GAO-03-407, Tobacco Settlement: States' Allocations of Fiscal Years 2002 and 2003 Master Settlement Agreement Payments


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entitled 'Tobacco Settlement: States' Allocations of Fiscal Years 2002 
and 2003 Master Settlement Agreement Payments' which was released on 
February 28, 2003.



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Report to Congressional Requesters:



February 2003:



TOBACCO SETTLEMENT:



States’ Allocations of Fiscal Years 2002 and 2003 Master Settlement 

Agreement Payments:



GAO-03-407:



GAO Highlights:



Highlights of GAO-03-407, a report to congressional requesters.



TOBACCO SETTLEMENT

States’ Allocations of Fiscal Years 2002 and 2003 Master Settlement 

Agreement Payments.



Why GAO Did This Study:



The Master Settlement Agreement (MSA) requires four of the nation’s 

largest tobacco companies to make annual payments to states in 

perpetuity as reimbursement for past health care costs related to 

tobacco use. The Farm Security and Rural Investment Act of 2002 

requires GAO to report annually on the amount of MSA payments states 

receive and how they allocate these payments for the years 2002 through 

2006.



This report provides information on the



* amount of MSA payments that the 46 states party to the MSA received 

for fiscal year 2002 and the amount these states expect to receive 

during fiscal year 2003; 

* states’ allocations of MSA funds to various program categories for 

fiscal years 2002 and 2003 and changes in these allocations from prior 

years; and 

* changes in states’ decision-making frameworks for MSA funds since 

fiscal year 2001.



To conduct this study, GAO sent a survey to budget officials in the 46 

states party to the MSA. GAO did not independently verify the accuracy 

of the information provided by the state budget offices.



What GAO Found:



The 46 states party to the MSA reported receiving a total of about 

$6.2 billion from the tobacco companies during fiscal year 2002 and 

expect to receive an additional $6.2 billion for fiscal year 2003. 

These amounts supplement the $13.2 billion the states had already 

received through April 2001. In addition, 12 of the 46 states issued 

bonds backed by all or a portion of their future MSA payments, a 

process known as securitization. Securitization allowed these states 

to receive upfront payments totaling an additional $10.6 billion for 

the 2-year period in lieu of some or all of their future MSA payments.

The MSA allows states to use their payments for any purpose. For fiscal 

years 2002 and 2003, states reported allocations of MSA funds for a 

variety of programs and budget priorities, although somewhat different 

than the allocations made for fiscal years 2000 and 2001. For example, 

for fiscal years 2002 and 2003, states reported that about half of 

their MSA payments were allocated to health-related programs, which is 

an increase from the 41 percent allocated in fiscal years 2000 and 

2001. States also allocated MSA payments to cover anticipated budget 

shortfalls, for education and social services, and for general purposes 

and reserves. The 12 states that securitized future MSA payments 

allocated these proceeds primarily to cover budget shortfalls (31 

percent for fiscal year 2002 and 66 percent for fiscal year 2003). 

Securitized proceeds were also allocated for infrastructure, education 

and social services, and health programs. About half of the 46 states 

reported changes to the frameworks they use for making decisions 

related to MSA funds since fiscal year 2001. The change most frequently 

reported by the states was the passage of legislation affecting the 

use of MSA funds. Other changes included the establishment of new goals 

or revised requirements for the use of MSA funds and increases or 

decreases in the use of dedicated funds, such as endowments or trusts.



States’ Allocations of MSA Payments, in Percents (Fiscal Years 2000-
2001,

2002 and 2003)



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Contents:



Letter:



Results in Brief:



Background:



States Expect to Receive More Than $12 Billion in MSA Payments for 

Fiscal Years 2002 and 2003:



States’ Allocations of MSA Payments Changed Since 2001:



Some States Changed the Way They Allocate MSA Payments:



Appendixes:



Appendix I: Appendix I: Objectives, Scope, and Methodology:



Appendix II: State-Specific Master Settlement Agreement Payments

Information:



Appendix III: Survey of States’ Use of Master Settlement Agreement

Payments:



Appendix IV: GAO Contact and Staff Acknowledgments:





Tables Tables :



Table 1: Percent Allocation of MSA Payments for 46 States		7:



Table 2: Fiscal Year 2002 MSA Payments Received and Fiscal Year 2003 

Payments Expected by the 46 States:



Table 3: Securitized Proceeds Received by 12 States for Fiscal Years 

2002 and 2003:



Table 4: Allocations of MSA Payments by Category, Fiscal Year 2002		15:



Table 5: Allocations of MSA Payments by Category, Fiscal Year 2003		17:



Table 6: Allocations of Securitized MSA Proceeds by Category, Fiscal 

Year 2002		19:



Table 7: Allocations of Securitized MSA Proceeds by Category, Fiscal 

Year 2003		20:



Table 8: Alabama’s MSA Payment Allocations		30:



Table 9: Alaska’s MSA Payments Allocations		32:



Table 10: Arizona’s MSA Payment Allocations		34:



Table 11: Arkansas’ MSA Payment Allocations		35:



Table 12: California’s MSA Payment Allocations		37:



Table 13: Colorado’s MSA Payment Allocations		39:



Table 14: Connecticut’s MSA Payment Allocations		41:



Table 15: Delaware’s MSA Payment Allocations		42:



Table 16: Georgia’s MSA Payment Allocations		43:



Table 17: Hawaii’s MSA Payment Allocations		45:



Table 18: Idaho’s MSA Payment Allocations		47:



Table 19: Illinois’ MSA Payment Allocations		49:



Table 20: Indiana’s MSA Payment Allocations		51:



Table 21: Iowa’s MSA Payment Allocations		52:



Table 22: Kansas’ MSA Payment Allocations		54:



Table 23: Kentucky’s MSA Payment Allocations		55:



Table 24: Louisiana’s MSA Payment Allocations		57:



Table 25: Maine’s MSA Payment Allocations		59:



Table 26: Maryland’s MSA Payment Allocations		61:



Table 27: Massachusetts’ MSA Payment Allocations		63:



Table 28: Michigan’s MSA Payment Allocations		64:



Table 29: Missouri’s MSA Payment Allocations		66:



Table 30: Montana’s MSA Payment Allocations		68:



Table 31: Nebraska’s MSA Payment Allocations		69:



Table 32: Nevada’s MSA Payment Allocations		71:



Table 33: New Hampshire’s MSA Payment Allocations		73:



Table 34: New Jersey’s MSA Payment Allocations		74:



Table 35: New Mexico’s MSA Payment Allocations		76:



Table 36: New York’s MSA Payment Allocations		78:



Table 37: North Carolina’s MSA Payment Allocations		79:



Table 38: North Dakota’s MSA Payment Allocations		80:



Table 39: Ohio’s MSA Payment Allocations		82:



Table 40: Oklahoma’s MSA Payment Allocations		83:



Table 41: Oregon’s MSA Payment Allocations		85:



Table 42: Pennsylvania’s MSA Payment Allocations		86:



Table 43: Rhode Island’s MSA Payment Allocations		88:



Table 44: South Carolina’s MSA Payment Allocations		89:



Table 45: South Dakota’s MSA Payment Allocations		91:



Table 46: Tennessee’s MSA Payment Allocations		92:



Table 47: Utah’s MSA Payment Allocations		93:



Table 48: Vermont’s MSA Payment Allocations		95:



Table 49: Virginia’s MSA Payment Allocations		96:



Table 50: Washington’s MSA Payment Allocations		97:



Table 51: West Virginia’s MSA Payment Allocations		99:



Table 52: Wisconsin’s MSA Payment Allocations		100:



Table 53: Wyoming’s MSA Payment Allocations		102:



Figures Figures:



Figure 1: States’ Allocations of MSA Payments, in Percents 

(Fiscal Years 2000-2001, 2002 and 2003)		4:



Figure 2: States’ Allocations of Securitized MSA Proceeds, in Percents 

(Fiscal Years 2002 and 2003)		5:



Figure 3: MSA States that Have Received Securitized Proceeds and Those 

that Have Not (Fiscal Years 2000-2003)		12:



Abbreviations

:



MSA: Master Settlement Agreement:



NASBO: National Association of State Budget Officers:



NGA : National Governors Association:



MTF : Medical Trust Fund:



Letter February 28, 2003:



Congressional Requesters:



The Master Settlement Agreement (MSA), signed in November 1998 by 

the attorneys general of 46 states,[Footnote 1] requires four of the 

nation’s largest tobacco companies to make annual payments to states in 

perpetuity as reimbursement for health care costs related to tobacco 

use, such as Medicaid expenditures. This agreement, the largest civil 

settlement in U.S. history, commits the tobacco companies to pay 

approximately $206 billion over the first 25 years and imposes no 

requirements on how states spend their payments.[Footnote 2] Four 

states are not party to the MSA--Florida, Minnesota, Mississippi, and 

Texas. These states reached earlier, individual settlements with the 

tobacco companies under which they will receive payments totaling 

$40 billion over 25 years.



The Farm Security and Rural Investment Act of 2002 (2002 Farm Bill) 

requires GAO to report annually on the amount of tobacco settlement 

payments states receive and how they use these payments for the years 

2002 through 2006. This report is the second in a series of reports 

responding to the 2002 Farm Bill requirement. On December 3, 2002, we 

issued a report entitled Tobacco Settlement: States’ Allocations of 

Phase II Funds (GAO-03-262R) that provided information on the National 

Tobacco Grower Settlement Trust (commonly referred to as the Phase II 

agreement). GAO previously reported in June 2001 on states’ receipt and 

use of MSA payments for fiscal years 2000 and 2001.[Footnote 3]



This report discusses the (1) amount of payments received by the 46 

states party to the MSA during fiscal year 2002 and the amount of 

payments these states expect to receive during fiscal year 2003, 

(2) states’ allocation of MSA funds to various program categories for 

fiscal years 2002 and 2003 and changes in these allocations from prior 

years, and (3) changes in states’ decision-making frameworks for MSA \

funds since fiscal year 2001.



To address our objectives, we surveyed the budget offices in each of 

the 46 states and requested budget-related information for fiscal years 

2002 and 2003.[Footnote 4] Our study focuses on the states’ share of 

MSA payments and does not include information on MSA payments made to 

counties and cities in New York and California; it also does not 

include information on MSA payments made to the District of Columbia 

and the five U.S. territories. We summarized the states’ categorization 

of their MSA payment allocations for fiscal years 2002 and 2003 using 

the eight program categories presented in our 2001 report. Because of 

changes in the fiscal status of states during the last two years, we 

added a ninth category to account for amounts that states allocated to 

balance state budgets and close gaps or reduce deficits resulting from 

lower than anticipated revenues or increased mandatory or essential 

expenditures (budget shortfalls). We did not verify the accuracy of the 

information provided to us by the state budget offices; however, as 

needed, we contacted some states to clarify the information they 

provided. We conducted our work from July 2002 through December 2002 in 

accordance with generally accepted government auditing standards. See 

appendix I for more information on our scope and methodology and 

detailed definitions of the nine program categories used in 

this report.



Results in Brief:



During fiscal year 2002, the 46 states party to the Master Settlement 

Agreement reported receiving a total of about $6.2 billion from the 

tobacco companies. For fiscal year 2003, these states expect to receive 

an additional $6.2 billion. These amounts supplement the $13.2 billion 

that the states had already received in payments through April 2001. In 

addition, 12 of the 46 states reported that in either fiscal year 2002 

or 2003 they had issued bonds backed by all or a portion of their 

future MSA payments (a process commonly known as securitization). 

Securitization allowed these states to receive upfront payments 

totaling an additional $10.6 billion for the two-year period in lieu of 

all or a portion of their future MSA payments.



The MSA allows states to use their payments for any purpose, and for 

fiscal years 2002 and 2003, the 46 states allocated MSA funds for a 

variety of programs and budget priorities. These allocations were 

somewhat different than those for fiscal years 2000 and 2001. For 

fiscal years 2002 and 2003, states reported that about half of their 

MSA payments have been allocated to health-related programs. This is an 

increase from the 41 percent allocated in fiscal years 2000 and 2001. 

Other categories that received MSA funds included budget shortfalls, 

education and social services, and general purposes and reserves. For 

fiscal years 2002 and 2003, states reported allocating 5 percent of MSA 

funds for tobacco control programs, such as youth education and 

cessation programs. Although this is a decrease from the 7 percent they 

allocated to tobacco control programs in fiscal years 2000 and 2001, 

some states rely on other sources of funds for these programs. Figure 1 

shows states’ allocations of MSA payments for fiscal years 2000-2001, 

2002, and 2003 for 9 program categories. (See app. I for a definition 

of each program category.):



Figure 1: States’ Allocations of MSA Payments, in Percents 

(Fiscal Years 2000-2001, 2002 and 2003):



[See PDF for image] - graphic text:



[End of figure] - graphic text:



Note: Percentages may not total 100 due to rounding.



[A] GAO’s June 2001 report combined states’ allocations of MSA payments 

for fiscal years 2000 and 2001.



The 12 states that securitized future MSA payments primarily allocated 

these funds to cover budget shortfalls. For fiscal year 2002, 

31 percent of these states’ securitized proceeds were allocated to 

budget shortfalls, and for fiscal year 2003, 66 percent were allocated 

for this purpose. Other areas to which these states allocated 

securitized proceeds included infrastructure, education and social 

services, and health.



Figure 2: States’ Allocations of Securitized MSA Proceeds, in Percents 

(Fiscal Years 2002 and 2003):



[See PDF for image] - graphic text:



[End of figure] - graphic text:



Notes: We did not obtain data on states’ allocations of securitized MSA 

proceeds for fiscal years 2000 and 2001.



Percentages may not total 100 due to rounding.



[A] The total allocation to tobacco control for fiscal year 2002 was 

0.04 percent.



About half of the 46 states indicated that they had made changes to the 

framework they use to make decisions related to MSA funds since 

fiscal year 2001. The change most frequently reported by the states was 

the passage of legislation affecting the use of MSA funds. States also 

reported other changes, including the establishment of new goals or 

changes in their requirements for the use of MSA funds, modifications 

to their methods of budgeting MSA funds, and variations in the use of 

dedicated funds, such as endowments or trusts.



Background:



Beginning in the mid 1990s, states and some localities sued tobacco 

companies, alleging that the industry had violated antitrust and 

consumer protection laws, withheld information about the adverse health 

effects of tobacco, manipulated nicotine levels to keep smokers 

addicted, and conspired to hold back less risky and less addictive 

tobacco products from the market. The states sought to obtain equitable 

relief and damages, including consumer protection and/or antitrust 

laws, in order to further the states’ policies regarding public health, 

including policies adopted to achieve a significant reduction in 

smoking by youth. During 1997 and 1998, four states--Florida, 

Minnesota, Mississippi, and Texas--settled their lawsuits with the 

tobacco industry by negotiating independent agreements. In November 

1998, four of the nation’s largest tobacco companies--Philip Morris 

Incorporated, R.J. Reynolds Tobacco Company, Brown & Williamson Tobacco 

Corporation, and Lorillard Tobacco Company (referred to as the 

“original participating manufacturers”)[Footnote 5]--negotiated an 

agreement with the attorneys general of the remaining 46 states, the 

District of Columbia, and the 5 U.S. territories, thereby settling a 

number of lawsuits brought by these parties against them. The terms of 

this agreement, known as the MSA, apply only to those tobacco companies 

and states that are party to the agreement. Under the MSA, the tobacco 

companies are required to provide monetary relief to the states in the 

form of annual payments and reimbursement for attorney fees. For 

additional information on the agreement, refer to our June 2001 report 

on the MSA.[Footnote 6]



Each state receives a share of the annual MSA payments made by tobacco 

companies based on a fixed percentage as agreed to in the MSA. Table 1 

shows each state’s share of annual MSA payments.





Table 1:  Percent Allocation of MSA Payments for 46 States:



State: Alabama; Percent: 1.6161308.



State: Alaska; Percent: 0.3414187.



State: Arizona; Percent: 1.4738845.



State: Arkansas; Percent: 0.8280661.



State: California; Percent: 12.7639554.



State: Colorado; Percent: 1.3708614.



State: Connecticut; Percent: 1.8565373.



State: Delaware; Percent: 0.3954695.



State: Georgia; Percent: 2.4544575.



State: Hawaii; Percent: 0.6018650.



State: Idaho; Percent: 0.3632632.



State: Illinois; Percent: 4.6542472.



State: Indiana; Percent: 2.0398033.



State: Iowa; Percent: 0.8696670.



State: Kansas; Percent: 0.8336712.



State: Kentucky; Percent: 1.7611586.



State: Louisiana; Percent: 2.2553531.



State: Maine; Percent: 0.7693505.



State: Maryland; Percent: 2.2604570.



State: Massachusetts; Percent: 4.0389790.



State: Michigan; Percent: 4.3519476.



State: Missouri; Percent: 2.2746011.



State: Montana; Percent: 0.4247591.



State: Nebraska; Percent: 0.5949833.



State: Nevada; Percent: 0.6099351.



State: New Hampshire; Percent: 0.6659340.



State: New Jersey; Percent: 3.8669963.



State: New Mexico; Percent: 0.5963897.



State: New York; Percent: 12.7620310.



State: North Carolina; Percent: 2.3322850.



State: North Dakota; Percent: 0.3660138.



State: Ohio; Percent: 5.0375098.



State: Oklahoma; Percent: 1.0361370.



State: Oregon; Percent: 1.1476582.



State: Pennsylvania; Percent: 5.7468588.



State: Rhode Island; Percent: 0.7189054.



State: South Carolina; Percent: 1.1763519.



State: South Dakota; Percent: 0.3489458.



State: Tennessee; Percent: 2.4408945.



State: Utah; Percent: 0.4448869.



State: Vermont; Percent: 0.4111851.



State: Virginia; Percent: 2.0447451.



State: Washington; Percent: 2.0532582.



State: West Virginia; Percent: 0.8864604.



State: Wisconsin; Percent: 2.0720390.



State: Wyoming; Percent: 0.2483449.



[End of table]



Source: Master Settlement Agreement.



The MSA does not impose any restrictions on how states use the payments 

they receive from the tobacco companies. As we reported in 2001, many 

states gave high priority to the use of MSA payments for health-related 

funding. During recent years, states have seen a decrease in their 

general revenues because of weaknesses in state tax collections and the 

stalled national economy while spending pressures have continued to 

mount. According to a recent report by the National Governors 

Association (NGA) and the National Association of State Budget Officers 

(NASBO), to help manage their fiscal year 2002 budget shortfalls, some 

states have turned to a variety of short-term solutions, including 

drawing from sources such as the MSA payments.



States Expect to Receive More Than $12 Billion in MSA Payments for 

Fiscal Years 2002 and 2003:



The 46 states party to the MSA received a total of about $6.2 billion 

during fiscal year 2002, and expect to receive an additional 

$6.2 billion for fiscal year 2003. These amounts are in addition to the 

$13.2 billion that states received through April 2001.[Footnote 7] The 

amount of payments that each state received in fiscal year 2002 ranged 

from about $19 million for Wyoming to over $400 million for 

California.[Footnote 8] Table 2 shows the amount of MSA payments each 

state reported receiving in fiscal year 2002 and the amount each state 

expects to receive in fiscal year 2003.



