DHFAC Meeting Minutes
October 26, 2000

Present:

• Patricia BlevinsM
• Deborah Capano
• Joseph DiPinto
• Thomas Grabowski
• Joseph Lieberman
• Gregg C. Sylvester (Chair)

Absent:

• David McBride
• Charles F. Reinhardt
• Calvin Wilson

Welcome & Introductions

Gregg Sylvester welcomed the committee and the public. Dr. Sylvester announced the resignations of Charles Simpson and Vivan Longo from the committee. New appointments will probably wait until after the election. Introductions followed.

States' use of tobacco settlement funds: A national perspective

Joan Henneberry, Policy Studies Director, National Governors' Association

Dr. Sylvester introduced Ms. Henneberry. She presented the following information.

NGA is available to help states inform decision making on the use of tobacco settlement money. Information on state activities is available on their website, www.nga.org. NGA will also do specialized searches and summaries as requested.

NGA's role

• Track options for states and their decisions, working with other agencies like the National Conference of State Legislatures and the Centers for Disease Control and Prevention.
• Focus on best practices through NGA's Center for Best Practices, a non-profit research arm of the organization.
• Develop NGA policies on tobacco.
• Help states use what works based on state experimentation with evaluated programs.

Recent Congressional activity

• Congress recently held hearings on how the settlement funds are being spent. States were criticized for unwise decisions.
• Sen. McCain asked the General Accounting Office to do a survey, with results due in the spring or summer.
• Current law gives states control of the funds, but that can be changed. The battle is not necessarily over, especially with a new Administration and a new Congress.

State activities

Detailed state information is available on NGA's website. The following summary points were presented.

Health

All 43 states that have made decisions have allocated some portion to health priorities. Health accounts for over 50% of the funds allocated.

• 38 states have allocated some portion of tobacco settlement monies to tobacco prevention and control. (88%). This is $754 million, compared to $140 million devoted to tobacco control prior to the settlement.
  • States have been cautious to see what works
  • Some states couldn't spend large amounts immediately, but needed to build infrastructure in community organizations and state government.
  • 2 states (IL, IN) fully funded CDC guidelines. Others are close to that (CO,HI, ME, NJ, VA, WI).

• 16 states have allocated some portion of tobacco settlement monies to programs for the elderly, including prescription drug programs. (37%)
• 13 states have allocated some portion of tobacco settlement monies to state Children's Health Insurance Programs. (30%)
• 12 states have allocated some portion of tobacco settlement monies to maternal and child health programs. (28%)
• 12 states have allocated some portion of tobacco settlement monies to Medicaid. (28%)
• 12 states have allocated some portion of tobacco settlement monies to research, including biomedical, cancer, and tobacco-related. (28%)
• 10 states have allocated some portion of tobacco settlement monies on chronic diseases (23%)

Education

20 states spending some portion of their tobacco settlement on education. (47%)

• Including scholarships, school construction, technology, literacy, and other topics.
• NH spent all of FY2000 funds on education because of a Supreme Court decision and a school funding formula crisis. Natural Resources
• 3 states allocated monies to Natural Resources projects, including water projects.(7%)

Employment and Social Services

• 15 states devoted money to improve or implement social service programs. (35%)
• 10 states allocated money for substance abuse or mental health programs. (23%)
• 7 states allocated money for early childhood development or children's social services. (16%)
• 5 states allocated money to improve criminal justice systems, with an emphasis on youth programs (12%)

Economic Development and Commerce

• 22 states allocated money to Economic Development, Commerce and Information Technology (51%)
• 6 states used Master Settlement funds to assist tobacco growers and quota holders, aside from Phase 2 funds. (14%)

Undecided

• Six states - Arizona, Arkansas, Missouri, Oregon, Pennsylvania and Tennessee - and the District of Columbia have not made spending decisions as of October 2000.
• Voters in Arizona, Arkansas, Oklahoma and Oregon will consider ballot initiatives on the issue in November 2000.

Finance

• 30 states have deposited their tobacco settlement funds into trust funds (principal and interest can be spent). (70%)
• 20 states have deposited the money into the general fund (47%)
• 2 states have set up foundations with the money (5%)
• 5 states have used endowments (only return on investment can be spent) (12%)
• 13 states have used a combination of these four methods for dealing with the money. (30%)
• To date, only 1 state, South Carolina, has securitized their tobacco settlement funds. However, other states are investigating the option, as are some localities.

Following Ms. Henneberry's presentation, several questions relating to securitization, evaluation, and relationships with other organizations were discussed.

HFAC Process

Review of last year's guiding principles

The committee agreed to retain the same guiding principles for the coming year.

Review of available funds

Approximately $27 million is expected in payments in the coming year. The committee reviewed current appropriations and discussed what would be required to continue the programs started. There was discussion about which appropriations were one-time appropriations. The committee agreed to review this in detail at the next meeting, with a commitment to supporting ongoing programs wherever appropriate.

With a portion of funds going to ongoing programs, less funds will be available for new initiatives. In addition to current levels of funding, some programs are anticipated to require more funds. Dr. Sylvester reminded the committee that tobacco control was not fully funded at the CDC recommended level, and asked that the committee consider increased funding for this purpose.

Timeline for recommendations

The State Budget Office has requested preliminary recommendations by December 2000. The committee agreed to submit a preliminary recommendation to secure the funds in the Governor's Recommended Budget.

Process for recommendations

A preliminary recommendation should be approved at the November meeting. This could include the amount to be held in strategic reserve, and the amount for ongoing and new programs.

Given the limited amount of funds available for new programs, the committee decided that numerous public hearings were not necessary. The committee agreed to hold one meeting focused on public input and proposals. The meeting would include information on current programs and presentations from the public of no more than five to ten minutes. The committee was urged to distinguish between formal proposals and public comments. Presenters would have to register before the meeting.

The committee agreed to the following timeline:

• Preliminary recommendation to the State Budget Office in early December 2000.
• Hold a forum for public comment and proposals in February 2001.
• Reach consensus on committee recommendations in April 2001.
• Present final recommendations to the Governor and General Assembly in May 2001.

Items for future meetings

The following items were suggested:

• Identification of one-time funds and preliminary recommendations for State Budget Office (next meeting)
• Update on tobacco contracts (next meeting)
• DPAP update /McBride Resolution (SR 33)

Public Comment

No comments were offered during the public comment period.