Oklahomans would have the chance to redirect how the earnings from the state’s national tobacco settlement funds are used under legislation advanced by an Oklahoma Senate committee.

In 1998, four major tobacco companies agreed to a settlement with 46 states, including Oklahoma, promising to pay participating states at least $206 billion over the first 25 years in exchange for those states dropping litigation against the tobacco companies.

In 2000, Oklahomans approved a constitutional amendment requiring that the state’s annual payments from tobacco companies be deposited into the Tobacco Settlement Endowment Trust (TSET) from which investment earnings would be spent on smoking cessation and other health-related measures.

However, the TSET board’s subsequent use of those funds has produced little notable improvement in Oklahoma health outcomes.

In 2021, a report from the Legislative Office of Fiscal Transparency (LOFT) evaluated the outcomes generated by TSET spending over two decades. A LOFT official told lawmakers, “Oklahoma’s ranking for tobacco use remains one of the worst despite high levels of spending and continued protection of the settlement fund.” She also told lawmakers that LOFT’s review found “a lack of evidence demonstrating correlation between state spending on tobacco cessation and prevention and smoking prevalence.”

The LOFT report noted that Connecticut, “which does not dedicate any state funding to tobacco prevention,” had a far lower smoking rate than Oklahoma.

A report prepared by staff at the Oklahoma House of Representatives and released on March 31, 2026, noted that TSET had devoted upwards of 15 percent of its available funds to administration.

According to America’s Health Rankings, produced by the United Health Foundation, Oklahoma’s health outcomes remain worse than many other states, even though those other states simply spent their tobacco-settlement funds while Oklahoma placed its payments into TSET, supposedly for health uses.

Those poor results have led lawmakers to consider changes to the system this year.

House Joint Resolution 1077, by state Rep. Trey Caldwell and Senate President Pro Tempore Lonnie Paxton, originally asked the voters to approve a state question that would direct that a portion of TSET’s earnings be used to fund college scholarships for Oklahomans from low-income and middle-class families. The proposal would have funded an estimated 40,000 more scholarships annually.

But the measure was amended in the Senate Rules Committee.

Under the latest proposal, Oklahoma voters would be given the chance to create the “For Oklahoma’s Future Trust Fund” and place $1 billion in TSET’s corpus into the new fund. TSET’s corpus currently includes $2.2 billion.

Oklahoma lawmakers would then be able to direct how 80 percent of the interest earnings from the new $1 billion fund are spent, so long as funding is directed to health or education needs.

Paxton said the interest earnings would likely be distributed as grants rather than built into any recurring expense of the state.

“A lot of rural hospitals have lots of debt, so maybe the Legislature, whenever this comes to fruition, could set up grant programs where rural hospitals help retire their debt,” Paxton said. “As a 10-year member of a rural hospital board, I know that the debt load that we carried and the amount of service net debt was very detrimental to us operating the hospital. So, this is the kind of thing that this could really help out with.”

Opponents objected, arguing that Oklahoma voters intended for the issue to never be revisited when they first created TSET over a quarter-century ago.

“When voters created the Tobacco Settlement Endowment Trust, they made a deliberate choice: protect the principal, invest for the long term, and keep it independent of legislative control,” said state Sen. Carri Hicks, D-Oklahoma City.

But supporters noted that TSET’s board of directors has refused to use the fund for pressing health needs in recent years.

“In the past, we have approached TSET to see if they would like to partner with us and help to cover some of the costs of what we see as good initiatives to help with good outcomes,” said state Sen. Julie Daniels, R-Bartlesville. “And they have declined. So here is an opportunity for the folks of the state of Oklahoma to say, ‘Yes, there are times when the Legislature sees a place, or an issue, or a need, where money can be directed to help with good health outcomes in Oklahoma, and these dollars could be used for that.’”

HJR 1077 passed the Senate Rules Committee on a 14-4 vote. The bill now proceeds to the floor of the Oklahoma Senate.