The National Center for Tobacco-Free Older Persons

Tobacco Settlement Funds
Updates

The Center for Social Gerontology
2307 Shelby Avenue, Ann Arbor, MI 48103 tel: 734 665-1126 fax: 734 665-2071
tcsg@tcsg.org



1999 Highlights of Settlement Allocations

This section of the web site of the National Center for Tobacco-Free Older Persons of The Center for Social Gerontology (click on our Home Page below for more information about TCSG) contains regularly updated information on what is happening in states regarding the almost $250 billion the tobacco industry must pay to the states over the next 25 years as a result of the settlements they have signed to resolve Medicaid lawsuits filed by the states. The payment schedule is also on our web site. The information included focuses mostly on how the tobacco settlement funds are being directed toward programs for two major purposes: aging programs and tobacco control programs. Immediately below, we present highlights from 1999 settlement fund allocations, some with links to news articles.

STATES IN WHICH SETTLEMENT FUNDS WERE ALLOCATED IN 1999 FOR AGING or TOBACCO CONTROL PROGRAMS: (SEE BELOW FOR SPECIFICS OF WHAT EACH STATE HAS DONE):

AGING: Alabama - $2 million in FY'2000 for trust fund for elderly services; Delaware - an estimated $2.7 million in FY'2000 and $5.1 million in FY'2001 for a prescription drug program for low-income elders; Florida - $1.7 billion Fund for elders & kids with $17.3 million for elders in FY'2000; Maine - $5 million for use in FY'2001; Massachusetts - $42 million for FY'2000; Michigan - $53 million in FY'2000, plus about half the $6 million going to Community Foundations for programs for children and elders; Nebraska - $0.5 million; Nevada - 30% of settlement payments annually equals $360 million over 25 years; New Jersey - $19.2 million in FY'2000; Rhode Island - $3.4 million in FY'2000; Vermont - $325,000 in FY'2000.

TOBACCO CONTROL: Alaska - $1.4 million for FY'2000; Florida - $45 million in FY'2000; Hawaii - 25% of settlement total, or about $3.6 million in FY'2000 and about $10-12 million in future years; Maine - $3.5 million in FY'2001; Maryland - $21 million annually; Massachusetts - 1/4 of 30% of funds annually or about $22.8 million in FY'2000; Minnesota - $489 million into endowments for tobacco prevention programs, with $17.7 million for FY'2000; Mississippi - a pilot program for 1999 & 2000 was funded with $62 million ; Montana - $7 million for biennium of FY'2000-01; Nevada - 10% of settlement funds annually or $120 million over 25 years; New Hampshire - $3 million per year; New Jersey - $18.6 million in FY'2000; New York state - $37 million in FY'2000; New York City - $13 million for FY'2000; North Dakota - some portion of 10% of the funds set aside for health programs; Rhode Island - $1 million for FY'2000; Texas - $200 million into an endowment, with interest of about $10 million annually for tobacco prevention; Vermont - reserved $19.2 million for FY'2000; Virginia - 10% of settlement funds for tobacco control and other health programs, with $11.8 million to go for tobacco prevention in the coming year; Washington - $100 million for tobacco control, but not clear how much for FY'2000 or future years out of the $100 million; Wisconsin - $23.5 million for the biennium, with $2.3 million for FY'2000 and $21.2 million for FY'01; Wyoming - all settlement funds in a trust, with some to be allocated in 2000 for tobacco control and other health programs, with $11.8 million to go for tobacco prevention in the coming year; Washington - $100 million for tobacco control, but not clear how much for FY'2000 or future years out of the $100 million; Wisconsin - $23.5 million for the biennium, with $2.3 million for FY'2000 and $21.2 million for FY'01; Wyoming - all settlement funds in a trust, with some to be allocated in 2000 for tobacco prevention.