Table 2: Fiscal Year 2002 MSA Payments Received and Fiscal Year 2003 

Payments Expected by the 46 States:



State: Alabama; Actual fiscal year 2002

 MSA payments: $121,567,706; Expected fiscal year 2003

 MSA payments: $116,904,241.



State: Alaska; Actual fiscal year 2002

 MSA payments: 24,800,000; Expected fiscal year 2003

 MSA payments: 24,500,000.



State: Arizona; Actual fiscal year 2002

 MSA payments: 111,955,069; Expected fiscal year 2003

 MSA payments: 105,656,500.



State: Arkansas; Actual fiscal year 2002

 MSA payments: 62,180,504; Expected fiscal year 2003

 MSA payments: 63,149,680.



State: California; Actual fiscal year 2002

 MSA payments: 474,992,000[A]; Expected fiscal year 2003

 MSA payments: 474,400,000[A].



State: Colorado; Actual fiscal year 2002

 MSA payments: 100,304,008; Expected fiscal year 2003

 MSA payments: 103,757,361.



State: Connecticut; Actual fiscal year 2002

 MSA payments: 140,000,000; Expected fiscal year 2003

 MSA payments: 133,000,000.



State: Delaware; Actual fiscal year 2002

 MSA payments: 29,800,000; Expected fiscal year 2003

 MSA payments: 29,400,000.



State: Georgia; Actual fiscal year 2002

 MSA payments: 184,650,080; Expected fiscal year 2003

 MSA payments: 175,080,760.



State: Hawaii; Actual fiscal year 2002

 MSA payments: 43,751,843; Expected fiscal year 2003

 MSA payments: 50,508,337.



State: Idaho; Actual fiscal year 2002

 MSA payments: 26,397,202; Expected fiscal year 2003

 MSA payments: 26,953,192.



State: Illinois; Actual fiscal year 2002

 MSA payments: 312,276,311; Expected fiscal year 2003

 MSA payments: 295,190,266.



State: Indiana; Actual fiscal year 2002

 MSA payments: 149,200,000; Expected fiscal year 2003

 MSA payments: 150,800,000.



State: Iowa; Actual fiscal year 2002

 MSA payments: 63,537,410; Expected fiscal year 2003

 MSA payments: 63,080,096.



State: Kansas; Actual fiscal year 2002

 MSA payments: 60,998,554; Expected fiscal year 2003

 MSA payments: 56,000,000.



State: Kentucky; Actual fiscal year 2002

 MSA payments: 132,777,390; Expected fiscal year 2003

 MSA payments: 125,600,000.



State: Louisiana; Actual fiscal year 2002

 MSA payments: 165,021,020; Expected fiscal year 2003

 MSA payments: 163,196,404.



State: Maine; Actual fiscal year 2002

 MSA payments: 56,317,761; Expected fiscal year 2003

 MSA payments: 55,669,879.



State: Maryland; Actual fiscal year 2002

 MSA payments: 164,247,000; Expected fiscal year 2003

 MSA payments: 164,791,000.



State: Massachusetts; Actual fiscal year 2002

 MSA payments: 304,500,000; Expected fiscal year 2003

 MSA payments: 288,100,000.



State: Michigan; Actual fiscal year 2002

 MSA payments: 328,200,000; Expected fiscal year 2003

 MSA payments: 328,600,000.



State: Missouri; Actual fiscal year 2002

 MSA payments: 172,700,000; Expected fiscal year 2003

 MSA payments: 164,000,000.



State: Montana; Actual fiscal year 2002

 MSA payments: 31,079,018; Expected fiscal year 2003

 MSA payments: 31,605,000.



State: Nebraska; Actual fiscal year 2002

 MSA payments: 42,543,266; Expected fiscal year 2003

 MSA payments: 44,250,000.



State: Nevada; Actual fiscal year 2002

 MSA payments: 44,628,083; Expected fiscal year 2003

 MSA payments: 44,134,648.



State: New Hampshire; Actual fiscal year 2002

 MSA payments: 48,725,000; Expected fiscal year 2003

 MSA payments: 47,400,000.



State: New Jersey; Actual fiscal year 2002

 MSA payments: 283,872,000; Expected fiscal year 2003

 MSA payments: 275,198,000.



State: New Mexico; Actual fiscal year 2002

 MSA payments: 43,600,000; Expected fiscal year 2003

 MSA payments: 42,900,000.



State: New York; Actual fiscal year 2002

 MSA payments: 399,000,000[A]; Expected fiscal year 2003

 MSA payments: 500,000,000[A].



State: North Carolina; Actual fiscal year 2002

 MSA payments: 175,835,882; Expected fiscal year 2003

 MSA payments: 177,862,000.



State: North Dakota; Actual fiscal year 2002

 MSA payments: 26,780,712; Expected fiscal year 2003

 MSA payments: 26,536,441.



State: Ohio; Actual fiscal year 2002

 MSA payments: 368,587,515; Expected fiscal year 2003

 MSA payments: 372,700,000.



State: Oklahoma; Actual fiscal year 2002

 MSA payments: 75,872,921; Expected fiscal year 2003

 MSA payments: 74,778,992.



State: Oregon; Actual fiscal year 2002

 MSA payments: 86,524,314; Expected fiscal year 2003

 MSA payments: 84,950,966.



State: Pennsylvania; Actual fiscal year 2002

 MSA payments: 433,529,654; Expected fiscal year 2003

 MSA payments: 424,255,000.



State: Rhode Island; Actual fiscal year 2002

 MSA payments: 52,601,291; Expected fiscal year 2003

 MSA payments: 53,410,000.



State: South Carolina; Actual fiscal year 2002

 MSA payments: 86,078,586; Expected fiscal year 2003

 MSA payments: 85,128,014.



State: South Dakota; Actual fiscal year 2002

 MSA payments: 25,358,785; Expected fiscal year 2003

 MSA payments: 25,803,143.



State: Tennessee; Actual fiscal year 2002

 MSA payments: 180,705,600; Expected fiscal year 2003

 MSA payments: 170,000,000.



State: Utah; Actual fiscal year 2002

 MSA payments: 32,551,745; Expected fiscal year 2003

 MSA payments: 31,897,822.



State: Vermont; Actual fiscal year 2002

 MSA payments: 30,920,000; Expected fiscal year 2003

 MSA payments: 29,330,000.



State: Virginia; Actual fiscal year 2002

 MSA payments: 149,613,891; Expected fiscal year 2003

 MSA payments: 151,354,360.



State: Washington; Actual fiscal year 2002

 MSA payments: 150,000,000; Expected fiscal year 2003

 MSA payments: 149,000,000.



State: West Virginia; Actual fiscal year 2002

 MSA payments: 64,861,064; Expected fiscal year 2003

 MSA payments: 74,392,000.



State: Wisconsin; Actual fiscal year 2002

 MSA payments: 156,215,304; Expected fiscal year 2003

 MSA payments: 157,602,800.



State: Wyoming; Actual fiscal year 2002

 MSA payments: 18,735,007; Expected fiscal year 2003

 MSA payments: 12,789,960.



State: Total; Actual fiscal year 2002

 MSA payments: $6,238,393,496; Expected fiscal year 2003

 MSA payments: $6,245,616,862.



[End of table]



Source: State budget offices.



[A] The amounts of MSA payments received and expected by New York and 

California do not include MSA payments made to the counties and cities 

within those states.



In addition to MSA payments received, 12 of the 46 states also received 

$10.6 billion for fiscal years 2002 and 2003 by issuing bonds backed by 

all or a portion of their future MSA payments in return for an upfront 

payment (a process commonly known as “securitization”).[Footnote 9] 

Ten states reported securitizing all or a portion of their MSA payments 

for the first time in fiscal years 2002 or 2003, and Alabama and Alaska 

securitized additional MSA payments.[Footnote 10] Figure 3 shows the 

MSA states that have received securitized proceeds. Table 3 shows the 

amounts of securitized proceeds that the 12 states received for 

fiscal years 2002 and 2003. During the course of our study, we learned 

that other states, such as Illinois, Missouri, and Virginia are 

currently considering the use of securitization in the future.



Figure 3: MSA States that Have Received Securitized Proceeds and Those 

that Have Not (Fiscal Years 2000-2003):



[See PDF for image] - graphic text:



[End of figure] - graphic text:



Note: Alabama and Alaska initially securitized a portion of their MSA 

payments in fiscal years 2000 and 2001, and securitized additional 

payments in fiscal year 2002. South Carolina securitized all of its MSA 

payments in fiscal year 2001. Ten other states securitized all or a 

portion of their MSA payments for the first time in fiscal years 2002 

or 2003.



Table 3: Securitized Proceeds Received by 12 States for Fiscal Years 

2002 and 2003:



State: Alabama; Fiscal year 2002

 securitized proceeds: $103,760,000; Fiscal year 2003

 securitized proceeds: $0.



State: Alaska; Fiscal year 2002

 securitized proceeds: 110,000,000; Fiscal year 2003

 securitized proceeds: 0.



State: Arkansas; Fiscal year 2002

 securitized proceeds: 58,268,549; Fiscal year 2003

 securitized proceeds: 0.



State: California; Fiscal year 2002

 securitized proceeds: 0; Fiscal year 2003

 securitized proceeds: 4,500,000,000.



State: Iowa; Fiscal year 2002

 securitized proceeds: 579,596,212; Fiscal year 2003

 securitized proceeds: 0.



State: Louisiana; Fiscal year 2002

 securitized proceeds: 1,069,510,894; Fiscal year 2003

 securitized proceeds: 0.



State: New Jersey; Fiscal year 2002

 securitized proceeds: 0; Fiscal year 2003

 securitized proceeds: 1,488,141,494.



State: Oregon; Fiscal year 2002

 securitized proceeds: 0; Fiscal year 2003

 securitized proceeds: 150,000,000.



State: Rhode Island; Fiscal year 2002

 securitized proceeds: 544,238,410; Fiscal year 2003

 securitized proceeds: 0.



State: South Dakota; Fiscal year 2002

 securitized proceeds: 0; Fiscal year 2003

 securitized proceeds: 243,596,553.



State: Washington; Fiscal year 2002

 securitized proceeds: 0; Fiscal year 2003

 securitized proceeds: 450,000,000.



State: Wisconsin; Fiscal year 2002

 securitized proceeds: 1,275,002,400; Fiscal year 2003

 securitized proceeds: 0.



State: Total; Fiscal year 2002

 securitized proceeds: $3,740,376,465; Fiscal year 2003

 securitized proceeds: $6,831,738,047.



[End of table]



Source: State budget offices.



States’ Allocations of MSA Payments Changed Since 2001:



For fiscal years 2002 and 2003, the program categories to which states 

allocated MSA and securitized MSA funds varied and had changed somewhat 

from the allocations made in fiscal years 2000 and 2001. We found that 

MSA payments that were not securitized were primarily allocated by the 

46 states to health-related programs. In contrast, the 12 states that 

securitized some or all of their MSA payments generally allocated these 

funds to cover budget shortfalls and finance infrastructure 

development.



In fiscal years 2002 and 2003, states reported that they had allocated 

$7.2 billion and $6.5 billion, respectively, of their MSA payments. In 

addition, states allocated $4.5 billion and $7.0 billion of securitized 

MSA proceeds for fiscal years 2002 and 2003, respectively. These 

amounts exceed the actual MSA payments and securitized proceeds that 

states received for these two years primarily because the amounts 

include carry-over funds from prior years and the interest earned on 

these funds.



Our analysis of states’ use of MSA payments (those funds that have not 

been securitized) shows that the largest amount of funds was allocated 

to health-related programs. For fiscal year 2002, 48 percent of MSA 

payments was allocated to health care programs, such as Medicaid, 

Children’s Health Insurance Program, state immunization programs, and 

cancer research and prevention, and for fiscal year 2003, states 

allocated 51 percent of the payments they expect to receive to these 

programs. This allocation is up from 41 percent for fiscal years 2000 

and 2001. Other major areas to which funds were allocated included 

budget shortfalls (14 percent for fiscal year 2002 and 15 percent for 

fiscal year 2003); education and social services, such as substance 

abuse treatment and intervention plans, child care management, and pre-

school and scholarship programs (10 percent for both years); and 

general purposes and reserves (10 percent for fiscal year 2002 and 

9 percent for fiscal year 2003). In addition, states allocated about 

5 percent of their payments to tobacco control programs for both years-

-such as tobacco prevention, cessation, and education programs, 

reducing tobacco sales to minors, and tobacco prevention and cessation 

grants. This allocation is down from the 7 percent allocated by the 

states for fiscal years 2000 and 2001. However, as we reported in 2001, 

states do not solely rely on MSA payments to fund tobacco control 

programs. Some states fund tobacco control programs from other sources, 

such as cigarette excise taxes. Tables 4 and 5 show the percentage of 

each state’s individual allocation of MSA payments to various program 

categories for fiscal years 2002 and 2003, respectively. (See app. I 

for definitions of the program categories and a description of 

our methodology.):



Table 4: Allocations of MSA Payments by Category, Fiscal Year 2002:



State: Alabama; Budget shortfall: 0.0; Tobacco control: 0.6; Assistance 

to tobacco growers and economic development: 0.0; Health: 47.2; 

Education and social services: 35.5; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 16.7; Unallocated: 0.0.



State: Alaska; Budget shortfall: 0.0; Tobacco control: 51.1; Assistance 

to tobacco growers and economic development: 0.0; Health: 8.5; 

Education and social services: 0.0; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 40.4.



State: Arizona; Budget shortfall: 0.0; Tobacco control: 0.0; Assistance 

to tobacco growers and economic development: 0.0; Health: 100.0; 

Education and social services: 0.0; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Arkansas; Budget shortfall: 0.0; Tobacco control: 31.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

69.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: California; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

84.9; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 15.1; Unallocated: 0.0.



State: Colorado; Budget shortfall: 70.7; Tobacco control: 4.7; 

Assistance to tobacco growers and economic development: 0.0; Health: 

15.8; Education and social services: 8.8; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.1; Unallocated: 0.0.



State: Connecticut; Budget shortfall: 0.0; Tobacco control: 12.3; 

Assistance to tobacco growers and economic development: 0.0; Health: 

2.8; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 84.9; Unallocated: 0.0.



State: Delaware; Budget shortfall: 0.0; Tobacco control: 16.4; 

Assistance to tobacco growers and economic development: 0.0; Health: 

68.7; Education and social services: 1.1; Tax reduc-tions: 0.0; 

Infrastruc-ture: 13.1; General purposes/

reserves: 0.6; Unallocated: 0.0.



State: Georgia; Budget shortfall: 0.0; Tobacco control: 14.3; 

Assistance to tobacco growers and economic development: 19.8; Health: 

61.8; Education and social services: 4.1; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Hawaii; Budget shortfall: 0.0; Tobacco control: 24.8; Assistance 

to tobacco growers and economic development: 0.0; Health: 34.7; 

Education and social services: 0.0; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 40.5; Unallocated: 0.0.



State: Idaho; Budget shortfall: 66.3; Tobacco control: 3.5; Assistance 

to tobacco growers and economic development: 0.0; Health: 2.9; 

Education and social services: 3.2; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 24.2.



State: Illinois; Budget shortfall: 0.0; Tobacco control: 15.3; 

Assistance to tobacco growers and economic development: 0.0; Health: 

51.3; Education and social services: 0.8; Tax reduc-tions: 11.2; 

Infrastruc-ture: 7.0; General purposes/

reserves: 1.8; Unallocated: 12.6.



State: Indiana; Budget shortfall: 0.0; Tobacco control: 13.0; 

Assistance to tobacco growers and economic development: 2.0; Health: 

23.7; Education and social services: 6.5; Tax reduc-tions: 0.0; 

Infrastruc-ture: 5.5; General purposes/

reserves: 0.0; Unallocated: 49.4.



State: Iowa; Budget shortfall: 0.0; Tobacco control: 0.0; Assistance to 

tobacco growers and economic development: 0.0; Health: 100.0; Education 

and social services: 0.0; Tax reduc-tions: 0.0; Infrastruc-ture: 0.0; 

General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Kansas; Budget shortfall: 0.0; Tobacco control: 0.8; Assistance 

to tobacco growers and economic development: 0.0; Health: 3.3; 

Education and social services: 61.5; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 16.4; Unallocated: 18.0.



State: Kentucky; Budget shortfall: 22.4; Tobacco control: 4.2; 

Assistance to tobacco growers and economic development: 40.9; Health: 

20.8; Education and social services: 10.2; Tax reduc-tions: 0.0; 

Infrastruc-ture: 1.5; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Louisiana; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

54.5; Education and social services: 45.5; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Maine; Budget shortfall: 17.5; Tobacco control: 20.8; Assistance 

to tobacco growers and economic development: 0.0; Health: 33.7; 

Education and social services: 28.0; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 0.1; Unallocated: 0.0.



State: Maryland; Budget shortfall: 0.0; Tobacco control: 5.5; 

Assistance to tobacco growers and economic development: 2.0; Health: 

11.5; Education and social services: 19.4; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 9.7; Unallocated: 51.8.



State: Massachusetts; Budget shortfall: 0.0; Tobacco control: 2.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

80.3; Education and social services: 3.5; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 14.3.



State: Michigan; Budget shortfall: 32.3; Tobacco control: 0.4; 

Assistance to tobacco growers and economic development: 0.0; Health: 

27.5; Education and social services: 30.1; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 9.7.



State: Missouri; Budget shortfall: 36.2; Tobacco control: 0.2; 

Assistance to tobacco growers and economic development: 0.0; Health: 

60.4; Education and social services: 2.5; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.7; Unallocated: 0.0.



State: Montana; Budget shortfall: 0.0; Tobacco control: 1.6; Assistance 

to tobacco growers and economic development: 0.0; Health: 40.0; 

Education and social services: 0.0; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 58.4; Unallocated: 0.0.



State: Nebraska; Budget shortfall: 0.0; Tobacco control: 16.5; 

Assistance to tobacco growers and economic development: 0.0; Health: 

44.2; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 39.3.



State: Nevada; Budget shortfall: 0.0; Tobacco control: 12.0; Assistance 

to tobacco growers and economic development: 0.0; Health: 35.1; 

Education and social services: 52.4; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 0.5; Unallocated: 0.0.



State: New Hampshire; Budget shortfall: 0.0; Tobacco control: 6.4; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 85.1; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 8.5; Unallocated: 0.0.



State: New Jersey; Budget shortfall: 0.0; Tobacco control: 8.2; 

Assistance to tobacco growers and economic development: 0.0; Health: 

72.5; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 19.3; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: New Mexico; Budget shortfall: 0.0; Tobacco control: 13.4; 

Assistance to tobacco growers and economic development: 0.0; Health: 

16.6; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 50.0; Unallocated: 20.0.



State: New York; Budget shortfall: 0.0; Tobacco control: 10.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

90.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: North Carolina; Budget shortfall: 36.4; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 56.8; Health: 

6.8; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: North Dakota; Budget shortfall: 0.0; Tobacco control: 8.7; 

Assistance to tobacco growers and economic development: 0.0; Health: 

1.2; Education and social services: 44.7; Tax reduc-tions: 0.0; 

Infrastruc-ture: 45.4; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Ohio; Budget shortfall: 77.3; Tobacco control: 0.2; Assistance 

to tobacco growers and economic development: 5.0; Health: 7.7; 

Education and social services: 5.1; Tax reduc-tions: 0.0; Infrastruc-

ture: 4.5; General purposes/

reserves: 0.3; Unallocated: 0.0.



