OKPOLICY.ORG
There was an interesting ruling by the Oklahoma Supreme Court recently staying implementation of House Bill 2783, authored by the respective chairmen and vice chairmen of the House and Senate appropriations committees.
The bill sought to strike statutory language providing for staggered terms for the Tobacco Settlement Endowment Trust (TSET) Fund. The TSET board authorizes expenditure each year from the earnings of the trust fund.
When the lawsuit against tobacco companies was settled over two decades ago, then-Oklahoma Attorney General Drew Edmondson was a major player nationally. Although the settlement was intended to compensate states for tobacco-related damages, most states deposit the settlement funds into their general revenue fund and use them as they see fit.
However, Edmondson convinced the Oklahoma Legislature to refer a state question to the voters, creating the constitutional TSET fund that receives a large portion of the tobacco payments received each year. The payments are added to the principal each year, and thus, only the earnings are available to be spent. As the principal grows, so do the earnings, meaning there is perpetual funding for projects that serve the purposes of the trust.
The constitutional provision specifies the earnings are to be used for: (1) cancer and other health research to prevent tobacco-related disease; (2) cost effective tobacco prevention and cessation programs; (3) health care and well-being programs with an emphasis on children and senior adults; and (4) other programs for the benefit of children such as education and substance abuse prevention and treatment programs.
The proposal was approved by popular vote in 2000 (State Question 692), and funds are allocated annually to projects as determined by the TSET Board of Directors.
The board is appointed for staggered seven-year terms, with the appointing authorities being the Governor, the President Pro Tempore of the Senate, the Speaker of the House, the Attorney General, the State Treasurer, the Auditor and Inspector, and the State Superintendent of Public Instruction.
These staggered terms give the board a degree of independence intended to insulate them from control by their appointing authorities.
It seems that, during this past session, legislators discussed with TSET some projects they felt met constitutional requirements and should be funded. Apparently the TSET board either disagreed or chose to fund different projects.
In response, the legislature passed HB 2783, striking language in the statute providing for staggered terms and instead inserting language that would allow each board member to serve at the pleasure of their appointing authority, not to exceed a seven-year term of office.
The goal was obviously to allow the appointing authorities to assert more direct control over the expenditure of the funds. The problem is staggered terms are a constitutional requirement that can’t be overridden by changing the statute.
This is not the first time TSET has come into conflict with the legislature. The earnings on the nearly $2 billion principle are sizable, and there are bound to be differing opinions on how it should be spent.
It’s not a criticism of current legislators to say Edmondson and past legislators who submitted the TSET proposal to the people were wise to establish constitutional guidelines for expenditures of the money, and to provide some distance between decisions on how to spend the money and current issues of the day.
Had they not done so, the original principal and annual receipts from the tobacco companies would likely be long gone by now, not providing earnings for worthwhile tobacco-related projects.
