The Tobacco Settlement Permanent Trust Account Investment Advisory Committee (the Committee) approved $67 million for the 2017 tobacco settlement distribution. According to the distribution report published by the Department of State Health Services (DSHS), 155 counties received approximately $6.6 million in reimbursements during the month of April. Last year, 157 counties received $5.3 million.
Under the terms of a historic settlement negotiated in the summer of 1998, tobacco companies agreed to create a $2.275 billion fund for the benefit of “all hospital districts, other local political subdivisions owning and maintaining public hospitals, and counties of the State of Texas responsible for providing indigent care to the general public.”
At the outset, $450 million of the nearly $2.3 billion was deposited into a “lump sum trust account” and distributed to local entities over a three-year period. The remainder, approximately $1.8 billion, was deposited into a “permanent trust account” with local entities receiving yearly disbursements each spring from investment earnings.
In response to the economic challenges faced in 2009, the Committee recommended updates to rules related to the Tobacco Settlement Permanent Trust Account. The revised rules, Texas Administrative Code, 34 TAC §18.2, were effective on March 24, 2011, regarding trust account distributions.
“These measures taken by the Committee serve to safeguard the trust during economic downturns such as the one experienced in 2009,” said Elaine McHard, manager of the DSHS Funds Coordination and Management Branch.
DSHS adds up eligible expenditures from all statements received to obtain a statewide total, according to the DSHS Tobacco Settlement Frequently Asked Questions/Answers at http://www.dshs.texas.gov/tobaccosettlement/faq.shtm. DSHS then divides that total into the individual statement amount submitted by each political subdivision. This determines the percentage that the political subdivision will receive out of the available tobacco settlement proceeds for that year. The use of the money is unrestricted, as the settlement agreement does not require that it be spent for a particular purpose.
DSHS certified the 2016 expenditure statements submitted by the eligible political subdivisions and published its distribution report in May 2017. According to the report identifying 2016 unreimbursed health care expenditures, hospital districts reported $2,971,377,728.30; eligible cities reported $1,495,074.00; and counties reported $327,815,024.80. Total expenditures reported by all eligible political subdivisions for 2016 were $3,300,687,827.10. The total 2016 distribution was $67 million.