COM 0942.115 2006-2008 - Laserfiche WebLink

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Tobacco State Settlement: Hawal'I 3/7/08 1:11 PM Background: Hawaii's tobacco settlement funds are governed by a 1999 law approved by the Legislature and then-Governor Benjamin Cayetano (D) that originally allocated 25 percent of the funds to a Tobacco Prevention and Control Trust Fund. The law also distributed 40 percent of the funds to the state's Emergency and Budget Reserve Fund and 35 percent to the Department of Health for health promotion and disease prevention. When the 1999 law was passed, it was initially interpreted to allow expenditure of only the interest and earnings on the trust fund for tobacco prevention and cessation in order to preserve and grow the endowment. Subsequently the law was amended in a 2001 special legislative session to permit expenditure of up to 50 percent of the fair market value of the trust fund. In October, 2002, the Trust Fund Advisory Board approved a policy to expend interest and earnings and a portion of the principal. As such, the Board approved an allocation of at least $6.1 million of the Tobacco Prevention and Control Trust Fund to be spent in FY2003. In a special session in the fall of 2001, Governor Cayetano proposed and the Legislature amended the tobacco settlement law modifying the allocation percentages set by the 1999 law. The amended law created a new 28 percent allocation to the University of Hawaii (UH) for debt service on $150 million in revenue bonds issued for construction of a new medical school. In order to create the 28 percent UH allocation, the percentage of settlement funds going to the Tobacco Prevention and Control Trust Fund was cut in half to 12.5 percent, and the percentage allocated to the Emergency and Budget Reserve Fund was reduced from 40 percent to 24.5 percent. In FY2002, the Tobacco Prevention and Control Trust Fund received $11.2 million in settlement money - the 25 percent allocated by the 1999 law before it was changed. The Trust Fund released $1.8 million in grants for tobacco prevention and cessation. In addition, the Department of Health allocated an additional $2.4 million for tobacco prevention and control for a total of $4.19 million in tobacco prevention and control funding in FY2002. The 2003 Legislature imposed new assessments on Hawaii's Tobacco Settlement Special Fund, effective in FY 2004. All of the state's tobacco settlement revenue is deposited into a special fund under the purview of the Department of Health (DOH) and allocated by percentage according to law. The tobacco settlement law also allocates tobacco settlement money to the Emergency and Budget Reserve Fund, children's health insurance programs, and to pay debt service on revenue bonds for the construction of the University of Hawaii Health and Wellness Center, including a biomedical research center and a new medical school. Also in 2003, the Legislature transferred $1.9 million, the interest earned by the tobacco settlement special fund from the state investment pool, to the general treasury. Hawaii appropriated $10.25 million in FY2003 and $8.9 million in FY2004 and FY2005 for tobacco prevention. In FY2006, funding for the program was reduced to $5.8 million, but increased to $9.1 million in FY07. Additional Resources The Toll of Tobacco in Hawaii view http://w .tobaccofreekids.org/reports/settlements/print.php?statel0-HI Paoe 2 of 2