Tobacco Settlement: States' Allocations of Fiscal Year 2005 and
Expected Fiscal Year 2006 Payments (11-APR-06, GAO-06-502).
In the 1990's, states sued major tobacco companies to obtain
reimbursement for health impairments caused by the public's use
of tobacco. In 1998, four of the nation's largest tobacco
companies signed a Master Settlement Agreement (MSA) to make
annual payments to 46 states in perpetuity as reimbursement for
past tobacco-related health care costs. Some states have arranged
to receive advance proceeds based on the amounts that tobacco
companies owe by issuing bonds backed by future payments. The
Farm Security and Rural Investment Act of 2002 requires GAO to
report annually, through fiscal year 2006, on how states use MSA
payments made by tobacco companies. To conduct this study, GAO
surveys the 46 states. This is the fifth and final of a series of
reports that provides information on the payments the 46 states
received in fiscal year 2005 and expect to receive in fiscal year
2006 and states' allocations of these funds to various program
categories and changes from prior years.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-06-502
ACCNO: A51357
TITLE: Tobacco Settlement: States' Allocations of Fiscal Year
2005 and Expected Fiscal Year 2006 Payments
DATE: 04/11/2006
SUBJECT: Allocation (Government accounting)
Balances of budget authority
Budget administration
Claims settlement
Financial management
Funds management
Health care costs
Health care services
Payments
Reporting requirements
State budgets
State governments
Tobacco industry
Reimbursements
Master Settlement Agreement
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GAO-06-502
* Report to Congressional Requesters
* April 2006
* TOBACCO SETTLEMENT
* States' Allocations of Fiscal Year 2005 and Expected Fiscal Year
2006 Payments
* Contents
* Results in Brief
* States Received About $5.8 Billion in MSA Payments and
Securitized Proceeds in Fiscal Year 2005 and Expect to Receive
Somewhat Less in Fiscal Year 2006
* States Allocated the Largest Portion of Their Funds to Address
Health-Related Programs and Debt Service on Securitized Proceeds
in Fiscal Year 2005 and Expect to Do the Same in Fiscal Year 2006
* Objectives, Scope, and Methodology
* Survey Methodology and Categorization of States' Allocations
* Categories of States' Allocations
* Allocations of MSA Payments for 46 States
* States' Allocations of Combined MSA Payments and Securitized Proceeds
for Fiscal Years 2000 through 2006
* State-Specific Information on Amounts of MSA Payments and Securitized
Proceeds Received and Allocated
* Alabama
* Alaska
* Arizona
* Arkansas
* California
* Colorado
* Connecticut
* Delaware
* Georgia
* Hawaii
* Idaho
* Illinois
* Indiana
* Iowa
* Kansas
* Kentucky
* Louisiana
* Maine
* Maryland
* Massachusetts
* Michigan
* Missouri
* Montana
* Nebraska
* Nevada
* New Hampshire
* New Jersey
* New Mexico
* New York
* North Carolina
* North Dakota
* Ohio
* Oklahoma
* Oregon
* Pennsylvania
* Rhode Island
* South Carolina
* South Dakota
* Tennessee
* Utah
* Vermont
* Virginia
* Washington
* West Virginia
* Wisconsin
* Wyoming
* GAO Survey on States' Allocations of Fiscal Years 2005 and 2006 MSA
Payments
* GAO Contact and Staff Acknowledgments
* PDF6-Ordering Information.pdf
* Order by Mail or Phone
Report to Congressional Requesters
April 2006
TOBACCO SETTLEMENT
States' Allocations of Fiscal Year 2005 and Expected Fiscal Year 2006
Payments
Contents
Tables
Figure
April 11, 2006Letter
Congressional Requesters:
In the 1990s, states sued major tobacco companies to obtain reimbursement
for health impairments caused by the public's use of tobacco. During 1997
and 1998, four states-Florida, Minnesota, Mississippi, and Texas-settled
their lawsuits with the tobacco industry by negotiating independent
agreements.1 In November 1998, four of the nation's largest tobacco
companies-Philip Morris, USA;2 R.J. Reynolds Tobacco Company; Brown &
Williamson Tobacco Corporation; and Lorillard Tobacco Company-negotiated
and signed an agreement with the attorneys general of the remaining 46
states, the District of Columbia, and the five U.S. territories, thereby
settling a number of lawsuits brought by these parties against the
companies.3 This agreement is known as the Master Settlement Agreement
(MSA).4 The MSA commits the tobacco companies to make annual payments to
the 46 states and the aforementioned entities in perpetuity as
reimbursement for health care costs, such as Medicaid expenditures,
related to tobacco use.5 Each state receives a share of the annual MSA
payments based on a fixed percentage identified in the MSA. These
percentages were negotiated during the settlement and were based, in part,
on smoking-related health care costs for each state. The total payment
fluctuates annually based on a formula that considers participating
manufacturers' annual U.S. shipments of tobacco as compared with those of
1997, as well as other factors such as inflation. The MSA imposed no
requirements on how states spend their payments.
The Farm Security and Rural Investment Act of 2002 (the 2002 Farm Bill)
requires GAO to report annually, from fiscal years 2002 through 2006, on
how states use MSA payments made by tobacco companies. In addition to
these payments, 15 of the 46 states have received substantial advance
proceeds based on the amounts that tobacco companies owe by issuing bonds
backed by payments to be made in the future, a process known as
securitization.6 States can securitize the expected payment stream to
receive funds up front rather than over time as MSA payments are made.
This report also includes information about states' receipt and allocation
of these securitized proceeds.7 This report is the fifth and final in a
series of reports responding to the 2002 Farm Bill requirement.8 In
addition, we previously reported in June 2001 on states' receipt and use
of MSA payments for fiscal years 2000 and 2001.9
This report discusses the (1) amount of payments, including securitized
proceeds, received by the 46 states party to the MSA during fiscal year
2005, the amount of payments these states expect to receive in fiscal year
2006, and (2) states' allocation of these funds to various program
categories for fiscal year 2005 and expected allocations for fiscal year
2006.
To address our objectives, we surveyed state budget offices, or their
designees, in each of the 46 states to obtain MSA payment and allocation
information for fiscal years 2005 and 2006.11 We asked the states to 10,
categorize their MSA payment allocations for fiscal year 2005 and their
expected allocations for fiscal year 2006 using 13 categories. In
addition, we asked states if they securitized their payments and, if so,
the amount of proceeds they received from securitization and the
categories to which they allocated the securitized proceeds. We took
several steps to assess the reliability of the states' data, including
independently corroborating the data to the extent possible. We determined
that the data were reliable enough for our purposes. In addition, we
compared the data we received for fiscal years 2005 and 2006 with the
payment and allocation information we collected from states for our
earlier reports.12 We conducted our work from September 2005 through March
2006 in accordance with generally accepted government auditing standards.
See appendix I for more information on our scope and methodology and for
detailed definitions of the categories used in this report.13 Appendix II
shows each state's percentage share of annual MSA payments.
Results in Brief
The 46 states party to the MSA expect to receive a total of about $11.3
billion in fiscal years 2005 and 2006, mostly from payments made by
tobacco companies. These states reported receiving over $5.8 billion in
fiscal year 2005 and expect to receive $5.4 billion in fiscal year 2006.
These amounts are substantially less than those of previous years, when
total payments and proceeds averaged about $9.3 billion annually. The
decreases occurred because only one state, Virginia, chose to issue a bond
and receive securitized proceeds ($390 million) in 2005, and none plan to
do so in 2006. Since the MSA was signed, 15 of the 46 states securitized
all or part of their payments, including the two states (California and
New York) with the largest payments, which alone received $6.7 billion in
securitized proceeds in 2 prior years. Of the $46.7 billion states
reported receiving over the first 5 years, about $31.1 billion were MSA
payments from the tobacco companies and about $15.6 billion were
securitized proceeds.
States allocated the largest portions of their fiscal year 2005 tobacco
settlement funds to health-related programs (32 percent) and debt service
on securitized proceeds (24 percent). They expect health programs to
remain about 32 percent and debt service to increase to 29 percent for
fiscal year 2006. These two categories increased substantially from fiscal
year 2004, when health-related programs represented 20 percent and debt
service was 9 percent. However, while the percentage allocations to some
program categories increased in fiscal year 2005, the dollars allocated to
these categories decreased because of the nearly $4 billion decrease in
securitized proceeds from fiscal year 2004 to 2005.
States Received About $5.8 Billion in MSA Payments and Securitized
Proceeds in Fiscal Year 2005 and Expect to Receive Somewhat Less in Fiscal
Year 2006
The 46 states party to the MSA reported receiving about $5.5 billion in
MSA payments from the tobacco companies and about $390 million in
securitized proceeds for 2005. For fiscal year 2006, these 46 states
expect to receive close to the same amount of MSA payments; 14 however no
states expect to receive securitized proceeds. While the fiscal year 2005
and expected fiscal year 2006 MSA payments are similar to those of 2004,
the securitized proceeds for the 2 years are about $4 billion and $4.4
billion less than in fiscal year 2004, respectively. Table 1 shows the
payments and proceeds for each state for fiscal years 2005 and 2006.
