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Oklahoma's use of tobacco settlement funds is a state success story

by The Oklahoman Editorial Board Published: November 3, 2013

WE weren't blowing smoke in 1998 when lighting up public officials for their hyperbole surrounding the Master Settlement Agreement. Fifteen years ago this month, 46 states (including Oklahoma) reached a settlement with Big Tobacco that would bring billions of dollars to state treasuries, ostensibly to reimburse those states for government-paid health care expenses related to smoking.

Despite our misgivings, the agreement has aided Oklahoma health care in myriad ways. The people are largely responsible for this by protecting settlement proceeds from the vicissitudes of political whim — as has happened in other states and as has happened with another, more recent settlement, the one involving mortgage lending.

Fifteen years ago, state Attorney General Drew Edmondson termed the tobacco settlement “the most important advance in public health since the discovery of a polio vaccine.” The logical shortcoming of this remark is that it likened health problems related to a choice (smoking) to a disease spread by contagion (polio).

The settlement came in an era when society forgot that tobacco usage is a personal choice. We looked instead for a scapegoat. Big Tobacco filled the bill. Its choice was to accept a “master” settlement or face numberless lawsuits from individuals. Another sticking point was the millions of settlement dollars that flowed to politically connected laws firms for a case that never got close to a courtroom.

Also troubling: The settlement didn't require states to use the proceeds for any particular purpose. A legal premise based on the recovery of health care costs produced money that could (and has) gone to budget items far afield from health care in some states.

We cite the above to provide perspective on a settlement that could have enriched not just law firms but the pet projects of powerful politicians at the expense of smokers saddled with higher cigarette prices. What's happened since the settlement is that Oklahoma voters directed most of the money to an endowment, the earnings from which go to health care.

Frank Keating, who was governor in 1998, suggested that some of the money go to shoring up underfunded public pension plans. There was no shortage of ideas for spending a projected $2 billion (to be paid out over 25 years), but voter creation of the Tobacco Settlement Endowment Trust (TSET) in 2000 redirected the discussion — and the spending.

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by The Oklahoman Editorial Board
The Oklahoman Editorial Board consists of Gary Pierson, President and CEO of The Oklahoma Publishing Company; Christopher P. Reen, president and publisher of The Oklahoman; Kelly Dyer Fry, editor and vice president of news; Christy Gaylord...
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