[ Previous Section | Next Section | Contents ]

Tobacco Settlement Funds

Settling the Tobacco Lawsuit

In the late 1990's Louisiana joined in a nationwide suit to sue the tobacco industry for the costs incurred to the states for treating smoking related illnesses. In 1998, in an unprecedented victory, the states won the suit and are now receiving payments in perpetuity from the tobacco companies as specified in the Master Settlement Agreement.

Trusting the Tobacco Settlement Proceeds

• The Louisiana Legislature proposed a constitutional amendment to trust the monies received from the Master Settlement Agreement similar to the manner in which the state chose to trust monies received in the settlement agreement between the State of Louisiana v. United States relative to monies attributable to mineral production activities or leasing activities on the Outer Continental Shelf. Monies from that settlement are deposited in the Louisiana Education Quality Trust Fund, commonly referred to as the 8(g) settlement.
   
• The amendment to trust the tobacco settlement proceeds was ratified by the Louisiana voters in October 1999.

The Trust Funds

The Millennium Trust

The Millennium Trust received and/or will receive the following allocations from tobacco settlement proceeds:

• Fiscal 2000-2001, forty-five percent of the total monies received that year.
   
• Fiscal Year 2001-2002, sixty percent of the total monies received that year.
   
• Fiscal Year 2002-2003, and each year thereafter, seventy-five percent of the total monies received that year.

For Fiscal Years 2001 through 2003, 10% of the total monies received in the Millennium Trust will be credited to the Education Excellence Fund for various educational purposes.

The Millennium Trust Fund is divided into three individual funds:

• The Health Excellence Fund receives one-third of the Settlement Agreement proceeds deposited each year into Millennium Trust and one-third of all investment earnings on the investment of the Millennium Trust. Appropriations from the Health Excellence Fund are restricted to:
   
  • Initiatives to ensure optimal development of Louisiana's children through the provision of appropriate health care.
     
• The Education Excellence Fund receives one-third of the Settlement Agreement proceeds deposited each year into Millennium Trust and one-third of all investment earnings on the investment of the Millennium Trust. Appropriations from the Education Excellence Fund are restricted to:
   
  • Initiatives and funding for public and private elementary and secondary schools
     
• The TOPS Fund receives one-third of the Settlement Agreement proceeds deposited each year into Millennium Trust and one-third of all investment earnings on the investment of the Millennium Trust. Appropriations from the TOPS Fund are restricted to:
   
  • Support of state programs for financial assistance for students attending Louisiana institutions of postsecondary education.
     

The Louisiana Fund

The Louisiana Fund receives all monies after deposits into the Millennium Trust Fund.

Appropriations from the Louisiana Fund are restricted to:

• Initiatives to ensure the optimal development of Louisiana's children through enhancement of educational opportunities and the provision of appropriate health care, which includes but is not limited to:
  • Early childhood intervention programs targeting children from birth through age four, including programs to reduce infant mortality
  • Support of state programs for children's health insurance
  • School-based health clinics, rural health clinics, and primary care clinics
• Initiatives to benefit the citizens of Louisiana with respect to health care through pursuit of innovation in advances health care sciences, provision of comprehensive chronic disease management services and expenditures for capital improvements for state health care facilities.
   
• Provision of direct health care services for tobacco-related illnesses. Initiatives to diminish tobacco-related injury and death to Louisiana's citizens through educational efforts, cessation assistance services, promotion of a tobacco-free lifestyle, and enforcement of the requirements if the Settlement Agreement by the Attorney General.
   

Securitization of the Tobacco Settlement Proceeds

• Act 1145 of the 2001 Regular Session provided for the securitization of a portion of Louisiana's tobacco settlement. The purpose of securitizing a portion of the monies was to hedge the prospect of tobacco companies going bankrupt and the State losing future prospective earnings.
   
• In November of 2001, the state executed the securitization of 60% of tobacco settlement monies and netted approximately $1.2 billion.
   
• All proceeds from the sale were deposited into the Millennium Trust and allocated as specified in the Constitution.