Table 1: MSA Payments and Securitized Proceeds States Reported Receiving
in Fiscal Year 2005 and Expect to Receive in Fiscal Year 2006
Fiscal year Expected
2005 fiscal
year
2006
State MSA payments Securitized Total MSA payments Securitized Total
received proceeds expected to be proceeds
received received expected to
be received
Alabama $101,871,492 0 $101,871,492 $101,871,679 0 $101,871,679
Alaska 21,759,260 0 21,759,260 22,133,477 0 22,133,477
Arizona 93,933,400 0 93,933,400 89,553,200 0 89,553,200
Arkansas 52,774,224 0 52,774,224 49,500,000 0 49,500,000
Californiaa 406,932,000 0 406,932,000 401,637,000 0 401,637,000
Colorado 87,367,598 0 87,367,598 88,934,450 0 88,934,450
Connecticut 118,320,645 0 118,320,645 111,000,000 0 111,000,000
Delaware 25,207,000 0 25,207,000 27,698,000 0 27,698,000
Georgia 156,427,234 0 156,427,234 146,123,673 0 146,123,673
Hawaii 38,357,999 0 38,357,999 42,154,625 0 42,154,625
Idaho 23,151,453 0 23,151,453 24,071,285 0 24,071,285
Illinois 296,629,800 0 296,629,800 282,459,316 0 282,459,316
Indiana 130,000,535 0 130,000,535 132,132,122 0 132,132,122
Iowa 55,425,528 0 55,425,528 56,409,091 0 56,409,091
Kansas 53,131,448 0 53,131,448 52,000,000 0 52,000,000
Kentucky 112,241,980 0 112,241,980 108,600,000 0 108,600,000
Louisiana 144,591,814 0 144,591,814 145,366,560 0 145,366,560
Maine 49,033,129 0 49,033,129 49,594,690 0 49,594,690
Maryland 151,263,000 0 151,263,000 149,503,000 0 149,503,000
Massachusetts 257,411,796 0 257,411,796 253,349,780 0 253,349,780
Michigan 274,326,923 0 274,326,923 285,500,000 0 285,500,000
Missouri 144,964,644 0 144,964,644 154,000,000 0 154,000,000
Montana 27,070,703 0 27,070,703 26,102,000 0 26,102,000
Nebraska 37,919,415 0 37,919,415 36,273,307 0 36,273,307
Nevada 38,872,322 0 38,872,322 39,507,406 0 39,507,406
New Hampshire 42,400,000 0 42,400,000 43,000,000 0 43,000,000
New Jersey 246,462,646 0 246,462,646 249,152,772 0 249,152,772
New Mexico 38,009,047 0 38,009,047 29,657,921 0 29,657,921
New Yorka 410,564,424 0 410,564,424 434,741,632 0 434,741,632
North 148,640,949 0 148,640,949 163,353,241 0 163,353,241
Carolina
North Dakota 23,326,754 0 23,326,754 22,972,067 0 22,972,067
Ohio 321,050,059 0 321,050,059 321,050,059b 0 321,050,059b
Oklahoma 66,034,977 0 66,034,977 49,348,303 0 49,348,303
Oregon 73,142,434 0 73,142,434 75,110,359 0 75,110,359
Pennsylvania 366,258,217 0 366,258,217 351,180,000 0 351,180,000
Rhode Island 45,817,205 0 45,817,205 47,988,000 0 47,988,000
South 73,361,299 0 73,361,299 74,329,662 0 74,329,662
Carolina
South Dakota 22,238,977 0 22,238,977 23,232,155 0 23,232,155
Tennessee 156,708,209 0 156,708,209 153,000,000 0 153,000,000
Utah 28,353,400 0 28,353,400 29,541,000 0 29,541,000
Vermont 26,205,607 0 26,205,607 24,500,000 0 24,500,000
Virginia 130,315,484 $389,977,667 520,293,151 132,777,945 0 132,777,945
Washington 130,879,000 0 130,879,000 131,000,000 0 131,000,000
West Virginia 56,495,804 0 56,495,804 55,400,000 0 55,400,000
Wisconsin 132,054,977 0 132,054,977 138,929,751 0 138,929,751
Wyoming 15,827,492 0 15,827,492 15,827,492 0 15,827,492
Total $5,453,132,303a $389,977,667 $5,843,109,970a $5,441,567,020a, 0 $5,441,567,020a,
b b
Sources: State budget offices or their designees.
aThe amounts of MSA payments received and expected by California and New
York do not include MSA payments made to the counties and cities in those
states.
bWe used Ohio's 2005 MSA payment as an estimate for its expected 2006
payment based on Ohio's budget document, which advises state agencies to
expect the same or less tobacco funds for that year as was received in
2005. In responding to our survey, Ohio declined to provide an estimate of
its 2006 expected payment because of uncertainties in adjustments in MSA
payments that may result from changes in participating manufacturers'
share of the tobacco market.
Since fiscal year 2000, states have received a total of about $53 billion
in MSA payments and securitized proceeds; specifically, about $37 billion
from MSA payments and $16 billion in securitized proceeds (see table 2).
The amount of total payments and proceeds in fiscal year 2005 ($5.8
billion) was significantly less than in fiscal year 2004, when New York
alone received $4.2 billion in securitized proceeds. States that have
issued bonds backed by MSA payments must pay for debt service on these
bonds.
Table 2: MSA Payments and Securitized Proceeds Received by the 46 States
Since Fiscal Year 2000
Fiscal year MSA payments Securitized proceeds Total
2000-01 $13,200,000,000 $928,900,000 $14,128,900,000
2002 6,238,393,496 3,838,376,465 10,076,769,961
2003 6,306,329,459 6,482,764,469 12,789,093,928
2004 5,340,128,223 4,374,698,723 9,714,826,946
2005 5,453,132,303 389,977,667 5,843,109,970
Total $36,537,983,481 $16,014,717,324 $52,552,700,805
Sources: GAO-01-851 , GAO-03-407 , GAO-04-518 , GAO-05-312 , state budget
offices or their designees, and GAO analysis.
Note: This table does not include payments or proceeds that went to cities
and counties in California and New York.
In fiscal year 2005, Virginia was the only state that received securitized
proceeds. Fifteen states have received a total of about $16 billion in
proceeds from the sale of bonds since fiscal year 2000, as shown in table
3. Five of the states-Alabama, Alaska, Iowa, Oregon and Rhode Island-have
received proceeds in more than one year.
Table 3: Total Amount of Securitized Proceeds Received by States, Fiscal
Years 2000-2005
State Total securitized proceeds
Alabama $153,760,000
Arkansas 58,268,549
Alaska 203,000,000
California 2,485,000,000
Iowa 643,108,448
Louisiana 1,069,510,894
New Jersey 2,751,814,469
New York 4,200,000,000
Oregon 657,565,000a
Rhode Island 545,859,897
South Carolina 785,900,000
South Dakota 278,045,000
Washington 517,905,000
Virginia 389,977,667
Wisconsin 1,275,002,400
Total $16,014,717,324a
Sources: GAO-01-851 , GAO-03-407 , GAO-04-518 , GAO-05-312 , state budget
offices or their designees, and GAO analysis.
aOregon issued bonds, but did not securitize them with tobacco settlement
payments.
States Allocated the Largest Portion of Their Funds to Address
Health-Related Programs and Debt Service on Securitized Proceeds in Fiscal
Year 2005 and Expect to Do the Same in Fiscal Year 2006
The 46 states reported that in fiscal year 2005 they allocated the largest
portion of their combined MSA payments and securitized proceeds (32
percent) to health-related programs, and the next largest portion (24
percent) was allocated to debt service on securitized proceeds. In fiscal
year 2006, the states expected the funding proportion that is devoted to
health programs to remain at 32 percent and that which is devoted to debt
service to increase to 29 percent. These two categories increased
substantially from fiscal year 2004, when health-related programs
represented 20 percent and debt service was 9 percent. The increases were
accompanied by substantial decreases in state allocations to cover state
budget shortfalls. Also, while the percentage allocations to some program
categories increased in fiscal year 2005, the total number of dollars
allocated to these categories decreased because of the nearly $4 billion
decrease in securitized proceeds from fiscal year 2004 to 2005. For
example, the percentage allocation to health care increased from 20 to 32
percent, while the dollar amount decreased from about $2.26 billion in
fiscal year 2004 to $1.87 billion in fiscal year 2005 and is expected to
remain about the same in fiscal year 2006. Examples of the health-related
programs included Medicaid, Children's Health Insurance Program, and
cancer research and prevention. Figure 1 and appendix III provide more
details on states' allocations of their combined MSA payments and
securitized proceeds for fiscal years 2000 through 2005, and expected
allocations for fiscal year 2006.
In addition, between fiscal years 2004 and 2005, the portion of funds that
all states allocated to cover budget shortfalls decreased substantially
from 44 percent to 4 percent, as shown in figure 1. Our analysis shows
that changes in the allocations (primarily securitized proceeds) by New
York and New Jersey were the primary cause of that decrease. The funds
(about $6.3 billion) allocated by these two states accounted for over half
of the total funds ($11.4 billion) that all states allocated in fiscal
year 2004, but these amounts declined substantially in fiscal year 2005
and are expected to further decline in 2006. Specifically, in fiscal year
2004, New York allocated $3.8 billion to budget shortfalls while New
Jersey allocated $873 million. These two states' allocations accounted for
about 92 percent of all funds allocated to budget shortfalls in fiscal
year 2004. In fiscal year 2005, however, New York allocated only $354
million to budget shortfalls while New Jersey did not allocate any funds
to budget shortfalls. In fiscal year 2006, neither New York nor New Jersey
expect to allocate any funds to budget shortfalls.
