SQ 814: Oklahoma voters to decide whether to change tobacco settlement distribution

Sierra Rains
Man smoking a cigarette.

Oklahoma voters will soon be deciding whether to change the way the state’s tobacco settlement money is distributed.

Legislators have stated that SQ 814, which will appear on the November ballot, will help pay for Medicaid expansion, but opponents say it would be funneling millions of dollars away from critical programs that have already helped 2.4 million Oklahomans. 

In 1998, Oklahoma and 45 other states sued "Big Tobacco" for the damage and death their products inflicted on Americans. Before the case went to trial, a compromise known as the “Master Settlement Agreement” was reached. 

As a part of this settlement, "Big Tobacco" is required to make annual payments to the participating states for as long as cigarettes are sold nationally. Oklahoma receives its payment each year in April, and is the only state to protect a portion of these funds in a constitutionally protected trust. 

Seventy-five percent of the funds are placed in the Tobacco Settlement Endowment Trust (TSET), and the other 25% is split between the state legislature and the state's attorney general. 

State Question 814 would amend the Oklahoma Constitution to switch the percentages, with 75% going to the legislature and 25% going to TSET. 

The state question would also mandate that the legislature’s portion of funds be used to help fund the state’s Medicaid program. Oklahoma voters approved a state question expanding Medicaid in August. The legislature is now constitutionally mandated to find a way to fund the expansion. 

Senate Majority Floor Leader Kim David, R-Porter, who has been a leading voice and sponsor of SQ 814, said the expansion is expected to cost upwards of $164 million, and the state does not have that money in the General Revenue Fund. 

"I’ve never been for Medicaid expansion, but I think it is responsible to find a way to pay for expansion," David said. "The TSET fund was created to improve the health of Oklahomans, so it makes sense to consider using it to pay for providing healthcare to more Oklahomans."

Annual MSA payments add up to tens of millions of dollars. According to TSET, the 2020 MSA payment to Oklahoma was $66,280,746. Supporters of SQ 814 argue that the change could generate millions of dollars to help fund Medicaid expansion without raising revenues, and that using the settlement payments could help keep the state from having to cut existing health care services. 

Thomas Larson, Director of Public Information and Outreach for TSET, said the interest from the endowment is used to fund research, rural physician programs, healthy living grants and tobacco cessation initiatives. 

“Probably our most recognizable program is the Oklahoma Tobacco Helpline, which has served over 450,000 Oklahomans since it was set up,” Larson said. “The Oklahoma Tobacco Helpline is one of the top ranked helplines in the country. It exceeds the national benchmark for quit lines nationwide.”

The TSET Healthy Living Program supports communities in developing strategies, programs and policies to improve health by preventing or reducing tobacco use, improving nutrition and increasing physical activity. In the first cycle of the five-year grant, Larson said the program resulted in more than 1,500 health promoting policies passed statewide. 

TSET also provides funds for phase one clinical trials at the Stevenson Cancer Center. “Because of that funding, Oklahomans are able to get cutting edge, world class cancer treatment close to home, without having to leave the state,” Larson said. 

The total balance of the endowment as of June 30, 2020 was $1.3 billion, and some supporters of SQ 814 have suggested that TSET will be able to continue funding research, prevention and health initiatives even if the change is implemented. 

However, a smaller deposit to the trust fund would mean lower interest earnings in the future. If SQ 814 passes, Larson said the effect would not be immediate, but there would be an impact overtime. 

“That would impact our ability to stand up new programs, expand existing programs, or keep up with the rate of inflation,” Larson said. “We’re continuously seeing new health challenges.” Five years ago, Larson said no one saw vaping coming. Now, it’s considered an epidemic among high school students. 

“The tobacco industry continues to evolve and develop new products to hook a new generation of users,” Larson said. “So with fewer funds going into the endowment that could impact our ability to meet those new challenges.”

Many national health organizations have come out against the state question, including the American Cancer Society Action Network. Opponents of SQ 814 argue that there are other ways to fund expansion of Medicaid, and object to making drastic changes to a program with proven success amid new challenges and a national health crisis.

As a state agency, Larson said TSET does not have a stance on SQ 814, but people can find out more information about TSET grants and programs online at tset.ok.gov.

“I’ve been asked a lot about the state question, and of course the state agency, we don’t have a stance on it, but tset.ok.gov has a lot of great resources if people want to go learn about our programs and our impact in the state of Oklahoma,” Larson said. 

Oklahoma voters have already begun sending in absentee ballots for the Nov. 3 election. The last day to request an absentee ballot is Oct. 27. Early in-person voting will begin on Thursday, Oct. 29 and will continue through Saturday, Oct. 31. Polling places will be open from 7 a.m. to 7 p.m. on Election Day, November 3.