Tobacco Settlement Endowment Trust

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.

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.

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