Figure 1: States' Allocations of Combined MSA Payments and Securitized
Proceeds for Fiscal Years 2000 through 2005, and Expected Allocations for
Fiscal Year 2006
Note: Percentages may not add up to 100 because of rounding.
aWe did not obtain data for budget shortfalls and debt service on
securitized funds for fiscal year 2000 to 2001.
Tables 4 and 5 show the percentage of the combined MSA payments and
securitized proceeds that individual states allocated, and expect to
allocate, to various categories in fiscal years 2005 and 2006,
respectively.
Table 4: Allocation of States' Combined MSA Payments and Securitized
Proceeds, Fiscal Year 2005
State Budget Debt on Economic Education General Health
shortfalls securitized development purposes
proceeds for tobacco
regions
Alabama 0.0% 12.8% 0.0% 11.5% 5.9% 44.6%
Alaska 0.0 80.0 0.0 0.0 0.0 0.0
Arizona 0.0 0.0 0.0 0.0 0.0 100.0
Arkansas 0.0 9.5 0.0 4.8 0.0 57.3
California 0.0 100.0 0.0 0.0 0.0 0.0
Colorado 0.0 0.0 0.0 13.2 51.9 29.1
Connecticut 0.0 0.0 0.0 0.0 95.5 1.7
Delaware 0.0 0.0 0.0 7.3 0.2 61.6
Georgia 0.0 0.0 30.1 0.0 0.0 57.1
Hawaii 0.0 0.0 0.0 0.0 7.3 32.5
Idaho 0.0 0.0 0.0 0.0 0.0 2.2
Illinois 0.0 0.0 0.0 4.8 17.2 71.4
Indiana 0.0 0.0 26.4 0.0 0.0 49.7
Iowa 0.0 36.0 0.0 1.8 1.9 56.0
Kansas 0.0 0.0 0.0 16.3 1.4 2.5
Kentucky 0.0 0.0 42.9 9.7 3.2 34.3
Louisiana 0.0 59.6 0.0 0.0 0.2 9.9
Maine 0.1 0.0 0.0 21.2 0.1 36.3
Maryland 0.0 0.0 0.0 2.0 19.9 66.1
Massachusetts 0.0 0.0 0.0 0.0 100.0 0.0
Michigan 2.4 0.0 0.0 34.0 0.1 63.4
Missouri 49.6 0.0 0.0 0.0 1.6 48.4
Montana 0.0 0.0 0.0 0.0 10.6 68.5
Nebraska 0.0 0.0 0.0 0.0 0.2 53.3
Nevada 0.0 0.0 0.0 54.0 0.3 21.3
New Hampshire 0.0 0.0 0.0 94.3 5.7 0.0
New Jersey 0.0 99.9 0.0 0.0 0.0 0.1
New Mexico 0.0 0.0 0.0 0.0 68.8 31.2
New York 22.6 27.8 0.0 0.0 0.0 0.0
North 0.0 0.0 17.5 0.0 38.5 34.4
Carolina
North Dakota 0.0 0.0 0.0 45.0 0.0 2.1
Ohio 0.0 0.0 13.9 8.2 8.5 33.2
Oklahoma 0.0 0.0 0.0 0.0 2.7 61.2
Oregon 0.0 35.6 0.0 0.0 0.0 22.4
Sources: State budget offices and their designees (data); GAO (analysis).
Notes: Percentages may not add up to 100 because of rounding. Appendix IV
shows the dollar amount.
Table 5: Expected Allocation of States' Combined MSA Payments and
Securitized Proceeds, Fiscal Year 2006
Source: State budget offices and their designees (data); GAO (analysis)
Notes: Percentages may not add up to 100 because of rounding. Appendix IV
shows the dollar amount each state allocated to the various categories.
We are sending copies of this report to interested congressional
committees and others upon request. Copies are also available at no charge
on the GAO Web site at http://www.gao.gov .
If you or your staff have any questions about this report, please contact
me at (202) 512-3841 or robinsonr@gao.gov . Contact points for our Offices
of Congressional Relations or Public Affairs may be found on the last page
of this report. Key contributors to this report are listed in appendix VI.
Robert A. Robinson Managing Director, Natural Resources and Environment
List of Congressional Requesters
The Honorable Saxby Chambliss Chairman The Honorable Tom Harkin Ranking
Democratic Member Committee on Agriculture, Nutrition, and Forestry
United States Senate
The Honorable Robert Goodlatte Chairman, Committee on Agriculture House of
Representatives
The Honorable Jim Bunning United States Senate
Objectives, Scope, and Methodology Appendix I
The Farm Security and Rural Investment Act of 2002 (the 2002 Farm Bill)
requires GAO to report annually, from fiscal years 2002 through 2006, on
how states use Master Settlement Agreement (MSA) payments made by tobacco
companies. This report is the fifth and final in a series of reports
responding to the 2002 Farm Bill requirement. In December 2002, we issued
the report Tobacco Settlement: States' Allocations of Phase II Funds (
GAO-03-262R ), which provides information on the National Tobacco Grower
Settlement Trust (commonly referred to as the Phase II agreement). In
February 2003, we issued the report Tobacco Settlement: States'
Allocations of Fiscal Years 2002 and 2003 Master Settlement Agreement
Payments ( GAO-03-407 ). In March 2004, we issued the report Tobacco
Settlement: States' Allocations of Fiscal Year 2003 and Expected Fiscal
Year 2004 Payments ( GAO-04-518 ). In March 2005, we issued the report
Tobacco Settlement: States' Allocations of Fiscal Year 2004 and Expected
Fiscal Year 2005 Payments ( GAO-05-312 ). We also reported on states'
receipt and use of MSA payments for fiscal years 2000 and 2001 in a June
2001 report, Tobacco Settlement: States' Use of Master Settlement
Agreement Payments ( GAO-01-8 51).
To respond to the Farm Bill requirement, the objectives of this study were
to provide information on (1) the amount of payments received by the 46
states party to the MSA during fiscal year 2005 and the amount of payments
these states expect to receive during fiscal year 2006 and (2) states'
allocations of MSA funds to various program categories for fiscal year
2005 and states' expected allocations for fiscal year 2006.21,
To address these objectives, we surveyed3 the executive budget offices, or
their designees, in the 46 states party to the MSA. In addition, we
performed some reliability testing and independently corroborated these
data, to the extent possible. We reviewed and compared MSA payment data
reported by states with amounts provided by the National Association of
Attorneys General.4 We contacted state officials to discuss any data
entries on the surveys that were questionable, and resolved all
discrepancies between the survey data and the data provided by National
Association of Attorneys General. We also reviewed previous GAO reports
and other relevant studies. Based on this work, we determined that the
data were reliable enough for our purposes. We conducted our work from
September 2005 through March 2006 in accordance with generally accepted
government auditing standards.
Our study focuses on the states' shares of MSA payments and does not
include information on allocations of MSA payments to cities and counties
in California and New York.5 In addition, we did not collect information
on MSA payments made to the District of Columbia or the five U.S.
territories that are also party to the MSA. Because we completed our
fieldwork before states received their fiscal year 2006 payments, we were
unable to obtain final information on the actual MSA payments states
received during fiscal year 2006. Consequently, we obtained information on
states' expected fiscal year 2006 MSA payments.
Survey Methodology and Categorization of States' Allocations
We used a survey instrument similar to the one used to obtain information
for our March 2005 report. In September 2005, we contacted the 46 state
budget officials, or their designees, who completed the surveys for our
March 2005 report. The officials in many of these states indicated they
would be the respondents for this year's survey and several identified new
respondents. In September 2005, we E-mailed the survey to the identified
officials in each of the 46 states party to the MSA. We received responses
from all 46 states. From these responses, we obtained information on MSA
payments states received in fiscal year 2005 and MSA payments they expect
to receive in fiscal year 2006, and the states' allocations and expected
allocations of MSA payments in fiscal years 2005 and 2006, respectively.
We also obtained information on the states' proceeds, if any, from
securitization or expected securitization in fiscal years 2005 and 2006,
respectively, and the allocation of the securitized proceeds. Furthermore,
in the survey, we asked the states to categorize their allocations of MSA
payments and securitized MSA proceeds for fiscal years 2005 and 2006 using
the 13 program categories developed for our report. (See below for the
definitions of the 13 categories.) The level of detail for individual
states varies because we are relying on state-reported information.
There are no sampling errors because this was not a sample survey.
Nevertheless, the practical difficulties of conducting any survey may
introduce errors, commonly referred to as nonsampling errors. For example,
difficulties in how a particular question is interpreted, in the sources
of information that are available to respondents, or in how the data are
entered into a database or were analyzed can introduce unwanted
variability into the survey results. We took steps in the development of
the survey, the data collection, and the data editing and analysis to
minimize these nonsampling errors. For example, we edited the completed
surveys for consistency and contacted state budget offices to clarify
responses, verified all survey data that were entered into our database,
and verified that the computer programs were written correctly.
