State Question 814 would allow the State of Oklahoma to cover its share of the cost of additional Medicaid coverage by reapportioning funding from Oklahoma’s tobacco settlement fund.
The Tobacco Settlement Endowment Trust Fund (TSET) was created in 2000 when state voters approved State Question (SQ) 692, proposed by the State Legislature as a way to use funds Oklahoma had received from tobacco companies under a 1998 settlement agreement. By definition, those funds were to be used for tobacco use prevention, smoking cessation programs, education, health care and other uses established by the fund’s board of directors. Today, many adults are familiar with TSET through its commercials warning residents of the dangers of tobacco and programs promoting health — from free cessation help to encouraging healthy meals.
According to Ballotpedia, Oklahoma receives money annually under the 1998 Master Settlement Agreement, and 75 percent of those funds are deposited into the TSET Fund. The remaining 25 percent is deposited into the Tobacco Settlement Fund, which is appropriated by the State Legislature.
SQ 814 would amend the mandates of Article 10, Section 40 of the Oklahoma Constitution, reversing those percentages. With voter approval, 75 percent of the funds would go to the Legislature for appropriation and 25 percent would be designated to TSET. By definition, those 75 percent funds would be used to provide matching funds to funding designated to Oklahoma for its Medicaid program. SQ 814 also would trigger Senate Bill 1529, which changes the percentage of funds in the Tobacco Settlement Fund directed to the Attorney General’s Evidence Fund, so the amount of money being directed there under the current law would remain the same even if the law changes.
Gov. Kevin Stitt said there is about $1.3 billion in the fund from the original settlement and that money would not be touched. He said new revenues generated would mean about $56 million available for appropriation to the Medicaid program, adding using those funds for Medicaid meets the spirit of TSET because both improve the health of Oklahomans.
“It aligns with the goals of TSET,” he said, adding it will help the state meet its local match requirement.
State officials said if SQ 814 is approved, about $18.75 million would be deposited into the TSET Fund. Of the $56.25 million (75 percent), 8.33 percent ($4.68 million) would be placed in the Attorney General’s fund and the remaining $51.57 million would be matching funds for federal Medicaid funding.
That funding became necessary when Oklahoma voters, by a narrow margin, approved expansion of the Medicaid program to provide coverage to another 200,000 residents. Federal funds come with a matching requirement from the state, and state leaders who opposed the expansion (including Stitt) were concerned about where the state would find additional funds.
The Reason Foundation says the need for smoking cessation and anti-tobacco education programs have declined significantly, falling to 20 percent for adults and 12.5 percent for youth in 2017, so critics say those programs are less important. The foundation also said TSET could continue to receive “a substantial chunk” of the tobacco settlement money, which, combined with its reserves, is enough to cover current activities.
Sen. Kim David, who sponsored the measure, said the issue ties back to the state’s budgetary limitations, saying “the last thing we want to do right now is next year or the year after look at possible budget cuts to health care or the provider rate cuts that we’ve had in the past....”
Those who oppose the change fear the effect on a program that they say has made genuine progress.
Matt Glanville, government relations director with the American Cancer Society Action Network, said it isn’t the first time state legislators have suggested using TSET funding to “bail out the budget” or fund other projects. He said the proposal diverts funds from Oklahoma’s primary source of tobacco control and prevention funding at at time when the state should be building a stronger public health infrastructure, including comprehensive control measures.
“It is shortsighted and worrisome to consider such sweeping changes to a proven program when public health has never been more important,” he said.
The Reason Foundation said critics also find the proposal shortsighted, noting, for example, that while Oklahoma’s smoking rates are shrinking, they still are higher than the national average. Smoking also remains the state’s number one preventable cause of death, accounting for 31 percent of cancer deaths in Oklahoma.