Unlike State Question 805, SQ 814 has garnered little attention, thus many Oklahomans are in the dark as to what the measure entails.
SQ 814 is a ballot measure that amends Oklahoma’s constitution to reduce the amount of tobacco settlement funds going to the Tobacco Settlement Endowment Trust (TSET) from 75 percent to 25 percent.
The estimated cost of Medicaid expansion is between $123 and $164 million annually. The state’s legislature is constitutionally required to find a funding mechanism for the expansion.
Every year, Oklahoma receives money from the 1998 tobacco lawsuit settlement. Seventy-five percent of the funds go to the Tobacco Settlement Endowment Trust, and the other 25 percent is split between the Legislature and the Attorney General.
If this ballot initiative is approved, the Oklahoma Legislature would receive 75 percent of the settlement funds to help fund the state’s Medicaid program and the costs associated with Medicaid expansion constitutionally mandated by the passage of State Question 802. Of the 75 percent allocated to the legislature, 6.25 percent goes to the attorney general’s office, which would continue under SQ 814.
The Oklahoma State Legislature referred SQ 814 to the ballot in the spring through legislation from Senate Majority Floor Leader Kim David, R-Porter. Since TSET was constitutionally mandated by a ballot measure, lawmakers can’t amend it without voters’ permission.
In 1998, Oklahoma was one of 46 states that were part of a lawsuit that was settled with tobacco companies agreeing to make annual payments to states as long as tobacco is sold nationally.
The Oklahoma Tobacco Settlement Endowment Trust Fund Amendment, also known as State Question 692, appeared on the November 7, 2000, ballot in Oklahoma as a legislatively referred constitutional amendment, The measure, which was approved, created the Tobacco Settlement Endowment Trust Fund. It should be noted that Oklahoma is the only state to establish a trust and not arbitrarily place the money into general funds.
These annual payments are between 65 and 100 million dollars, and the 75 percent that goes to TSET is invested. The interest is used to fund research and healthy lifestyle grants, stop-smoking programs, and programs to recruit rural physicians. According to TSET, the various programs funded by the endowment have saved 42,000 lives and $1.24 billion in health expenditures.
TSET has an annual budget of 48 million dollars. The Trust can only spend the interest earned. The trust fund currently contains 1.3 billion dollars.
Under SQ 814, the Legislature will not have access to the trust, often referred to as the “corpus,” which is the “sum of money or property that is set aside to produce income for a specified beneficiary.” However, if SQ 814 passes, the corpus will not grow as quickly because less money will be placed in the trust each year.
TSET payments have been declining since fewer cigarettes are sold each year,.The settlement payment was $69 million in the fiscal year 2019. Approximately $52 million went to TSET, the legislature received 13 million, and $4 million went to the attorney general’s office.
Senate Bill 1529, passed by legislators in the spring, prevents the Legislature from using the TSET funds for other purposes.
Below is the ballot measure:
“This measure amends Section 40 of Article 10 of the Oklahoma Constitution. It modifies the amount of the annual tobacco settlement payments to the state to be deposited into the Tobacco Settlement Endowment Trust Fund. It modifies the amount of the annual tobacco settlement payments to the state to be deposited into the Tobacco Settlement Fund for appropriation by the Oklahoma Legislature. It specifies that deposits into the Tobacco Settlement Fund shall be appropriated and expended to draw down federal matching funds for the Medicaid program.”
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