In addition, we took information on MSA payments and securitized proceeds
received and allocated for fiscal years 2000 through 2004 that we
collected for previous GAO reports dealing with the MSA6 and compared it
with receipts and allocations for fiscal years 2005 and 2006.
Categories of States' Allocations
To standardize the information reported by the 46 states, we developed the
following categories and definitions for the program areas to which states
allocated their payments.
Budget shortfalls: This category is comprised of amounts allocated to
balance state budgets and close gaps or reduce deficits resulting from
lower than anticipated revenues or increased mandatory or essential
expenditures.
Debt service on securitized funds: This category consists of amounts
allocated to service the debt on bonds issued when the state securitized
all or a portion of its MSA payments.
Economic development for tobacco regions: This category is comprised of
amounts allocated for economic development projects in tobacco states such
as infrastructure projects, education and job training programs, and
research on alternative uses of tobacco and alternative crops. This
category includes projects specifically designed to benefit tobacco
growers as well as economic development that may serve a larger population
within a tobacco state.
Education: This category is comprised of amounts allocated for education
programs such as day care, preschool, Head Start, early childhood
education, elementary and secondary education, after-school programs, and
higher education. This category does not include money for capital
projects such as construction of school buildings.
General purposes: This category is comprised of amounts allocated for
attorneys' fees and other items, such as law enforcement or community
development, which could not be placed into a more precise category. This
category also includes amounts allocated to a state's general fund that
were not earmarked for any particular purpose. Amounts used to balance
state budgets and close gaps or reduce deficits should be categorized as
budget shortfalls rather than general purposes.
Health: This category is comprised of amounts allocated for direct health
care services; health insurance, including Medicaid and the State
Children's Health Insurance Program (SCHIP); hospitals; medical
technology; public health services; and health research. This category
does not include money for capital projects such as construction of health
facilities.
Infrastructure: This category is comprised of amounts allocated for
capital projects such as construction and renovation of health care,
education, and social services facilities; water and transportation
projects; and municipal and state government buildings. This category
includes retirement of debt owed on capital projects.
Payments to tobacco growers: This category is comprised of amounts
allocated for direct payments to tobacco growers, including subsidies and
crop conversion programs.
Reserves/rainy day funds: This category is comprised of amounts allocated
to state budget reserves such as rainy day and budget stabilization funds
not earmarked for specific programs. Amounts allocated to reserves that
are earmarked for specific areas are categorized under those areas-e.g.,
reserve amounts earmarked for economic development purposes should be
categorized in the economic development category.
Social services: This category is comprised of amounts allocated for
social services such as programs for the aging, assisted living, Meals on
Wheels, drug courts, child welfare, and foster care. This category also
includes amounts allocated to special funds established for children's
programs.
Tax reductions: This category is comprised of amounts allocated for tax
reductions such as property tax rebates and earned income tax credits.
Tobacco control: This category is comprised of amounts allocated for
tobacco control programs such as prevention, including youth education,
enforcement, and cessation services.
Unallocated: This category is comprised of amounts not allocated for any
specific purpose, such as amounts allocated to dedicated funds that have
no specified purpose; amounts states chose not to allocate in the year MSA
payments were received that will be available for allocation in a
subsequent fiscal year; interest earned from dedicated funds not yet
allocated; and amounts that have not been allocated because the state had
not made a decision on the use of the MSA payments.
Allocations of MSA Payments for 46 States Appendix II
Each of the 46 states receives a share of the annual MSA payments based on
the following fixed percentages identified in the MSA.
Table 6: Allocations of MSA Payments for 46 States
State Percent
Alabama 1.6161308%
Alaska 0.3414187
Arizona 1.4738845
Arkansas 0.8280661
California 12.7639554
Colorado 1.3708614
Connecticut 1.8565373
Delaware 0.3954695
Georgia 2.4544575
Hawaii 0.6018650
Idaho 0.3632632
Illinois 4.6542472
Indiana 2.0398033
Iowa 0.8696670
Kansas 0.8336712
Kentucky 1.7611586
Louisiana 2.2553531
Maine 0.7693505
Maryland 2.2604570
Massachusetts 4.0389790
Michigan 4.3519476
Missouri 2.2746011
Montana 0.4247591
Nebraska 0.5949833
Nevada 0.6099351
New Hampshire 0.6659340
New Jersey 3.8669963
New Mexico 0.5963897
New York 12.7620310
North Carolina 2.3322850
North Dakota 0.3660138
Ohio 5.0375098
Oklahoma 1.0361370
Oregon 1.1476582
Pennsylvania 5.7468588
Rhode Island 0.7189054
South Carolina 1.1763519
South Dakota 0.3489458
Tennessee 2.4408945
Utah 0.4448869
Vermont 0.4111851
Virginia 2.0447451
Washington 2.0532582
West Virginia 0.8864604
Wisconsin 2.0720390
Wyoming 0.2483449
Sources: GAO-05-312 and the MSA.
States' Allocations of Combined MSA Payments and Securitized Proceeds for
Fiscal Years 2000 through 2006 Appendix III
Sources: GAO-05-312 and state budget offices or their designees (data);
GAO (analysis).
Note: Percentages may not add up to 100 percent and allocations may not
add up to total allocations due to rounding. The amounts for each year are
in the current year dollars for that year. Percentages across years may be
compared but not dollars across years because the dollars are not adjusted
to a constant base year.
aWe did not obtain information on allocations for budget shortfalls and
debt service on securitized funds in fiscal years 2000 and 2001.
State-Specific Information on Amounts of MSA Payments and Securitized
Proceeds Received and Allocated Appendix IV
This appendix presents the following information for each of the 46 states
party to the MSA:
o the amount of MSA payments received and the categories to which they
were allocated for fiscal year 2005;
o the amount of MSA payments expected to be received and the expected
categories to which they will be allocated for fiscal year 2006; and
o the amount of securitized proceeds received or expected to be received
and the categories to which they were allocated or expected to be
allocated for fiscal years 2005 and 2006, respectively, if applicable
(applies to four states).
Tables 7 through 52 include only those program categories to which a state
reported allocating funds. If a category is not listed, it means the state
did not allocate funds to the category. In some cases, the total amounts
allocated may exceed the actual MSA payments and securitized proceeds
because the amounts allocated include carry-over funds from prior years
and/or the interest earned on those funds. Some states that allocated
funds to a program category did not provide examples of programs receiving
funds. Only Virginia received securitized proceeds in fiscal year 2005; no
states expect to receive proceeds in fiscal year 2006. However, Iowa, New
York, and South Dakota allocated or expected to allocate funds composed of
securitized proceeds received in prior years. In these four cases, we
combined securitized proceeds with MSA payments.
Alabama
Alabama reported receiving $101,871,492 from MSA payments in fiscal year
2005 and expects to receive $101,871,679 in fiscal year 2006.
Table 7: Alabama's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Debt service on $13,000,000 $13,000,000
securitized funds
Education 11,675,163 11,675,188 Alternative schools,
Department of Education
General purposes 6,008,160 53,008,172 Juvenile probation
officers, administration,
forensic sciences
Health 45,449,741 45,449,837 Public health, mental
health, Medicaid, senior
services
Social services 25,207,739 25,207,792 Child welfare, children's
programs, youth services,
rehabilitation services
Tobacco control 530,689 530,690 Tobacco enforcement for
minors
Total $101,871,492 $148,871,679a
Source: Alabama Executive Budget Office.
aIncludes carry-over funds.
Alaska
Alaska reported receiving $21,759,260 from MSA payments in fiscal year
2005 and expects to receive $22,133,477 in fiscal year 2006.
Table 8: Alaska's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Debt service on $17,407,408 $16,900,000
securitized funds
Tobacco control 4,351,852 5,085,339 Tobacco use prevention
programs, use cessation
grants, enforcement, counter
marketing, evaluation of
programs
Total $21,759,260 $21,985,339
Source: Alaska Department of Revenue - Tax Division.
Arizona
Arizona reported receiving $93,933,400 from MSA payments in fiscal year
2005 and expects to receive $89,553,200 in fiscal year 2006.
Table 9: Arizona's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs receiving
or expected to receive
allocations
Health $94,142,500 $89,553,200 Health services, including
behavioral health
Total $94,142,500a $89,553,200
Source: Arizona Governor's Budget Office.
aIncludes interest earned.
Arkansas
Arkansas reported receiving $52,774,224 from MSA payments in fiscal year
2005 and expects to receive $49,500,000 in fiscal year 2006.
Table 10: Arkansas' MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Debt service on $5,000,000 $5,000,000
securitized funds
Education 2,508,007 2,337,289 University of Arkansas'
School of Public Health
Health 30,235,237 27,230,395 Prevention and cessation,
biomedical research,
Medicaid, minority health
Tobacco control 15,030,980 14,932,316 Enforcement related to sales
to minors
Total $52,774,224 $49,500,000
Source: Arkansas Department of Finance and Administration.
California
California reported receiving $406,932,000 from MSA payments in fiscal
year 2005 and expects to receive $401,637,000 in fiscal year 2006.
