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The Honolulu Advertiser
Posted on: Monday, November 12, 2001

Use of tobacco fund for medical school criticized

By Johnny Brannon
Advertiser Staff Writer

Ambitious plans to build a $300 million University of Hawai'i medical school and health center at Kaka'ako have been strongly applauded by healthcare professionals, but many also say that slashing a state anti-tobacco fund to help finance the project was a big mistake.

To bankroll the state's half of the public-private venture, the legislature agreed last month to issue $150 million in revenue bonds, and pay off the principal and interest with money from the 1998 settlement of state litigation against the tobacco industry.

Hawai'i expects to receive up to $1.3 billion through the settlement over 25 years. Twenty-five percent of that money had been earmarked for the Hawai'i Tobacco Prevention and Control Trust Fund, so that investment earnings from the fund could finance tobacco education and prevention programs.

But the medical center plan will cut the fund's share of tobacco settlement revenue in half, and many fear that will cripple efforts to reduce smoking in Hawai'i, leaving the state saddled with the high cost of tobacco-related health problems in the future.

"We're very supportive of the medical school being built, but we just believe it is not a good solution to take money from prevention efforts to pay for the medical school," said Clifford Chang, director of the Coalition for a Tobacco Free Hawai'i.

Tobacco use kills more than 1,300 Hawai'i residents each year and is the state's No. 1 cause of preventable death, he said, with health care and related costs of more than $328 million annually.

Efforts to use money from the tobacco prevention fund to reduce smoking have only recently gotten under way, with less than $1 million in investment earnings granted to 14 organizations since August. By contrast, the tobacco industry spends an estimated $23 million each year to promote smoking in Hawai'i, Chang said.

Under best practices guidelines developed by the U.S. Centers for Disease Control, Hawai'i should be investing between $11 million and $24 million in a comprehensive anti-smoking campaign, he said.

Unless prevention efforts are increased, results are predictable, said Don Weisman, American Heart Association of Hawai'i communications director. "More kids addicted, and more death and disability down the road that the state will be paying for."

Neither the Heart Association nor the Coalition for a Tobacco Free Hawai'i accept grants from the tobacco prevention fund, though 10 of the coalition's 140 member-organizations have received about $642,000.

Evan Dobelle, University of Hawai'i president, said he had not proposed that money for the medical school come at the expense of the tobacco prevention fund.

Dobelle said he had initially proposed to Gov. Ben Cayetano that the state's Emergency Budget and Reserve Fund, or "rainy day fund," be the sole public revenue source for retiring the school bonds.

Like the tobacco prevention fund, the rainy day fund is also supplied by tobacco settlement revenue. To pay back the school bonds, Cayetano proposed, and the Legislature approved, that the rainy day fund's share be reduced from 40 percent to 24.5 percent.

The remaining settlement revenue goes to the state Health Department, and was not changed. Sam Callejo, Cayetano's chief of staff, said the center is an excellent use of settlement revenue.

"Hawai'i is working to expand its position as the health care center of the Pacific," he said. "The center will include a strong cancer research component, and as we all know throat and lung cancer brought on by smoking are leading causes of cancer deaths."

But Chang said a better plan would be to retain the old formula for splitting the settlement revenue three ways, and deduct money for the school bonds before the remaining revenue is divided.

"It's clear that all of the money could have been taken out of the rainy day fund, or it could have come off the top," he said. "We would have been more willing to live with that. We strongly believe there are other sources of money, even from within the tobacco settlement, that would not have impacted the trust fund itself."

Jackie Kido, Cayetano's communications director, said the decision agreed upon made the most sense to the administration, but that anti-smoking groups were free to advocate for changes.

"Every constituency needs to speak up in their area of focus and fight for their piece of the pie, in this case, groups which encourage smoking cessation," she said. "At the same time, government leaders need to take a broader approach in advancing good health for Hawai'i's people, and that means getting this health center up and running."

Forty-six states and six U.S. territories and possessions were parties to the multi-billion dollar lawsuit that requires large tobacco companies to help pay for the impact of smoking-related health problems. Many beneficiaries have opted to use some of the money for capital improvement projects.

San Francisco is using much of its share to rebuild a $400 million convalescent hospital for the poor. Ohio is building new schools, North Dakota is using it for flood control projects, and others are using it to plug various budget gaps.

In fact, less than half of the $21 billion paid out across the nation so far has financed health services, according to a report released in August by the National Conference of State Legislatures, and only five percent has gone to anti-smoking programs.

That has alarmed many doctors, who say it is more cost effective and socially responsible to focus on discouraging tobacco use. In Hawai'i, another concern is that the legislation that cut the tobacco prevention fund's revenue stream also allows up to 50 percent of the fund's base to be tapped for future tobacco prevention grants, rather than relying on income gained by investing that base.

Any decision to dip into the fund base would be made by an 11-member advisory board appointed by the governor, which is chaired by Margery Bronster, former state attorney general. She could not be reached for comment, but Callejo, also on the board, said that could be a good idea.

"This will free up even more money for tobacco prevention in the near years to come, and we will need to build on health care initiatives to keep people off cigarettes in the long term," he said.

But Weisman said the danger is that the fund base will erode and will not provide sufficient money to continue anti-smoking programs once the settlement is concluded.

The amount of settlement money Hawai'i will get is based on a complex formula involving the number of cigarettes sold. If cigarette use continues to decrease, the state could get far less than it expects, and that could create pressure to divert even more money from prevention efforts, Weisman said.

Dobelle said he is confident that the medical school project will not exceed its budget, and that the University of Hawai'i Foundation will be able to raise $150 million in private donations for the plan. A single check, for $25, has been received so far, but Dobelle said he has been busy meeting with potential donors in California and Japan.

"We have to set a high goal and achieve it, otherwise it's always going to be business as usual around here," Dobelle said.

He said he was very unhappy with the university's dismal record on capital improvements, the most recent example being the skyrocketing cost of renovating the university mansion where Dobelle lives.

Officials originally estimated that the work would cost $172,000, but the project has expanded considerably and is now expected to cost nearly $1 million.