Posted on: Tuesday, November 19, 2002

Tobacco settlement spending upheld

Associated Press

SAN FRANCISCO — A federal appeals court yesterday struck down a challenge to how Hawai'i is spending its $1.38 billion in tobacco settlement funds.

With its ruling, the 9th U.S. Circuit Court of Appeals reaffirmed the rights of states to spend the tobacco settlement money at their discretion and sided with a host of other federal appeals courts that have addressed the topic.

The San Francisco-based court, ruling 3-0, said federal legislation allows the states to spend any way they want funds obtained from the historic 1998 accord with the tobacco industry.

The court rejected a challenge to how Hawai'i is spending the $1.38 billion it is receiving over 25 years.

Hawai'i residents federally insured by the Medicaid health plan sued to get a piece of the pie. But the appeals court said tobacco settlement funds may be used "for any expenditures deemed appropriate by the state."

Under Hawai'i legislation effective July 1, the state is allocating 24.5 percent to a budget reserve fund, 35 percent for a children's health insurance program, 12.5 percent to the Hawaii Tobacco Prevention and Control Trust Fund and 28 percent to pay bonds for a new medical school facility at the University of Hawai'i, according to the court.

Forty-six states, including Hawai'i, settled lawsuits with the tobacco industry, which agreed to pay them billions.

Hawai'i is one of the worst states in the country for use of the tobacco settlement funds for smoking prevention, according to a national group.

The Campaign for Tobacco-Free Kids has listed the state among the "most disappointing" for meeting Centers for Disease Control and Prevention recommendations for spending tobacco settlement funds.

Others that made the list were Connecticut, Florida, Michigan, Montana, North Carolina, Tennessee, Texas, Wisconsin and the District of Columbia.

However, Gov. Ben Cayetano recently cited a study that found Hawai'i was among the top four states for the amount of settlement money spent per capita on tobacco-control programs.

The finding was contained in a Yale School of Medicine study published in a recent issue of the New England Journal of Medicine.