![]() Funding of North Carolina Tobacco Control Programs Through the Master Settlement Agreement. Alison Snow Jones is with the Division of Public Health Sciences, Department of Social Sciences and Health Policy, Wake Forest University School of Medicine, Winston- Salem, NC. David Austin is with the Community and Health Education Research Program of the Public Health and Environmental Division of RTI International, Research Triangle Park, NC. Beach is with the Food and Agricultural Policy Research Program, RTI International. Altman is with the Center for Creative Leadership, Greensboro, NC. Requests for reprints should be sent to Alison Snow Jones, PHS/SSHP, WFUHS, Medical Center Blvd, Winston- Salem, NC 2. Accepted February 1. Copyright . Allocation patterns demonstrate lawmakers’ changing priorities in response to changes in the economic climate; some of the agreement’s funds targeted to tobacco farmers appear to reflect objectives favored by tobacco manufacturers. Funds earmarked for health have underfunded youth tobacco prevention and tobacco control initiatives, and spending for tobacco farmers in North Carolina has not lived up to the rhetoric that accompanied the original agreement. We discuss the implications of these findings for future partnerships between public health advocates and workers as well as tobacco control strategies. ALLOCATION OF MASTER Settlement Agreement (MSA) funds to tobacco control programs has fallen short of public health advocates’ expectations. There are several reasons for this failure, some structural and others the result of shifting political objectives and fiscal crises that recently confronted most states. We examined the evolution of these changing forces in 1 tobacco- dependent state, North Carolina, and discuss implications for future tobacco control efforts. North Carolina provides an excellent case study. It is a major tobacco- producing state with above- average tobacco use, 2 factors likely to diminish lawmakers’ and constituents’ interest in tobacco control. State lawmakers face a complex array of competing interests and political issues: the tobacco lobby continues to exercise considerable political strength, tobacco- dependent communities face fragile economic futures, the substantial loss of manufacturing jobs in non–tobacco- dependent communities has introduced new pressures for economic development,3 and shrinking tax revenues combined with rapidly rising Medicaid costs have created a constrained economic climate. Additionally, North Carolina tobacco farmers’ phase 2 settlement payments are being replaced by tobacco quota buyout payments. Although neither of the latter 2 funding sources is controlled by the state, their purposes and those of MSA funds are intertwined. THE MASTER SETTLEMENT AGREEMENT IN NORTH CAROLINAIn November 1. MSA with the major tobacco companies. The settlement produced a framework for tobacco industry payments to states totaling more than $2. In addition to monetary payments, the MSA imposed restrictions on advertising, marketing, and promotion of tobacco products, particularly those aimed at youth. The second phase, which was the direct result of intervention by North Carolina’s then attorney general, Michael Easley, tobacco- producing states negotiated a plan to compensate tobacco quota owners and tobacco growers for revenue losses resulting from declines in demand because MSA payments forced tobacco manufacturers to raise prices. This phase 2 settlement established the National Tobacco Growers’ Settlement Trust Fund, into which the 4 participating cigarette manufacturers were to pay $5.
