Fifteen years after tobacco companies agreed to pay restitution to states for costs related to tobacco use, a new report finds that most states are not spending enough of that money on smoking prevention and cessation programs.
Chris Hansen is the president of the American Cancer Society’s Cancer Action Network, one of the advocacy groups behind the report titled "Broken Promises to Our Children: The 1998 State Tobacco Settlement 15 Years Later."
“The money was supposed to be used for prevention and cessation programs to help people stop using tobacco,” Hansen said. “The problem is, that less than 2 percent of that money is actually be used for that purpose. The rest of it, for lack of a better way to say it, is being misappropriated.”
The report, released Monday, is a joint effort of the American Cancer Society, the Robert Wood Johnson Foundation, the Campaign for Tobacco-Free Kids, the American Heart Association, Americans for Nonsmokers’ Rights and the American Lung Association.
Complicating the situation in Pennsylvania is the fact that an arbitration panel in September found that the state should have been taxing loose leaf or “roll-your-own” tobacco. As a result of that ruling, in 2014 the state will miss out on 60 percent of its annual settlement funds, also called Master Settlement Agreement or MSA funds.
According to Aimee Tysarczyk, communications director for the Pennsylvania Department of Health, that will reduce the 2014 payment to between $90 million to $140 million, from an annual average of $310 million to $320 million.
The new report ranks Pennsylvania 39th in terms of the percentage of tobacco-related funds put toward tobacco prevention programs. The report estimates that Pennsylvania will spend about $5 million on such programs in 2014, though it is not clear where that number came from. The report also estimates that the state will receive more than $1.2 billion in MSA funding in 2014.
That figure is made up of roughly $1 billion in tobacco tax revenues and $200 million in tobacco settlement revenues – far more than the $90 million to $140 million figure provided by Tysarczyk.
The Centers for Disease Control and Prevention in 2007 issued a report recommending that Pennsylvania spend $155.5 million on tobacco prevention and cessation programs annually. According to the Broken Promises report, in 2013 Pennsylvania spent about $14.2 million on such programs, or about 9.1 percent of the CDC recommendation. The $5 million estimate from that same report represents just 3.2 percent of the CDC recommendation.
In 2001, when Pennsylvania first began receiving payments from the 1998 tobacco settlement, the state Legislature passed a law requiring that 12 percent of those monies go toward tobacco prevention and cessation programs. Between 2001 and 2013, when the state was receiving the full amount of MSA funding, that would have amounted to roughly $37 million to $38 million per year.
According to the Broken Promises report, state spending on tobacco prevention and cessation programs has been in decline since 2004, when it hit a peak of $52.6 million.
Even with the drastic reduction in MSA funding, the state should still spend between $10.8 million and $16.8 million on such programs in 2014, in order to be in compliance with the law.
Hansen says Pennsylvania’s consistently decreasing spending on such programs is going to cost the state more money in the long-term.
“This is penny wise and pound foolish, really, not to spend the money this way, because they’ll save more money,” Hansen said. “The only reason they don’t do it is because the savings come later, the savings don’t happen in the same fiscal year. It’s very myopic thinking.”
The CDC recommends that Pennsylvania spend a little more than $12 per person on tobacco prevention and cessation programs. Meanwhile, the Broken Promises report estimates that the state and federal tax burden from smoking-caused government expenditures is around $661 for each household in the state.