State: Oklahoma; Budget shortfall: 0.0; Tobacco control: 25.4; 

Assistance to tobacco growers and economic development: 0.0; Health: 

59.8; Education and social services: 13.1; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 1.7; Unallocated: 0.0.



State: Oregon; Budget shortfall: 0.0; Tobacco control: 0.0; Assistance 

to tobacco growers and economic development: 0.0; Health: 0.0; 

Education and social services: 57.4; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 42.6; Unallocated: 0.0.



State: Pennsylvania; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

100.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Rhode Island; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 100.0; Unallocated: 0.0.



State: South Carolina[A]; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: South Dakota; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 100.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Tennessee; Budget shortfall: 100.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Utah; Budget shortfall: 0.0; Tobacco control: 12.0; Assistance 

to tobacco growers and economic development: 0.0; Health: 34.0; 

Education and social services: 5.9; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 48.1; Unallocated: 0.0.



State: Vermont; Budget shortfall: 0.0; Tobacco control: 21.4; 

Assistance to tobacco growers and economic development: 0.0; Health: 

53.6; Education and social services: 4.6; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 20.4; Unallocated: 0.0.



State: Virginia; Budget shortfall: 0.0; Tobacco control: 10.0; 

Assistance to tobacco growers and economic development: 50.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 40.0; Unallocated: 0.0.



State: Washington; Budget shortfall: 0.0; Tobacco control: 10.5; 

Assistance to tobacco growers and economic development: 0.0; Health: 

86.6; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 3.0.



State: West Virginia; Budget shortfall: 0.0; Tobacco control: 8.3; 

Assistance to tobacco growers and economic development: 0.0; Health: 

91.7; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Wisconsin; Budget shortfall: 0.0; Tobacco control: 3.9; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 96.1; Unallocated: 0.0.



State: Wyoming; Budget shortfall: 0.0; Tobacco control: 4.6; Assistance 

to tobacco growers and economic development: 0.0; Health: 95.4; 

Education and social services: 0.0; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Total state allocations; Budget shortfall: 14.4; Tobacco 

control: 5.2; Assistance to tobacco growers and economic development: 

4.1; Health: 48.0; Education and social services: 9.6; Tax reduc-tions: 

0.5; Infrastruc-ture: 2.0; General purposes/

reserves: 9.8; Unallocated: 6.5.



State: Total number of states; Budget shortfall: 9; Tobacco control: 

35; Assistance to tobacco growers and economic development: 7; Health: 

38; Education and social services: 24; Tax reduc-tions: 1; Infrastruc-

ture: 7; General purposes/

reserves: 23; Unallocated: 11.



[End of table]



Source: State budget offices (data), GAO (analysis).



Note: Percentages may not total 100 due to rounding.



[A] South Carolina used all of its MSA payments for fiscal year 2002 to 

service the debt on the bonds issued when the state securitized its MSA 

payments in fiscal year 2001.



Table 5: Allocations of MSA Payments by Category, Fiscal Year 2003:



State: Alabama; Budget shortfall: 0.0; Tobacco control: 0.6; Assistance 

to tobacco growers and economic development: 0.0; Health: 47.2; 

Education and social services: 35.5; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 16.7; Unallocated: 0.0.



State: Alaska; Budget shortfall: 0.0; Tobacco control: 73.8; Assistance 

to tobacco growers and economic development: 0.0; Health: 8.2; 

Education and social services: 0.0; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 18.0; Unallocated: 0.0.



State: Arizona; Budget shortfall: 0.0; Tobacco control: 0.0; Assistance 

to tobacco growers and economic development: 0.0; Health: 100.0; 

Education and social services: 0.0; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Arkansas; Budget shortfall: 0.0; Tobacco control: 31.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

69.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: California; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

100.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Colorado; Budget shortfall: 0.0; Tobacco control: 20.6; 

Assistance to tobacco growers and economic development: 0.0; Health: 

33.8; Education and social services: 16.5; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 23.9; Unallocated: 5.3.



State: Connecticut; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 100.0; Unallocated: 0.0.



State: Delaware; Budget shortfall: 0.0; Tobacco control: 16.4; 

Assistance to tobacco growers and economic development: 0.0; Health: 

81.5; Education and social services: 1.4; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.6; Unallocated: 0.0.



State: Georgia; Budget shortfall: 0.0; Tobacco control: 8.8; Assistance 

to tobacco growers and economic development: 37.8; Health: 49.3; 

Education and social services: 4.1; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Hawaii; Budget shortfall: 0.0; Tobacco control: 12.4; Assistance 

to tobacco growers and economic development: 0.0; Health: 34.8; 

Education and social services: 0.0; Tax reduc-tions: 0.0; Infrastruc-

ture: 27.8; General purposes/

reserves: 25.0; Unallocated: 0.0.



State: Idaho; Budget shortfall: 32.8; Tobacco control: 4.2; Assistance 

to tobacco growers and economic development: 0.0; Health: 6.2; 

Education and social services: 1.4; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 55.5.



State: Illinois; Budget shortfall: 0.0; Tobacco control: 4.9; 

Assistance to tobacco growers and economic development: 0.0; Health: 

64.9; Education and social services: 1.2; Tax reduc-tions: 27.4; 

Infrastruc-ture: 1.1; General purposes/

reserves: 0.5; Unallocated: 0.0.



State: Indiana; Budget shortfall: 0.0; Tobacco control: 11.3; 

Assistance to tobacco growers and economic development: 2.3; Health: 

35.1; Education and social services: 15.1; Tax reduc-tions: 0.0; 

Infrastruc-ture: 6.8; General purposes/

reserves: 0.0; Unallocated: 29.4.



State: Iowa; Budget shortfall: 0.0; Tobacco control: 0.0; Assistance to 

tobacco growers and economic development: 0.0; Health: 100.0; Education 

and social services: 0.0; Tax reduc-tions: 0.0; Infrastruc-ture: 0.0; 

General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Kansas; Budget shortfall: 0.0; Tobacco control: 0.9; Assistance 

to tobacco growers and economic development: 0.0; Health: 3.5; 

Education and social services: 76.7; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 9.5; Unallocated: 9.4.



State: Kentucky; Budget shortfall: 0.0; Tobacco control: 4.6; 

Assistance to tobacco growers and economic development: 45.1; Health: 

37.5; Education and social services: 7.9; Tax reduc-tions: 0.0; 

Infrastruc-ture: 4.9; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Louisiana; Budget shortfall: 0.0; Tobacco control: 0.4; 

Assistance to tobacco growers and economic development: 0.0; Health: 

51.4; Education and social services: 48.3; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Maine; Budget shortfall: 40.3; Tobacco control: 17.7; Assistance 

to tobacco growers and economic development: 0.0; Health: 23.4; 

Education and social services: 18.6; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 0.1; Unallocated: 0.0.



State: Maryland; Budget shortfall: 0.8; Tobacco control: 10.7; 

Assistance to tobacco growers and economic development: 2.1; Health: 

51.5; Education and social services: 11.2; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 14.7; Unallocated: 9.0.



State: Massachusetts; Budget shortfall: 45.9; Tobacco control: 0.9; 

Assistance to tobacco growers and economic development: 0.0; Health: 

38.0; Education and social services: 4.3; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 10.9.



State: Michigan; Budget shortfall: 26.2; Tobacco control: 0.5; 

Assistance to tobacco growers and economic development: 0.0; Health: 

31.4; Education and social services: 38.2; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.1; Unallocated: 3.6.



State: Missouri; Budget shortfall: 53.7; Tobacco control: 0.3; 

Assistance to tobacco growers and economic development: 0.0; Health: 

44.5; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 1.5; Unallocated: 0.0.



State: Montana; Budget shortfall: 0.0; Tobacco control: 1.6; Assistance 

to tobacco growers and economic development: 0.0; Health: 40.0; 

Education and social services: 0.0; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 58.4; Unallocated: 0.0.



State: Nebraska; Budget shortfall: 0.0; Tobacco control: 15.8; 

Assistance to tobacco growers and economic development: 0.0; Health: 

48.5; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 35.7.



State: Nevada; Budget shortfall: 0.0; Tobacco control: 10.7; Assistance 

to tobacco growers and economic development: 0.0; Health: 30.1; 

Education and social services: 58.6; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 0.6; Unallocated: 0.0.



State: New Hampshire; Budget shortfall: 0.0; Tobacco control: 6.3; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 84.4; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 9.3; Unallocated: 0.0.



State: New Jersey; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

98.2; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 1.8; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: New Mexico; Budget shortfall: 0.0; Tobacco control: 12.5; 

Assistance to tobacco growers and economic development: 0.0; Health: 

41.3; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 46.2; Unallocated: 0.0.



State: New York; Budget shortfall: 0.0; Tobacco control: 8.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

92.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: North Carolina; Budget shortfall: 43.9; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 56.2; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: North Dakota; Budget shortfall: 0.0; Tobacco control: 8.8; 

Assistance to tobacco growers and economic development: 0.0; Health: 

1.2; Education and social services: 44.5; Tax reduc-tions: 0.0; 

Infrastruc-ture: 45.6; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Ohio; Budget shortfall: 75.9; Tobacco control: 0.2; Assistance 

to tobacco growers and economic development: 4.5; Health: 2.3; 

Education and social services: 5.1; Tax reduc-tions: 0.0; Infrastruc-

ture: 11.9; General purposes/

reserves: 0.2; Unallocated: 0.0.



State: Oklahoma; Budget shortfall: 0.0; Tobacco control: 27.2; 

Assistance to tobacco growers and economic development: 0.0; Health: 

44.8; Education and social services: 26.8; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 1.3; Unallocated: 0.0.



State: Oregon; Budget shortfall: 0.0; Tobacco control: 0.0; Assistance 

to tobacco growers and economic development: 0.0; Health: 2.6; 

Education and social services: 97.5; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Pennsylvania; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

100.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Rhode Island; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 100.0; Unallocated: 0.0.



State: South Carolina[A]; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: South Dakota; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 100.0; Unallocated: 0.0.



State: Tennessee; Budget shortfall: 100.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Utah; Budget shortfall: 50.3; Tobacco control: 11.5; Assistance 

to tobacco growers and economic development: 0.0; Health: 32.5; 

Education and social services: 5.7; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Vermont; Budget shortfall: 0.0; Tobacco control: 30.1; 

Assistance to tobacco growers and economic development: 0.0; Health: 

55.9; Education and social services: 2.6; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 11.4; Unallocated: 0.0.



State: Virginia; Budget shortfall: 0.0; Tobacco control: 10.0; 

Assistance to tobacco growers and economic development: 50.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 40.0; Unallocated: 0.0.



State: Washington; Budget shortfall: 0.0; Tobacco control: 10.5; 

Assistance to tobacco growers and economic development: 0.0; Health: 

67.2; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 22.3.



State: West Virginia; Budget shortfall: 0.0; Tobacco control: 7.8; 

Assistance to tobacco growers and economic development: 0.0; Health: 

92.2; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Wisconsin; Budget shortfall: 0.0; Tobacco control: 9.7; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 90.3; Unallocated: 0.0.



State: Wyoming; Budget shortfall: 0.0; Tobacco control: 19.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

19.0; Education and social services: 62.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Total state allocations; Budget shortfall: 14.5; Tobacco 

control: 5.1; Assistance to tobacco growers and economic development: 

5.0; Health: 50.7; Education and social services: 9.8; Tax reduc-tions: 

1.4; Infrastruc-ture: 1.5; General purposes/

reserves: 8.6; Unallocated: 3.5.



State: Total number of states; Budget shortfall: 10; Tobacco control: 

34; Assistance to tobacco growers and economic development: 7; Health: 

37; Education and social services: 23; Tax reduc-tions: 1; Infrastruc-

ture: 7; General purposes/

reserves: 23; Unallocated: 9.



[End of table]



Source: State budget offices (data), GAO (analysis).



Note: Percentages may not total 100 due to rounding.



[A] South Carolina used all of its MSA payments for fiscal year 2003 to 

service the debt on the bonds issued when the state securitized its MSA 

payments in fiscal year 2001.



Our analysis of states’ use of securitized MSA proceeds shows that the 

category to which the largest amount of funds were allocated was budget 

shortfalls--31 percent for fiscal year 2002 and 66 percent for fiscal 

year 2003.[Footnote 11] Other major areas for which securitized 

proceeds were used included the following: infrastructure, such as 

school construction and the retirement of state infrastructure debt 

(24 percent for fiscal year 2002 and 18 percent for fiscal year 2003); 

education and social services, such as state aid for public schools and 

trust funds for education purposes (16 percent for fiscal year 2002 and 

6 percent for fiscal year 2003); and health, such as trust funds for 

health purposes (21 percent for fiscal year 2002). Tables 6 and 7 show 

the percentage of each state’s individual allocation of securitized 

proceeds to the nine program categories for fiscal years 2002 and 2003, 

respectively. (See appendix I for definitions of the program categories 

and a description of our methodology.):



Table 6: Allocations of Securitized MSA Proceeds by Category, Fiscal 

Year 2002:



State: Alabama; Budget shortfall: 0.0; Tobacco control: 0.0; Assistance 

to tobacco growers and economic development: 0.0; Health: 0.0; 

Education and social services: 0.0; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 100.0; Unallocated: 0.0.



State: Alaska; Budget shortfall: 0.0; Tobacco control: 0.0; Assistance 

to tobacco growers and economic development: 0.0; Health: 0.0; 

Education and social services: 0.0; Tax reduc-tions: 0.0; Infrastruc-

ture: 100.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Arkansas; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 100.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: California; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Iowa; Budget shortfall: 0.0; Tobacco control: 0.0; Assistance to 

tobacco growers and economic development: 0.0; Health: 6.8; Education 

and social services: 0.0; Tax reduc-tions: 0.0; Infrastruc-ture: 93.2; 

General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Louisiana; Budget shortfall: 0.0; Tobacco control: 0.0[A]; 

Assistance to tobacco growers and economic development: 0.0; Health: 

32.9; Education and social services: 67.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: New Jersey; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Oregon; Budget shortfall: 0.0; Tobacco control: 0.0; Assistance 

to tobacco growers and economic development: 0.0; Health: 0.0; 

Education and social services: 0.0; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Rhode Island; Budget shortfall: 24.8; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 54.2; General purposes/

reserves: 0.0; Unallocated: 21.0.



State: South Carolina; Budget shortfall: 0.0; Tobacco control: 0.2; 

Assistance to tobacco growers and economic development: 14.9; Health: 

73.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 11.9; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: South Dakota; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Washington; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Wisconsin; Budget shortfall: 100.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

reserves: 0.0; Unallocated: 0.0.



State: Total state allocations; Budget shortfall: 31.2; Tobacco 

control: 0.0[B]; Assistance to tobacco growers and economic 

development: 2.6; Health: 21.5; Education and social services: 15.9; 

Tax reduc-tions: 0.0; Infrastruc-ture: 23.9; General purposes/

reserves: 2.3; Unallocated: 2.5.



State: Total number of states; Budget shortfall: 2; Tobacco control: 2; 

Assistance to tobacco growers and economic development: 1; Health: 3; 

Education and social services: 1; Tax reduc-tions: 0; Infrastruc-ture: 

5; General purposes/

reserves: 1; Unallocated: 1.



[End of table]



Source: State budget offices (data), GAO (analysis).



Note: Percentages may not total 100 due to rounding.



[A] Louisiana’s allocation for tobacco control was 0.03 percent.



[B] The total state allocation for tobacco control was 0.04 percent.



Table 7: Allocations of Securitized MSA Proceeds by Category, Fiscal 

Year 2003:



State: Alabama; Budget shortfall: 0.0; Tobacco control: 0.0; Assistance 

to tobacco growers and economic development: 0.0; Health: 0.0; 

Education and social services: 0.0; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

 reserves: 0.0; Unallocated: 0.0.



State: Alaska; Budget shortfall: 0.0; Tobacco control: 0.0; Assistance 

to tobacco growers and economic development: 0.0; Health: 0.0; 

Education and social services: 0.0; Tax reduc-tions: 0.0; Infrastruc-

ture: 100.0; General purposes/

 reserves: 0.0; Unallocated: 0.0.



State: Arkansas; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

 reserves: 0.0; Unallocated: 0.0.



State: California; Budget shortfall: 100.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

 reserves: 0.0; Unallocated: 0.0.



State: Iowa; Budget shortfall: 0.0; Tobacco control: 0.0; Assistance to 

tobacco growers and economic development: 0.0; Health: 0.0; Education 

and social services: 0.0; Tax reduc-tions: 0.0; Infrastruc-ture: 0.0; 

General purposes/

 reserves: 0.0; Unallocated: 0.0.



State: Louisiana; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

 reserves: 0.0; Unallocated: 0.0.



State: New Jersey; Budget shortfall: 9.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 2.3; Tax reduc-tions: 0.0; 

Infrastruc-ture: 46.5; General purposes/

 reserves: 14.5; Unallocated: 27.8.



State: Oregon; Budget shortfall: 0.0; Tobacco control: 0.0; Assistance 

to tobacco growers and economic development: 0.0; Health: 0.0; 

Education and social services: 100.0; Tax reduc-tions: 0.0; Infrastruc-

ture: 0.0; General purposes/

 reserves: 0.0; Unallocated: 0.0.



State: Rhode Island; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

 reserves: 100.0; Unallocated: 0.0.



State: South Carolina; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

 reserves: 0.0; Unallocated: 0.0.



State: South Dakota; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 100.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

 reserves: 0.0; Unallocated: 0.0.



State: Washington; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 100.0; General purposes/

 reserves: 0.0; Unallocated: 0.0.



State: Wisconsin; Budget shortfall: 0.0; Tobacco control: 0.0; 

Assistance to tobacco growers and economic development: 0.0; Health: 

0.0; Education and social services: 0.0; Tax reduc-tions: 0.0; 

Infrastruc-ture: 0.0; General purposes/

 reserves: 0.0; Unallocated: 0.0.



State: Total state allocations; Budget shortfall: 66.0; Tobacco 

control: 0.0; Assistance to tobacco growers and economic development: 

0.0; Health: 0.0; Education and social services: 6.1; Tax reduc-tions: 

0.0; Infrastruc-ture: 17.8; General purposes/

 reserves: 4.3; Unallocated: 5.9.



State: Total number of states; Budget shortfall: 2; Tobacco control: 0; 

Assistance to tobacco growers and economic development: 0; Health: 0; 

Education and social services: 3; Tax reduc-tions: 0; Infrastruc-ture: 

3; General purposes/

 reserves: 2; Unallocated: 1.



[End of table]



Source: State budget offices (data), GAO (analysis).



Note: Percentages may not total 100 due to rounding.



Some States Changed the Way They Allocate MSA Payments:



Since we last reported on this issue, about half of the 46 states 

indicated that they had made some changes to the framework they use to 

make decisions related to MSA funds. The most widely reported change 

among the states was the passage of legislation affecting the use of 

MSA funds. For example, six states--Alaska, Illinois, Iowa, Missouri, 

Virginia, and Washington--passed legislation authorizing the 

securitization of future MSA payments. Some states also indicated that 

they had established new goals or changed their requirements for the 

use of MSA funds. For example, Hawaii and California either changed 

the percentage of MSA funds that could be used for specific purposes or 

restricted MSA expenditures for designated purposes, such as tobacco 

control or health care. In addition, Wyoming created a Substance Abuse 

Treatment Plan from its MSA payments. The creation of this plan 

decreased the state’s allocation of MSA payments into its trust fund 

currently earmarked for future health and tobacco prevention spending 

and redirected these funds for substance abuse efforts in the state. 