HIGHLIGHTS FROM 1999

  • SETTLEMENT FUNDS RELEASED TO STATES WITH FINALITY ON DEC. 14TH: On December 14th, all the states which had achieved state specific finality on their tobacco settlement lawsuits began to receive their payments from the tobacco companies as required by the Master Settlement Agreement. Additional payments will be received in January, and April, 2000 and then annually in perpetuity each succeeding April. As noted below, the real challenge for states will be to responsibly spend the funds. The rule should be simple: tobacco funds for tobacco-related problems. [Bloomberg News Service, Dec. 15, 1999]

  • Press Release SUMMARIZING THE ALLOCATION OF SETTLEMENT FUNDS FOR AGING & TOBACCO CONTROL PROGRAMS this past year: On Dec. 9th, with the settlement funds about to be released to the states within the next few days, TCSG's new National Center for Tobacco-Free Older Persons has released up-to-date figures on what the states have done thus far. Since older persons were not even on the radar screen when the settlements were first announced, this year has seen substantial progress in getting policymakers to recognize that older persons are the unseen victims of the tobacco industry. As a result, AGING PROGRAMS, PARTICULARLY PRESCRIPTION DRUG AND IN-HOME SERVICES PROGRAMS have received $160 MILLION in FY'2000 settlement fund appropriations, with related funding bringing the total to about $200 MILLION; and, most of these programs represent long-term commitments by the states. This amount still is a pittance versus the harm suffered by older persons, however. TOBACCO CONTROL PROGRAMS have received slightly OVER $200 MILLION for FY'2000 thus far, with some additional state commitments for more, but those are still promises that can't be cashed. Given the promises made by governors, attorneys general and legislators that the settlement funds were all about PREVENTING TOBACCO USE, the amount allocated thus far for TOBACCO PREVENTION AND CESSATION PROGRAMS reeks of highway robbery. For a detailed look at the figures, see NCTFOP Press Release and Listings.

  • TCSG announces new NATIONAL CENTER FOR TOBACCO-FREE OLDER PERSONS: On Dec. 2nd, The Center for Social Gerontology (TCSG), based in Ann Arbor, Michigan, announced the creation of a new National Center for Tobacco-Free Older Persons (NCTFOP). The NCTFOP will be dedicated to redressing and mitigating the physical and emotional harm to older persons caused by the actions of the tobacco industry. The NCTFOP will serve as a national advocate and source of information on tobacco and older persons issues, as well as a center for conducting research, education, and training to increase public awareness of the effects of tobacco on older persons and to reduce smoking and exposure to secondhand smoke by older persons. Since the mid-1990's, TCSG has been in the forefront in the U.S. in focusing on issues of tobacco and older persons. TCSG's activities have now become so substantial and have resulted in the involvement of so many other groups that TCSG has created the new NCTFOP. The NCTFOP will serve as a central unit to coordinate all TCSG's tobacco-related programs and activities and as a national focal point for information, research and advocacy on tobacco and older persons issues. One of the key roles of the NCTFOP will be to shortly create a National Coalition for Tobacco-Free Older Persons consisting of national, state and local aging organizations and key national leaders in aging. For more info, see press release.

  • HUGE VICTORIES FOR AGING & TOBACCO CONTROL IN MASSACHUSETTS. Aging and tobacco control advocates, working together, scored major victories on Nov. 10th when the Massachusetts legislature approved a $20.87 billion state budget that includes $42 million of settlement funds for PRESCRIPTION DRUG SUBSIDIES FOR ELDERS, about $25 million annually for TOBACCO PREVENTION & CESSATION PROGRAMS, and a TOBACCO TRUST FUND to be created with 70% of the funds from the tobacco lawsuit settlement with interest to be used for funding future health care programs. The ELDERS PRESCRIPTION DRUG PROGRAMS include $22 million to expand the existing drug program for low-income seniors and $20 million for a new program to aid seniors with catastrophic drug costs that consume 10% of more of their income. TOBACCO CONTROL programs should receive 1/4 of 30% of the settlement funds, or about $25 million annually, in addition to existing appropriations for this purpose. The legislature also added another $24 million for ELDERLY SERVICES, including $12 million for seniors who lost home health benefits due to U.S. Medicare cutbacks (these funds are not from the settlement). The House approved the plan, 155-2. The Senate vote was 31-4. It now goes to Governor Paul Cellucci, who is expected to veto a few items and return the budget to the legislature by Nov. 16th for final approval or rejection of his vetoes. See article. [Boston Globe 11/11/99]

  • "ON WISCONSIN" -- $23.5 MILLION FOR BIENNIUM FOR TOBACCO CONTROL Governor Tommy Thompson's office announced on Oct. 22nd that the governor will line item veto $2.5 million from the $26 million the legislature allocated for TOBACCO PREVENTION & CESSATION PROGRAMS, leaving $2.3 million for FY'2000 and $21.2 million for FY'01. This is a major victory, since the governor had been threatening a bigger veto. However, the governor will veto language directing who he appoints to the 20 member board which will oversee the distribution of these funds. It is unclear at this time what the AGING allocations will ultimately be. The governor is expected to sign the full budget later during the week of October 25th.