Table 11: California's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Debt service on $406,932,000 $401,637,000
securitized funds
Total $406,932,000 $401,637,000
Source: California Department of Finance.
Notes: These MSA payments exclude payments made to California cities and
counties. Cities and counties in the state received the same amount as the
state.
Colorado
Colorado reported receiving $87,367,598 from MSA payments in fiscal year
2005 and expects to receive $88,934,450 in fiscal year 2006.
Table 12: Colorado's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Education $16,355,403 $4,446,723 Read to Achieve
General purposes 64,530,052 34,909,422
Health 36,172,817 39,905,273 Visiting Nurses, Primary
and Preventive Care grants,
Children's Health Plan Plus
and Prenatal Health Care,
dental loan repayment,
breast and cervical cancer,
children's mental health,
Ryan White AID/HIV,
children with autism, the
Medicaid Management
Information System
Infrastructure 0 7,114,156
Social services 4,304,053 4,446,723 Veteran's Trust Fund, Tony
Grampsas Youth Services
Tobacco control 2,951,553 0 Tobacco use cessation
Total $124,313,878a $90,822,297b
Source: Colorado Governor's Office of State Planning and Budgeting.
aIncludes carry-over funds and interest earned.
bIncludes interest earned.
Connecticut
Connecticut reported receiving $118,320,645 from MSA payments in fiscal
year 2005 and expects to receive $111,000,000 in fiscal year 2006.
Table 13: Connecticut's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
General purposes $112,984,760 $94,875,000 General Fund
Health 2,000,000 16,000,000 Biomedical Research Trust
Fund, Tobacco and Health
Trust Fund
Tobacco control 125,000 125,000
Unallocated 3,210,885 0
Total $118,320,645 $111,000,000
Source: Connecticut Office of Policy and Management, Fiscal and Program
Policy Section.
Delaware
Delaware reported receiving $25,207,000 from MSA payments in fiscal year
2005 and expects to receive $27,698,000 in fiscal year 2006.
Table 14: Delaware's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Education $1,926,000 $2,188,000 Scholarships for nursing
students at community
college, survey on alcohol
use, 5-year study and
guidelines for lesser known
illnesses
General 57,100 57,100 Funding for one full-time
purposes staff to assist the Delaware
Health Care Commission
Health 16,193,400 16,849,500 Delaware Prescription Drug
Assistance Program, Medicaid
coverage for Supplemental
Security Income Transition
and for Pregnant Women's
Diabetes Pilot Program,
Uninsured Action Plan,
various cancer programs,
Public Access Defibrillation
Program
Social services 2,888,700 2,926,500 Supplemental Security Income
supplement, substance abuse
transitional housing, Heroin
Residential Program, assisted
living, attendant care
services, caregiver support
Tobacco control 4,684,500 4,684,500 Tobacco use prevention
education, enforcement
activities, Smoking Cessation
Quitline
Unallocated 542,700 992,400
Total $26,292,400a $27,698,000
Source: Delaware Department of Health and Social Services.
aIncludes carry-over funds.
Georgia
Georgia reported receiving $156,427,234 from MSA payments in fiscal year
2005 and expects to receive $146,123,673 in fiscal year 2006.
Table 15: Georgia's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Economic $47,123,333 $47,123,333 One Georgia Authority
development for
tobacco regions
Health 89,362,868 99,148,370 Medicaid, state children's
health insurance programs,
critical access hospital
reimbursement, public
health, Medicaid home and
community-based waiver
programs, Georgia Cancer
Coalition (includes the
Georgia Cancer Coalition
Eminent Cancer Scientists
and Clinicians Program for
Cancer Research)
Social services 7,149,804 7,149,804 Home and community-based
services to the elderly,
early intervention for
families at risk for child
abuse
Tobacco control 12,733,995 3,205,245 Tobacco Use Prevention
Program, compliance and
enforcement for underage
smokers
Unallocated 5,723
Total $156,375,723a $156,626,752b
Source: Georgia Office of Planning and Budget.
aPayments received in fiscal year 2004 were budgeted for fiscal year 2005.
bPayments received in fiscal year 2005 were budgeted for fiscal year 2006.
Hawaii
Hawaii reported receiving $38,357,999 from MSA payments in fiscal year
2005 and expects to receive $42,154,625 in fiscal year 2006.
Table 16: Hawaii's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
General purposes $2,784,010 $3,027,143 Centralized administrative
services, Tobacco
Enforcement Special Fund
for the Attorney General's
Office for MSA Enforcement
Health 12,450,896 13,694,619 Department of Health's
public health programs,
Department of Human
Service's children's health
insurance programs
Infrastructure 9,960,717 10,955,695 Debt service on University
of Hawaii revenue bonds
issued for the new Health
and Wellness Center, to
include a new biomedical
research center and medical
school
Reserves/rainy day 8,715,627 9,586,233 State of Hawaii's Emergency
fund and Budget Reserve Fund,
health and social service
programs
Tobacco control 4,446,749 4,890,935 Tobacco Prevention and
Control Trust Fund
Total $38,357,999 $42,154,625
Source: Hawaii Department of Budget and Finance.
Idaho
Idaho reported receiving $23,151,453 from MSA payments in fiscal year 2005
and expects to receive $24,071,285 in fiscal year 2006.
Table 17: Idaho's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs receiving or
expected to receive allocations
Health $500,000 0 Catastrophic Health Care Cost
Program for tobacco-related
disease treatment
Social 270,000 $270,000 Youth courts and status offender
services programs as they relate to
tobacco and substance abuse
issues
Tobacco 1,169,700 430,000 Development of statewide youth
control coalitions, tobacco
counter-marketing, public health
districts' tobacco use cessation
programs, youth tobacco
investigations
Unallocated 21,211,753 23,371,285
Total $23,151,453 $24,071,285
Source: Idaho Division of Financial Management.
Illinois
Illinois reported receiving $296,629,800 from MSA payments in fiscal year
2005 and expects to receive $282,459,316 in fiscal year 2006.
Table 18: Illinois' MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Education $13,800,000 $13,800,000 Payments to Centers for
Academic Excellence for
medical research
General purposes 49,001,698 26,553,172 Technology marketing,
technology centers,
administrative fees charged
to the tobacco fund, audit
expenses charged to the
tobacco fund, Court of
Claims awards
Health 203,765,481 238,414,550 Medicaid drugs, drugs for
senior citizens
Infrastructure 1,817,343 7,602,749 Capital maintenance on
state owned facilities
Social services 9,319,189 9,990,900 Outreach programs to the
aging
Tobacco control 7,539,377 12,917,900 Tobacco prevention
activities of local health
departments, tobacco
control programs, tobacco
enforcement of MSA
provisions, grant to the
American Lung Association
Total $285,243,088a $309,279,271a
Source: Illinois Governor's Office of Management and Budget.
aIncludes carry-over funds and interest earned.
Indiana
Indiana reported receiving $130,000,535 from MSA payments in fiscal year
2005 and expects to receive $132,132,122 in fiscal year 2006.
Table 19: Indiana's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Economic $46,300,000 $43,100,000 Value Added Research Fund,
development for Rural Development
tobacco regions Administration Fund, Rural
Development Council Fund,
Technology Development
Grant Fund, 21st Century
Research and Technology
Fund, Commission on
Hispanic and Latino Affairs
General purposes 0 300,000 Attorney General's Office
Health 87,400,000 92,200,000 Breast cancer education and
diagnosis; prostate cancer
education and diagnosis;
sickle cell; State
Department of Health
Administration; cancer
registry; minority health
initiative; HIV/AIDS
services; testing for
drug-afflicted babies; AIDS
education; state chronic
diseases; Women, Infants,
and Children supplement;
Maternal and Child Health
supplement; aid to TB
hospitals; Local Health
Maintenance Fund; Local
Health Department Trust
Account; Community Health
Centers; minority
epidemiology; Children's
Health Insurance Program;
Prescription Drug
Account/Hoosier Rx;
Community Health Centers
Infrastructure 2,900,000 8,200,000 Regional health care
construction
Social services 28,300,000 33,900,000 Developmentally Disabled
Client Services, Division
of Disability, Aging and
Rehabilitative Services;
Social Services Block Grant
Tobacco control 10,800,000 10,100,000 Tobacco use prevention and
cessation
Total $175,700,000a $187,800,000a
Source: Indiana State Budget Agency.
aIncludes carry-over funds and interest earned.
Iowa
Iowa reported receiving $55,425,528 from MSA payments in fiscal year 2005
and expects to receive $56,409,091 in fiscal year 2006. In addition, Iowa
reported $63,852,236 was available in fiscal year 2005 from a fund
composed of (1) securitized proceeds received in prior years and (2)
interest earned on these proceeds. Iowa expects $66,284,236 to be
available from this fund in fiscal year 2006.
Table 20: Iowa's Allocations of MSA Payments and Securitized Proceeds
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Debt service on $42,978,000 $43,680,000
securitized funds
Education 2,153,250 2,153,250 Early childhood
development
General purposes 2,297,285 3,331,285 Correctional programs
Health 66,837,664 68,517,227 Medicaid, substance abuse
Tobacco control 5,011,565 5,011,565 Tobacco use, control,
cessation programs
Total $119,277,764a $122,693,327a
Source: Iowa Department of Management.
aIncludes carry-over funds and interest earned.