Moreover, several states reported that they had made certain changes in 

their method of budgeting MSA funds since fiscal year 2001. For 

example, 14 states reported that they had either increased or decreased 

their use of dedicated funds, such as endowments or trusts. Of these 14 

states, 10 reported a decrease in their use of dedicated funds, with 7 

states making transfers from trust funds to their general fund. Two of 

the states indicated that these transfers were made to cover budget 

shortfalls.



We are sending copies of this letter to interested congressional 

committees and others upon request. The letter is also available on the 

GAO Web site at http://www.gao.gov. Please call me at (202) 512-3841 if 

you or your staff have any questions concerning this report. Major 

contributors to this report are listed in appendix IV.



Anu K. Mittal

Acting Director, Natural Resources and Environment:

Signed by Anu K. Mittal:





List of Requesters:



The Honorable Thad Cochran

Chairman, Committee on Agriculture, Nutrition, 

  and Forestry

United States Senate:



The Honorable Tom Harkin

Ranking Democratic Member, Committee on Agriculture, Nutrition, 

  and Forestry

United States Senate:



The Honorable Robert Goodlatte

Chairman, Committee on Agriculture

House of Representatives:



The Honorable Charles Stenholm

Ranking Minority Member, Committee on Agriculture

House of Representatives:



The Honorable Jim Bunning

United States Senate:





[End of section]



Appendixes:



Appendix I: Objectives, Scope, and Methodology:



The Farm Security and Rural Investment Act of 2002 (2002 Farm Bill) 

requires GAO to report annually on the amount of MSA payments states 

receive and how they use these payments for the years 2002 through 

2006. This report is the second in a series of reports responding to 

the 2002 Farm Bill requirement. On December 3, 2002, we issued a report 

entitled Tobacco Settlement: States’ Allocations of Phase II Funds 

(GAO-03-262R) that provides information on the National Tobacco Grower 

Settlement Trust (commonly referred to as the Phase II agreement). GAO 

also previously reported on states’ receipt and use of MSA payments for 

fiscal years 2000 and 2001 in a June 2001 report entitled Tobacco 

Settlement: States’ Use of Master Settlement Agreement Payments (GAO-

01-851).



To respond to the Farm Bill requirements, the objectives of this study 

were to provide information on the (1) amount of payments received by 

the 46 states party to the MSA during fiscal year 2002 and the amount 

of payments these states expect to receive during fiscal year 2003; 

(2) states’ allocations of MSA funds to various program categories for 

fiscal years 2002 and 2003 and changes in these allocations from prior 

years; and (3) changes in states’ decision-making frameworks for MSA 

funds since fiscal year 2001.



To address these objectives, we surveyed the executive budget offices 

in each of the 46 states party to the MSA. In addition, we obtained and 

reviewed fiscal year 2002 MSA disbursements data provided by the 

National Association of Attorneys General and,[Footnote 12] for some 

states, budget-related and legislative documents. We also reviewed 

previous GAO reports and other relevant studies, and we spoke with 

representatives from some of the organizations conducting these 

studies. Throughout this report, information on fiscal years 2000 and 

2001 MSA receipts and allocations is based on our June 2001 report. The 

2001 report’s methodology primarily consisted of GAO’s analysis of 

state budget-related and legislative documents and interviews of state 

budget office officials. We conducted our work from July 2002 through 

December 2002 in accordance with generally accepted government auditing 

standards.



Our study focuses on the states’ shares of MSA payments and does not 

include information on California and New York counties’ and cities’ 

allocations of MSA payments.[Footnote 13] In addition, we did not 

collect information on MSA payments made to the District of Columbia or 

the five U.S. territories that are also party to the MSA.



Because we completed our fieldwork in December 2002, before states 

received their fiscal year 2003 payments, we were unable to obtain 

final information on the actual MSA payments states received during 

fiscal year 2003. Consequently, we obtained information on states’ 

expected fiscal year 2003 MSA payments.



Survey Methodology and Categorization of States’ Allocations:



We pretested a survey in five state budget offices.[Footnote 14] Three 

of the pretested states have securitized a portion of their MSA 

payments. For each pretest, we sent the survey to the state budget 

office and asked a designated budget official to complete the survey 

and provide any information on problems or complications encountered 

while completing the survey. After the budget official had completed 

the survey, we interviewed the official to ensure that (1) the 

questions were clear and unambiguous, (2) the terms we used were 

precise, and (3) the survey did not place an undue burden on agency 

officials completing it.



Because this was not a sample survey, there are no sampling errors. 

However, the practical difficulties of conducting any survey may 

introduce errors, commonly referred to as nonsampling errors. For 

example, difficulties in how a particular question is interpreted, in 

the sources of information that are available to respondents, or in how 

the data are entered into a database or were analyzed can introduce 

unwanted variability into the survey results. We took steps in the 

development of the survey, the data collection, and the data editing 

and analysis to minimize these nonsampling errors. For example, as 

already noted, we pretested the survey. In addition, we edited the 

completed surveys for consistency and contacted state budget offices to 

clarify responses, verified a sample of the survey data that were 

entered into our database, and verified that the computer programs were 

written correctly.



In October 2002, we e-mailed the survey to the budget offices in each 

of the 46 states party to the MSA. We received responses from all 

46 states. From these responses, we obtained information on the states’ 

planned uses of MSA payments and securitized MSA proceeds for fiscal 

years 2002 and 2003. We refer to these planned uses reported by states 

as “allocations.”[Footnote 15] Furthermore, in the survey, we asked the 

states to categorize their allocations of MSA payments and securitized 

MSA proceeds for fiscal years 2002 and 2003 using the 11 program 

categories developed for our 2001 report.[Footnote 16] Because of 

changes in states’ fiscal status during the last two years, we added a 

12THcategory to account for budget shortfalls. In some cases 

allocations reported for this category may overlap with allocations 

made to the general purposes category. (See the definitions of the 12 

categories below.):



For reporting purposes, we consolidated some of the 12 categories and 

this report provides information for 9 consolidated program areas. 

Specifically, we combined (1) education and social services, 

(2) economic development for tobacco regions and payments to tobacco 

growers, and (3) general purposes and reserves/rainy day funds. Because 

we are relying on state-reported information, the level of detail for 

individual states varies. We did not independently verify the accuracy 

of the information provided to us by the state budget offices; however, 

as needed, we contacted some states to clarify the information they 

provided.



Definitions for Categories of States’ Allocations:



Budget Shortfalls:



This category comprises amounts budgeted to balance state budgets and 

close gaps or reduce deficits resulting from lower than anticipated 

revenues or increased mandatory or essential expenditures.



Economic Development for Tobacco Regions:



This category comprises amounts budgeted for economic development 

projects in tobacco states such as infrastructure projects, education 

and job training programs, and research on alternative uses of tobacco 

and alternative crops. This category includes projects specifically 

designed to benefit tobacco growers as well as economic development 

that may serve a larger population within a tobacco state.



Education:



This category comprises amounts budgeted for education programs such as 

day care, preschool, Head Start, early childhood education, elementary 

and secondary education, after-school programs, and higher education. 

This category does not include money for capital projects such as 

construction of school buildings.



General Purposes:



This category comprises amounts budgeted for attorneys’ fees and other 

items, such as law enforcement and community development, that could 

not be placed in a more precise category. This category also includes 

amounts budgeted to the state’s general fund that were not earmarked 

for any particular purpose. Amounts used to balance state budgets and 

close gaps or reduce deficits should be categorized as budget 

shortfalls rather than general purposes.



Health:



This category comprises amounts budgeted for direct health care 

services, health insurance, including Medicaid and the State Children’s 

Health Insurance Program, hospitals, medical technology, public health 

services, and health research. This category does not include money for 

capital projects such as construction of health facilities.



Infrastructure:



This category comprises amounts budgeted for capital projects such as 

construction and renovation of health care, education and social 

services facilities, water and transportation projects, and municipal 

and state government buildings. This category includes retirement of 

debt owed on capital projects.



Payments to Tobacco Growers:



This category comprises amounts budgeted for direct payments to tobacco 

growers including subsidies and crop conversion programs.



Reserves/Rainy Day Funds:



This category comprises amounts budgeted to state budget reserves such 

as rainy day and budget stabilization funds not earmarked for specific 

programs. Amounts budgeted to reserves that are earmarked for specific 

areas are categorized under those areas--e.g., reserve amounts 

earmarked for economic development purposes should be categorized in 

the economic development category.



Social Services:



This category comprises amounts budgeted for social services such as 

programs for the aging, assisted living, Meals on Wheels, drug courts, 

child welfare, and foster care. This category also includes amounts 

budgeted to special funds established for children’s programs:



Tax Reductions:



This category comprises amounts budgeted for tax reductions such as 

property tax rebates and earned income tax credits.



Tobacco Control:



This category comprises amounts budgeted for tobacco control programs 

such as prevention, including youth education, enforcement, and 

cessation services.



Unallocated:



This category comprises amounts not budgeted for any specific purpose, 

such as amounts budgeted to dedicated funds that have no specified 

purpose; amounts states chose not to budget in the year MSA payments 

were received that will be available for budgeting in a subsequent 

fiscal year; interest earned from dedicated funds not yet budgeted; and 

amounts that have not been budgeted because the state had not made a 

decision on the use of the MSA payments.



[End of section]



Appendix II: State-Specific Master Settlement Agreement Payments 

Information:



This appendix presents information for each of the 46 states party to 

the Master Settlement Agreement (MSA) on (1) payments received and 

allocated; (2) securitized proceeds received and allocated, if 

applicable; and (3) changes in the state’s decision-making framework 

for MSA funds since April 2001. In some cases, the amounts allocated 

may exceed the actual MSA payments and securitized proceeds that states 

received for fiscal years 2002 and 2003 because they include carry-over 

funds from prior years and the interest earned on these funds. Some 

states that allocated funding to a program category did not provide 

examples of programs receiving funds.



Alabama:



According to the terms of the MSA, Alabama receives 1.62 percent of the 

annual payments made by the tobacco companies. Alabama expects to 

receive a total of $467,089,947 from the MSA through fiscal year 2003. 

This total consists of:



* about $228,618,000 received as of April 2001;



* $121,567,706 received for fiscal year 2002; and:



* $116,904,241 expected to be received for fiscal year 2003.



Table 8 shows the program areas to which Alabama allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 8: Alabama’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $16,000,000; Fiscal year 

2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 104,556,000; Fiscal year 2002: 39,261,085; Fiscal year 2003: 

36,894,983; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: Alternative schools, school safety, foster care, 

childcare management, multiple needs children, at-risk programs, and 

aging waivers.



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 19,543,000; Fiscal year 2002: 18,486,901; Fiscal 

year 2003: 17,372,771; [Empty]; Types of programs receiving funds, 

fiscal years 2002 and 2003: Juvenile probation officers, juvenile 

detention programs, forensics.



Program areas: Health; Fiscal years 2000 and 2001: 84,667,000; Fiscal 

year 2002: 52,159,472; Fiscal year 2003: 49,016,031; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Children’s Health 

Insurance Program, mental health programs, AIDS waivers, and Medicaid 

services.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 560,000; 

Fiscal year 2002: 660,247; Fiscal year 2003: 620,456; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Prohibit access 

to tobacco by minors.



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $225,326,000; Fiscal 

year 2002: $110,567,705[B]; Fiscal year 2003: $103,904,241[B]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Alabama Department of Finance--Executive Budget Office.



Note: Although Alabama allocated all of the funds it received from the 

MSA to the program areas indicated above, some of these funds will not 

be used in fiscal year 2002 and will be carried over to fiscal year 

2003 and beyond.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] The amount available for allocation to the 9 program areas was 

reduced by $11 million in fiscal year 2002 and $13 million in fiscal 

year 2003 because these amounts were needed to service the debt on the 

bonds issued when the state securitized a portion of its MSA payments 

in fiscal years 2000 and 2002.



Alabama initially securitized a portion of its MSA payments in fiscal 

year 2000 and received $50 million. Subsequently, Alabama securitized 

another portion of its MSA payments in fiscal year 2002 and received an 

additional $103,760,000 in securitized proceeds. To service the debt on 

the bonds issued to procure these securitized funds, the state pledged 

$13 million per year from its annual MSA payment for fiscal years 2003 

through 2017 and $16 million per year thereafter. Alabama allocated all 

of its fiscal year 2002 securitized proceeds for general purposes. 

According to the state budget office, these funds will most likely be 

used for economic development, industrial recruiting, and training 

initiatives, in the state.



Alabama reported no changes in its decision-making framework for MSA 

funds since fiscal year 2001.



Alaska:



According to the terms of the MSA, Alaska receives 0.34 percent of the 

annual payments made by the tobacco companies. Alaska expects to 

receive a total of $98,420,000 from the MSA through fiscal year 2003. 

This total consists of:



* about $49,120,000 received as of April 2001;



* $24,800,000 received for fiscal year 2002; and:



* $24,500,000 expected to be received for fiscal year 2003.



Table 9 shows the program areas to which Alaska allocated MSA funds for 

fiscal years 2000 and 2001, 2002, and 2003 and the types of programs 

that received these funds.



Table 9: Alaska’s MSA Payments Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 1,337,000; Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 

1,100,000; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: Medicaid.



Program areas: Health; Fiscal years 2000 and 2001: 46,304,000; Fiscal 

year 2002: 400,000; Fiscal year 2003: 500,000; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 3,106,000; 

Fiscal year 2002: 2,400,000; Fiscal year 2003: 4,500,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Tobacco 

Cessation/ Education Fund.



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 1,900,000[B]; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total	; Fiscal years 2000 and 2001: $50,748,000; Fiscal 

year 2002: $4,700,000[C]; Fiscal year 2003: $6,100,000[D]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Alaska Office of Management and Budget.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] The state legislature did not appropriate the entire MSA payment 

for fiscal year 2002.



[C] The amount available for allocation to the 9 program areas was 

reduced by $20.1 million for fiscal year 2002 because this amount was 

needed to service the debt on the bonds issued when the state 

securitized a portion of its MSA payments in fiscal years 2001 and 

2002.



[D] The amount available for allocation to the 9 program areas was 

reduced by $20.2 million for fiscal year 2003 because this amount was 

needed to service the debt on the bonds issued when the state 

securitized a portion of its MSA payments in fiscal years 2001 and 

2002. In addition, the amount allocated for fiscal year 2003 includes 

$2.4 million in carry-over funds from prior years.



Alaska initially securitized a portion of its MSA payments in fiscal 

year 2001 and received $93 million. Subsequently, Alaska securitized 

another portion of its MSA payments in fiscal year 2002 and received an 

additional $110 million in securitized proceeds. The state pledged 40 

percent of its annual MSA payments for fiscal years 2001 through 2017 

and 40 percent of its annual MSA payments for fiscal years 2002 through 

2023 to service the debt on the bonds issued to procure these 

securitized funds. During fiscal year 2002, Alaska allocated the $93 

million in securitized proceeds that it received in fiscal year 2001 

for infrastructure purposes. According to the state’s Office of 

Management and Budget, these funds will be used for school construction 

and major maintenance. For fiscal year 2003, Alaska allocated the 

additional $110 million in securitized proceeds that it received in 

fiscal year 2002 also for infrastructure purposes. These funds will be 

used primarily to fund the development and maintenance of schools, 

ports, and harbors.



Alaska reported changes in its decision-making framework for MSA funds 

since fiscal year 2001. Primarily, the state passed legislation in both 

2000 and 2001 authorizing the securitization of 40 percent of the 

state’s 2001-2017 MSA payments and 40 percent of 2002-2023 payments. 

This legislation also delegated decision-making authority over the use 

of the MSA funds to a special corporation--the Northern Tobacco 

Securitization Corporation, which oversees the debt service on the 

state’s securitized proceeds. Alaska also earmarked 20 percent of its 

annual MSA payments to be placed in a special account within the 

state’s general fund called the Tobacco Cessation and Education Fund.



Arizona:



According to the terms of the MSA, Arizona receives 1.47 percent of the 

annual payments made by the tobacco companies. Arizona expects to 

receive a total of $425,577,569 from the MSA through fiscal year 2003. 

This total consists of:



* about $207,966,000 received as of April 2001;



* $111,955,069 received for fiscal year 2002; and:



* $105,656,500 expected to be received for fiscal year 2003.



Table 10 shows the program areas to which Arizona allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 10: Arizona’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

[Empty].



Program areas: Health; Fiscal years 2000 and 2001: 159,600,000; Fiscal 

year 2002: 111,955,000; Fiscal year 2003: 105,656,500; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: Medical 

services for an expanded segment of the population[B].



Program areas: Infrastructure; Fiscal years 2000 and 2001: 40,000,000; 

Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $199,600,000; Fiscal 

year 2002: $111,955,000; Fiscal year 2003: $105,656,500; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Arizona Governor’s Budget Office.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] In November 2000, Arizona voters passed an expansion of medical 

services eligibility to 100 percent of the federal poverty level. This 

initiative requires that all MSA payments be used for medical services.



Arizona reported no changes in its decision-making framework for MSA 

funds since fiscal year 2001.



Arkansas:



According to the terms of the MSA, Arkansas receives 0.83 percent of 

the annual payments made by the tobacco companies. Arkansas expects to 

receive a total of $246,876,184 from the MSA through fiscal year 2003. 

This total consists of:



* about $121,546,000 received as of April 2001;



* $62,180,504 received for fiscal year 2002; and:



* $63,149,680 expected to be received for fiscal year 2003.



:



Table 11 shows the program areas to which Arkansas allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 11: Arkansas’ MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

[Empty].



Program areas: Health; Fiscal years 2000 and 2001: 43,736,000; Fiscal 

year 2002: 15,245,627; Fiscal year 2003: 39,454,548; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Bioscience 

Institute operations and enhancement to Medicaid.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 6,912,000; 

Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 6,952,000; 

Fiscal year 2002: 6,849,484; Fiscal year 2003: 17,725,957; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: State 

law directs 31 percent of MSA payments to the Department of Health for 

Prevention and Cessation program grants.



Program areas: Unallocated; Fiscal years 2000 and 2001: 64,700,000; 

Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total[B]; Fiscal years 2000 and 2001: $122,300,000; 

Fiscal year 2002: $22,095,111[C]; Fiscal year 2003: $57,180,505[D]; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

[Empty].



[End of table]



Source: Arkansas Office of Budget--Department of Finance and 

Administration.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] The amount available for allocation to the 9 program areas was 

reduced by $5 million in fiscal years 2002 and 2003 because these 

amounts were needed to service the debt on the bonds issued when the 

state securitized a portion of its MSA payments in fiscal year 2002.



[C] The state did not budget the first three years of MSA payments 

until fiscal year 2001 (totaling about $122 million). According to 

state law, the first $100 million was to be deposited to a Healthy 

Century Trust Fund, for which no appropriations currently exist. This 

deposit was made in fiscal year 2001. The remaining $22 million was not 

allocated until fiscal year 2002.