  • SMOKING COST MEDICARE $20.5 BILLION IN 1997 AND MEDICAID $17 BILLION A study by University of California San Francisco researchers in the Summer, 1999 issue of Health Care Financing Review documents for the first time the smoking-attributable costs to Medicare and Medicaid. According to Dorothy Rice, one of the researchers, "our estimates for 1997 smoking-related costs to the Medicare program are only one out of 30 years of payments by the Medicare program for aged and disabled persons who have suffered from smoking-related diseases, suggesting that the aggregate Medicare payments over the 30 years could have exceeded $600 BILLION in current dollars." The study also found the total cost of smoking to the U.S. in 1993 amounted to $72.7 billion, of which Medicare paid $14.2 billion, with the remainder covered by Medicaid and other public and private health care programs and insurers. This study provides valuable ammunition for the federal Medicare lawsuit and for advocates for spending settlement funds on health-related programs for elders and all citizens. See Press Release.

  • FEDERAL GOVERNMENT FILES "MIND-BOGGLING" LAWSUIT AGAINST TOBACCO INDUSTRY; OLDER PERSONS ARE THE VICTIMS OF THE TOBACCO INDUSTRY On September 22nd, the U.S. Justice Department filed a "monster lawsuit" against the tobacco industry seeking to recover BILLIONS of dollars spent by the Medicare program, the Veterans Administration, and federal employees health insurance treating largely older persons who suffered from tobacco-related diseases. The suit will allege that the federal government spends an estimated $25 billion annually on these costs. This lawsuit is about OLDER PEOPLE. It is a MEDICARE & VETERANS LAWSUIT. As this lawsuit progresses, it is important that no one be allowed to forget who the victims of tobacco-related diseases are. Go to TCSG's web site at www.tcsg.org/tobacco.htm for a wealth of information which you can draw on for your own press releases, information sheets, etc. to use with policymakers and the media. See Washington Post article of September 22, 1999 for more information on the lawsuit. News article.

  • RHODE ISLAND allocates $3.4 million for AGING programs and $1 million for TOBACCO PREVENTION. In finishing up its work on the FY'2000 budget, the Rhode Island legislature appropriated $3.4 million for community-based care for the ELDERLY, a sum that was less than the amount sought by the aging community, but a solid start on an effort that aging advocates promise will continue next session. TOBACCO PREVENTION AND CESSATION PROGRAMS received $1 million, which was substantially less than had been requested by the tobacco control advocates who have also vowed to mount a strong effort next session to achieve a more realistic amount for tobacco control programs. [TCSG sources in R.I., 7/30/99]

  • AGING ADVOCATES in MINNESOTA and OREGON unleashed strong campaigns to obtain settlement funds for AGING programs; while no settlement funds were obtained, the efforts did result in millions in new general funds appropriations. The availability of the new and unencumbered settlement funds provided AGING ADVOCATES in MINNESOTA and OREGON with the opportunity to seek substantial increases in funding for aging programs for the people who are the primary victims of tobacco's scourge. In these two states, the settlement funds provided the opening for aging advocates to make their case to the legislature for substantial funding for prescription drugs for elders (in Minnesota) and transportation services (in Oregon). In Minnesota, the aging and tobacco control groups worked together for each others proposals. In the end, the legislature decided not to use settlement funds for the prescription drug program for elders, but, instead, decided to use $12 million of general funds revenues; a result which made everyone a winner, since TOBACCO CONTROL received a substantial allocation. In Oregon, the legislature decided not to appropriate any settlement funds, instead sending the decision to a ballot initiative in November, 2000. But, aging advocates had made their case so effectively for using settlement funds for transportation services for elders that the legislature appropriated $4 million of general revenues for this purpose. Thus, in both cases, the settlement funds provided the means to very satisfactory ends; or, put another way, the availability of the settlement funds provided the opening for aging advocates to reasonably put on the table the allocation of substantial increases in funding for aging programs. [TCSG sources in Minn. and Oregon, August 2, 1999.]