Kansas
Kansas reported receiving $53,131,448 from MSA payments in fiscal year
2005 and expects to receive $52,000,000 in fiscal year 2006.
Table 21: Kansas' MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs receiving
or expected to receive
allocations
Education $8,684,755 $9,329,045 Parent education, 4-year olds
at risk, vision research,
special education
General 752,882 252,882 State General Fund, Children's
purposes Cabinet Administration
Health 1,337,792 1,300,000 Healthy Start Home Visitor,
Telekid Health Care Link
Social 41,865,293 41,863,081 Juvenile justice prevention and
services sanction grants, children's
mental health initiative,
family-centered systems of
care, therapeutic preschool,
childcare and child welfare
community services, Healthwave,
Medicaid, Smart Start Kansas
(early childhood care and
education), immunization
outreach, school violence
prevention, family
preservation, attendant care
for independent living
Tobacco 500,000 1,000,000 Smoking prevention and
control cessation
Total $53,140,722 a $53,745,008a
Source: Kansas Division of the Budget.
aIncludes interest earned.
Kentucky
Kentucky reported receiving $112,241,980 from MSA payments in fiscal year
2005 and expects to receive $108,600,000 in fiscal year 2006.
Table 22: Kentucky's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Economic $48,195,900 $33,541300 Governor's Office for
development for Agricultural Policy,
tobacco regions Conservation: Environmental
Stewardship
Education 10,908,800 10,908,800 Families and Children: Early
Childhood Development
Program, Governor's Office
of Early Childhood
Development Program;
Kentucky Higher Education
Assistance Authority: Early
Childhood Scholarship
Program
General purposes 3,616,980 175,000 General Fund, Department of
Revenue: enforcement
Health 38,461,300 38,370,400 Public Health: Health Access
Nurturing Development
Service, Folic Acid
Distribution, Healthy Start,
Universal Children's
Immunization, Child Advocacy
Centers, Early Childhood
Mental and Oral Health;
Mental Health: Substance
Abuse Services to
Medicaid-Eligible Women with
Dependent Children;
Children With Special Health
Care Needs: Universal
Newborn Hearing Testing and
Vision Screening;
Council on Postsecondary
Education: Lung Cancer
Research Program;
Insurance: Kentucky Access
(High Risk Individual
Insurance Pool)
Infrastructure 6,116,600 20,671,200 Debt Service: Water Resource
Development, Rural
Development Bond Fund
Tobacco control 4,942,400 4,933,300 Smoking cessation
Total $112,241,980 $108,600,000
Source: Kentucky Governor's Office for Policy Research.
Louisiana
Louisiana reported receiving $144,591,814 from MSA payments in fiscal year
2005 and expects to receive $145,366,560 in fiscal year 2006.
Table 23: Louisiana's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Debt service on $86,242,759 $87,148,112
securitized
funds
General purposes 350,000 350,000 Attorney General
enforcement programs
Health 14,377,675 13,758,480 Medicaid, School-based
Health Centers, Louisiana
Children's Health Insurance
Programs, health care
science grants
Tobacco control 500,000 500,000 Smoking prevention and
cessation grants
Unallocated 43,121,380 43,609,968
Total $144,591,814a $145,366,560
Source: Louisiana Division of Administration, Office of Planning and
Budget.
aIncludes carry-over funds.
Maine
Maine reported receiving $49,033,129 from MSA payments in fiscal year 2005
and expects to receive $49,594,690 in fiscal year 2006.
Table 24: Maine's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Budget $55,218 $451,010
shortfalls
Education 10,423,452 10,793,711 Child care and development
activities, after-school
services, Head Start
General 56,552 65,747 Attorney General enforcement
purposes and administration
Health 17,883,261 17,920,623 Prescription drugs, Medicaid,
other health initiatives
Social services 5,658,262 5,741,915 Substance abuse prevention,
intervention, testing,
treatment
Tobacco control 15,159,818 15,295,990 Community and school grants
and statewide coordination to
reduce tobacco addiction and
use; tobacco prevention,
control, treatment
Total $49,236,563a $50,268,996a
Source: Maine Department of Administrative and Financial Services, Bureau
of the Budget.
aIncludes carry-over funds and interest earned.
Maryland
Maryland reported receiving $151,263,000 from MSA payments in fiscal year
2005 and expects to receive $149,503,000 in fiscal year 2006.
Table 25: Maryland's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Education $3,000,000 $3,000,000 Text books for nonpublic
schools
General purposes 30,169,000 30,052,000 Legal fees (settlement with
outside counsel), Attorney
General's Office for
Nonparticipating
Manufacturers' Enforcement
Health 99,924,000 104,362,000 Medicaid, cancer prevention,
screening and treatment;
heart and lung disease;
breast and cervical cancer;
management; drug addiction
Payments to 5,653,000 5,956,000 Tri-County Council of
tobacco growers Southern Maryland
Tobacco control 9,854,000 9,230,000 Countermarketing, minority
outreach and technical
assistance, surveillance and
evaluation, administration
Unallocated 2,663,000 0
Total $151,263,000 $152,600,000a
Source: Maryland Department of Budget and Management.
aIncludes carry-over funds.
Massachusetts
Massachusetts reported receiving $254,593,761 from MSA payments in fiscal
year 2005 and expects to receive $253,349,780 in fiscal year 2006.
Table 26: Massachusetts' MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs receiving
or expected to receive
allocations
General $254,593,761 $253,349,780 Commonwealth's General Fund
purposes
Total $254,593,761 $253,349,780
Source: Massachusetts Executive Office of Administration and Finance.
Michigan
Michigan reported receiving $274,326,923 from MSA payments in fiscal year
2005 and expects to receive $285,500,000 in fiscal year 2006.
Table 27: Michigan's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs receiving
or expected to receive
allocations
Budget $7,000,000 0
shortfalls
Education 99,300,000 $166,300,000 Merit Award scholarships and
tuition incentive grants for
higher education students,
Michigan Educational Assessment
Program testing for K-12
students, nursing scholarships,
Michigan Education Savings
Plan, general higher education
support
General 368,200 386,800 Attorney General administration
purposes
Health 185,100,000 122,300,000 Elder pharmaceutical
assistance, Medicaid personal
needs allowance, respite care,
Medicaid support, biomedical
research and development
Total $291,768,200a $288,986,800a
Source: Michigan Office of Health and Human Services, State Budget Office.
aIncludes carry-over funds and interest earned.
Missouri
Missouri reported receiving $144,964,644 from MSA payments in fiscal year
2005 and expects to receive $154,000,000 in fiscal year 2006.
Table 28: Missouri's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs receiving
or expected to receive
allocations
Budget $72,149,994 $84,089,532
shortfalls
General 2,375,886 2,145,573 General revenue fund to support
purposes programs such as education,
Medicaid, corrections
Health 70,369,652 67,282,481 Payments to Medicaid providers,
grants to hospitals for
graduate medical education,
prescription drug assistance
for low-income seniors through
the Missouri Senior Rx Program
Tobacco 482,414 482,414 Enforcement of state laws on
control underage tobacco use
Total $145,377,946a $154,000,000
Source: Missouri Division of Budget and Planning.
aIncludes carry-over funds.
Montana
Montana reported receiving $27,070,703 from MSA payments in fiscal year
2005 and expects to receive $26,102,000 in fiscal year 2006.
Table 29: Montana's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
General $2,977,777 $2,871,220 General Fund
purposes
Health 19,263,236 14,065,685 State Children's Health
Insurance Program (SCHIP),
Medicaid, Mental Health
Services, Hospice and Home
Health, Tobacco Trust Fund,
Montana Comprehensive Health
Insurance
Social services 2,844,884 0 Childcare, child support
enforcement, infant
mortality abatement, poison
control, AIDS prevention,
independent living, extended
employment
Tobacco control 2,509,368 $6,825,385 Tobacco prevention
Unallocated 524,562 2,339,710
Total $28,119,823 a $26,102,000
Source: Montana Office of Budget and Program Planning.
aIncludes carry over funds.
Nebraska
Nebraska reported receiving $37,919,415 from MSA payments in fiscal year
2005 and expects to receive $36,273,307 in fiscal year 2006.
Table 30: Nebraska's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs receiving
or expected to receive
allocations
General $86,595 $88,437 MSA and tobacco tax law
purposes enforcement
Health 20,216,433 21,678,570 Behavioral health (Medicaid
and non-Medicaid), public
health, State Children's
Health Insurance Program,
biomedical research
Social services 2,848,200 2,983,029 Community-based developmental
disability services, respite
care assistance
Tobacco control 2,500,000 2,500,000 Tobacco use prevention,
control, and cessation
programs for youth and adults
Unallocated 12,268,187 9,023,271
Total $37,919,415 $36,273,307
Source: Nebraska Department of Administrative Services-Budget Division.
Nevada
Nevada reported receiving $38,872,322 from MSA payments in fiscal year
2005 and expects to receive $39,507,406 in fiscal year 2006.