[D] This amount represents fiscal year 2002 payments that were 

allocated in fiscal year 2003.



In fiscal year 2002, Arkansas securitized a portion of its MSA payments 

and received $58,268,549 in securitized proceeds. Arkansas will use 

$5 million from the state’s annual MSA payments for the first 25 years 

to service the debt on the bonds issued to procure these securitized 

funds. When the state’s debt on these securitized proceeds is paid off, 

the state will continue to deposit $5 million on an annual basis for 

any future MSA securitization that may happen. Arkansas allocated all 

of the securitized proceeds it received in fiscal year 2002 for 

infrastructure purposes. According to the state budget office, these 

funds will be used for the construction of a School of Public Health 

and a Biosciences Institute at the University of Arkansas for Medical 

Sciences and Arkansas State University.



Arkansas reported no changes in its decision-making framework for MSA 

funds since fiscal year 2001.



California:



According to the terms of the MSA, California receives 12.76 percent of 

the annual payments made by the tobacco companies. California expects 

to receive a total of $1,844,570,000 from the MSA through fiscal year 

2003. This total consists of:



* about $895,178,000 received as of April 2001;



* $474,992,000 received for fiscal year 2002; and:



* $474,400,000 expected to be received for fiscal year 2003.[Footnote 

17]



Table 12 shows the program areas to which California allocated MSA 

funds for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 12: California’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 0; Fiscal year 2002: 71,627,000; Fiscal year 2003: 

0; [Empty]; Types of programs receiving funds, fiscal years 2002 

and 2003: [Empty].



Program areas: Health; Fiscal years 2000 and 2001: 904,000,000; Fiscal 

year 2002: 403,365,000; Fiscal year 2003: 546,027,000; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: Healthy 

families, Medi-Cal expansion, breast and cervical cancer treatment, and 

child health and disability prevention.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $904,000,000; Fiscal 

year 2002: $474,992,000; Fiscal year 2003: $546,027,000[B]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: California Department of Finance.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] The amount allocated for fiscal year 2003 includes about $71.6 

million in carry-over funds from prior fiscal years.



California securitized its MSA payments in fiscal year 2003 and will 

receive $4.5 billion in securitized proceeds. The state pledged all of 

its MSA payments beginning in 2004 and continuing for 25 years to 

service the debt on the bonds issued to procure these securitized 

funds. According to the state’s Department of Finance, California 

allocated all of its fiscal year 2003 securitized proceeds to cover 

budget shortfalls.



California reported changes in its decision-making framework for MSA 

funds since fiscal year 2001. For example, the state passed legislation 

that established a special Tobacco Settlement fund that restricts MSA 

expenditures to either health care or tobacco control. This legislation 

changed the state’s requirements for the use of MSA funds. However, 

according to state budget officials, none of the funding from the MSA 

was used for tobacco control in either fiscal year 2002 or 2003. 

Instead, all of the MSA funds were used for other health treatment. 

According to budget officials, California did not need to use MSA funds 

for tobacco control because the state currently spends $88.4 million 

annually on tobacco control using Proposition 99 funding--an initiative 

passed by California in 1988 that placed a $0.25 surtax on all tobacco 

products.



Colorado:



According to the terms of the MSA, Colorado receives 1.37 percent of 

the annual payments made by the tobacco companies. Colorado expects to 

receive a total of $401,286,369 from the MSA through fiscal year 2003. 

This total consists of:



* about $197,225,000 received as of April 2001;



* $100,304,008 received for fiscal year 2002; and:



* $103,757,361 expected to be received for fiscal year 2003.



Table 13 shows the program areas to which Colorado allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 13: Colorado’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $138,123,849; Fiscal year 2003: $0; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 26,638,000; Fiscal year 2002: 17,188,402; Fiscal year 2003: 

19,796,823; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: Read to Achieve, Veteran’s trust fund.



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 0; Fiscal year 2002: 105,574; Fiscal year 2003: 

28,760,251; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: Reserved for investment advisors, deposits to the 

state’s trust fund in FY 2003.



Program areas: Health; Fiscal years 2000 and 2001: 43,834,000; Fiscal 

year 2002: 30,827,418; Fiscal year 2003: 40,641,642; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Primary and 

preventive care grants, State’s Children’s Health Insurance Program, 

breast and cervical cancer (Medicaid).



Program areas: Infrastructure; Fiscal years 2000 and 2001: 1,402,000; 

Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 21,030,000; 

Fiscal year 2002: 9,173,614; Fiscal year 2003: 24,731,160; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Tobacco 

cessation grants.



Program areas: Unallocated; Fiscal years 2000 and 2001: 105,808,000; 

Fiscal year 2002: 81,823,125; Fiscal year 2003: 73,704,110[B]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Carry 

over to future fiscal years.



Program areas: Total; Fiscal years 2000 and 2001: $198,712,000; Fiscal 

year 2002: $277,241,982[C]; Fiscal year 2003: $187,633,986[D]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Colorado Office of State Planning and Budget.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] This amount includes about $67.3 million to be carried over to 

fiscal year 2004, and about $6.4 million that will be deposited in the 

state’s trust fund.



[C] The amount allocated for fiscal year 2002 includes a deposit from 

the state’s trust fund and interest earned.



[D] The amount allocated for fiscal year 2003 includes carry-over funds 

from prior years and interest earned.



Colorado reported changes in its decision-making framework for MSA 

funds since fiscal year 2001. Primarily, the state passed legislation 

transferring about $138 million from a trust fund to the general fund 

for fiscal years 2001 and 2002. This transfer was used to help cover 

budget shortfalls. The state also used MSA funds to provide pre-natal 

benefits through the state’s Children’s Health Insurance Program 

totaling $7.7 million in fiscal years 2002 and 2003 and to include 

Medicaid eligibility for breast cancer patients who met certain income 

requirements in fiscal years 2001 and 2002.



Connecticut:



According to the terms of the MSA, Connecticut receives 1.86 percent of 

the annual payments made by the tobacco companies. Connecticut expects 

to receive a total of $533,406,000 from the MSA through fiscal year 

2003. This total consists of:



* about $260,406,000 received as of April 2001;



* $140,000,000 received for fiscal year 2002; and:



* $133,000,000 expected to be received for fiscal year 2003.



Table 14 shows the program areas to which Connecticut allocated MSA 

funds for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 14: Connecticut’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 58,700,000; Fiscal year 2002: 0; Fiscal year 2003: 0; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

[Empty].



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 20,500,000; Fiscal year 2002: 120,000,000; Fiscal 

year 2003: 133,100,000; [Empty]; Types of programs receiving funds, 

fiscal years 2002 and 2003: General fund revenue.



Program areas: Health; Fiscal years 2000 and 2001: 77,600,000; Fiscal 

year 2002: 4,000,000; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: Biomedical Research Trust 

Fund.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 100,000,000; 

Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 5,000,000; 

Fiscal year 2002: 17,400,000; Fiscal year 2003: 0; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Tobacco and 

Health Trust Fund.



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $261,800,000; Fiscal 

year 2002: $141,400,000[B]; Fiscal year 2003: $133,100,000[B]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Connecticut Office of Policy and Management.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] The amounts allocated for fiscal years 2002 and 2003 include carry-

over funds from prior years and interest earned.



Connecticut reported changes in its decision-making framework for MSA 

funds since fiscal year 2001. The state passed legislation in 2001 

modifying the use of MSA payments for the biennium ending June 30, 

2003. Through this legislation, the state transferred funds from the 

state’s Tobacco and Health Trust Fund for a variety of purposes, 

including the Children’s Health Initiatives’ Easy Breathing program, 

the Children’s Trust Fund for the Healthy Families program, a school-

based health clinic in Norwich, and tobacco related health, education, 

and prevention for fiscal years 2002 and 2003. However, for fiscal year 

2003 the state decided to eliminate the transfer of these funds from 

the Tobacco and Health Trust Fund and will credit any balance from this 

fund to the state’s general fund.



Delaware:



According to the terms of the MSA, Delaware receives 0.40 percent of 

the annual payments made by the tobacco companies. Delaware expects to 

receive a total of $114,670,000 from the MSA through fiscal year 2003. 

This total consists of:



* about $55,470,000 received as of April 2001;



* $29,800,000 received for fiscal year 2002; and:



* $29,400,000 expected to be received for fiscal year 2003.



Table 15 shows the program areas to which Delaware allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 15: Delaware’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 340,000; Fiscal year 2003: 430,000; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

[Empty].



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 14,935,000; Fiscal year 2002: 188,300; Fiscal year 

2003: 192,300; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: [Empty].



Program areas: Health; Fiscal years 2000 and 2001: 14,176,000; Fiscal 

year 2002: 20,500,000; Fiscal year 2003: 24,300,000; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Various health 

purposes and deposits to the tobacco-fund Strategic Reserve[B].



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 3,900,000; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 2,833,000; 

Fiscal year 2002: 4,900,000; Fiscal year 2003: 4,900,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Unallocated; Fiscal years 2000 and 2001: 25,000,000; 

Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $56,944,000; Fiscal 

year 2002: $29,828,300[C]; Fiscal year 2003: $29,822,300[D]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Delaware Department of Health and Social Services.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] In fiscal year 2002, Delaware allocated $9.4 million to the 

tobacco-fund Strategic Reserve. These funds are held in savings for 

future health-related initiatives. The state allocated an additional 

$9.9 million to the Strategic Reserve in fiscal year 2003. These funds 

cannot revert back to the state for general use.



[C] The difference in the amount received and the amounts allocated for 

fiscal year 2002 is due to rounding.



[D] The difference in the amount received and the amounts allocated for 

fiscal year 2003 is due to rounding and the anticipation of $400,000 in 

carry-over funds from fiscal year 2002 programs.



Delaware reported no changes in its decision-making framework for MSA 

funds since fiscal year 2001.



Georgia:



According to the terms of the MSA, Georgia receives 2.45 percent of the 

annual payments made by the tobacco companies. Georgia expects to 

receive a total of $712,851,540 from the MSA through fiscal year 2003. 

This total consists of:



* about $353,121,000 received as of April 2001;



* $184,650,080 received for fiscal year 2002; and:



* $175,080,760 expected to be received for fiscal year 2003.



Table 16 shows the program areas to which Georgia allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 16: Georgia’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $79,954,000; Fiscal year 

2002: 34,131,677; Fiscal year 2003: 65,430,712; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: OneGeorgia 

Authority.



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 7,149,804; Fiscal year 2003: 7,149,804; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

Home community-based services to the elderly; early intervention for 

at-risk families.



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

[Empty].



Program areas: Health; Fiscal years 2000 and 2001: 109,907,000; Fiscal 

year 2002: 106,647,690; Fiscal year 2003: 85,255,966; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Medicaid, 

Children’s Health Insurance Program expansion, school nurses, public 

health programs, Medicaid waiver programs, Georgia Cancer Coalition.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 15,766,000; 

Fiscal year 2002: 24,715,890; Fiscal year 2003: 15,165,890; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Tobacco 

use prevention program compliance/ enforcement for underage smoking.



Program areas: Unallocated; Fiscal years 2000 and 2001: 139,905,000; 

Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $345,532,000; Fiscal 

year 2002: $172,645,061[B]; Fiscal year 2003: $173,002,372[B]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Georgia Governor’s Office of Planning and Budget.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] Georgia allocated fiscal year 2001 MSA payments during fiscal year 

2002 and allocated fiscal year 2002 payments during fiscal year 2003. 

Any remaining MSA payments received in fiscal year 2002 that have not 

been allocated for fiscal year 2003 will be appropriated through the 

fiscal year 2003 Amended Budget.



Since fiscal year 2001, Georgia reported creating a special board--the 

OneGeorgia Authority--to support local and regional economic 

development efforts using MSA funds. The authority will use one-third 

of the state’s MSA payments to assist in development efforts for the 

state’s most economically challenged areas.



Hawaii:



According to the terms of the MSA, Hawaii receives 0.60 percent of the 

annual payments made by the tobacco companies. Hawaii expects to 

receive a total of $178,680,180 from the MSA through fiscal year 2003. 

This total consists of:



* about $84,420,000 received as of April 2001;



* $43,751,843 received for fiscal year 2002; and:



* $50,508,337 expected to be received for fiscal year 2003.



Table 17 shows the program areas to which Hawaii allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.





Table 17: Hawaii’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 21,214,000; Fiscal year 2002: 17,710,737; Fiscal 

year 2003: 12,638,793; [Empty]; Types of programs receiving funds, 

fiscal years 2002 and 2003: Tobacco enforcement special fund of the 

Attorney General’s Office for MSA enforcement, Emergency and Budget 

Reserve Fund.



Program areas: Health; Fiscal years 2000 and 2001: 18,563,000; Fiscal 

year 2002: 15,190,645; Fiscal year 2003: 17,555,418; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Department of 

Health for public health programs, Department of Human Services for 

Children’s Health Insurance Program.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 14,044,334; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: Debt service on bonds 

issued to the University of Hawaii[B].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 13,259,000; 

Fiscal year 2002: 10,850,461; Fiscal year 2003: 6,269,792; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Tobacco 

Prevention and Control Trust Fund.



Program areas: Unallocated; Fiscal years 2000 and 2001: 33,955,000; 

Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $86,991,000; Fiscal 

year 2002: $43,751,843; Fiscal year 2003: $50,508,337; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Hawaii Department of Budget and Finance.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] Beginning in fiscal year 2003, 28 percent of Hawaii’s MSA payment 

will be allocated to service the debt on the bond issued to fund the 

construction of a new Health and Wellness Center, biomedical research 

center, and medical school at the University of Hawaii.



During fiscal year 2001, Hawaii passed legislation affecting the 

state’s use of MSA funds and established new goals for the funds. 

Specifically, the state passed legislation changing the statutory 

allocations of MSA funds in the following areas (1) decreasing the MSA 

payments allocated to the Emergency and Budget Reserve Fund by 15.5 

percent, (2) decreasing the allocation to the Tobacco Prevention and 

Control Trust Fund by 12.5 percent, and (3) making a new allocation of 

28 percent to the University of Hawaii to pay debt service on bonds 

issued for the Medical School. Hawaii also changed its requirements for 

use of MSA funds, which will allow the Tobacco Prevention and Control 

Trust Fund to spend up to 50 percent of its total assets in any fiscal 

year for tobacco prevention and control purposes.



Idaho:



According to the terms of the MSA, Idaho receives 0.36 percent of the 

annual payments made by the tobacco companies. Idaho expects to receive 

a total of $105,612,394 from the MSA through fiscal year 2003. This 

total consists of:



* about $52,262,000 received as of April 2001;



* $26,397,202 received for fiscal year 2002; and:



* $26,953,192 expected to be received for fiscal year 2003.



Table 18 shows the program areas to which Idaho allocated MSA funds for 

fiscal years 2000 and 2001, 2002, and 2003, and the types of programs 

that received these funds.



Table 18: Idaho’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $19,335,604; Fiscal year 2003: $10,000,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 920,000; Fiscal year 2003: 420,000; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

Youth courts to address juvenile crime, youth asset building, status 

offender program for high-risk youth, adolescent pregnancy prevention.



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

[Empty].



Program areas: Health; Fiscal years 2000 and 2001: 0; Fiscal year 2002: 

830,000; Fiscal year 2003: 1,891,400; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: Program to reduce county 

deductible payments for health care for indigents with tobacco-related 

diseases, cancer camp for children with cancer, planning funds for 

small business health insurance.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 2,305,000; 

Fiscal year 2002: 1,006,500; Fiscal year 2003: 1,267,800; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Tobacco 

counter marketing, smoking prevention and cessation; tobacco free 

coalitions; youth tobacco investigations.



Program areas: Unallocated; Fiscal years 2000 and 2001: 37,679,000; 

Fiscal year 2002: 7,061,598; Fiscal year 2003: 16,953,192; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Deposit 

to the Millennium Trust Fund.



Program areas: Total; Fiscal years 2000 and 2001: $39,984,000; Fiscal 

year 2002: $29,153,702[B]; Fiscal year 2003: $30,532,392[B]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Idaho Division of Financial Management.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] The amounts allocated for fiscal years 2002 and 2003 include MSA 

payments received in fiscal years 2002 and 2003 and the interest earned 

on the Millennium Trust Fund.



Idaho reported changes in its decision-making framework for MSA funds 

since fiscal year 2001. Through legislation, the state established the 

Joint Millennium Fund Committee to make recommendations to the 

legislature regarding the use of MSA allocations to the Millennium 

Trust Fund. Idaho also increased the allocation of MSA funds into the 

state’s general fund, transferring $19.3 million of fiscal year 2002 

MSA payments and $10 million of the projected fiscal year 2003 MSA 

payments into the general fund to cover budget shortfalls.



Illinois:



According to the terms of the MSA, Illinois receives 4.65 percent of 

the annual payments made by the tobacco companies. Illinois expects to 

receive a total of $1,277,069,577 from the MSA through fiscal year 

2003. This total consists of:



* about $669,603,000 received as of April 2001;



* $312,276,311 received for fiscal year 2002; and:



* $295,190,266 expected to be received for fiscal year 2003.[Footnote 

18]



Table 19 shows the program areas to which Illinois allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 19: Illinois’ MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 1,800,000; Fiscal year 2002: 2,500,000; Fiscal year 2003: 

4,000,000; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: University of Illinois Veterinary Research Grant, 

Information campaign to let seniors know about the Pharmaceutical 

Assistance Program.



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 147,246,000; Fiscal year 2002: 5,636,088; Fiscal 

year 2003: 1,500,000; [Empty]; Types of programs receiving funds, 

fiscal years 2002 and 2003: Marketing of Illinois Technology, Illinois 

Technology Enterprise Corporation.



Program areas: Health; Fiscal years 2000 and 2001: 91,650,000; Fiscal 

year 2002: 160,032,533; Fiscal year 2003: 214,226,450; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: SeniorCare, 

Pharmaceutical Assistance Program for seniors, AIDS, Hepatitis C 

awareness, sickle cell research, academic excellence centers, juvenile 

diabetes.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 25,000,000; 

Fiscal year 2002: 21,933,320; Fiscal year 2003: 3,500,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: 

Statewide capital maintenance projects, Argonne Rare Isotope 

Accelerator, Fermi National Accelarator Lab, Peoria Oncology Center, 

University of Illinois Office of Technology Transfer.



Program areas: Tax reduction; Fiscal years 2000 and 2001: 315,750,000; 

Fiscal year 2002: 35,000,000; Fiscal year 2003: 90,500,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Earned 

income tax credit, property tax rebate for senior citizens.



Program areas: Tobacco control; Fiscal years 2000 and 2001: 29,550,000; 

Fiscal year 2002: 47,904,109; Fiscal year 2003: 16,200,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Local 

health departments, teen tobacco prevention, enforcement of tobacco 

laws, MSA enforcement.



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 39,270,261; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $610,996,000; Fiscal 

year 2002: $312,276,311; Fiscal year 2003: $329,926,450[B]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Illinois Bureau of the Budget.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] The amount allocated for fiscal year 2003 includes carry-over from 

payments received in prior fiscal years.



