional framework that has governed Oklahoma’s tobacco-settlement endowment for a quarter century.