Table 31: Nevada's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs receiving
or expected to receive
allocations
Education $33,003,114 $16,250,000 Scholarship program for Nevada
students who attend a Nevada
higher education institution
General 286,523 427,350 Attorney General's tobacco
purposes retail enforcement and master
settlement legal expenses
Health 12,990,070 12,523,141 Grants to improve health
services for children and
persons with disabilities,
prescription drugs and
pharmaceutical services for
low-income seniors, endowment
fund to provide grants for the
promotion of public health
Social 10,121,699 5,757,637 Grants that assist senior
services citizens to live independent of
care facilities, senior
services, homemaker program
Tobacco 4,680,754 4,528,847 Grants to help fund tobacco
control cessation programs
Total $61,082,160a $39,486,975a
Source: State Treasurer's Office.
aIncludes carry-over funds and interest earned.
New Hampshire
New Hampshire reported receiving $42,400,000 from MSA payments in fiscal
year 2005 and expects to receive $43,000,000 in fiscal year 2006.
Table 32: New Hampshire's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs receiving or
expected to receive allocations
Education $40,000,000 $43,000,000 Education Trust Fund, which
distributes grants to school
districts
General 2,400,000 0 General Fund
purposes
Total $42,400,000 $43,000,000
Source: New Hampshire Office of Legislative Budget Assistant.
New Jersey
New Jersey reported receiving $246,462,646 from MSA payments in fiscal
year 2005 and expects to receive $249,152,772 in fiscal year 2006.
Table 33: New Jersey's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Debt service on $245,110,225 $249,152,772
securitized
funds
Health 135,242 0 New Jersey Family Care, new
and expanded Community
Options for Seniors,
expansion of Cancer
Initiative, Senior Gold
Pharmaceutical Assistance
Total $245,245,467 $249,152,772
Source: New Jersey Office of Management and Budget.
New Mexico
New Mexico reported receiving $38,009,047 from MSA payments in fiscal year
2005 and expects to receive $29,657,921 in fiscal year 2006.
Table 34: New Mexico's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs receiving or
expected to receive allocations
General $26,139,047 $17,787,921
Purposes
Health 11,870,000 11,870,000 Lung and tobacco illness
research, poison control
Total $38,009,047 $29,657,921
Source: New Mexico Department of Finance and Administration.
New York
New York reported receiving $410,564,424 from MSA payments in fiscal year
2005 and expects to receive $434,741,632 in fiscal year 2006. These MSA
payments include only the payments made to the state, which amount to
about 51 percent of the annual payments made by the tobacco companies to
New York. New York City and counties in the state receive the other 49
percent of the annual MSA payments to New York.
Table 35: New York's Allocations of MSA Payments and Securitized Proceeds
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Budget shortfalls $354,313,266 0
Debt service on 447,946,434 $434,741,632
securitized funds
Total $802,259,700a $434,741,632
Source: New York State Division of the Budget.
aThis amount includes securitized proceeds received in fiscal year 2004.
North Carolina
North Carolina reported receiving $148,640,949 from MSA payments in fiscal
year 2005 and expects to receive $163,353,241 in fiscal year 2006.
Table 36: North Carolina's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Debt service on 0 $1,979,096
securitized funds
Economic $27,200,505 5,059,214 Aerospace Alliance
development for Initiative Awards,
tobacco regions Economic Catalyst Awards,
Diversification
Initiatives, Agri-Economic
Development, Workforce
Development, Conservation
of Natural Resources
Education 0 2,000,000 Golden Leaf Foundation
General purposes 60,000,000 34,000,000 General Fund
Health 53,500,000 40,245,278 Senior Care Prescription
Drug Program, Childhood
Obesity Reduction,
Medication Assistance
Program, Health
Disparities
Infrastructure 0 1,979,096 Tobacco Trust fund
transfer
Tobacco control 15,000,000 15,000,000 Youth tobacco use
prevention and cessation,
enforcement of tobacco
laws prohibiting sales to
minors
Total $155,700,505a $100,262,684a
Source: North Carolina Office of State Budget and Management.
aIncludes carry-over funds and interest earned. In addition, officials
reported that they excluded the allocation for administrative expenses for
fiscal year 2005 because the data were not available.
North Dakota
North Dakota reported receiving $23,326,754 from MSA payments in fiscal
year 2005 and expects to receive $22,972,067 in fiscal year 2006.
Table 37: North Dakota's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs receiving
or expected to receive
allocations
Education $10,497,039 10,337,430 45 percent of the MSA Funds
are deposited in the common
schools trust fund and
interest earned on the fund is
used for K-12 education
Health 489,862 229,721 Dental loan repayment program,
breast and cervical cancer
screening
Infrastructure 10,497,039 10,337,430 Water projects
Tobacco control 1,842,814 2,067,486 Tobacco cessation programs
Total $23,326,754 $22,972,067
Source: North Dakota Office of Management and Budget, Fiscal Management
Division.
Ohio
Ohio reported receiving $321,050,059 from MSA payments in fiscal year
2005. We used Ohio's 2005 MSA payment as an estimate for its expected 2006
payment based on Ohio's budget documents, which advise state agencies to
expect the same or less tobacco funds for that year as was received in
2005. In responding to our survey, Ohio declined to provide an estimate of
their 2006 expected payment because of uncertainties in adjustments in MSA
payments that may result from changes in participating manufacturers'
share of the tobacco market.
Table 38: Ohio's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Economic $15,584,593 $13,030,277 Programs to increase the
development for variety, quantity, and
tobacco regions value of nontobacco
agricultural products,
strategic investment in
communities adversely
impacted by a reduction in
tobacco demand, education
and training for tobacco
growers
Education 9,277,865 6,274,109 Technology enhancements in
schools
General purposes 9,533,109 17,971,831 Administration, oversight,
and enforcement activities
related to the MSA, law
enforcement facilities
improvements
Health 37,307,790 52,080,892 Minority health programs,
alcohol and drug abuse
prevention, biomedical
technology transfer,
support for children's
hospitals, lung cancer and
disease research and
prevention
Infrastructure 0 245,922,706 School construction
Social services 3,725,000 3,982,451 Funding for uncompensated
health care of uninsured
Tobacco control 37,050,428 47,905,890 Underage tobacco
enforcement, use prevention
and cessation programs
Total $112,478,785a $387,168,156a
Source: Ohio Office of Budget and Management.
aOhio supports each year's programs with MSA payments received during the
prior fiscal year as well as interest earned.
Oklahoma
Oklahoma reported receiving $66,034,977 from MSA payments in fiscal year
2005 and expects to receive $49,348,303 in fiscal year 2006.
Table 39: Oklahoma's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
General purposes $1,806,502 $1,500,000 Attorney General's Evidence
Fund
Health 40,445,047 32,649,026 Medicaid, Tobacco Settlement
Endowment Trust Fund (to be
used for health programs)
Social services 0 4,345,788 Child welfare, foster care
services for homebound
elders, senior nutrition
Tobacco control 18,886,011 15,199,277 Tobacco Settlement Endowment
Trust Fund (to be used for
control programs)
Unallocated 4,897,417 0
Total $66,034,977 $53,694,091a
Source: Oklahoma Office of State Finance.
aIncludes carry-over funds.
Oregon
Oregon reported receiving $73,142,434 from MSA payments in fiscal year
2005 and expects to receive $75,110,359 in fiscal year 2006.
Table 40: Oregon's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Debt service $43,770,304 $58,737,984
Health 27,600,000 12,250,000 Oregon Health Plan, the
state's Medicaid acute
health care delivery system
Tobacco control 700,000 0
Unallocated 50,925,577 4,122,375
Total $122,995,881a $75,110,359
Source: Oregon Department of Administrative Services.
aIncludes carry-over funds.
Pennsylvania
Pennsylvania reported receiving $366,258,217 from MSA payments in fiscal
year 2005 and expects to receive $351,180,000 in fiscal year 2006.
Table 41: Pennsylvania's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs receiving
or expected to receive
allocations
Healtha $326,354,000 $333,295,000 Health research, adult health
insurance, uncompensated care,
medical assistance for workers
with disabilities, community
medical assistance
Tobacco 44,503,000 32,963,000 Tobacco use prevention and
control cessation
Total $370,857,000 a $366,258,000a
Source: Pennsylvania Governor's Office of the Budget.
aIncludes carry-over funds.
Rhode Island
Rhode Island reported receiving $45,817,205 from MSA payments in fiscal
year 2005 and expects to receive $47,988,000 in fiscal year 2006.
Table 42: Rhode Island's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Debt service on $45,315,618 $47,988,000
securitized funds
Total $45,315,618 $47,988,000
Source: State of Rhode Island Budget Office.
South Carolina
South Carolina reported receiving $73,361,299 from MSA payments in fiscal
year 2005 and expects to receive $74,329,662 in fiscal year 2006.
Table 43: South Carolina's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Debt service on $73,361,299 $74,329,662
securitized funds
Total $73,361,299 $74,329,662
Source: South Carolina Office of State Budget.
South Dakota
South Dakota reported receiving $22,238,977 from MSA payments in fiscal
year 2005 and expects to receive $23,232,155 in fiscal year 2006. In
addition, South Dakota reported $14,322,737 was available in fiscal year
2005 from a fund composed of (1) securitized proceeds received in prior
years and (2) interest earned on these proceeds. South Dakota expects
$15,005,263 to be available from this fund in fiscal year 2006.
