While Rhode Island wrestles with two competing proposals to spend its share of the $206 billion tobacco settlement reached last year, several states are setting up trust funds and endowments to handle their portion of the windfall. In November of last year, the attorneys general of 46 states, five commonwealths and territories, and the District of Columbia settled with the five major tobacco firms in an agreement that calls for the tobacco industry to pay the states $206 billion over the next 26 years. A formula the attorneys general developed will be used to determine each state’s portion of the sum.
States are expected to receive the first installment of their awards next spring.
In Rhode Island, Gov. Lincoln Almond has said he plans to use the first installment of the settlement, about $63 million of the $1.4 billion total, to balance the state’s budget. Meanwhile, Lt. Gov. Charles J. Fogarty would apply the money to health programs, including improving access to long-term care, improving the health of children, and the prevention of tobacco use.
Several states, however, are already establishing trust funds and endowments to deal with specific problems, such as providing health care for the uninsured and financial aid to tobacco farmers, according to the National Governors Association.
For example, Alabama created a fund in 1998, anticipating that a settlement would be reached with the industry. Its Children’s First Trust Fund will receive $85 million from the settlement, according to the governor’s association. Meanwhile, the governors of several other states also propose to create trust funds. For example, Michigan Gov. John Engler has proposed the “Michigan Merit Award Trust Fund” to receive the settlement money. The money the fund generates will be used to support a Michigan Merit Award Program, a merit scholarship for high school students who want to further their education.
Virginia Gov. James S. Gilmore III proposes to create two trust funds. One would serve tobacco farmers; the other would fund tobacco prevention programs, according to the governors association.
Maine plans to dedicate the entire first installment it is expected to receive next spring to health programs, said Kevin Concannon, the states’ health commissioner. The state will receive $18 million of its total $62 million share of the settlement. One of the things the state plans to do is expand its Child Health Insurance Program, which is an expanded Medicaid program. The state currently funds children who live at up to 185 percent of the federal poverty level. The money coming in will allow the state to boost the program to serve children at 200 percent the poverty level, Concannon said.
Connecticut has established a “Tobacco and Health Trust Fund” to create a continuing source of funds to support programs to reduce tobacco use in the state. The state will receive $3.6 billion over the life of the settlement and $300 million over the next two years, according to Roy Occhiogrosso, who works for the Connecticut Senate Democrats in the state Capitol building.
Overall, however, most states have yet to make firm decisions on how they will use their tobacco money, said Joan Henneberry, program director for health policy for the National Governors Association.
“I would say we don’t know of any trends yet; it’s very premature,” Henneberry said, noting many state governors are investigating how other states plan to use the funds. “They’re very interested in learning about what has been effective in other states. A number of states have commissions working on gathering information.”
Massachusetts thus far has been unable to decide how it wants to spend the $5 billion it will receive because it has yet to pass a state budget, said Roseanne Pawelec, a spokeswoman for the state Department of Health.
James Beardsworth, deputy press secretary for Almond, said the governor intends to use the money to offset “budgetary concerns.” He added that while the governor supports health related programs such as smoking cessation, he prefers to tackle the state’s budget problems first.
Still, the Fogarty plan has been lauded by the Rhode Island Medical Society because it allocates all of the funds to improve public health.
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