Monday, December 10, 2012

Up in smoke: What will state do about lost tobacco funds?

By SCOTT ROTHSCHILD, The Lawrence Journal-World

Programs serving approximately 200,000 children statewide are facing their own fiscal cliff, and it has nothing to do with budget talks between Congress and the White House.

“My anxiety is high,” said Rich Minder, collaborative projects coordinator of Success By 6 Coalition of Douglas County, which serves a number of groups helping children and families.

“The state of Kansas needs to decide whether or not we are going to make a commitment to children and families, and how are we going to do that,” Minder said.

Here is the problem. Kansas is among some 30 states in arbitration with Big Tobacco companies that are seeking to reduce payments promised to the states under a mammoth legal settlement from the 1990s.

Big Tobacco agreed to pay out billions of dollars to help offset the health costs of smoking. One of the conditions of the settlement was that the states would help ensure the companies’ market share.

Now Big Tobacco says the states, including Kansas, have failed to hold up their end of the deal, so they want to reduce payments to the states.

This year Kansas received $56 million as part of its annual share of the settlement. Next year, it could be as low as $12 million, officials have warned.

That means a number of programs and services that have over the past decade been built up on tobacco money could come crashing down.

“We don’t know what the tobacco settlement dollars will be yet,” said Jim Redmon, executive director of the Kansas Children’s Cabinet. “We don’t know what the arbitration is going to look like. The attorney general could comment on that."

Repeated messages left with the attorney general’s office were unanswered.

The Kansas Children’s Cabinet, which was set up to make recommendations on use of tobacco settlement funds, recently decided to whittle down its focus on programs to early-childhood development and came up with a $38 million list. Some programs left off its list may be picked up by other state agencies.

“The Children’s Cabinet seeks to build and support innovative delivery models for those children and families that are most at risk with a clear focus on ROI (return on investment) and accountability,” said Amanda Adkins, who is chair of the Children’s Cabinet.

“During our recent meeting, we made a decision to prioritize early-childhood programs and those that have met our accountability framework requirements. Governor Brownback is very supportive of our strategic plan and objectives,” she said.

That recommendation will now go to Brownback and the Legislature.

Shannon Cotsoradis, president and chief executive officer of Kansas Action for Children, however, said she fears some programs will lose funding under a $38 million recommendation, including mental health programs and those to assist families.

An endowment fund that was supposed to have been built up with a portion of tobacco funds has regularly been raided, to the tune of $140 million, by the Legislature to pay for other items in the state budget, Cotsoradis noted.

“This is really a problem of our own making,” she said.

Advocates say they are hoping if the arbitration reduces tobacco funding, Brownback and the Legislature will backfill those dollars from general tax revenue.

“My hope is that the governor will lead the way and you will see state general funds for those programs. It starts with the governor’s budget if the tobacco checks come in short,” Cotsoradis said.

She noted that the governor has repeatedly stated support of programs for children.

But state tax dollars are tight. With Brownback’s tax cuts to individuals and business owners kicking in, the state is facing a $328 million revenue shortfall next year, which will continue to grow, according to revenue forecasts.

The confluence of tax cuts and possible cuts in tobacco funds has Minder concerned.

“We have been carefully building systems that support young children, prevent child abuse and neglect, and enhance outcomes for children and families,” Minder said. “At some point, you have to make your decisions about what you’re actually going to do."