Small: TSET failure shows need for reform

TSET failure shows need for reform

By Jonathan Small

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.

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) with investment earnings earmarked for smoking cessation and other health-related measures.

In theory, TSET was supposed to eliminate “politics” from spending decisions. In practice, it simply eliminated voter input and left unaccountable, unelected bureaucrats in charge of TSET spending.

The results are embarrassing, at best. After a quarter-century, Oklahoma still ranks among the worst states for smoking. States that simply spent their tobacco settlement money on general expenditures are doing much better.

Consider this: The state of North Carolina mostly dumped its tobacco-settlement money into a general revenue fund and spent it each year. In fact, North Carolina used tobacco-settlement funds to subsidize tobacco farms. This year, the state of North Carolina spent just $2.1 million on tobacco prevention efforts, ranking 48th, while Oklahoma spent $38.5 million, ranking second highest in the country.

Yet, according to America’s Health Rankings, produced by the United Health Foundation, just 11.5 percent of North Carolina adults report smoking on a regular basis, ranking among the top half of the country for the best smoking outcomes. But in Oklahoma, 14.1 percent of adults are smokers, ranking 41st. And both states started from essentially the same point with roughly one-in-four adults smoking in 1998.

In 2021, a report from the Legislative Office of Fiscal Transparency (LOFT) concluded there was no evidence showing any impact on smoking from TSET spending. That report noted that Connecticut, “which does not dedicate any state funding to tobacco prevention,” nonetheless had a far lower smoking rate than Oklahoma.

When a state subsidizing tobacco farms still achieves a lower smoking rate than Oklahoma, it’s clear that TSET has failed to produce the results promised when it was first approved in 2000 while enjoying an extraordinary lack of legislative oversight and unique autonomy.

Thus, legislation filed this year would allow voters to direct TSET funds to pay for college scholarships.

The proposed reforms to TSET will provide a greater opportunity for the voters, through their elected representatives, to deploy the funds to educational spending, which is better correlated with increased education, health and other outcomes that lead to thriving. The reforms will also give students, parents, working families, taxpayers and elected officials greater influence and control over higher education.

We don’t need to endure another quarter-century of failed spending schemes by unelected bureaucrats to know it’s time to change course.

Jonathan Small serves as president of the Oklahoma Council of Public Affairs.