  • MAINE, NEW JERSEY AND VERMONT in June saw significant victories for both AGING and TOBACCO CONTROL settlement allocations. Before ending their legislative session for 1999, the MAINE legislature allocated the first settlement payment of almost $18.5 million, with $5 million going to the PRESCRIPTION DRUG PROGRAM FOR ELDERS, or about 27% of the total , and $3.5 million (about 19%) going to TOBACCO PREVENTION & CESSATION, although the settlement funds appear to simply be replacing prior general revenues funds for the tobacco control program. The NEW JERSEY legislature passed and the Governor signed the FY'2000 budget, with AGING PROGRAMS receiving $19.2 million, and TOBACCO CONTROL PROGRAMS getting $18.6 million; thus, both aging and tobacco control received about 20% of the $92.8 million first payment. In VERMONT, the legislature allocated the first two settlement payments totaling $36.2 million, with $19.2 million reserved for TOBACCO PREVENTION, EDUCATION & CESSATION or about 53% of the total amount, and $325,000 for AGING PROGRAMS; how the tobacco control funds will be spent will be determined in 2000 by the legislature based on recommendations from a Task Force. It also appears that some funds in Vermont (maybe as much as $9 million) are still up for grabs and aging programs may still obtain a share of those. [TCSG sources in Maine, New Jersey and Vermont.]

  • On June 10th, the MICHIGAN legislature enacted bills which distribute the settlement funds, and SENIOR CITIZENS ARE BIG WINNERS. Over the next 25 years, about 75% of the funds will go for the Governor's Michigan Merit Scholarship Program, and "the remaining 25% is targeted for expansion of the SENIOR PRESCRIPTION DRUG PROGRAM, LONG-TERM CARE INITIATIVES and a number of other items to improve the health of Michigan SENIORS, families and children." In FY'2000, $53 MILLION will go for SENIORS PROGRAMS.The plan announced by House Speaker Charles Perricone (R) and Senate Majority Leader Dan DeGrow (R), with support from Governor John Engler (R), will allocate $53 million, or about 14% of the initial two payments ($384 million), for the following SENIORS PROGRAMS: Governor John Engler (R), will allocate $53 million, or about 14% of the initial two payments ($384 million), for the following SENIORS PROGRAMS: $30 million for expansion of the Senior Prescription Drug Program; $5 million for an increase in the personal needs allowance from $30 to $60 per month for nursing home residents; $5 million for respite care for elders through local Area Agencies on Aging; $3 million for a new Long-Term Care Advisor in the state Office of Services to the Aging; and a one-time allocation of $10 million for long-term care innovation grants. Another $75 million will go to education and job training programs. In a major defeat for health advocates, no funds were allocated for TOBACCO CONTROL. It is not clear at the moment whether some funds may still be available in FY'2000 for other appropriations, such as for tobacco control programs. [TCSG sources June 11, Republican Press Release of June 8 & Ann Arbor News, June 10,1999]

  • On June 9th, the ALABAMA Governor signed compromise legislation on the tobacco settlement funds for FY'2000 which allocates up to $40 million for the Medicaid program, which includes a variety of services for low-income Alabamians, including many ELDERS IN NURSING HOMES AND IN THE COMMUNITY, a new $2 million for a TRUST FUND FOR SERVICES TO THE ELDERLY, up to $60 million for the Children First program, and $7 million for the Governor's new Alabama 21st Century Fund for economic development. While the $2 million allocation is less than elder advocates had hoped for (see Alabama State Updates below), it constitutes a major victory for these advocates who took on the legislature and the Governor to assert their right to a share of the settlement funds for the victims of tobacco-related illnesses -- the elderly. Elders will receive $2 million in settlement funds each year,or $50 million over the next 25 years. TOBACCO CONTROL ADVOCATES WERE UNSUCCESSFUL in receiving any of the funds, as most of the settlement funds were designated for the Children First Program last year already, and it was a bitter fight for others to obtain any of the funds. [AP, June 9, 1999 & TCSG sources.]