Allotment of funds among states was based on 1. North Carolina receiving the largest share (3. Funds were to be paid directly to individual quota holders and producers, with no restrictions on use. The public health community had strong reasons to expect that a significant portion of MSA funds would target tobacco control programs. Senator John Mc. Cain, a major architect of the MSA legislation, described the general agreement among state governors, saying that the money would be used “on smoking cessation programs.”6 Resolutions passed by the National Governor’s Association in 1. Reports in the press and elsewhere reflected a belief that similar commitments would be made. However, several studies have documented that, with few exceptions, only a small proportion of MSA funds have been devoted to tobacco control. Gross et al. Consequently, some advocates have collaborated with growers to address both public and economic health simultaneously. Any detailed examination of states’ MSA allocation decisions after the agreement was signed must be considered against a nationwide backdrop of dwindling state tax revenues in those early years. Schroeder provided evidence that increasing percentages of MSA payments were diverted directly into state coffers to alleviate budget shortfalls. In 2. 00. 3, nearly half (4. MSA funds were diverted, a sharp increase from 2. There is evidence that state governors, whose budgetary discretion varies by state, regard fund diversion as simply reflecting structural flexibility that is codified in the MSA by Public Law 1. President Bill Clinton on May 2. Throughout North Carolina, law enforcement agencies, mental health professionals and advocates join in partnerships to establish Crisis Intervention Teams (CIT). CIT programs are police-based pre-booking jail diversion. This flexibility may reflect the varying bases upon which states initially sought legal remedy. Some complaints did not cite Medicaid or health care costs, while others did, possibly leading states to view allocation of MSA funds as discretionary. North Carolina’s governor had both incentive and ability to exploit this flexibility because the state constitution requires the governor to balance the budget in every year,2. As many of you know (mainly because you’ve tried to contact me and I haven’t been available!) Chief Justice Mark Martin appointed me to serve as Reporter for the Criminal Committee of the North Carolina Commission on the. North Carolina budget shortfalls ranged from $7. If the diversion of funds away from tobacco prevention had been the result of decreases in smoking prevalence, public health advocates would be less concerned. However, this diversion appears to reflect political considerations and economic changes rather than decreased tobacco use. Loss of manufacturing jobs in North Carolina increased lawmakers’ interest in economic development, especially in communities that lost textile, furniture, and other manufacturing jobs, regardless of their dependence on tobacco. Added to this were unprecedented fiscal pressures from rapidly dwindling tax revenues coupled with increasing Medicaid costs. These pressures combined with increased sentiment against taxes generally. MSA funds may have enabled lawmakers to avoid or reduce tax increases or budget cuts and their political consequences by diverting these funds to satisfy balanced- budget mandates. STRUCTURE OF MASTER SETTLEMENT AGREEMENT FUNDSIn North Carolina, 3 new institutional structures, each with its own broad mandate and board of directors, were created to receive and disburse MSA funds. The Golden LEAF Foundation (GLF), originally allocated 5. MSA funds, was broadest in scope and charged with improving the economic and social conditions of North Carolina’s people, promoting the social welfare of North Carolina citizens, and receiving and distributing funds for economic impact assistance. The Tobacco Trust Fund (TTF), with 2. MSA funds, was charged with assisting tobacco farmers, tobacco quota holders, persons engaged in tobacco- related businesses, individuals displaced from tobacco- related employment, and tobacco product component businesses in North Carolina by funding programs that support and foster a strong agricultural economy in the state. The Health and Wellness Trust Fund (HWTF) received the remaining 2. MSA funds and was charged with addressing the health needs of vulnerable and underserved populations; supporting health research, education, prevention, and treatment programs; increasing capacity of communities to respond to public health needs; and developing a comprehensive, community- based plan with goals and objectives to improve the health and wellness of North Carolina residents, with an emphasis on reducing youth tobacco use. We extracted grant award data from the Web sites of the 3 North Carolina MSA- based foundations and from the phase 2 Web site. HWTF data were compiled from a table that contained total commitments through fiscal year 2. GLF total expenditures for fiscal years 2. GLF Web site. 2. 4 TTF total expenditures for fiscal years 2. TTF Web site (no awards were made in 2. GLF grants were classified as focused on agriculture, economic development, or work- force preparedness, according to definitions within GLF priority areas. GLF also defined certain economic development grants as economic stimulus or for “shovel- ready” certification of industrial development sites. Within the agriculture- focused category, tobacco diversification–focused projects were defined broadly as any project that directly targets tobacco farmers to assist in diversifying to other enterprises or that produces knowledge, techniques, markets, financing, and so on that could assist tobacco farmers to diversify. Grants made by TTF and HWTF were categorized by each foundation’s specific focus area. ALLOCATION OF MASTER SETTLEMENT AGREEMENT FUNDSThe box on this page presents grant categories by fund. Detailed data in Table 1 . Across all 4 years, 1. These large changes in grant allocation percentages were primarily a result of GLF’s decision in 2. Biotechnology Training Consortium composed of major educational institutions. Total annual allocation between 2. GLF policy temporarily departed from its policy of restricting grants to investment income. There is evidence that the consortium funding decision was influenced by the governor and powerful state legislators and that the decision likely prevented GLF funds being diverted to the state’s general fund. Table 2 . By 2. 00. Biotechnology Training Consortium. Master Settlement Agreement Fund Grant Categories. Agriculture (Tobacco Trust Fund and Golden Leaf Fund . However, only 6. 9% of agriculture funding was targeted to tobacco diversification. In a move that was arguably counterproductive to tobacco control, 8.
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