Stitt supports plan to redirect tobacco settlement

Voters will decide with SQ 814 whether to gut TSET funding source

Gov. Kevin Stitt supports a state question that would allow legislators to tap into a greater portion of funding for the state's Tobacco Settlement Endowment Trust.

Stitt supports State Question 814, which will appear on Oklahoma's general election ballot on Nov. 3.

The question that state legislators referred to the ballot asks voters to reduce the amount of settlement funds going to TSET from 75% to 25%.

The trust currently receives 75% of the state's annual payment from the 1998 master settlement agreement with tobacco companies. The remaining 25% goes to the Legislature and the attorney general's office.

If passed, SQ 814 would let the Legislature redirect the TSET funds to pay for the state's current Medicaid program and the expansion Oklahoma voters approved when they passed State Question 802 in June.

“In my opinion, ( SQ 814) needs to pass,” Stitt said. “We need to redirect some of those funds to the Legislature so we can actually pay for Medicaid expansion.” Stitt opposed expanding Medicaid.

Oklahoma's share of Medicaid expansion is estimated to be about $164 million annually.

SQ 814 is unlikely to cover all of the expansion costs as estimates indicate the measure could yield about $ 70 million annually.

Legislators are also likely to explore increasing a provider fee assessed on some hospitals to cover part of the expansion.

TSET uses the interest earnings off the $1.3 billion corpus of the trust to fund tobacco prevention programs, cancer research and other initiatives to improve Oklahomans' health.

But smaller payments going into the trust could reduce the agency's ability to fund future initiatives, said TSET spokesman Thomas Larson.

“With less money going into the endowment, the endowment is not going to grow as quickly, especially when we have a downturn in the economy," he said. "Not only would that affect our ability to stand up new programs or expand existing programs, a sharp economic downturn that lasts for a while could impact current programs."

As a state agency,

TSET doesn't have a position on SQ 814, Larson said.

The state question started as legislation proposed by Sen. Kim David, R- Porter, who expressed concerns about Oklahoma's growing Medicaid costs and the possible cost of expanding Medicaid to cover more low-income Oklahomans. The state appropriates more money to Medicaid than any other program.

"The whole purpose of us getting those tobacco dollars is to use them toward the health care of Oklahomans," she said.

Several public health groups have criticized the attempt to redirect TSET funds, saying the measure will have a "devastating" effect on public health in Oklahoma.

TSET was formed in 2000 when Oklahoma voters overwhelmingly approved a state question.

"TSET is really a model for the nation,' Larson said. "Oklahoma is the only state that put those master settlement agreement funds into a constitutionally protected endowment."

Oklahoma will expand Medicaid by July 1, 2021.

"TSET is really a model for the nation. Oklahoma is the only state that put those master settlement agreement funds into a constitutionally protected endowment."

TSET spokesman Thomas Larson