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Since Arkansas voters in 2000 approved a plan for spending revenue from a legal settlement with tobacco companies, the state has received about $446 million.

A subcommittee of the Senate Public Health, Welfare and Labor Committee recently began a series of hearings to make sure the tobacco revenue is still being spent according to the wishes of voters. Auditors will measure administrative and personnel costs in each of the programs funded by the tobacco settlement. The subcommittee will have about 10 meetings.

Last year the state got $57 million in tobacco settlement revenue. That is a typical amount, although it fluctuates from year to year. The money helps pay for health care and biological research, and Arkansas is one of very few states that spends the entire amount of tobacco revenue on health-related programs. Other states use settlement money to augment spending for highways, schools and law enforcement.

A large portion of the tobacco funding in Arkansas goes to the Health Department for antismoking efforts. Some programs are targeted toward teenagers to encourage them to never begin smoking. Other programs help smokers quit.

Another portion of the tobacco revenue goes directly into the state Medicaid program, which subsidizes health care for senior citizens, the poor and people with disabilities.

Other programs are geared to improving health care among minority populations. The Public Health subcommittee hasheard concerns that spending on minority health care should expand beyond the African-American community and include more Hispanics, native Americans and people from the Marshall Islands who have settled in northwest Arkansas.

Soon after voters approved the Arkansas tobacco settlement plan, a $100 million Health Century Fund was created. In the event of a sudden or sharp decline in tobacco settlement revenue, health programs could tap into the fund and avoid cuts in services.

Also, the fund ensured that the state could pay debt service on new facilities built with tobacco settlement money. They include the College of Public Health in Little Rock and Biosciences Research facilities at Arkansas State University in Jonesboro, the University of Arkansas at Fayetteville, the University of Arkansas for Medical Sciences and Children's Hospital at Little Rock and the University of Arkansas Division of Agriculture.

The Health Century Fund has grown to about $125 million and the subcommittee will look into whether maintaining that large an amount in the fund is the most efficient use of the money. Many of the bioscience research facilities have been completed and the debt service on them has been paid down significantly. Therefore, such a large reserve fund may no longer be needed to protect the state's credit rating.

Public health officials told the subcommittee they budget conservatively and maintain reserve funds because of the uncertainties of their revenue source. Funding may drop if people quit smoking, or if cigarette companies prevail in pending lawsuits.

A Health Department survey indicates the number of Arkansans who smoke has dropped by 100,000 since 2002.

There are numerous reasons, including higher prices for cigarettes due to increases in tobacco taxes.

If you have any questions or comments about legislative issues, please contact me at HendrenK@arkleg.state.ar.us or call me at 479-787-6500, extension 30.

Forum, Pages 5 on 08/12/2009

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