Since fiscal year 2001, Illinois passed legislation that could 

potentially alter the way the state uses its MSA funds. The legislation 

authorizes the securitization of $750 million to be issued in bonds 

backed by tobacco settlement payments for fiscal year 2003. The 

Governor has discretion to determine whether to issue these bonds, the 

amount and timing of any bond sales, and the repayment schedule, which 

cannot exceed 30 years. If bonds are issued, the proceeds of any size 

issue must be used as follows: 50 percent will be placed in the General 

Revenue Fund to build the general funds cash balance and to meet the 

ordinary and contingent expenses of the state, and 50 percent will be 

placed in the Budget Stabilization Fund. The same legislation also 

authorizes transfers of MSA funds, beginning in fiscal year 2004, from 

the Tobacco Settlement Recovery Fund to the General Revenue Fund to pay 

the principal and interest on any general obligation bonds that are 

issued. No fiscal year 2003 tobacco payments can be used to repay these 

bonds, even if the bonds are issued early in fiscal year 2003. However, 

at the time of our survey, Illinois had not taken the steps to 

securitize funds as allowed by the legislation.



Indiana:



According to the terms of the MSA, Indiana receives 2.04 percent of the 

annual payments made by the tobacco companies. Indiana expects to 

receive a total of $593,465,000 from the MSA through fiscal year 2003. 

This total consists of:



* about $293,465,000 received as of April 2001,



* $149,200,000 received for fiscal year 2002, and:



* $150,800,000 expected to be received for fiscal year 2003.



Table 20 shows the program areas to which Indiana allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 20: Indiana’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 

5,000,000; Fiscal year 2003: 5,000,000; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: Tobacco farmers and rural 

community.



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 16,400,000; Fiscal year 2003: 

33,300,000; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: Waiver programs, residential services.



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

[Empty].



Program areas: Health; Fiscal years 2000 and 2001: 86,400,000; Fiscal 

year 2002: 59,900,000; Fiscal year 2003: 77,600,000; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Children’s Health 

Insurance Program, Prescription Drugs for Seniors, vaccines, health 

center.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 10,000,000; 

Fiscal year 2002: 14,000,000; Fiscal year 2003: 15,000,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: State 

Operated Facilities, Health Centers.



Program areas: Tax reduction; Fiscal years 2000 and 2001: [Empty]; 

Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 35,000,000; 

Fiscal year 2002: 32,800,000; Fiscal year 2003: 25,000,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: 

Prevention and cessation programs.



Program areas: Unallocated; Fiscal years 2000 and 2001: 159,093,000; 

Fiscal year 2002: 124,800,000[B]; Fiscal year 2003: 65,000,000; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

Interest earned, carry-over savings.



Program areas: Total; Fiscal years 2000 and 2001: $290,493,000; Fiscal 

year 2002: $252,900,000[C]; Fiscal year 2003: $220,900,000[C]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Indiana State Budget Agency.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] Indiana made a transfer of $60 million in fiscal year 2002 MSA 

payments to the state’s general fund. However, as of January 2003, the 

actual transfer had not been completed.



[C] The amounts allocated for fiscal years 2002 and 2003 include carry-

over funds from prior years.



Indiana reported changes in its decision-making framework for MSA funds 

since fiscal year 2001. Specifically, the state passed legislation 

affecting its use of MSA funds by restricting the transfer of unspent 

funds at the end of each fiscal year out of certain tobacco accounts 

back to the Indiana Tobacco Master Settlement Agreement Fund, from 

which allocations to individual programs are made. These restricted 

tobacco accounts include the Indiana Tobacco Prevention and Cessation 

Account and the Local Health Department Trust Account. In addition to 

passing this legislation, Indiana also authorized the transfer of $60 

million in fiscal year 2002 MSA payments to the state’s general fund. 

As of January 2003, however, the actual transfer had not been 

completed.



Iowa:



According to the terms of the MSA, Iowa receives 0.87 percent of the 

annual payments made by the tobacco companies. Iowa expects to receive 

a total of $251,735,506 from the MSA through fiscal year 2003. This 

total consists of:



* about $125,118,000 received as of April 2001;



* $63,537,410 received for fiscal year 2002; and:



* $63,080,096 expected to be received for fiscal year 2003.



Table 21 shows the program areas to which Iowa allocated MSA funds for 

fiscal years 2000 and 2001, 2002, and 2003, and the types of programs 

that received these funds.



Table 21: Iowa’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 64,600,000; Fiscal year 2002: 0; Fiscal year 2003: 

0; [Empty]; Types of programs receiving funds, fiscal years 2002 

and 2003: [Empty].



Program areas: Health; Fiscal years 2000 and 2001: 45,645,000; Fiscal 

year 2002: 13,904,202; Fiscal year 2003: 13,877,621; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Deposited into 

the Endowment for Iowa’s Health fund.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 9,345,000; 

Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Unallocated; Fiscal years 2000 and 2001: 3,461,000; 

Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $123,051,000; Fiscal 

year 2002: $13,904,202[B]; Fiscal year 2003: $13,877,621[B]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Iowa Department of Management.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] The amount available for allocation to the 9 program areas was 

reduced by $49,633,207 in fiscal year 2002 and $49,202,475 in fiscal 

year 2003 because these amounts were needed to service the debt on the 

bonds issued when the state securitized a portion of its MSA payments 

in fiscal year 2002.



Iowa securitized a portion of its MSA payments in fiscal year 2002 and 

received $579,596,212. The state pledged about 78 percent of its fiscal 

years 2002 through 2027 MSA payments to service the debt on the bonds 

issued to procure the securitized funds. Iowa allocated its securitized 

proceeds to two funds as follows:



* $540,045,010 to a tax-exempt restricted capital fund for 

infrastructure projects, and:



* $39,551,202 to the Endowment for Iowa’s Health fund, which is to be 

used for future appropriations to health-related programs.



In addition to passing legislation during 2001 to securitize part of 

the state’s MSA payments, Iowa also made a one-time transfer of $6 

million in fiscal year 2002 from a health programs fund to the state’s 

general fund.



Kansas:



According to the terms of the MSA, Kansas receives 0.83 percent of the 

annual payments made by the tobacco companies. Kansas expects to 

receive a total of $236,938,554 from the MSA through fiscal year 2003. 

This total consists of:



* about $119,940,000 received as of April 2001;



* $60,998,554 received for fiscal year 2002; and:



* $56,000,000 expected to be received for fiscal year 2003.



Table 22 shows the program areas to which Kansas allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 22: Kansas’ MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 34,962,000; Fiscal year 2002: 37,500,000; Fiscal year 2003: 

44,436,626; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: Parent education, 4-year old at risk, school violence 

prevention, reading and vision research, juvenile justice prevention 

and sanction grants, family centered systems of care, therapeutic 

preschool, child care and child welfare community services, Medicaid, 

smart start Kansas.



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 91,038,000; Fiscal year 2002: 10,000,000; Fiscal 

year 2003: 5,528,860; [Empty]; Types of programs receiving funds, 

fiscal years 2002 and 2003: State general fund.



Program areas: Health; Fiscal years 2000 and 2001: [Empty]; Fiscal year 

2002: 2,000,000; Fiscal year 2003: 2,000,000; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Infants & 

Toddlers, healthy start home visitor, pediatric biomedical research, 

tele-kid health care link.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 500,000; 

Fiscal year 2002: 500,000; Fiscal year 2003: 500,000; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Smoking 

prevention & cessation.



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 10,998,554; Fiscal year 2003: 5,471,140; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Funds allocated 

to the Key trust fund[B].



Program areas: Total; Fiscal years 2000 and 2001: $126,500,000; Fiscal 

year 2002: $60,998,554; Fiscal year 2003: $57,936,626[C]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Kansas Division of the Budget.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] Unallocated funds include MSA payments allocated to the Key Fund, a 

trust fund which is to be used in the future to provide earnings if MSA 

payments are reduced or ceased. For fiscal year 2002, $50 million of 

the MSA payments were allocated, leaving $10,998,554 in the Key Fund. 

For fiscal year 2003, $5,471,140 was allocated to the Key Fund.



[C] The amount allocated for fiscal year 2003 includes about $1.9 

million carried over from prior year payments.



Kansas reported an increase in its appropriations of MSA funds into the 

state’s general fund since fiscal year 2001. Specifically, the state 

transferred about $11.5 million to the state’s general fund to finance 

an increase in education base aid per pupil.



Kentucky:



According to the terms of the MSA, Kentucky receives 1.76 percent of 

the annual payments made by the tobacco companies. Kentucky expects to 

receive a total of $505,405,390 from the MSA through fiscal year 2003. 

This total consists of:



* about $247,028,000 received as of April 2001;



* $132,777,390 received for fiscal year 2002; and:



* $125,600,000 expected to be received for fiscal year 2003.



Table 23 shows the program areas to which Kentucky allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 23: Kentucky’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $29,735,233; Fiscal year 2003: $0; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $124,000,000; Fiscal year 

2002: 54,342,697; Fiscal year 2003: 56,688,000; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Governor’s Office 

for Agricultural Policy, Natural Resources-Conservation-Environmental 

Stewardship.



Program areas: Education and social services; Fiscal years 2000 and 

2001: 97,500,000; Fiscal year 2002: 13,500,000; Fiscal year 2003: 

9,961,700; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: Families and Children-Early Childhood Development 

Program,; Higher Education Assistance Authority-Early Childhood 

Scholarship Program.



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

[Empty].



Program areas: Health; Fiscal years 2000 and 2001: 21,473,000; Fiscal 

year 2002: 27,660,000; Fiscal year 2003: 47,123,500; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Health access 

nurturing development services, folic acid distribution, healthy start, 

universal children’s immunization, substance abuse services to Medicaid 

eligible women with dependent children, universal newborn hearing 

testing, lung cancer research program, Kentucky access.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 2,000,000; Fiscal year 2003: 6,112,000; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Debt service--

Kentucky Infrastructure Authority-water resource; development.



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 5,027,000; 

Fiscal year 2002: 5,540,000; Fiscal year 2003: 5,714,800; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Smoking 

cessation.



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $248,000,000; Fiscal 

year 2002: $132,777,930; Fiscal year 2003: $125,600,000; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Kentucky Governor’s Office for Policy Research.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



Kentucky reported no changes in its decision-making framework for MSA 

funds since fiscal year 2001.



Louisiana:



According to the terms of the MSA, Louisiana receives 2.26 percent of 

the annual payments made by the tobacco companies. Louisiana expects to 

receive a total of $652,693,424 from the MSA through fiscal year 2003. 

This total consists of:



* about $324,476,000 received as of April 2001;



* $165,021,020 received for fiscal year 2002; and:



* $163,196,404 expected to be received for fiscal year 2003.



Table 24 shows the program areas to which Louisiana allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 24: Louisiana’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 88,896,000; Fiscal year 2002: 44,305,854; Fiscal year 2003: 

45,844,357; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: Local and special schools, Tuition Opportunity Program, 

Education Excellence trust fund.



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 10,750,000; Fiscal year 2002: 0; Fiscal year 2003: 

0; [Empty]; Types of programs receiving funds, fiscal years 2002 

and 2003: [Empty].



Program areas: Health; Fiscal years 2000 and 2001: 212,473,000; Fiscal 

year 2002: 53,051,828; Fiscal year 2003: 48,787,815; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Children’s Health 

Insurance Program, school-based health care centers, Medicaid, Health 

Excellence trust fund.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 9,930,000; 

Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 1,680,000; 

Fiscal year 2002: 0; Fiscal year 2003: 342,074; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Attorney General 

enforcement.



Program areas: Unallocated; Fiscal years 2000 and 2001: -229,000[B]; 

Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $323,500,000; Fiscal 

year 2002: $97,357,682[C]; Fiscal year 2003: $94,974,246[C]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Louisiana Office of Planning and Budget, Division of 

Administration.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] A negative unallocated amount represents an adjustment for over-

allocation of MSA payments in prior years.



[C] The amount available for allocation to the 9 program areas was 

reduced by $99,012,612 for fiscal year 2002 and $97,900,000 for fiscal 

year 2003 because these amounts were needed to service the debt on the 

bonds issued when the state securitized a portion of its MSA payments 

in fiscal year 2002. In addition, the amounts available for allocation 

in fiscal years 2002 and 2003 include carry-over funds from the 

Louisiana Fund, the Education Excellence trust fund, the Health 

Excellence trust fund, and the Tuition Opportunity Program fund, as 

well as interest earned on the Millennium Trust Fund.



Louisiana securitized a portion of its MSA payments in fiscal year 2002 

and received $1,069,510,894. The state pledged 60 percent of its annual 

MSA payments from fiscal years 2001 through 2039 to service the debt on 

the bonds issued to procure these securitized funds. In fiscal year 

2002, the state paid about $65.9 million to service the debt on the 

bonds and deposited an additional $33 million in a trust fund for 

future payments. In fiscal year 2003, the state paid about $77 million 

to service the debt on the bonds, with an additional $20.8 million 

deposited into a trust fund for future payments. According to the state 

budget office, Louisiana allocated most of its securitized proceeds to 

education and health programs. The state’s specific allocations for 

fiscal year 2002 were:



* $304,186,602 to the Education Excellence trust fund;



* $304,186,602 to the Tuition Opportunity trust fund;



* $106,951,089 to local and special schools;



* $304,186,602 to the Health Excellence trust fund;



* $48,160,863 for Louisiana’s Children’s Health Insurance Program, 

school-based health care centers, and Medicaid;



* $1,489,137 for the Starting Points pre-school program; and:



* $350,000 to the attorney general’s office for enforcement of tobacco 

control programs.



In addition to securitizing a portion of its MSA payments, Louisiana 

passed a ballot initiative that created the Tobacco Settlement 

Financing Corporation. The purpose of this corporation is to carry out 

the finance, purchase, ownership, and management of the assets the 

state received as a result of its securitization of MSA payments.



Maine:



According to the terms of the MSA, Maine receives 0.77 percent of the 

annual payments made by the tobacco companies. Maine expects to receive 

a total of $222,673,640 from the MSA through fiscal year 2003. This 

total consists of:



* about $110,686,000 received as of April 2001;



* $56,317,761 received for fiscal year 2002; and:



* $55,669,879 expected to be received for fiscal year 2003.



Table 25 shows the program areas to which Maine allocated MSA funds for 

fiscal years 2000 and 2001, 2002, and 2003, and the types of programs 

that received these funds.



Table 25: Maine’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $10,000,000; Fiscal year 2003: $32,872,838; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 9,854,000; Fiscal year 2002: 16,070,241; Fiscal year 2003: 

15,142,600; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: Child care and child development initiatives: infant, 

toddler and preschool child care subsidies, after-school services, year 

round Head Start, substance abuse prevention, intervention, testing and 

treatment.



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 971,000; Fiscal year 2002: 49,372; Fiscal year 

2003: 51,840; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: Attorney General enforcement and administration costs.



Program areas: Health; Fiscal years 2000 and 2001: 78,496,000; Fiscal 

year 2002: 19,292,539; Fiscal year 2003: 19,087,362; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Expand Medicaid 

to parents/ guardians up to 150 percent of the federal poverty levels, 

increase access to Cub Care and infants under one, extend Medicaid 

coverage for pregnant women, and expand oral health programs.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 21,826,000; 

Fiscal year 2002: 11,890,000; Fiscal year 2003: 14,472,789; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: 

Community/ school grants and statewide coordination to reduce tobacco 

addiction and use, tobacco prevention, control and treatment.



Program areas: Unallocated; Fiscal years 2000 and 2001: 1,321,000; 

Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $112,468,000; Fiscal 

year 2002: $57,302,152[B]; Fiscal year 2003: $81,627,429[C]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Maine Department of Administrative and Financial Services, 

Bureau of the Budget.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] The amount allocated for fiscal year 2002 includes carry-over funds 

from MSA payments received in fiscal year 2001 and interest earned.



[C] The amount allocated for fiscal year 2003 includes approximately 

$25 million in carry-over funds from MSA payments received in prior 

years and interest earned.



Since fiscal year 2001, Maine reported passing legislation that changed 

its decision-making framework for MSA funds. The legislation allowed 

the balance in the Trust Fund for a Healthy Maine to be transferred to 

the general fund in June 2001 for unappropriated surplus. This transfer 

of about $11.1 million was included with the fiscal year 2001 budget, 

thereby increasing the state’s appropriations of MSA funds into the 

general fund for fiscal year 2001.



Maryland:



According to the terms of the MSA, Maryland receives 2.26 percent of 

the annual payments made by the tobacco companies. Maryland expects to 

receive a total of $654,248,000 from the MSA through fiscal year 2003. 

This total consists of:



* about $325,210,000 received as of April 2001;



* $164,247,000 received for fiscal year 2002; and:



* $164,791,000 expected to be received for fiscal year 2003.



Table 26 shows the program areas to which Maryland allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 26: Maryland’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $2,450,000; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $11,500,000; Fiscal year 

2002: 6,292,000; Fiscal year 2003: 6,291,000; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Crop Conversion 

and tobacco buy-out: the state pays farmers not to grow tobacco for 

human consumption; 75 percent for payment to tobacco growers and 

25 percent for economic development.



Program areas: Education and social services; Fiscal years 2000 

and 2001: 53,800,000; Fiscal year 2002: 60,098,000; Fiscal year 2003: 

32,960,000; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: Drug addiction.



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 81,758,000; Fiscal year 2002: 30,100,000; Fiscal 

year 2003: 43,130,000; [Empty]; Types of programs receiving funds, 

fiscal years 2002 and 2003: State legal expenses and outside counsel.



Program areas: Health; Fiscal years 2000 and 2001: 175,400,000; Fiscal 

year 2002: 35,577,000; Fiscal year 2003: 151,544,000; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Medicaid, cancer 

research and prevention, Maryland Health Care Foundation.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 18,100,000; 

Fiscal year 2002: 16,914,000; Fiscal year 2003: 31,363,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Unallocated; Fiscal years 2000 and 2001: -11,200,000[B]; 

Fiscal year 2002: 160,256,000; Fiscal year 2003: 26,404,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Includes 

money paid into escrow account for legal services as a result of MSA 

and carry-over funds.



Program areas: Total; Fiscal years 2000 and 2001: $329,358,000; Fiscal 

year 2002: 309,237,000[C]; Fiscal year 2003: 294,142,000[D]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Maryland Department of Budget and Management.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] A negative unallocated amount represents an adjustment for over-

allocation of MSA payments in prior years.



[C] The amount allocated for fiscal year 2002 includes carry-over funds 

from fiscal year 2001, interest earned, a refund from the Internal 

Revenue Service, and a $93,075,478 disbursement from a joint escrow 

account pursuant to settlement of a legal dispute between the state and 

its outside attorneys.



[D] The amount allocated for fiscal year 2003 includes carry-over funds 

from fiscal year 2002 (including the transfer from the state’s escrow 

account), interest earned, a payment from the National Arbitration 

Panel for outside attorney fees, and a payment pursuant to the 

settlement agreement with the outside counsel.



Maryland reported changes in its decision-making framework for MSA 

funds since fiscal year 2001. Since it began receiving MSA payments, 

Maryland has been depositing 25 percent of its payments to a joint 

escrow account because of a court order and legal dispute with the 

state’s outside counsel. In April 2002, a settlement was reached 

between the state and its legal counsel resolving all disputes, and 

pursuant to that settlement, funds in the joint escrow account were 

disbursed to the legal counsel ($30,000,000) and to the state 

($93,075,478). Maryland’s 2002 General Assembly passed legislation that 

provided for the appropriation of the state’s portion of these escrow 

funds in fiscal year 2003. This legislation also required that 25 

percent of the state’s MSA payments for fiscal years 2003 through 2006 

would be appropriated to the Maryland Medical Assistance Program, which 

is the state’s Medicaid program.