  • Governor Kenny Guinn (R) and the NEVADA legislature reached a historic agreement on May 27th on the settlement funds; an agreement that was enacted before the legislature adjourned on May 31st. Under the agreement, 30% of the $1.2 billion expected over the next 25 years will go for SERVICES FOR SENIOR CITIZENS, INCLUDING HALF FOR A PRESCRIPTION DRUG PROGRAM AND HALF FOR GRANTS FOR HOME CARE, RESPITE CARE & SERVICES TO ENABLE ELDERS TO LIVE INDEPENDENTLY. This will amount to about $360 MILLION over the 25 years, or an average of over $14 million annually. An ANTI-SMOKING PUBLIC AWARENESS PROGRAM WILL RECEIVE 10% OF THE $1.2 BILLION IN FUNDS, PLUS A ONE-TIME $2 MILLION ALLOCATION FOR ANTI-SMOKING TELEVISION SPOTS and $5 MILLION FOR CANCER RESEARCH. The agreement also calls for 40% of the funds to go for a scholarship program, which the Governor had sought as a top priority. The remaining 20% of the funds will be divided equally between services for children and the disabled (10%), and a trust fund for health care programs (10%). Again, the principle for the tobacco industry is simple -- "you cause the health care crisis for elders, you pay for it." [ Las Vegas SUN, June 1, 1999] (See Nevada news in State Updates below and in news articles.) News article

  • On May 21st, President Clinton signed the Emergency Appropriations bill which includes a section which overrides the Federal government's claim to a share of the state tobacco settlement funds. This provision allows the states to spend the settlement funds on whatever they want to, with no strings attached.This provision had been strongly supported by the nation's governors and removes the possibility of the Clinton Administration forcing the states to spend a portion of the settlement funds on TOBACCO PREVENTION and public health programs. It will now be totally up to the states as to how they will spend their settlement funds. [Clinton press release, May 21, 1999]

  • MINNESOTA tobacco prevention advocates won a huge victory on May 17th when the legislature passed a Human Services bill which places $489 million in settlement funds into Endowment Funds for TOBACCO PREVENTION AND CESSATION PROGRAMS. Interest from the endowments will produce about $19 million annually for advertising and other tobacco prevention efforts, plus another approximately $10 million annually split equally between youth anti-smoking efforts and programs to fight other youth health risks.The passage of this legislation closes the door on a very heated battle over the initial tobacco settlement funds, in which tobacco control advocates fought a very tough battle to keep the funds from being spent on tax cuts and other non-health-related programs. A total of $1.3 billion in nonrecurring tobacco payments is due by 2003, with the rest of the $6.1 billion in settlement payments to be paid in annual installments of more than $200 million for as long as tobacco is sold in Minnesota. The 2001 legislature will consider how to spend the next one-time payment of $402 million. News article

  • FLORIDA became the FIRST STATE IN THE NATION TO APPROPRIATE TOBACCO SETTLEMENT FUNDS for AGING PROGRAMS, when, on May 13th, Governor Jeb Bush signed legislation creating the Lawton Chiles Endowment for Children and Elders. Within four years, at least $1.7 billion of settlement payments will go into the fund, with interest being available to fund programs for children, elders and cancer research. While final figures are not yet available, it appears that $15 to $20 million will be allocated in FY'2000 for programs to enable elders to remain in their homes. The allocation of tobacco settlement funds for programs for elders who have health problems which might otherwise force them into nursing homes is very fitting, since many of these older persons suffer from tobacco-related diseases. For the first time, the tobacco industry, which caused these diseases and resultant suffering, is paying forced to pay for the health care services they caused elders to need. The principle is simple -- "you cause the health care crisis for elders, you pay for it." (See Florida news in Highlights and State Updates below and in news articles.) News article

  • The Maryland Senate agreed to a deal with the Governor and the House and then voted on April 10th to raise the cigarette tax by 30 a pack, for a total state cig tax of 66 per pack. Part of the deal to raise the tax and break a legislative logjam with the Governor included an agreement in the budget that $21 MILLION ANNUALLY OF THE SETTLEMENT FUNDS WILL BE SPENT ON TOBACCO PREVENTION & CESSATION PROGRAMS. PLUS, 5% OF THE SETTLEMENT FUNDS WILL GO TO ASSIST TOBACCO FARMERS IN FINDING ALTERNATIVES TO TOBACCO FARMING. A budget proposal by Governor Glendening, strongly backed by tobacco control advocates, to raise the cigarette tax by $1.00/pack passed the House but ran into a Senate filibuster in the waning hours of the legislative session. The final compromise resulted in a tax increase less than wanted, but in a huge victory when all parties agreed to provide the $21 million annually for TOBACCO CONTROL PROGRAMS -- the amount anti-tobacco advocates wanted. News article

    Columnist Ellen Goodman writes about the proposed Medicare lawsuit against the tobacco industry: Few say it so well. Read her column.