TSET is an endowment trust established with payments from the 1998 Master Settlement Agreement (MSA) between 46 states and the tobacco industry.
In November 2000, with passage of State Question 692, Oklahoma became the first and only state to direct its tobacco settlement payments into a constitutionally-protected trust fund. Under the measure, 75 percent of Oklahoma’s annual payment is now deposited in the Tobacco Settlement Endowment Trust (TSET), with the remainder divided between legislative appropriations (18.75 percent) and the Attorney General Office’s Evidence Fund (6.25 percent). To ensure that the Trust grows over time and provides an ongoing and sustainable funding stream, TSET is allowed to spend only certified investment earnings.
TSET is governed by two boards: a five-member Board of Investment that oversees the investment of funds to the Trust and a seven-member Board of Directors that allocates the endowment’s earnings to programs that promote health and well-being under one of five categories of allowable expenditures. A total of $49.3 million was allocated in FY 2020.
The size of the tobacco companies’ annual MSA payment to Oklahoma fluctuates; the average payment since 2000 has been $77 million, but it has ranged from $65 million to $110 million. Since 2008, an average of $61 million has been allocated annually to the Endowment, which has grown to $1.3 billion as of June 30, 2020.