Massachusetts:



According to the terms of the MSA, Massachusetts receives 4.04 percent 

of the annual payments made by the tobacco companies. Massachusetts 

expects to receive a total of $1,159,126,000 from the MSA through 

fiscal year 2003. This total consists of:



* about $566,526,000 received as of April 2001;



* $304,500,000 received for fiscal year 2002; and:



* $288,100,000 expected to be received for fiscal year 2003.



Table 27 shows the program areas to which Massachusetts allocated MSA 

funds for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 27: Massachusetts’ MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $162,000,000; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 11,900,000; Fiscal year 2003: 

15,000,000; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: Home care for elders, adult community placements.



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

[Empty].



Program areas: Health; Fiscal years 2000 and 2001: 544,647,000; Fiscal 

year 2002: 273,800,000[B]; Fiscal year 2003: 134,200,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Health 

insurance benefits for individuals with HIV, grants to distressed 

hospitals, prescription drug insurance for elders, Hepatitis C research 

and screening, school health, Health Care Security Trust Fund.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 27,138,000; 

Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 31,260,000; 

Fiscal year 2002: 6,800,000; Fiscal year 2003: 3,300,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Smoking 

cessation programs.



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 48,600,000; Fiscal year 2003: 38,400,000; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $603,045,000; Fiscal 

year 2002: $341,100,000[C]; Fiscal year 2003: $352,900,000[C]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Massachusetts Fiscal Affairs Division.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] In fiscal year 2002, Massachusetts deposited $152.3 million (about 

half of the total MSA payment) in the Health Care Security Trust Fund.



[C] The amounts allocated for fiscal years 2002 and 2003 include carry-

over funds, investment revenue, and federal reimbursement for tobacco 

expenditures.



Massachusetts reported changes in its decision-making framework for MSA 

funds since fiscal year 2001. The state passed legislation that 

resulted in increased appropriations of MSA funds to the state’s 

general fund for fiscal years 2001, 2002, and 2003. In fiscal year 

2001, the legislation appropriated 30 percent of the state’s MSA 

payment to the general fund; in fiscal year 2002, it increased the 

amount appropriated to the general fund to 50 percent and, in fiscal 

year 2003, appropriated all of the state’s MSA payment to the general 

fund.



Michigan:



According to the terms of the MSA, Michigan receives 4.35 percent of 

the annual payments made by the tobacco companies. Michigan expects to 

receive a total of $1,267,224,000 from the MSA through fiscal year 

2003. This total consists of:



* about $610,424,000 received as of April 2001;



* $328,200,000 received for fiscal year 2002; and:



* $328,600,000 expected to be received for fiscal year 2003.



Table 28 shows the program areas to which Michigan allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 28: Michigan’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $159,000,000; Fiscal year 2003: $100,000,000; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

[Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 366,700,000; Fiscal year 2002: 148,500,000; Fiscal year 2003: 

145,500,000; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: Merit Award scholarships and tuition incentive grants 

for higher education students, Michigan Educational Assessment Program 

testing for K-12 students, post secondary scholarships, nursing 

scholarships, Michigan Education Savings Plan.



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 400,000; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

Attorney General enforcement expenses.



Program areas: Health; Fiscal years 2000 and 2001: 177,700,000; Fiscal 

year 2002: 135,600,000; Fiscal year 2003: 119,800,000; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: Elder 

pharmaceutical assistance, Medicaid personal needs allowance, long term 

care advisor, respite care, indigent medical programs, Medicaid 

support, biomedical research and development, health promotion programs 

for seniors.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 2,000,000; Fiscal year 2003: 2,000,000; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Education and 

cessation programs for youth and senior populations.



Program areas: Unallocated; Fiscal years 2000 and 2001: 90,900,000; 

Fiscal year 2002: 47,600,000; Fiscal year 2003: 13,600,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Merit 

Award Trust Fund and the Tobacco; Settlement Trust Fund balances.



Program areas: Total; Fiscal years 2000 and 2001: $635,300,000; Fiscal 

year 2002: $492,700,000[B]; Fiscal year 2003: $381,300,000[B]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Michigan Budget Development and General Government Division, 

State Budget Office.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] The amounts allocated for fiscal years 2002 and 2003 include carry-

over funds and interest earned.



Michigan reported changes in its decision-making framework for MSA 

funds since fiscal year 2001. First, the state changed its 

appropriation of MSA funds into the general fund. While there were no 

funds transferred to the general fund in fiscal year 2001, the state 

transferred $159 million in fiscal year 2002 and $100 million in fiscal 

year 2003 to cover budget shortfalls. Additionally, beginning in fiscal 

year 2002, Michigan law required that 75 percent of MSA payments be 

deposited in a Merit Award Trust Fund and 25 percent in a Tobacco 

Settlement Trust Fund. However, according to state budget officials, 

this requirement has no impact on how the legislature makes 

appropriation decisions from each of the funds.



Missouri:



According to the terms of the MSA, Missouri receives 2.27 percent of 

the annual payments made by the tobacco companies. Missouri expects to 

receive a total of $674,900,000 from the MSA through fiscal year 2003. 

This total consists of:



* about $338,200,000 received through the end of fiscal year 2001; 

[Footnote 19]



* $172,700,000 received for fiscal year 2002; and:



* $164,000,000 expected to be received for fiscal year 2003.



Table 29 shows the program areas to which Missouri allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 29: Missouri’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $139,100,000; Fiscal year 2003: $89,400,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 9,700,000; Fiscal year 2003: 0; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Early 

childhood education programs such as Parents as Teachers.



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 0; Fiscal year 2002: 2,500,000; Fiscal year 2003: 

2,500,000; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: Administrative costs.



Program areas: Health; Fiscal years 2000 and 2001: 0; Fiscal year 2002: 

232,200,000; Fiscal year 2003: 74,200,000; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: Prescription drugs for 

seniors, lead screening, Medicaid, graduate medical education, 

federally qualified health centers, Telemedicine, lead screening.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 900,000; Fiscal year 2003: 500,000; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 

$384,400,000[B]; Fiscal year 2003: $166,600,000[B]; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Missouri Division of Budget and Planning.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] The amounts allocated for fiscal years 2002 and 2003 include carry-

over funds from payments received in prior fiscal years.



At the time of our study, Missouri was considering securitizing a 

portion of its MSA payments for fiscal year 2003. According to the 

Missouri Division of Budget and Planning, the state is authorized to 

securitize up to 30 percent of its future stream of tobacco payments. 

However, as of January 2003, the state had not securitized any of its 

MSA payments, although the Governor had recently suggested the 

securitization of about $350 million in fiscal year 2003 rather than 

the $50 million the General Assembly originally estimated that the 

state would receive. However, to procure the $350 million in proceeds, 

Missouri is considering the issuance of a hybrid tobacco bond instead 

of securitizing its MSA payments. According to the budget director, 

such a hybrid approach would use a revenue pledge--such as a general 

revenue appropriation--as a means of capturing lower interest costs. 

This would help reduce the cost of the bonds and would allow the state 

to fall back on general revenues if future MSA payments became 

insufficient to pay the bonds.



In addition to passing legislation authorizing the securitization of up 

to 30 percent of its total MSA payments, Missouri established the (1) 

Tobacco Settlement Financing Authority to implement the state’s 

securitization process and (2) Advisory Committee on Tobacco 

Securitization to make recommendations on projects and programs that 

should be funded with the state’s securitized proceeds.



Montana:



According to the terms of the MSA, Montana receives 0.42 percent of the 

annual payments made by the tobacco companies. Montana expects to 

receive a total of $123,794,018 from the MSA through fiscal year 2003. 

This total consists of:



* about $61,110,000 received as of April 2001;



* $31,079,018 received for fiscal year 2002; and:



* $31,605,000 expected to be received for fiscal year 2003.



Table 30 shows the program areas to which Montana allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 30: Montana’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 1,600,000; Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 42,333,000; Fiscal year 2002: 18,147,411; Fiscal 

year 2003: 18,463,000; [Empty]; Types of programs receiving funds, 

fiscal years 2002 and 2003: [Empty].



Program areas: Health; Fiscal years 2000 and 2001: 10,000,000; Fiscal 

year 2002: 12,431,607; Fiscal year 2003: 12,642,000; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Deposited in a 

trust fund where the proceeds are restricted for new or expanded health 

costs and tobacco control[B].



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 7,000,000; 

Fiscal year 2002: 500,000c; Fiscal year 2003: 500,000[C]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $60,933,000; Fiscal 

year 2002: $31,079,018; Fiscal year 2003: $31,605,000; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Montana Office of Budget and Program Planning.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] Allocations from the trust fund are directed to the Children’s 

Health Insurance Program and its related Medicaid costs, youth 

challenge and intensive military style confidence building programs for 

school dropouts, and tobacco prevention.



[C] With the passage of legislation establishing the state’s trust 

fund, the general fund for tobacco prevention was reduced from $3.5 

million to $500,000 per year. Tobacco control programs also receive 

some additional funds from the state’s trust fund.



Montana reported no changes in its decision-making framework for MSA 

funds since fiscal year 2001.



Nebraska:



According to the terms of the MSA, Nebraska receives 0.59 percent of 

the annual payments made by the tobacco companies. Nebraska expects to 

receive a total of $172,393,266 from the MSA through fiscal year 2003. 

This total consists of:



* about $85,600,000 received as of April 2001;



* $42,543,266 received for fiscal year 2002; and:



* $44,250,000 expected to be received for fiscal year 2003.



Table 31 shows the program areas to which Nebraska allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 31: Nebraska’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

[Empty].



Program areas: Health; Fiscal years 2000 and 2001: 56,820,000; Fiscal 

year 2002: 18,814,000; Fiscal year 2003: 21,461,475; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Behavioral 

health, public health, biomedical research, community-based 

developmental disability services.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 14,000,000; 

Fiscal year 2002: 7,000,000; Fiscal year 2003: 7,000,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Tobacco 

quit line, teen tobacco education project, media campaign, youth access 

enforcement, community-oriented program grants.



Program areas: Unallocated[B]; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 16,728,266; Fiscal year 2003: 15,788,525; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $70,820,000; Fiscal 

year 2002: $42,542,266; Fiscal year 2003: $44,250,000; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Nebraska Department of Administrative Services, Budget 

Division.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] Unallocated funds also include MSA payments deposited to the 

Tobacco Settlement Trust Fund, which is the state’s endowment fund. For 

fiscal years 2002 and 2003, $15,453,266 of MSA payments will be 

invested in the Tobacco Settlement Trust Fund. According to the state 

budget office, funds in the Tobacco Settlement Trust Fund are not 

authorized for expenditure.



Since fiscal year 2001, Nebraska passed legislation affecting the 

state’s use of MSA funds. The state’s legislature established an 

endowment investment strategy for the purpose of creating an annual 

transfer of MSA funds from the Tobacco Settlement Trust Fund to the 

Nebraska Health Care Cash Fund; these funds are to be used for health 

care priorities.



Nevada:



According to the terms of the MSA, Nevada receives 0.61 percent of the 

annual payments made by the tobacco companies. Nevada expects to 

receive a total of $176,513,731 from the MSA through fiscal year 2003. 

This total consists of:



* about $87,751,000 received as of April 2001;



* $44,628,083 received for fiscal year 2002; and:



* $44,134,648 expected to be received for fiscal year 2003.



Table 32 shows the program areas to which Nevada allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 32: Nevada’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 44,383,000; Fiscal year 2002: 24,178,014; Fiscal year 2003: 

26,213,005; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: Scholarship program for students who attend and graduate 

from a Nevada Higher Education Institute, grants that assist senior 

citizens to live independent of care facilities, support senior 

services, a homemaker program.



Program areas: General purposes and reserves/ rainy day funds; Fiscal 

years 2000 and 2001: 0; Fiscal year 2002: 238,501; Fiscal year 2003: 

251,825; [Empty]; Types of programs receiving funds, fiscal years 2002 

and 2003: Support Attorney General’s Office administration expenses.



Program areas: Health; Fiscal years 2000 and 2001: 28,243,000; Fiscal 

year 2002: 16,179,926; Fiscal year 2003: 13,471,469; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Grants to improve 

health services for persons with disabilities, pay for prescription 

drugs and pharmaceuticals supplies for low-income seniors, an endowment 

fund that expends interest earnings only to provide grants for the 

promotion of public health.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 8,070,000; 

Fiscal year 2002: 5,512,344; Fiscal year 2003: 4,795,918; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Grants 

provided to organizations to help fund tobacco cessation programs.



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $80,696,000; Fiscal 

year 2002: $46,108,785[B]; Fiscal year 2003: $44,732,217[B]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Nevada Department of Administration, Budget Office.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] The amounts allocated for fiscal years 2002 and 2003 include carry-

over funds and interest earned.



Nevada reported changes in its decision-making framework for MSA funds 

since fiscal year 2001. The state passed legislation allowing for the 

appropriation of MSA funds to support the Attorney General’s Office 

administration and senior service programs. The state also changed the 

percentage of MSA funds that can be used to administer the Healthy 

Nevada Fund and appropriated a portion of the interest earnings from 

the Public Health Trust Fund, which is dependent on MSA funds, to fund 

nursing loans.



New Hampshire:



According to the terms of the MSA, New Hampshire receives 0.67 percent 

of the annual payments made by the tobacco companies. New Hampshire 

expects to receive a total of $191,932,000 from the MSA through fiscal 

year 2003. This total consists of:



* about $95,807,000 received as of April 2001;



* $48,725,000 received for fiscal year 2002; and:



* $47,400,000 expected to be received for fiscal year 2003.



Table 33 shows the program areas to which New Hampshire allocated MSA 

funds for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 33: New Hampshire’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 and 

2001: 91,548,000; Fiscal year 2002: 40,000,000; Fiscal year 2003: 

40,000,000; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: To support the education trust fund.



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 442,000; Fiscal year 2002: 4,000,000; Fiscal year 

2003: 4,400,000; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: To the overall general fund.



Program areas: Health; Fiscal years 2000 and 2001: 0; Fiscal year 2002: 

0; Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, 

fiscal years 2002 and 2003: [Empty].



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 3,000,000; 

Fiscal year 2002: 3,000,000; Fiscal year 2003: 3,000,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Tobacco 

use prevention.



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $94,990,000; Fiscal 

year 2002: $47,000,000[B]; Fiscal year 2003: $47,400,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: New Hampshire Legislative Budget Assistant’s Office.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] The amount allocated for fiscal year 2002 is $1.725 million less 

than the amount received because, according to the state’s Budget 

Office, the state had developed a conservative budget for the year.



New Hampshire reported increasing the state’s appropriation of MSA 

funds into the general fund since fiscal year 2001. For example, from 

fiscal year 2002 to fiscal year 2003, the state increased MSA 

appropriations to the general fund by $400,000.



New Jersey:



According to the terms of the MSA, New Jersey receives 3.87 percent of 

the annual payments made by the tobacco companies. New Jersey expects 

to receive a total of $1,116,800,000 from the MSA through fiscal year 

2003. This total consists of:



* about $557,730,000 received as of April 2001;



* $283,872,000 received for fiscal year 2002; and:



* $275,198,000 expected to be received for fiscal year 2003.



Table 34 shows the program areas to which New Jersey allocated MSA 

funds for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 34: New Jersey’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 53,268,000; Fiscal year 2002: 0; Fiscal year 2003: 0; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

[Empty].



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 42,000,000; Fiscal year 2002: 0; Fiscal year 2003: 

0; [Empty]; Types of programs receiving funds, fiscal years 2002 

and 2003: [Empty].



Program areas: Health; Fiscal years 2000 and 2001: 396,367,000; Fiscal 

year 2002: 264,751,000; Fiscal year 2003: 271,706,000; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: NJ Family 

Care, Supplemental Charity Care, New and Expanded Community Options for 

Seniors, senior pharmaceutical assistance, expanded cancer 

initiatives, Cancer Institute of New Jersey, Garden State Cancer 

Center, medical services.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 11,900,000; 

Fiscal year 2002: 70,453,000; Fiscal year 2003: 5,000,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Cancer 

Institute of New Jersey and education facilities construction.



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 48,562,000; 

Fiscal year 2002: 30,000,000; Fiscal year 2003: 0; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Youth Anti-

Tobacco Awareness Media Campaign, Smoking Cessation Programs for 

Addicted Adults and Youth, Research, surveillance, evaluation and 

assistance for anti-smoking programs, school-based programs for the 

prevention of tobacco use and community-based tobacco control programs.



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $552,097,000; Fiscal 

year 2002: $365,204,000[B]; Fiscal year 2003: $276,706,000[C]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: New Jersey Office of Management and Budget, Department of the 

Treasury.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] The amount allocated for fiscal year 2002 includes carry-over funds 

from prior years.



[C] The amount allocated for fiscal year 2003 includes interest earned.



New Jersey securitized a portion of its MSA payments and received 

proceeds of $1,488,141,494 in fiscal year 2003. The state pledged 

50 percent of its MSA payments beginning in fiscal year 2004 to service 

the debt on the bonds issued to procure these securitized proceeds. New 

Jersey’s allocations of its securitized proceeds for fiscal year 2003 

were the following:



* $691,264,082 for infrastructure, including grants to public schools 

for capital spending, public health and environment laboratories, and 

various transportation system improvements;



* $216,304,321 for general purposes including information technology;



* $133,999,764 to cover a budget shortfall;



* $33,431,833 for social services; and:



* $413,000,000 unallocated for fiscal year 2003.



Other than its securitization of its MSA payments beginning in fiscal 

year 2004, New Jersey reported no other changes in its decision-making 

framework for MSA funds since fiscal year 2001.



New Mexico:



According to the terms of the MSA, New Mexico receives 0.60 percent of 

the annual payments made by the tobacco companies. New Mexico expects 

to receive a total of $172,302,000 from the MSA through fiscal year 

2003. This total consists of:



* about $85,802,000 received as of April 2001;



* $43,600,000 received for fiscal year 2002; and:



* $42,900,000 expected to be received for fiscal year 2003.



Table 35 shows the program areas to which New Mexico allocated MSA 

funds for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 35: New Mexico’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 60,929,000; Fiscal year 2002: 18,700,000; Fiscal 

year 2003: 21,800,000; [Empty]; Types of programs receiving funds, 

fiscal years 2002 and 2003: Permanent fund[B].



Program areas: Health; Fiscal years 2000 and 2001: 19,525,000; Fiscal 

year 2002: 6,220,000; Fiscal year 2003: 19,498,000; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Lung and tobacco 

illness research, diabetes prevention and control, HIV services and 

medication, Mobile Prenatal/Primary Care Clinics, genomics and 

environmental research, base Medicaid funding, breast and cervical 

cancer, defibrillators, link access information.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 2,225,000; 

Fiscal year 2002: 5,000,000; Fiscal year 2003: 5,900,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Tobacco 

cessation and prevention programs and youth nonsmoking.



Program areas: Unallocated; Fiscal years 2000 and 2001: 2,654,000; 

Fiscal year 2002: 7,480,000; Fiscal year 2003: 0; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $85,333,000; Fiscal 

year 2002: $37,400,000[C]; Fiscal year 2003: $47,198,000[D]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: New Mexico Department of Finance and Administration.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] MSA deposits to the permanent fund are not available for 

expenditure and only the interest earned may be appropriated in future 

years.



