Budget & Tax

Oklahoma’s TSET under scrutiny as reports question effectiveness, administrative costs

April 6, 2026

Ray Carter

In 1998, four major tobacco companies agreed to a settlement with 46 states, including Oklahoma. The tobacco companies promised 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.

That was in sharp contrast to what occurred in North Carolina.

In 2015, the Roosevelt Institute noted that North Carolina received about $140 million annually from the 1998 Master Settlement Agreement and that “most of this money” had been deposited in a general fund and spent on a wide range of items.

“North Carolina even sent $42 million in settlement funds to tobacco farmers for marketing and equipment improvements,” the Roosevelt Institute noted.

A 2001 report from the U.S. General Accounting Office similarly noted that North Carolina had allotted 25 percent of its tobacco-settlement payments at that time to “a trust fund aimed at assisting tobacco growers—all or part of which will be used to make direct payments to these growers.” The report noted that North Carolina had allotted another 50 percent of settlement payments at that time to economic-development efforts in tobacco-growing regions, including funding “scientific research to develop new uses for tobacco.”

This year, the State of North Carolina spent just $2.1 million on tobacco prevention efforts, ranking 48th out of the 50 states. From 2012 to 2026, North Carolina spent no more than $17.3 million on tobacco prevention in any single year, and in 10 of those 15 years, the state spent $2.8 million or less annually on smoking prevention.

In contrast, Oklahoma spent $38.5 million on tobacco prevention this year, ranking second-highest in the country. In the last 15 years, Oklahoma has spent at least $19 million per year on tobacco prevention efforts.

The two states have achieved very different results with those two very different approaches to the expenditure of tobacco-settlement funds and smoking-cessation efforts: The percentage of people who smoke is substantially lower in North Carolina than in Oklahoma.

According to America’s Health Rankings, produced by the United Health Foundation, just 11.5 percent of North Carolina adults report smoking at least 100 cigarettes in their lifetime and currently smoke daily or some days, ranking among the top half of the country for the best smoking outcomes. In Oklahoma, 14.1 percent of adults are smokers, ranking 41st out of 49 states reviewed.

In 1998, roughly one in four adults in both states were smokers, although North Carolina had a slightly higher rate than Oklahoma.

An independent review in Oklahoma has also questioned TSET’s effectiveness.

In 2021, a report from the Legislative Office of Fiscal Transparency (LOFT) evaluated the outcomes generated by TSET spending over two decades. The conclusions were blunt.

“Oklahoma’s ranking for tobacco use remains one of the worst despite high levels of spending and continued protection of the settlement fund,” Shannon Rios, senior program manager of process improvement at LOFT at that time, told lawmakers.

Rios told lawmakers that LOFT’s review of TSET 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.

The fact that a state like North Carolina, which used tobacco-settlement funds to subsidize tobacco farms, has outperformed Oklahoma when it comes to smoking cessation has state policymakers now asking if it’s time to alter TSET’s mission.

A report prepared by staff at the Oklahoma House of Representatives and released on March 31, 2026, noted that TSET is a largely redundant agency that duplicates existing entities. The report noted that “the entirety of the TSET mission is also encompassed within the mission of the State Department of Health (OSDH), a state agency with vastly greater internal resources and existing cooperative agreements with federal and local governments.”

While TSET may not be generating health improvement in Oklahoma, it is producing high overhead, according to the House staff report.

“TSET’s current budget practices devote upward of 15% of their available funds to the administration of TSET’s efforts,” the report stated.

And the trendline for administrative spending has been on an upswing.

“TSET has not embraced a belief that administration is a flat cost; instead, TSET administration costs have increased as TSET resources have increased,” the House staff report stated. “For example, TSET's Direct Administration Costs have increased 88% from FY22 to FY25.”

State House lawmakers have advanced several measures to reform TSET this year, including House Joint Resolutions 1076 and 1077, by state Rep. Trey Caldwell, R-Lawton. Those measures would allow a portion of TSET’s earnings to fund college scholarships for Oklahomans from low-income and middle-class families.

During March 25 debate on House Joint Resolution 1077, Caldwell said the measure could fund up to 40,000 more scholarships annually.

He said Oklahomans should have the opportunity to reassess TSET’s mission.

“Let’s give the people of Oklahoma a choice,” Caldwell said, “a choice to say after a quarter of a century is it time to reevaluate how we use the state’s asset.”