Voters Could Weigh Proposals to Change How Tobacco Settlement Payments are Managed

Feb 19, 2020

Oklahoma lawmakers are again looking to change how tobacco settlement payments are handled.

Sen. Kim David proposes decreasing the share of annual payments going to the Tobacco Settlement Endowment Trust from 75% to 25%. The rest would go toward Medicaid expansion.

Gov. Kevin Stitt wants to be able to put tobacco settlement funds toward his SoonerCare 2.0 proposal, a Medicaid expansion that would use capped federal funding.

David said while that may set aside more money for Medicaid than officials have estimated they’ll need, other states have found themselves short.

"They’ve underestimated the population that’s come in. They’ve underestimated the number of people that jump off of the exchange that are now eligible, will be eligible for the free health care. So, those numbers will continue to grow, and in every instance, every state has underestimated that," David said.

Another proposal would give TSET more money to spend each year but give lawmakers more control over how it’s spent.

Sen. Greg McCortney wants to allow the board overseeing the Tobacco Settlement Endowment Trust to spend up to 5% of its principal each year. Currently, they may spend only earnings on it.

"All the different foundations or endowments I’ve worked with in the past … they do exactly what’s being proposed here," said Sen. Gary Stanislawski. "In their case, their fiscal year’s usually Dec. 31, and on Dec. 31, it’s a snapshot of the balance, and you take 5% of that snapshot and that’s what’s available the following year."

McCortney's proposal would also increase the amount from annual settlement payments going to TSET from 75% to 79.25%, but it would go into the general revenue fund instead of going directly into the trust, allowing lawmakers control over how that funding is spent.

"So, in the end, this almost doubles TSET’s expenditures per year. They’ll have their money from the corpus, and then they’re going to have an additional almost $50 million to spend," McCortney said.

McCortney said his priorities for TSET spending include setting up loans or grants for rural hospitals, supporting rural ambulance service, and establishing a retention program for doctors and nurses.

Both David's and McCortney's proposals are constitutional amendments and would have to go to voters.