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Health and Human Services

### Executive Summary

#### Funding Statistics

- In FY20, Oklahoma's MSA Payment was $66.3 million
- TSET's trust fund balance (as of 04/30/21) is $1.66 billion
- TSET spends only the annual interest earnings (approximately $50 million) on programs
- 40 percent of TSET budget is spent on direct tobacco cessation efforts
- In 2019, the smoking rate for Medicaid recipients was approximately 25.8 percent, 18.9 percent of the state in general.
- For every dollar spent by Oklahoma on media and marketing, the tobacco industry spends ten.

The 1998 Master Settlement Agreement (MSA) between states and tobacco companies provided states a continual funding stream from which to combat the health costs and consequences of tobacco use.

In 2000, Oklahoma voters approved constitutional protections for the millions in annual payments from tobacco companies, primarily dedicating the funds to preventing and combatting cancer and other tobacco-related diseases, improving the health of Oklahomans, and enhancing the provision of health care services to Oklahomans.

With the established economic and health toll of tobacco use, the State of Oklahoma has a vested interest in the success of TSET’s mission. Through this evaluation, the Legislative Office of Fiscal Transparency (LOFT) sought to determine if the programs and services provided by the Tobacco Settlement Endowment Trust (TSET) are providing outcomes aligned with its constitutional mandate, and whether 20 years of significant investment has led to measurable outcomes for the State.

LOFT’s evaluation resulted in four key findings:

#### Finding 1: Oklahoma’s ranking for tobacco use remains one of the worst despite high levels of spending and continued protection of the settlement fund.

![ok-tobacco-policy-outcomes.png](https://dy8iim215g2zo.cloudfront.net/ok_tobacco_policy_outcomes_9b16cafcc0.png)

Oklahoma currently ranks 8th highest in spending among states (based on percent of CDC recommended spending) but ranks 40th when it comes to adult smoking prevalence and 44th in youth smoking prevalence. Oklahoma has made progress to reduce smoking prevalence but continues to lag national trends, with an adult smoking prevalence rate of 18.9 percent compared to 15.9 percent nationally. Regionally, Oklahoma has the 4th highest smoking rate.

Approximately 40 percent of TSET’s spending is dedicated to tobacco cessation and prevention. However, LOFT observed a lack of evidence demonstrating correlation between state spending on tobacco cessation and prevention and smoking prevalence. Long-term, direct tobacco use outcomes are not tied to tobacco prevention and cessation programs and services provided by TSET.

#### Finding 2: Oklahoma ranks among worst states for critical health outcomes.

TSET’s health strategy prioritizes three critical outcomes focused on improving the health of Oklahomans: obesity, cardiovascular disease deaths and cancer deaths. Oklahoma ranks 46th among states when examining measures of health. Compared to other states, Oklahoma has the highest cardiovascular disease death rate and ranks 4th highest for both cancer death rates and obesity rates.

In an effort to influence positive behavioral changes regarding tobacco use and healthy lifestyles, TSET invests approximately 35 percent of its annual budget in marketing and communication campaigns. With the vast external marketing efforts by the tobacco industry and others promoting unhealthy behavior, any funds spent by TSET on “mass reach” marketing must be extremely strategic and able to demonstrate direct impact on outcomes. TSET currently tracks short-term outcomes, such as awareness of media materials, but does not track the type of outcome data necessary to determine the effectiveness of media campaigns across the state.

#### Finding 3: TSET’s resources are not aligned to Oklahoma’s greatest needs.

LOFT estimates that for every one percent reduction in smoking prevalence, Oklahoma would realize a cumulative savings of $135 million by 2030. In an analysis of smoking prevalence rates at a county level, compared to county- level programmatic spending by TSET, LOFT observed no apparent alignment of TSET resources with the areas of the state with the highest rates of smoking prevalence. Additionally, TSET does not conduct local level evaluation or analysis that would help determine the effectiveness (or replicability) of strategies within Oklahoma communities.

One of TSET’s signature programs, the Oklahoma Tobacco Helpline, spends approximately five times more per smoker for cessation services than the national average ($11.52 vs. national average of $2.21 and regional average of $2.55). While the Helpline reports positive outcomes, it reaches just three percent of Oklahoma’s smokers. Of those callers, approximately a third reportedly quit smoking. The percent of Helpline callers who register for services also declines year after year.

#### Finding 4: Oklahoma has opportunities to improve outcomes through policy changes, prioritization of spending, and a unified statewide strategy.

Over the past decade, the annual healthcare-related and economic costs of tobacco use in Oklahoma have increased from $3.1 billion to more than $4 billion.

