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Can TSET save the state budget?

A view of the Oklahoma State Capitol (KOKH)

Oklahoma has suffered through years of budget problems and it is more difficult than ever to just break even. However the state has a billion dollars’ worth of investments in one agency. It is a fund that some lawmakers and policy groups have suggested tapping into to help alleviate budget woes.

The fund is what makes up TSET, the Tobacco Settlement Endowment Trust. Oklahoma received the money as part of the master settlement agreement reached with tobacco companies as a result of a lawsuit.

“In Oklahoma we sometimes do things either remarkably great or remarkably poorly,” said John Woods the new executive director of TSET, “We were a national model for how [the settlement fund trust] should be done.”

While the trust is worth $1.1 billion, the amount TSET can spend any given year is far less, because it is only allowed to tap into interest earned on investments. The funds are constitutionally protected.

“Voters created this so they are protected for times exactly like this,” Woods said.

Some states blew through their settlement money, but Oklahoma though has been able to leverage its investments. Currently TSET is able to provide funds to other state agencies like the Health Department, the Department of Mental Health and the Health Care Authority to provide the money that serves as state matching dollars to receive federal grants. Without TSET bankrolling the state matches, the agencies would have to first spend taxpayer dollars before they would be eligible for some federal grants.

“In fact our very existence is saving other state agencies millions of dollars from having to be the funding source for those programs,” Woods said.

Recently, TSET provided about $3 million to state agencies in order to help shore up programs that were facing cuts during the latest budget crisis. That transfer of money prompting some of the program’s critics to call for TSET funds to be used for more programs and agencies.

It is not as simple as just writing a check. Because of the constitutional framework the agency’s funds are not available to be used for general revenue.

Still, lawmakers say there may be a way to stay within the rules TSET and allow the trust funds to do more to protect public health.

“I do think there is an opportunity to look at how can we by using TSET funds,” said Representative Chad Caldwell, R-Enid, “Maybe an enhancement of our rural residency programs.”

Representative Caldwell Says lawmakers have been talking with TSET about ways for trust funds to better support public health programs.

“I do think we should look at maybe some different opportunities and maybe expanding our focus a little bit but still keeping that limited to just the earnings of the fund,” Caldwell said.

Most recently, the Oklahoma Council of Public Affairs announced their budget suggestions including a proposal that would let the voters decide if future tobacco settlement payments should be redirected to other areas of government. That proposal has not been put into any bill, but as the budget battle continues all sources of cash remain on the table.

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