Good Government

TSET adds $53 million to its untouchable funds

May 11, 2018

Cody Ray Milner

The state of Oklahoma recently received its annual settlement payment from the Tobacco Master Settlement Agreement. The payment was divided based on current state law, with $4 million going to the Oklahoma Attorney General’s office, $13 million to the Legislature’s general revenue fund, and $53.3 million to the Oklahoma Tobacco Settlement Endowment Trust (TSET).

This deposit enlarges TSET’s endowment to more than $1.1 billion. To put that in perspective, TSET currently sits on three times more than the $350 million the Legislature appropriated for teachers’ pay raises.

In the past fiscal year, TSET spent a grand cumulative total of $49.2 million (less than 4% of its total nest egg). However, despite an original mission of “helping Oklahomans stop smoking,” just one-quarter of that spending went to tobacco prevention programs. Since TSET can spend money on virtually any project, the remaining $35 million-plus went to a variety of discretionary expenditures, such as promoting bars and nightclubs and the nearly $800,000 ad campaigns attacking soda and promoting “water recipes.”

And as demonstrated by the April 20, 2018 deposit into TSET's endowment, even when TSET burns through millions on various frivolous projects, the annual settlement payment exceeds the questionable spending. Unless reformed, TSET will continue to ceaselessly accumulate millions more than it could possibly spend on tobacco prevention.

OCPA president Jonathan Small has repeatedly called for a statewide vote to let voters amend TSET’s purpose and disbursement of funds. Some part of the $1.1 billion currently locked away could be better used to fund transformational reforms. At the very least, new settlement payments should be dedicated to fund critical state health care needs or any other pressing state obligation.

TSET Budget Breakdown

Taxpayers might note that: since 2015, the state of Oklahoma has passed an extensive list of tax and fee increases to raise a total of $1.1 billion in new annual revenue – incidentally, almost exactly the amount of TSET's endowment.

How many tax increases could Oklahoma’s taxpayers have avoided over the last three years by voting to reform TSET? Or how many future demands for new taxes can be averted at no additional cost by simply reforming the current endowment?