Table 44: South Dakota's Allocations of MSA Payments and Securitized
Proceeds
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Debt service on $23,222,138 $17,167,994
securitized
fundsa
Educationb 13,572,737 15,005,263 General and special
education, technology in
schools, scholarships,
postsecondary vocational
education
Tobacco controlb 750,000 0 Tobacco prevention and
reduction plan
Total $37,544,875 $32,173,257
Source: South Dakota Bureau of Finance and Management and South Dakota
Health and Education Facilities Authority.
aThe Education Enhancement Funding Corporation pays for the debt service
on securitized funds because the MSA payments are issued directly to the
corporation rather than to the state.
bThe state allocates these funds based on interest earned.
Tennessee
Tennessee reported receiving $156,708,209 from MSA payments in fiscal year
2005 and expects to receive $153,000,000 in fiscal year 2006.
Table 45: Tennessee's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs receiving
or expected to receive
allocations
General $156,708,209 $153,000,000 General Fund
purposes
Total $156,708,209 $153,000,000
Source: Tennessee Department of Finance and Administration.
Utah
Utah reported receiving $28,353,400 from MSA payments in fiscal year 2005
and expects to receive $29,541,000 in fiscal year 2006.
Table 46: Utah's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
General purposes $100,000 $100,000 Attorney General's Office
Health 12,891,800 13,002,800 State Children's Health
Insurance Program, cancer
research, immunizations,
health promotion
Reserves/rainy day 8,506,000 7,385,300 Tobacco Permanent Trust
funds Fund (an endowment that
allows the Legislature to
allocate the interest to
fund programs)
Social services 2,000,000 2,000,000 Drug Courts, Drug Board
Pilot Program
Tobacco control 4,076,000 4,062,100 Tobacco Quit Line, TV
campaign, prevention
partnerships
Unallocated 779,600 2,990,800
Total $28,353,400 $29,541,000
Source: Utah Governor's Office of Planning and Budget.
Vermont
Vermont reported receiving $26,205,607 from MSA payments in fiscal year
2005 and expects to receive $24,500,000 in fiscal year 2006.
Table 47: Vermont's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs receiving
or expected to receive
allocations
General $158,000 $158,000 Tax and Fund administration
purposes
Health 21,111,951 21,233,111 State Medicaid Match, drug and
alcohol programs
Social 652,349 579,000 Safe housing (project against
services domestic violence)
Tobacco 4,919,317 5,132,698 Media campaigns, marketing
control enforcement
Total $26,841,617a $27,102,809a
Source: Vermont Department of Finance and Management.
aIncludes carry-over funds.
Virginia
Virginia reported receiving $130,315,484 from MSA payments in fiscal year
2005 and expects to receive $132,444,540 in fiscal year 2006. In addition,
Virginia reported receiving $389,977,677 in securitized proceeds in fiscal
year 2005.
Table 48: Virginia's Allocations of MSA Payment and Securitized Proceeds
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Debt service on 0 $33,444,540
securitized
funds
Economic $45,157,742 75,601,135 Economic development
development for projects, infrastructure,
tobacco regions education, job training,
research, administration of
the Tobacco Indemnification
and Community Revitalization
Commission
Health 52,126,193 52,977,816 Virginia Health Care Fund for
support of the Medicaid
program
Payments to 20,000,000 13,710,000 Indemnification payments to
tobacco growers tobacco growers
Tobacco control 13,031,549 13,244,454 Public education campaigns to
discourage tobacco
consumption by minors,
research, administrative
budget of the Virginia
Tobacco Settlement Foundation
Total $130,315,484 $188,977,945a
Source: Virginia Department of Planning and Budget.
aIncludes carry-over funds and interest earned.
Washington
Washington reported receiving $130,879,000 from MSA payments in fiscal
year 2005 and expects to receive $131,000,000 in fiscal year 2006.
Table 49: Washington's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Debt service on $38,217,000 $38,252,000
securitized
funds
Health 92,662,000 92,748,000 Health services, including
state match on optional
children's Medicaid and
State Children's Health
Insurance Program;
subsidized health insurance
for low-income state
residents; grants to
community clinics; grants
to local public health
jurisdictions; statewide
public health programs such
as childhood immunizations
Tobacco control 16,164,000 17,500,000 Tobacco prevention and
cessation
Total $147, 043,000a $148,500,000a
Source: Washington State Office of Financial Management.
aIncludes carryover funds.
West Virginia
West Virginia reported receiving $56,495,804 from MSA payments in fiscal
year 2005 and expects to receive $55,400,000 in fiscal year 2006.
Table 50: West Virginia's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
General purposes 0 $30,000,000 Worker's Compensation Debt
Reduction Fund
Health $19,549,408 20,078,744 Institutional facilities
operation
Reserves/rainy day 28,247,902 0 Medical Trust Fund
funds
Tobacco control 5,850,592 5,850,592 Tobacco Education Program,
Alcohol Beverage Control
Administration's Tobacco
Retailer Education Program
Unallocated 2,847,902 0
Total $56,495,804 $55,929,336a
Source: West Virginia Department of Revenue-State Budget Office.
aIncludes carry-over funds and interest earned.
Wisconsin
Wisconsin reported receiving $132,054,977 from MSA payments in fiscal year
2005 and expects to receive $138,929,751 in fiscal year 2006.
Table 51: Wisconsin's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs
receiving or expected to
receive allocations
Debt service on $132,054,977 $138,929,751
securitized funds
Total $132,054,977 $138,929,751
Source: Wisconsin Department of Administration.
Wyoming
Wyoming reported receiving $15,827,492 from MSA payments in fiscal year
2005 and expects to receive $15,827,492 in fiscal year 2006.
Table 52: Wyoming's MSA Payment Allocations
Fiscal year
allocation
Program area 2005 Expected 2006 Examples of programs receiving
or expected to receive
allocations
General $261,245 $261,245 Alcohol compliance, attorney
purposes
Health 6,918,275 6,918,275 Substance abuse treatment and
prevention and intervention
services
Social 2,967,736 2,967,736 Drug court-related juvenile and
services family mentoring, community
services, day care, intensive
supervised probation
Tobacco 5,680,236 5,680,236 Tobacco prevention, regional
control prenatal programs, community
tobacco prevention activities,
tobacco cessation, media
Total $15,827,492a $15,827,492a
Source: Wyoming Department of Health, Substance Abuse Division.
GAO Survey on States' Allocations of Fiscal Years 2005 and 2006 MSA
Payments Appendix V
GAO Contact and Staff Acknowledgments Appendix VI
Robert A. Robinson, 202-512-3841
In addition to the contact named above, Charles M. Adams, Assistant
Director; Beverly Peterson; Bernice H. Dawson; Chuck Bausell; Kevin Bray;
Stuart Kaufman; and Alison O'Neill made key contributions to this report.
(360634)
www.gao.gov/cgi-bin/getrpt?GAO-06-502.
To view the full product, including the scope
and methodology, click on the link above.
For more information, contact Robert A. Robinson at (202) 512-3841 or
robinsonr@gao.gov.
Highlights of GAO-06-502, a report to congressional requesters
April 2006
TOBACCO SETTLEMENT
States' Allocations of Fiscal Year 2005 and Expected Fiscal Year 2006
Payments
In the 1990's, states sued major tobacco companies to obtain reimbursement
for health impairments caused by the public's use of tobacco. In 1998,
four of the nation's largest tobacco companies signed a Master Settlement
Agreement (MSA) to make annual payments to 46 states in perpetuity as
reimbursement for past tobacco-related health care costs. Some states have
arranged to receive advance proceeds based on the amounts that tobacco
companies owe by issuing bonds backed by future payments.
The Farm Security and Rural Investment Act of 2002 requires GAO to report
annually, through fiscal year 2006, on how states use MSA payments made by
tobacco companies. To conduct this study, GAO surveys the 46 states. This
is the fifth and final of a series of reports that provides information on
o the payments the 46 states received in fiscal year 2005 and
expect to receive in fiscal year 2006 and
o states' allocations of these funds to various program
categories and changes from prior years.
The 46 states that are party to the MSA reported receiving about $5.8
billion in fiscal year 2005 and expect to receive about $5.4 billion in
fiscal year 2006. Over the previous 5 years, on average, states received
$9.3 billion annually. The recent decrease in tobacco settlement funds
provided to states has occurred because securitized proceeds-payments
states obtained from the sale of bonds backed by future MSA payments-have
declined. Proceeds declined because only one state (Virginia) chose to
issue a bond and receive proceeds in fiscal year 2005, and the two states
(California and New York) with the largest payments issued bonds in prior
years. In fiscal year 2006, states reported that all of the tobacco
settlement funds they expect to receive will be payments from tobacco
companies, and none from securitized proceeds.
The MSA allows states to use their tobacco settlement payments for any
purpose. States reported that they used the largest portion of the fiscal
year 2005 payments and proceeds (32 percent) to fund health-related
programs and the next largest portion (24 percent) to fund debt service on
securitized proceeds. States expect health programs to account for the
same proportion of funds in fiscal year 2006, while they expect debt
service to increase to 29 percent.
Categories to Which States Allocated the Largest Portions of Tobacco
Settlement Payments and Securitized Proceeds (Fiscal Year 2005 and
Expected Fiscal Year 2006)
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