State Question 814 and its impact on the Tobacco Settlement Endowment Trust (TSET)
On November 3, 2020, Oklahoma voters will have the opportunity to cast their ballot for or against State Question (SQ) 814. SQ 814 is a statewide ballot measure asking voters to amend Oklahoma’s constitution regarding the percentage of funding established by the 1998 Tobacco Master Settlement Agreement going to the Tobacco Settlement Endowment Trust (TSET), from 75% to 25%.
If SQ814 passes, the Legislature would be allowed to redirect the TSET funds to go towards paying for the state’s current Medicaid program and the expansion Oklahoma voters approved when SQ 802 passed in June 2020. Upon commenting on SQ 814, it is the position of Governor Stitt that Oklahoma needs to redirect some of those funds to the Legislature so that we can pay for Medicaid expansion.
History of the Tobacco Master Settlement Agreement
In November 1998, the Tobacco Master Settlement Agreement was reached between the four largest United States tobacco companies and the attorney generals of 46 states. The states prevailed in the Medicaid based litigation against the tobacco companies for recovery of their tobacco-related health-care costs. As a part of the settlement, the tobacco companies agreed to curtail certain tobacco marketing practices, as well as pay, in perpetuity annual payments to the states to compensate them for some of the medical costs of caring for persons who suffer from smoking related illnesses.
Creation of the Tobacco Settlement Endowment Trust (TSET)
Under the leadership of then Attorney General Drew Edmondson, Oklahoma made an historic decision in 2000 to constitutionally set aside and protect most of the settlement dollars in an independent endowment trust fund. The statewide ballot ensured that only the earnings on the investment could be spent from the Oklahoma Tobacco Settlement Endowment Trust Fund, known as TSET. In addition, the initiative specified that the earnings could only be spent on projects focused on tobacco prevention, cancer research, and other health-related programs.
About TSET
Created in 2000, TSET is the state’s largest funder of programs targeting the reduction of tobacco use, poor nutrition and sedentary lifestyle, which leads to four conditions: heart disease, lung disease, cancer and diabetes, which are responsible for 65% of deaths in Oklahoma. Through focused and effective programs, TSET can be credited with saving countless lives and reducing medical costs for Oklahomans, as well as the state’s Medicaid system. The organization helps to improve the quality of life and the health of Oklahomans through accountability programs and services that address the hazards of tobacco use and other health issues.
Currently, the trust balance is $1.3 billion, of which TSET can only spend the interest earnings for its healthy living programs. The FY2021 TSET budget is set at $46 million. The investment of the endowment is managed by a five-member Board of Investors and spending decisions are made by a seven-member Board of Directors. Both boards are constitutionally created, and members are appointed by state elected officials and legislative leaders.
Per the original Master Settlement Agreement, the funds are currently allocated in the following manner:
75% goes to TSET
18.75% goes to the state legislature
6.25% goes to the Office of the Attorney General
TSET’s programs benefit OK cities and towns
Over the past 20 years, TSET has invested approximately $430 million in programs that have directly benefited Oklahoma cities and towns and their residents.
Below is a representation of the annual programs that are funded and/or administered by TSET:
The Oklahoma Tobacco Helpline has served more than 400,000 Oklahomans since its inception.
Investment in research at the Stephenson Cancer Center has been instrumental in bringing in $182.5 million additional grant dollars to Oklahoma.
The state leader in funding programs aimed at reducing tobacco use, poor nutrition and sedentary lifestyle, which are responsible for 65% of deaths in Oklahoma.
Awarded 222 incentive grants to schools and school districts throughout Oklahoma, impacting more than 300,000 students.
Administers the Healthy Living Program in 62 Oklahoma counties and covers 94% of the state’s population.
Partnership with Physician Manpower Training Commission to fund a medical loan repayment program. Currently, the program is funding 26 physicians in rural Oklahoma and underserved areas of the state. Physicians who participate in the program for up to four years can receive up to $200,000 in student loan repayment assistance. This program allows areas to have health care that they would possibly not enjoy otherwise.
Arianna Derr, Executive Director, Mayes County HOPE Coalition, said that over the years TSET has funded many programs and initiatives in Mayes County that benefit the communities in the areas of health and wellness. “Not only has TSET granted our communities funds, but as importantly, they have provided our staff and citizens with training on how to create partners and educate our residents in areas of healthy living. TSET’s investment of time and money has greatly impacted our communities and citizens,” Derr said. Derr also commented that if SQ 814 passes, it will have a direct financial impact on the organization’s mission and goals. “TSET will simply not have the resources to continue with all their current critical programs that help people in Oklahoma stop using tobacco and start living more healthy lives,” she added.
Since 2000, TSET has served as a partner and bridge builder for Oklahoma communities and organizations working to shape a better future for our citizens. Beginning in 2003, nearly 400,000 Oklahomans have been helped by the Oklahoma Tobacco helpline; thanks to the partnerships with Oklahoma schools, all are now 24/7 tobacco and vape free; adult smoking prevalence decreased from 28.7% in 2001 to 19.7% in 2018; and, Oklahoma smoking rates have dropped 10x faster than similar states.
Proponents of SQ 814 are warning that Medicaid expansion could cost more than anticipated and that if the measure fails, legislators will have to find other forms of funding and possibly cut other state programs.
Opponents to SQ 814 are saying that if it passes, it will be very harmful to the state of public health in Oklahoma because the Legislature is trying to divert funding from a state agency that operates proven public health and preventive programs that are making a significant positive difference in the lives of our citizens.
