Tobacco fund of $330M for Ohio nears extinction

Health officials fear gains Ohio has made in smoking prevention will be snuffed out.

CINCINNATI ENQUIRER

COLUMBUS — Ten years ago, Ohio won the tobacco lottery.

It was among 46 states to join a lawsuit accusing tobacco producers of using unfair advertising to get smokers addicted to nicotine. Smelling bankruptcy, 11 tobacco companies and industry trade groups settled instead — promising the states $260 billion in payments, spread out over 25 years.

Bob Taft, as the newly elected governor, persuaded the state Legislature to budget nearly half of Ohio’s $10 billion share of the multistate settlement for school construction projects — the state remained entangled in a major lawsuit over school funding at the time — and the other half for anti-smoking programs sponsored by the a new Ohio Tobacco Prevention Foundation.

But years of successive raids on the tobacco foundation — mostly to balance the state budget — have depleted its original $330 million endowment.

Now the fund, once envisioned to last a lifetime — and with a track record of slashing smoking rates — will be snuffed out within two years, its caretakers say.

The possible fatal blow came April 2 when Gov. Ted Strickland and legislative leaders decided to snatch nearly all of the foundation’s remaining investments — $230 million — to help finance a $1.57 billion jobs development program. The move is being contested in Franklin County Court. Just last year, the Strickland administration cashed out $5 billion in all future tobacco company payments to fund property tax breaks for senior citizens and speed up school construction projects.

All this despite the fact Ohio is considered a national leader in anti-smoking campaigns.

The targeting of the tobacco foundation is “kind of baffling,” said Susan Jagers, a lobbyist for the American Cancer Society of Ohio and one of the tobacco foundation’s 19 appointed board members. “We’ve gone from a national leader to now the bottom of the barrel,” Jagers said.

“All along, lawmakers would say, ‘The state really needs this money. You have the endowment. Your programs aren’t going away today. Be good team players.’ They’ve been saying that all along for years. But now that they’re taking the [original] endowment, there’s nothing left,” Jagers said.

Ohio isn’t the first state to reroute tobacco settlement money to what politicians consider more pressing needs. Ohio government They also cited increases in cigarette taxes, and the year-old ban on smoking in bars and workplaces as contributing to reduced smoking rates.

“The funding we have identified for our investments in Ohio’s future are state dollars, and we feel the state is best suited to determine how those dollars are best utilized,” Strickland, Senate President Bill Harris and House Speaker Jon Husted said in a joint statement.

By all accounts, Ohio’s anti-smoking programs have been working.

Model prevention programs — designed with the help of Northlich, a Cincinnati-based communications and marketing firm — cut smoking among Ohio teens by 40 percent, and adult smoking by 17 percent, according to statistics from the CDC.

About 22.4 percent of Ohio adults smoked in 2006, giving it the 12th-highest smoking rate, according to the latest figures from the CDC. Before anti-smoking programs began in 1999, Ohio was the third-worst state with 27.6 percent of its adults smoking.

By contrast, 28.5 percent of Kentuckians smoked in 2006 — the highest adult rate in the nation, down only slightly from 29.7 percent in 1999.

But the worst news lies ahead, foundation advocates say. State government’s short-term financial gains will result in larger bills for taxpayers and businesses later on — and more families devastated by smoking-related deaths.

Among them: higher health-care costs, including more taxpayer-financed Medicaid due to smoking-related illnesses. Tobacco use costs Ohio nearly $4.4 billion-a-year in health-care bills and another $4.7 billion in smoking-related productivity losses, according to the U.S. Centers for Disease Control and Prevention.

Additionally, the federal CDC says an employer absorbs about $1,760 per year in health-care costs for each of its tobacco-using employees. And about 19,000 Ohio adults die each year of smoking-related illnesses, even with successful anti-smoking programs, according to the CDC.

“This decision will guarantee that for years to come more Ohio children will become addicted to tobacco, more Ohio citizens will die prematurely from tobacco use, and all Ohio taxpayers will foot the bill for higher health-care costs,” said Matthew L. Myers, president of the Campaign for Tobacco-Free Kids.

In 1998, Ohio Attorney General Betty D. Montgomery gleefully announced Ohio’s share of the tobacco settlement windfall would be about $10 billion.

But that total was promised through the year 2025, and tied to tobacco sales. As anti-smoking programs worked, and tobacco company profits fell in the United States, annual payments were legally reduced, under the settlement agreement.

Meanwhile, what was coming in was frequently redirected away from tobacco prevention.

As Ohio’s economy and jobless rates worsened, former Gov. Taft and the Republican-led state Legislature decided the Ohio Tobacco Prevention Foundation’s first two annual settlement payments — $330 million — should last forever. Lawmakers seized $568 million in new annual tobacco payments to balance the state budget.

Last year, Strickland decided to sell all of Ohio’s future tobacco settlement payments — for about $5 billion — to finance property tax breaks for the elderly and disabled, and speed up school construction projects.

Anti-tobacco groups cried foul, again.

But the tobacco foundation still had its $267 million from its first two annual payments. It used the investments and interest from that endowment to pay its 17-member staff and Northlich, which designed stand — the anti-smoking program involving Ohio teenagers — operate a Quit Line and award community grants for other health-related programs.

But last week, Strickland and legislative leaders had a new idea, since they didn’t want to borrow more money for an economic development program: Seize $230 million — or 86 percent — of the tobacco foundation’s unspent endowment to help finance the new program, Building Ohio Jobs.

Strickland said he couldn’t understand why the tobacco foundation is unable to operate on nearly $40 million.

But the $40 million will last only another two years, said Michael Renner, the foundation’s executive director.

Facing extinction, the foundation took the state to court Thursday. A Franklin County judge temporarily blocked state Treasurer Richard Cordray from transferring $230 million of the foundation’s money for the state’s new jobs fund.

The judge scheduled a hearing for April 24.