NCSL Press Release: Health Care, Smoking Prevention Benefit from Tobacco Settlement Money

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October 9, 2003

Health Care, Smoking Prevention Benefit from Tobacco Settlement Money

Settlement revenues spare many programs from budget chopping block

WASHINGTON, D.C. - States are maintaining their distribution of tobacco settlement revenue to health-related services, smoking prevention efforts and preventing cuts in key state programs, according to a new report released today by the National Conference of State Legislatures (NCSL).

The report, State Management and Allocations of Tobacco Settlement Revenues 2003, shows that over the past four years, states have appropriated more than $17.3 billion in tobacco settlement revenue for health-related services and biomedical research. Additionally, smoking prevention efforts have reached historic levels as 46 states have appropriated $1.8 billion towards this effort -- four times more than the federal government has devoted to similar programs.

"States clearly are responding to their constituents' needs by dedicating large sums of their tobacco settlement funds to health services for the poor, elderly, disabled and other populations," says Lee Dixon, Director of NCSL’s Health Policy Tracking Service and co-author of the report. "Without the tobacco settlement revenue, many states would have been forced to cut these programs during these trying financial conditions."

State legislatures allocated more than $7.9 billion in tobacco settlement revenue in 2003, increasing the four-year total to $39.4 billion. Initially, as many as 20 state legislatures established set-asides for trust funds and endowments. This has proved to be a financially wise action as state legislatures drew down on these endowments and earmarks to address severe revenue shortfalls.

Additionally, three states -- California, Connecticut and New York -- securitized all or some of their tobacco settlement revenue. More than one-third (36 percent) of the 2003 allotment was appropriated to health-related services and research while an additional 3 percent went toward smoking prevention projects. Other 2003 appropriations are as follows:

No. of States	Category	Amount	Percent of Total
37	Health Services	$2,252,483	28%
17	Long-Term Care	$362,584	5%
33	Tobacco Prevention	$265,766	3%
14	Research	$226,474	3%
15	Education	$379,374	5%
11	Children and Youth	$231,399	3%
6	Tobacco Growers and Communities	$294,685	4%
11	Endowments and Budget Reserves	$195,442	2%
35	Other	$3,704,416	47%
50	Total States with appropriation	$7,912,723	100%

Dixon said states have also been able to leverage their tobacco settlement money to help ease the fiscal impact of skyrocketing Medicaid costs.

"By allocating tobacco settlement funds for Medicaid purposes, the federal government will then match state Medicaid spending on a two-to-one or three-to-one basis," he said. “While states continue to struggle with Medicaid costs, it seems a prudent investment of tobacco dollars."

NCSL is a bipartisan organization serving the legislators and legislative staff of the states, commonwealths and territories. Its mission is to improve the quality and effectiveness of state legislatures, foster interstate communication and provide the states a strong, cohesive voice in the federal system.

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