Statement of Advisory Committee on Health Care and Tobacco Control: Governor's Budget Undermines Premise of Tobacco Settlement

4/17/2003

From: Lori Fresina of the Advisory Committee on Health Care and Tobacco Control, 978-694-9988 or 617-686-3625

BOSTON, April 17 -- At its quarterly meeting last month, members of the Advisory Committee on Health Care and Tobacco Control were highly critical of the Romney Administration's plans to dismantle the structure for managing the state's annual payment from its settlement with tobacco companies that was designed by the legislature and supported by advocates in FY 2000.

Not only did the House 1 budget reject the committee's recommendation to fund tobacco prevention at the statutorily-required level of $22 million (7.5 percent of total) but Outside Section 39 of the Administration's House 1 budget erases any connection between the tobacco settlement and health by sweeping the entire Tobacco Settlement Fund into the General Fund, allowing these funds to be used for non-health purposes such as roads, bridges or corporate tax breaks -- no strings attached.

Advisory Committee Chair Lori Fresina, from the Campaign for Tobacco-Free Kids, said, "The Administration's proposal flies in the face of everything the states' lawsuit against tobacco companies sought to accomplish. This case and subsequent settlement promised to stem the tide of tobacco-caused disease, death and taxpayer burden by aggressively investing in tobacco prevention and health promotion. This budget undoes that."

Fresina continues, "We ask the legislature to reject this plan and urge the governor to reconsider his position and honor the intent of the Tobacco Settlement by putting the money back where it belongs -- into tobacco prevention and other health programs -- not into the general fund."

The Advisory Committee was created by statute in 1998 to advise lawmakers on how to prioritize spending of the annual Tobacco Settlement payments which amount to roughly $300 million/year.

(The Advisory Committee had waited to release this statement pending the resolution of another legal case involving Philip Morris that threatened to delay or stop payment to the states this year. That issue was resolved on April 14, and Phillip Morris will make its payment to states on time.)

Following is a Dec. 4, 2002, letter from the Advisory Committee on Health Care and Tobacco Control regarding the Massachusetts FY'04 budget:

December 4, 2002

Her Excellency Jane Swift, Governor The Honorable Thomas Finneran, Speaker The Honorable Thomas Birmingham, Senate President The Honorable Mark Montigny, Chair, Senate Committee on Ways and Means The Honorable John Rogers, Chair, House Committee on Ways and Means The Honorable Richard Moore, Senate Chair, Joint Committee on Health Care The Honorable Harriett Stanley, House Chair, Joint Committee on Health Care Stephen Barnard, Acting Budget Director, Fiscal Affairs Division Patrick Scanlan, Clerk, Massachusetts Senate Steven T. James, Clerk, Massachusetts House of Representatives

RE: FY'04 Budget Recommendation from the Advisory Committee on Health Care and Tobacco Control

The Advisory Committee on Health Care and Tobacco Control was established by the Massachusetts legislature with the charge "to recommend to the governor and the general court the most effective and prudent uses of the funds available in said trust for financing the present and future health related and tobacco control needs of the commonwealth." During FY'02 and FY'03, in contradiction to our recommendations, funding for tobacco control and other preventive health programs from the Tobacco Settlement Fund has been drastically reduced. The committee feels that all of the statutory principles (note) regarding allocation of Tobacco Settlement funds have been violated.

In accordance with M.G.L. Chapter 29 D paragraph 5(d), we, the members of the Advisory Committee on Health Care and Tobacco Control, respectfully submit the following FY'04 budget recommendation to the Governor and the General Court.

1. Tobacco control must remain a major priority. We recommend that all publicly funded health benefit programs include coverage for cessation products and programs. We recommend that tobacco control funding from the Settlement fund be calculated at 7.5 percent of annual payments in to the Health Security Trust Fund (which is 25 percent of the 30 percent statutory allotment) and that this 7.5 percent of should remain constant regardless of the annual percentage of the funds spent.

2. We are categorically opposed to "securitization" of the Tobacco Settlement, by which we mean selling the rights to future Settlement payments in exchange for a smaller current lump sum payment. The Commonwealth is currently funding essential programs with Tobacco Settlement payments. Other sources of funding for these programs would have to be found if the Tobacco Settlement revenue stream were to cease.

3. Settlement funds should be used to support public health strategies to promote better health for higher risk populations including: -- Primary prevention -- Screening and diagnosis -- Access for underserved populations -- Research directed at improving the health of underserved populations.

4. Settlement funds not spent on tobacco control or public health strategies or saved in trust for future health needs should be allocated to fund only health related services, with priority given to funding programs and services obligated in prior fiscal years, such as the Prescription Advantage pharmacy program for seniors and persons with qualified disabilities.

5. Any funded program should maximize use of federal matching funds and other strategies to improve efficiency (while protecting access). Matching funds generated through Tobacco Settlement Fund (TSF) appropriations should revert to the TSF, not to the general fund.

6. We request an annual appropriation for administrative support staff and consultants in order to perform our statutory function as outlined in section 5c. The amount of funding should be commensurate with the job classification based upon the job description for a full time executive director as well as appropriate administrative and professional support.

On behalf of the Advisory Committee on Health Care and Tobacco Control, we submit these recommendations.

Sincerely,

Lori Fresina, Chair Graham Kelder, Esq., Vice Chair

cc: Mr. Mitt Romney, governor-elect; trustees of the health care security trust; Thomas Reilly, Attorney General; and members of the general court

Note: The statutory principles as outlined in M.G.L. 29D are: -- That 25 percent of appropriations made by the General Court from the Tobacco Settlement Fund shall be dedicated to the purpose of tobacco control; -- That all monies from the Tobacco Settlement Fund shall be used for health related purposes, including tobacco control; and -- That appropriations from the Health Care Security Trust to the Tobacco Settlement Fund shall not be used to supplant or replace other health-related or non-health-related expenditures or obligations of the Commonwealth (including tobacco control expenditures).

--- Following is the 2003 Advisory Committee on Health Care and Tobacco Control Membership Roster:

Chair: Lori Fresina, 617-686-3625 or 978-694-9988

Dr. Carole Allen, Children's Health Care Deborah Banda, AARP Dr. John Bernardo, Boston University School of Medicine Dr. Joseph Bowlds, Massachusetts Medical Society Patricia Campbell, Home Health Care Association of Massachusetts, Inc. Kathleen Connelly Dr. Richard Daniels, Jr., Daniels Law Offices, P.C. David Day, Public Advocacy - AHA Richard Daynard, Northeastern University School of Law Dr. Thomas Derosier, DDS, Falmouth Dental Associates Roslyn Feldberg, Mass Nurses Association Lori Fresina, Campaign for Tobacco-Free Kids (ACS) Ralph Fucillo, The Harvard Pilgrim Health Care Foundation Marcia Hams, Health Care for All Jeremiah Hurley, Mass Senior Action Council Jackie Jenkins-Scott, Dimock Community Health Center Robert Mehrman, MTCP-DPH Abraham Morse, Massachusetts Extended Care Federation Delia O'Connor, Caritas Christi Health Care System Samuel Perlman, Dropkin, Perlman, Leavitt & Rubin, Attorneys at Law Dr. Stephen Earl Sallan, Dana-Farber Cancer Institute Cheryl Sbarra, Tobacco Control Program Stephen Weiner, Mintz Levin Geoffrey Wilkinson, Massachusetts Public Health Association