Analysis of State Question 814

State Question No. 814, Legislative Referendum No. 375: This measure seeks to amend Article 10, Section 40 of the Oklahoma Constitution (Section 40), which directs proceeds from the State’s settlements with or judgments against tobacco companies. Currently,

Section 40 directs 75% of proceeds to the Tobacco Settlement Endowment Trust Fund (TSET Fund), where earnings may only be used for tobacco prevention programs, cancer research, and other such programs to maintain or improve the health of Oklahomans. Meanwhile, the remaining 25% of proceeds are directed to a separate fund for the Legislature (Legislative Fund). The Legislature can also direct some of that 25% to the Attorney General. This measure amends Section 40 to reduce the percentage of proceeds that go into the TSET Fund from 75% to 25%. As a result, the remaining 75% will go to the Legislative Fund and the Legislature may continue to direct a portion to the Attorney

General. The measure would also restrict the use of the Legislative Fund. Section 40 currently states only that the Legislative Fund is subject to legislative appropriation. If this measure passes, money from the Legislative Fund must be used to get federal matching funds for Oklahoma’s Medicaid Program.

Shall the proposal be approved?

For the proposal - Yes Against the proposal - No

Summary: State Question 814, referred to voters by the state legislature, changes the amount of money directed to the state’s Tobacco Settlement Endowment Trust (TSET Fund) from 75 percent of the annual payments to 25 percent. Currently TSET receives 75 percent of the annual payment and the remaining 25 percent is directed to the legislature and the Attorney General. Oklahoma voters created TSET to manage smoking cessation, cancer research, obesity and other healthy living programs from the 1998 master settlement agreement between tobacco companies and 46 states. Only earnings on the state’s accumulated $1.3 billion fund are used each year. That amounts to between $70 million and $75 million payments to divide between TSET and the legislature. A yes vote on Nov. 3 would let lawmakers redirect TSET funds to pay for the current Medicaid program and the expanded program Oklahoma voters approved when they narrowly passed State

Question 802 in June. If passed Nov. 3, the money from the Legislative portion of TSET would be used to get federal matching funds. Gov. Kevin Stitt, who opposed the Medicaid expansion, supports State Question 814 as a way to pay the state’s portion of Medicaid costs. A Constitutional amendment is required to change the settlement proceeds formula as voters earmarked the funds in 2000 by approving SQ 692 by nearly 69 percent. Some health groups, such as the American Cancer Society’s Cancer Action Network, oppose SQ 814 on the grounds that it diverts funding from programs that improve the health of all Oklahomans.