LOFT’s comparative analysis and benchmarking study revealed variables that are most correlated with a state’s smoking prevalence: the cigarette tax rate, Medicaid expense per capita, and the state’s Stress Index calculation. Oklahoma ranks as the 6th highest state for Stress Index, 18th in cigarette taxation, and 40th in Medicaid expense per capita. These variables explain approximately 51 percent of the differences between state smoking rates.

![tobacco-cost-of-healthcare.png](https://dy8iim215g2zo.cloudfront.net/tobacco_cost_of_healthcare_756b787c4a.png)

Among the best-practice states evaluated, LOFT observed use of statewide comprehensive health action plans encompassing the categories contributing to the Stress Index ranking. These plans promote unified messaging and support related to state health objectives, including tobacco cessation and prevention. Oklahoma lacks a comprehensive state plan under one agency to spearhead tobacco prevention and cessation initiatives, provide strong support structure of partnerships within communities and other state agencies, and maximize state and federal resources.

LOFT also identified several best practices for Oklahoma to consider implementing, including regulating e-cigarettes and other alternative tobacco-derived products, or at the very least, collecting data on these emerging trends.

#### Economic Toll of Tobacco
- $1.62 billion annually in direct health care costs
- $264 million in direct Medicaid costs
- $849 per household tax burden from smoking-caused government expenditures

Executive Summary

Tobacco Settlement Endowment Trust Report

Report

Report & Resources

### Summary of Policy Considerations and Agency Recommendations

The Oklahoma State Legislature and TSET may consider the following:

#### Policy Considerations

- Adopt a coordinated funding plan across all state agencies supporting tobacco cessation, prevention, and related health outcomes.
- Empower one of the State’s health agencies to determine state- specific spending priorities and identify measurable, observable outcome data for tracking and reporting progress for key health metrics, including tobacco use.
- Define within statutes specific areas of spending on health programs consistent with TSET’s mission and the original purpose of the Master Settlement Agreement, such as Medicaid.
- Amend statutes to provide clarity for the constitutional broadness of TSET’s mission.
- Amend O.S. Title 62, Section 2306 to provide clearer guidance to the Board of Directors for TSET regarding the type of allowable expenditures related to executing its duties.
- Reorganize TSET within an existing state agency focused on health outcomes aligned with TSET’s constitutional duties. Options include the Department of Health, the Health Care Authority, and the Department of Mental Health and Substance Abuse Services.
- Expand the definition of smoking in statutes to include e-cigarettes and emerging technologies for ingesting nicotine and tobacco-related products.
- Create or repurpose an existing governmental body with the authority to create and execute a statewide strategy for improving the health and wellness of Oklahomans, including reducing tobacco use to below the national average. One option could be to build on the existing Advancement of Wellness Advisory Council, which is led by the Commissioner of Health.
- Require the production of an annual report about tobacco products and trends in the region, including taxation, use, sales, illegal sales and emerging products, including e-cigarettes. The current State Plan produced by the State Department of Health could be adapted.
- Require licensure for the distribution and sale of e-cigarettes. Options for the enforcement agency could include the ABLE Commission or the Attorney General’s Office.
- Require an annual forecast for MSA payments be provided to the Legislature. For example, Colorado’s Department of Public Health and Environment currently provides this to the public.

#### Agency Recommendations
- TSET should reorient its logic models to measure for behavioral change. These models should be publicly available and include data-collection plans that measure statewide impact success metrics at every level; short-term, intermediate, and long-term.
- TSET should partner with the State Department of Health to conduct more rigorous statistical analysis to better understand relationships between variables that impact smoking prevalence.
- TSET should begin collecting data to understand e-cigarette use across the state, as well as other tobacco products and emerging trends.
- TSET should report data related to health outcomes directly attributable to TSET programs and spending.
- TSET should measure outcome data, both intermediate and long- term, to determine the statewide efficacy of media campaigns.
- TSET should prioritize tobacco prevention and control programs based on Oklahoma-specific outcomes and needs.
- TSET should examine the operational cost effectiveness of its Helpline, looking to other states for examples of cost-saving measures.

Recommendations

June 2021

Tobacco Settlement Endowment Trust

Evaluations In Progress

Agency Investigation: Financial Condition of the Oklahoma Department of Mental Health and Substance Abuses Services
Expected Date Published: March 2025

Financial Condition of the Oklahoma Department of Mental Health and Substance Abuse Services

General Government 

Report: 24-000-01
Identify all reports statutorily required to be provided to the Legislature. 

Agency Reports

Report: 24-296-01
Conduct an operational assessment of the Ethics Commission.


Operational Assessment of the Oklahoma Ethics Commission

Tobacco Settlement Endowment Trust

More Reports & Evaluations

Financial Condition of the Oklahoma Department of Mental Health and Substance Abuse Services

Agency Reports

Operational Assessment of the Oklahoma Ethics Commission