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Red state financial official warns of threat DEI poses to shareholders

Fox News Digital spoke to Utah State Treasurer Marlo Oaks at the State Financial Officers Foundation conference in Orlando, Florida

A new report warns that red states are quietly adopting liberal policies — including DEI mandates, ESG investing, and gender ideology — even under Republican leadership, due to deep-rooted influence from national bureaucratic organizations.

The State Leadership Initiative (SLI), a group focused on state-level policy reform, argues in its "Shadow Government" report that unelected national associations are embedding progressive ideologies into state bureaucracies across the country, regardless of who voters elect.

"Conservative leaders are fond of declaring victory," the report reads. "They win elections, pass legislation, and appoint agency heads with great fanfare, yet, on issue after issue, the administrative state trudges forward in open defiance of their mandate: enforcing equity initiatives, embedding climate policy, and advancing bureaucratic priorities wholly alien to the voters who ostensibly elected the government. This disconnect is not incidental. It is structural."

The report claims that dozens of well-funded national associations — often branded as nonpartisan or professional groups — are responsible for this "shadow governance." These organizations set policy frameworks, distribute federal funding and provide "best practices" guidance that often aligns with left-wing values.

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A new report from the State Leadership Initiative says that conservative states are still espousing liberal policies.  (Getty Images)

Groups named in the report include the National Association of State Treasurers (NAST), National Association of Medicaid Directors (NAMD) and the National Association of State Boards of Education (NASBE).

"Every single one of these associations pushes DEI," SLI founder and president Noah Wall told Fox News Digital. "It doesn’t matter how specific—whether it's a fish and wildlife group or a treasury department—DEI is a core part of their programming."

Wall said SLI examined 23 of the largest associations for the report and found widespread adoption of progressive agendas, including diversity, equity and inclusion (DEI), environmental, social, and governance (ESG) principles and gender ideology initiatives.

The report characterizes the influence of these organizations as a form of "shadow governance," where state bureaucrats adopt ideological frameworks from national partners without input from lawmakers or voters.

"The ideological left does not need to win a single statehouse so long as it controls the bureaucratic bloodstream," the report claims.

The State Leadership Initiative warns that this arrangement allows DEI programming to persist in state transportation departments, ESG investing standards to dictate financial strategy and gender ideology to shape school curricula — even in states where voters oppose these ideas. State treasurers may object to ESG investment criteria, but find that national rankings and training frameworks still push those standards. A superintendent may oppose gender-affirming school policies, but still face accreditation pressure from a national group that insists on "inclusive pedagogy." 

In short, the report argues that these associations have created a parallel system of governance — one that functions independently of voter oversight and continues to advance a progressive agenda even under conservative administrations.

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The problem, Noah Wall, founder and president of the State Leadership Initiative, told Fox News Digital in an interview, is that national associations which work throughout the state bring agendas like DEI with them.  (Istock; Getty Images)

In one example, the report alleges that the NAMD pushed equity — not outcomes — as a top priority of Medicaid reform. 

In the NAMD 2021 Regulatory Priorities document, the group lists 11 "broad issues" that Medicaid directors could focus on to improve state Medicaid programs. The first priority listed was "advancing equity in Medicaid" and it stated, "Equity work should include a focus on racial and ethnic minorities, rural populations, Tribal populations, and any other groups experiencing disparate health outcomes, with an understanding that inequities are multidimensional and often fall across multiple population characteristics or categories. We also see discrete areas where focus would be beneficial, bearing in mind that the work to advance equity in Medicaid is holistic and branches across all issue domains."

Another example was NAST having a standing DEI committee and alleging that the group was embedding DEI into hiring and treasury operations. In 2022, the chair of the DEI committee shared a message with other members of NAST highlighting the DEI work in her state and how she and others on the committee were working to share best practices on how to incorporate DEI policies in their state. 

"Our goal is to gather resources to support our fellow treasurers. We plan to send out a survey to gather information on DE&I initiatives in the different states, similar to the successful approach we used with Financial Education several years ago. The results from this survey will be shared with everyone and could provide a basis for us to host future panels and webinars to support each other’s strategies," Deborah B. Goldberg, who was the Massachusetts State Treasurer, wrote.

She also shared how her state prioritized hiring a diverse workforce and how it benefited the treasury workforce.

"By starting with a diverse transition team and utilizing more extensive outreach we found that an exceptional talent pool began applying for positions in our various offices. And over the years, we have seen how diversity benefits and enriches our entire Treasury workforce," she wrote. "We truly pride ourselves in promoting DE&I within our office. Even though we are the most diverse office in the Massachusetts state government, we do not rest on our laurels. Our Treasury team began hosting monthly DE&I educational events in February of 2019, created a formal DE&I policy in December of 2020, and implemented a DE&I Strategic plan in August of 2021. We have developed a DE&I Working Group and DE&I Champions who meet regularly to brainstorm new ways to pursue DE&I in our offices and update one another on the accomplishment of department specific goals."

When reached for comment, NAST said the DEI committee in 2022 was an ad hoc committee and those committees expire at the end of the year, and they currently do not have a DEI committee. They also noted to Fox News Digital that Goldberg's DEI work was within her own office and not NAST. 

The report also accused NASBE of pushing gender-inclusive curricula, pronoun policies and resisting restrictions on transgender sports participation — even in red states. In a 2020 report titled, "Removing Barriers to LGBTQ Student Safety and Achievement," NASBE shared the need for states to issue guidance on the needs of transgender students. The report suggested that states address the "discriminatory school policies limiting their access to facilities" for transgender students and maintaining school records that reflect the gender identity and pronouns of students.

The guidance, according to the report, was in response to "the proliferation of potentially harmful legislation at the state level." 

The National Association of State Boards of Education declined to comment.

 A top priority, according to Noah Wall, founder and president of the State Leadership Initiative, is to end DEI working groups.  (Adobe Stock)

Wall argued that Republican governors and lawmakers have underestimated the scale of the problem.

"They’re not just sharing best practices," Wall said. "They’re setting the internal culture of state agencies and implementing federal priorities under the radar. Even conservative states are running progressive policies out of habit."

To address what it calls "shadow governance," the State Leadership Initiative outlines a series of recommendations aimed at helping conservative governors and lawmakers reclaim authority over state agencies. First, the report urges a full audit of every national association to which state agencies belong. This includes reviewing how much taxpayer money is spent on dues, how much influence these groups have over policy, and whether their agendas align with state law. It encourages states to withdraw from associations that are in direct conflict with their legislative priorities and to require legislative approval before renewing any membership.

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The report also calls for an end to the automatic adoption of "model policies" and "best practices" by national associations. Instead, SLI recommends executive orders that prevent agencies from implementing these guidelines without in-state review and oversight from elected officials. It also calls on states to prohibit public funds from being used to support DEI training or performance metrics, which the group describes as ideological Trojan horses.

"We think that Republican governors in particular need to make sure that they're sending people to these associations, knowing the problems that these associations have had in the past," Wall said. "And I don't think they have. So our goal is to educate Republican governors about the scale of the problem and make sure that they condition future membership on reforms."

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