Tobacco Settlement Funds Should Be Used to Fight Smoking in North Carolina

March 31, 2015

North Carolina continues to risk the health and economic wellbeing of its residents by refusing to use Master Settlement Agreement funds for tobacco prevention and control.

Over the last 50 years, more than 20 million Americans have died prematurely as a result of smoking or exposure to second-hand smoke. In the same time period, however, societal attitudes towards smoking have shifted from acceptance of its regularity to disapproval of the behavior as a harmful addiction. Driven largely by a growing body of research illuminating the adverse health effects of smoking and the implementation of widespread interventions that discourage tobacco use, the United States has experienced significant declines in the prevalence of smoking since the 1960s. Despite these successes, one in five adults in North Carolina continues to smoke cigarettes regularly, making North Carolina the 14th highest in smoking prevalence nationwide.

Every year, North Carolina receives $140 million in state funds from the 1998 Master Settlement Agreement, which requires tobacco companies to compensate tobacco-producing states for tobacco-related illnesses. These funds were intended to be used for youth tobacco prevention and control, but due to flexibility in the wording of the agreement, North Carolina has been able to send most of this money to a general fund. North Carolina even sent $42 million in settlement funds to tobacco farmers for marketing and equipment improvements. In 2014, North Carolina was the leading tobacco-producing state, followed by Kentucky, Georgia, and Virginia.

In the past, $25 million of this $140 million went to a Health and Wellness Trust Fund that invested in tobacco prevention and cessation programming. In 2012, however, the North Carolina General Assembly (NCGA) abolished the Health and Wellness Trust Fund and spent only $17 million on tobacco prevention. By 2014, this number had dropped to $1.2 million, or just 1.1 percent of the minimum recommended for tobacco prevention programs by the Centers for Disease Control and Prevention (CDC). North Carolina ranks 47th among the states for reaching CDC-recommended funding levels.

The health and economic impacts of this decision to cut state funds are substantial. In North Carolina, tobacco use costs nearly $2.5 billion in total medical costs and $3.3 billion in lost productivity annually. North Carolinians face an annual tax burden of $564 per household for smoking-related state and federal government expenditures.

North Carolina can look to examples from other states to improve its strategy for spending settlement dollars. Oklahoma, which reaches more than 50 percent of CDC-recommended tobacco prevention funding levels annually, amended its constitution in 2000 to create the Tobacco Settlement Endowment Trust (TSET), which receives no less than 75 percent of annual settlement payments. Oklahoma ranks among the worst for smoking behaviors, but has seen significant improvements in adult smoking rates with the percentage of smoke-free households reaching over 75 percent in 2010, up from 55 percent in 2001.

We’ve seen from other states that funding for youth tobacco prevention works. In Florida, where the state is required to spend at least 15 percent of its yearly settlement award on tobacco prevention, the high school smoking rate dropped to just 7.5 percent in 2014 – one of the lowest rates ever reported by any state. North Carolina’s high school smoking rate remained at over 15 percent in 2014.

While using the money as North Carolina does is not illegal, the state should end this poor practice of using settlement money for unrelated projects. North Carolina has the enormous opportunity and responsibility to use settlement funds to reduce the prevalence of smoking and improve the health and economic wellbeing of millions of residents across the state.