[C] The amount allocated for fiscal year 2002 includes MSA payments 

received in fiscal year 2001, totaling $37.4 million.



[D] The amount allocated for fiscal year 2003 includes MSA payments 

received in fiscal year 2002 and includes carry-over funds from prior 

years.



New Mexico reported increasing the state’s appropriation of MSA funds 

to the general fund since fiscal year 2001. For example, the state 

increased the general fund appropriations by $7.6 million during fiscal 

year 2003. These funds will be used to cover base Medicaid funding.



New York:



According to the terms of the MSA, New York receives 12.76 percent of 

the annual payments made by the tobacco companies. New York expects to 

receive a total of $1,550,845,185 from the MSA through fiscal year 

2003. This total consists of:



* about $651,845,135 received as of April 2001;



* $399,000,000 received for fiscal year 2002; and:



* $500,000,000 expected to be received for fiscal year 2003.[Footnote 

20]



Table 36 shows the program areas to which New York allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 36: New York’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 and 

2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 250,000,000; Fiscal year 2002: 0; Fiscal year 

2003: 0; [Empty]; Types of programs receiving funds, fiscal years 2002 

and 2003: [Empty].



Program areas: Health; Fiscal years 2000 and 2001: 388,000,000; Fiscal 

year 2002: 359,000,000; Fiscal year 2003: 460,000,000; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: Medicaid, 

indigent care, elderly pharmaceutical program, Family Health Plus, 

health insurance for the uninsured, breast and cervical cancer 

treatment and similar programs.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 30,000,000; 

Fiscal year 2002: 40,000,000; Fiscal year 2003: 40,000,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Tobacco 

control and prevention activities.



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $668,000,000; Fiscal 

year 2002: $399,000,000; Fiscal year 2003: $500,000,000; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: New York Division of the Budget.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



Since fiscal year 2001, New York enacted legislation to strengthen the 

enforcement of the MSA. This legislation changed the state’s tax law to 

ensure that nonparticipating tobacco manufacturers abide by the escrow 

provisions of the MSA. The legislation also requires cigarette tax 

stamping agents in the state to follow strict guidelines to ensure that 

nonparticipating tobacco manufacturers are abiding by the excise 

requirements of the MSA.



North Carolina:



According to the terms of the MSA, North Carolina receives 2.33 percent 

of the annual payments made by the tobacco companies. North Carolina 

expects to receive a total of $680,834,882 from the MSA through fiscal 

year 2003. This total consists of:



* about $327,137,000 received as of April 2001;



* $175,835,882 received for fiscal year 2002; and:



* $177,862,000 expected to be received for fiscal year 2003.



Table 37 shows the program areas to which North Carolina allocated MSA 

funds for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 37: North Carolina’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $64,009,022; Fiscal year 2003: $78,000,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $252,695,000; Fiscal year 

2002: 87,917,941; Fiscal year 2003: 99,862,000; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Tobacco Trust 

Fund.



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

[Empty].



Program areas: Health; Fiscal years 2000 and 2001: 84,232,000; Fiscal 

year 2002: 11,954,459; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: Health and wellness.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $336,927,000; Fiscal 

year 2002: $175,835,881; Fiscal year 2003: $177,862,000; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: North Carolina Office of State Budget and Management.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



North Carolina reported increasing its appropriation of MSA funds to 

the general fund since fiscal year 2001. The state increased the 

appropriations by $78 million. At this time, the increase has been 

approved only for fiscal year 2003 and will be used to offset Medicaid 

costs.



North Dakota:



According to the terms of the MSA, North Dakota receives 0.37 percent 

of the annual payments made by the tobacco companies. North Dakota 

expects to receive a total of $105,975,153 from the MSA through fiscal 

year 2003. This total consists of:



* about $52,658,000 received as of April 2001;



* $26,780,712 received for fiscal year 2002; and:



* $26,536,441 expected to be received for fiscal year 2003.



Table 38 shows the program areas to which North Dakota allocated MSA 

funds for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 38: North Dakota’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 23,483,000; Fiscal year 2002: 12,051,320; Fiscal year 2003: 

11,941,399; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: 45 percent of MSA payments are set aside for the Common 

Schools Trust Fund--allocated but not spent.



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

[Empty].



Program areas: Health; Fiscal years 2000 and 2001: 5,218,000; Fiscal 

year 2002: 322,378; Fiscal year 2003: 322,378; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Dental loan fund, 

breast and cervical cancer program.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 23,483,000; 

Fiscal year 2002: 12,249,147; Fiscal year 2003: 12,249,147; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Water 

development projects.



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 2,350,000; Fiscal year 2003: 2,350,000; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Tobacco Cessation 

Program.



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $52,184,000; Fiscal 

year 2002: $26,972,845[B]; Fiscal year 2003: $26,862,924[B]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: North Dakota Office of Management and Budget.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] The amounts allocated for fiscal years 2002 and 2003 include 

interest earned.



North Dakota reported no changes in its decision-making framework for 

MSA funds since fiscal year 2001.



Ohio:



According to the terms of the MSA, Ohio receives 5.04 percent of the 

annual payments made by the tobacco companies. Ohio expects to receive 

a total of $1,466,029,515 from the MSA through fiscal year 2003. This 

total consists of:



* about $724,742,000 received as of April 2001;



* $368,587,515 received for fiscal year 2002; and:



* $372,700,000 expected to be received for fiscal year 2003.



Table 39 shows the program areas to which Ohio allocated MSA funds for 

fiscal years 2000 and 2001, 2002, and 2003, and the types of programs 

that received these funds.



Table 39: Ohio’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $289,578,188; Fiscal year 2003: $282,858,890; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

[Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $22,189,000; Fiscal year 

2002: 18,595,425; Fiscal year 2003: 16,605,356; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Indemnification 

payments.



Program areas: Education and social services; Fiscal years 2000 and 

2001: 13,759,000; Fiscal year 2002: 19,063,156; Fiscal year 2003: 

18,819,419; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: SchoolNet: support for education technology in local 

school districts, alcohol and drug addiction services.



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 20,005,000; Fiscal year 2002: 1,109,239; Fiscal 

year 2003: 770,695; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: Taxation--settlement enforcement, Attorney 

General--oversight administration.



Program areas: Health; Fiscal years 2000 and 2001: 15,016,000; Fiscal 

year 2002: 28,890,525; Fiscal year 2003: 8,723,367; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Department of 

Health and Minority Health Commission, Biomedical Research Technology 

Transfer Trust Fund.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 138,063,000; 

Fiscal year 2002: 17,004,476; Fiscal year 2003: 44,286,273; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Funding 

to local school districts for school facilities, Ohio Peace Officer 

Training Academy Improvements.



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 

234,861,000; Fiscal year 2002: 546,507; Fiscal year 2003: 636,000; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

Under-age tobacco use enforcement.



Program areas: Unallocated; Fiscal years 2000 and 2001: 306,282,000; 

Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $750,175,000; Fiscal 

year 2002: $374,787,516; Fiscal year 2003: $372,700,000; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Ohio Office of Budget and Management.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



Ohio reported changes in its decision-making framework for MSA funds 

since fiscal year 2001. The state passed legislation allowing the use 

of $289.6 million in fiscal year 2002 and $282.9 million in fiscal year 

2003 for budget shortfalls. In addition, up to $120 million of the 

state’s MSA payments per year is being diverted from the Tobacco Use 

Prevention Trust Fund for deficit reduction in the fiscal years 2002 

and 2003 biennium. The state also decided to divert MSA payments 

amounting to $180 million in fiscal year 2002 and $165 million in 

fiscal year 2003 from the School Facilities Commission to cover budget 

deficits. Ohio is issuing debt to offset the loss of funding to the 

School Facilities Commission; however, the lost revenue will not be 

recovered until fiscal years 2013 and 2014.



Oklahoma:



According to the terms of the MSA, Oklahoma receives 1.04 percent of 

the annual payments made by the tobacco companies. Oklahoma expects to 

receive a total of $299,719,913 from the MSA through fiscal year 2003. 

This total consists of:



* about $149,068,000 received as of April 2001;



* $75,872,921 received for fiscal year 2002; and:



* $74,778,992 expected to be received for fiscal year 2003.



Table 40 shows the program areas to which Oklahoma allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 40: Oklahoma’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 4,000,000; Fiscal year 2002: 10,427,604; Fiscal year 2003: 

20,000,000; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: General Programs.



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 46,598,000; Fiscal year 2002: 1,373,905; Fiscal 

year 2003: 1,002,004; [Empty]; Types of programs receiving funds, 

fiscal years 2002 and 2003: Law Enforcement-Attorney General.



Program areas: Health; Fiscal years 2000 and 2001: 96,055,000; Fiscal 

year 2002: 47,590,850; Fiscal year 2003: 33,462,765; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: General Programs, 

Tobacco Trust Fund for treatment of tobacco-related disease.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 2,000,000; 

Fiscal year 2002: 20,206,878; Fiscal year 2003: 20,314,223; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Health 

Department’s tobacco cessation program, the Tobacco Trust Fund for 

cessation, education, and prevention.



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $148,653,000; Fiscal 

year 2002: $79,599,237[B]; Fiscal year 2003: $74,778,992; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Oklahoma Office of State Finance.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] The amount allocated for fiscal year 2002 includes carry-over funds 

from prior years.



Oklahoma reported no changes in its decision-making framework for MSA 

funds since fiscal year 2001. In November 2002, a proposal to change 

uses of the Tobacco Trust Fund was rejected in a statewide referendum.



Oregon:



According to the terms of the MSA, Oregon receives 1.15 percent of the 

annual payments made by the tobacco companies. Oregon expects to 

receive a total of $332,451,280 from the MSA through fiscal year 2003. 

This total consists of:



* about $160,976,000 received as of April 2001;



* $86,524,314 received for fiscal year 2002; and:



* $84,950,966 expected to be received for fiscal year 2003.



Table 41 shows the program areas to which Oregon allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 41: Oregon’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 133,449,338; Fiscal year 2003: 

95,530,949; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: Insurance Pool Governing Board/ Oregon Health Plan.



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 0; Fiscal year 2002: 99,219,713; Fiscal year 2003: 

0; [Empty]; Types of programs receiving funds, fiscal years 2002 

and 2003: State general fund.



Program areas: Health; Fiscal years 2000 and 2001: 0; Fiscal year 2002: 

0; Fiscal year 2003: 2,500,000; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: Bio-technology: Oregon Health 

Sciences Center.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Unallocated; Fiscal years 2000 and 2001: 161,039,000; 

Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $161,039,000; Fiscal 

year 2002: $232,669,051[B]; Fiscal year 2003: $98,030,949[B]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Oregon Department of Administrative Services.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] The amounts allocated for fiscal years 2002 and 2003 include carry-

over funds and interest from fiscal years 2000 and 2001. Oregon did not 

allocate any of its MSA payments until fiscal year 2002.



Oregon securitized a portion of its MSA payments in fiscal year 2003 

and received $150 million. The state pledged 77 percent of its MSA 

payments for fiscal years 2004 through 2007 to service the debt on the 

bonds issued to procure the securitized funds. Oregon allocated all of 

its fiscal year 2003 securitized proceeds for education. According to 

the state budget office, these funds will most likely be used for the 

state school fund for kindergarten through twelfth grade education.



During fiscal year 2002, Oregon also increased its appropriation of MSA 

funds into the state’s general fund by about $100 million.



Pennsylvania:



According to the terms of the MSA, Pennsylvania receives 5.75 percent 

of the annual payments made by the tobacco companies. Pennsylvania 

expects to receive a total of $1,521,974,654 from the MSA through 

fiscal year 2003. This total consists of:



* about $664,190,000 received as of April 2001;



* $433,529,654 received for fiscal year 2002; and:



* $424,255,000 expected to be received for fiscal year 2003.



Table 42 shows the program areas to which Pennsylvania allocated MSA 

funds for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 42: Pennsylvania’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

[Empty].



Program areas: Health; Fiscal years 2000 and 2001: 0; Fiscal year 2002: 

667,305,000; Fiscal year 2003: 433,529,000; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: Allocation to the Tobacco 

Settlement Fund, with funding for health care insurance for the 

uninsured, home and community-based care, contributions to the PACEnet 

program, tobacco use prevention and cessation, broad-based health 

research, medical care for workers with disabilities, and uncompensated 

care.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Unallocated; Fiscal years 2000 and 2001: 803,500,000; 

Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $803,500,000; Fiscal 

year 2002: $667,305,000[B]; Fiscal year 2003: $433,529,000[C]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Pennsylvania Governor’s Office of the Budget, Bureau of Budget 

Analysis.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] The amount allocated for fiscal year 2002 includes MSA payments 

received in fiscal years 2000 and 2001, which were held pending the 

passage of legislation that allowed the state to allocate these funds.



[C] The amount allocated for fiscal year 2003 includes MSA payments 

received in fiscal year 2002.



Pennsylvania reported changes in its decision-making framework for MSA 

funds since fiscal year 2001. In 2001, the state established the 

Tobacco Settlement Fund as the special revenue fund that receives the 

proceeds from the MSA. The fund maintains an endowment component to 

preserve a portion of the receipts to ensure funds for future 

generations, sustain critical programs if tobacco allocations decrease, 

and provide ongoing revenue if tobacco allocations end. Pennsylvania 

also passed legislation making distribution adjustments within the 

Tobacco Settlement Fund to support health-related programs, and also 

redirected funding that was to be deposited in an endowment account to 

support health-related programs within the Tobacco Settlement Fund.



Rhode Island:



According to the terms of the MSA, Rhode Island receives 0.72 percent 

of the annual payments made by the tobacco companies. Rhode Island 

expects to receive a total of $209,439,291 from the MSA through fiscal 

year 2003. This total consists of:



* about $103,428,000 received as of April 2001;



* $52,601,291 received for fiscal year 2002; and:



* $53,410,000 expected to be received for fiscal year 2003.



Table 43 shows the program areas to which Rhode Island allocated MSA 

funds for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 43: Rhode Island’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: [Empty]; Fiscal year 2003: [Empty]; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: $0; 

Fiscal year 2003: $0; [Empty]; Types of programs receiving funds, 

fiscal years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 102,853,000; Fiscal year 2002: 53,630,000; Fiscal 

year 2003: 53,410,000; [Empty]; Types of programs receiving funds, 

fiscal years 2002 and 2003: State general fund.



Program areas: Health; Fiscal years 2000 and 2001: 0; Fiscal year 2002: 

0; Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, 

fiscal years 2002 and 2003: [Empty].



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $102,853,000; Fiscal 

year 2002: $53,630,000[B]; Fiscal year 2003: $53,410,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Rhode Island Budget Office.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] This amount is greater than the actual payment received in fiscal 

year 2002 because allocations were based on projected receipts for the 

year.



Rhode Island securitized its MSA payments and received $544,238,410 in 

fiscal year 2002. The state pledged all of its fiscal years 2004 

through 2043 MSA payments to service the debt on the bonds issued to 

procure the securitized funds. Rhode Island allocated its securitized 

proceeds as follows:



* $295,100,000 for infrastructure projects, including transportation 

projects, correctional facilities, and other capital projects;



* $135,00,0000 to cover budget shortfalls; and:



* $114,138,410 was unallocated for fiscal year 2002, but $85,000,000 of 

this funding was subsequently allocated to the state’s general fund for 

fiscal year 2003.



Other than its securitization of its MSA payments for fiscal years 2004 

through 2043, Rhode Island reported no other changes in its decision-

making framework for MSA funds since fiscal year 2001.



South Carolina:



According to the terms of the MSA, South Carolina receives 1.18 percent 

of the annual payments made by the tobacco companies. South Carolina 

expects to receive a total of $340,447,600 from the MSA through fiscal 

year 2003. This total consists of:



* about $169,241,000 received as of April 2001;



* $86,078,586 received for fiscal year 2002; and:



* $85,128,014 expected to be received for fiscal year 2003.



Table 44 shows the program areas to which South Carolina allocated MSA 

funds for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 44: South Carolina’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [C].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [C].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [C].



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

[C].



Program areas: Health; Fiscal years 2000 and 2001: 163,422,000; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [C].



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [C].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [C].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 1,750,000; 

Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [C].



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [C].



Program areas: Total; Fiscal years 2000 and 2001: $165,172,000; Fiscal 

year 2002: $0[B]; Fiscal year 2003: $0[B]; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [C].



[End of table]



Source: South Carolina Office of State Budget.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] South Carolina used its entire MSA payments for fiscal years 2002 

and 2003 to service the debt on the bonds issued when the state 

securitized its MSA payments in fiscal year 2001.



[C] Data not applicable.



In fiscal year 2001, South Carolina securitized its MSA payments and 

received $785.9 million. The state pledged all of its annual MSA 

payments for fiscal years 2002 through 2030 to service the debt on the 

bonds issued to procure the securitized funds. For fiscal year 2002, 

the state allocated $791.3 million in securitized proceeds. According 

to the state budget office, the state allocated these funds as follows:



* $577.6 million for health purposes, including (1) the Silvercard-

Senior Citizen Prescription Assistance Program and (2) $553.6 million 

for a state Health Care Trust Fund;



* $94.3 million for infrastructure, funding programs such as (1) water 

and wastewater infrastructure grants and loans and (2) $92.7 million 

for an Economic Development and Local Government Fund to be used for 

water and wastewater infrastructure grants and loans throughout all 

regions of the state;



* $117.8 million for payments to tobacco growers, tobacco quota holders 

and warehousemen for reduced production since 1998, including $8.3 

million for the Tobacco Community Trust Fund; and:



* $1.6 million for tobacco control purposes, such as youth smoking 

prevention cessation.



South Carolina’s fiscal year 2002-2003 Appropriations Act also 

redirected $101 million in MSA payments from the unrestricted portion 

of the Healthcare Tobacco Settlement Trust Fund to fund Medicaid and 

mental health programs.



South Dakota:



According to the terms of the MSA, South Dakota receives 0.35 percent 

of the annual payments made by the tobacco companies. South Dakota 

expects to receive a total of $101,364,928 from the MSA through fiscal 

year 2003. This total consists of:



* about $50,203,000 received as of April 2001;



* $25,358,785 received for fiscal year 2002; and:



* $25,803,143 expected to be received for fiscal year 2003.



Table 45 shows the program areas to which South Dakota allocated MSA 

funds for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 45: South Dakota’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 25,358,785; Fiscal year 2003: 0; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

Education Enhancement Trust Fund.



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 100,000; Fiscal year 2002: 0; Fiscal year 2003: 

3,416,872; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: [Empty].



Program areas: Health; Fiscal years 2000 and 2001: 0; Fiscal year 2002: 

0; Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, 

fiscal years 2002 and 2003: [Empty].



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 700,000; 

Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Unallocated; Fiscal years 2000 and 2001: 48,400,000; 

Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $49,200,000; Fiscal 

year 2002: $25,358,785; Fiscal year 2003: $3,416,872[B]; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: South Dakota Bureau of Finance and Management.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] South Dakota used its entire MSA payment for fiscal year 2003 to 

service the debt on the bonds issued when the state securitized its MSA 

payments in fiscal year 2003. The amount allocated in fiscal year 2003 

to general purposes reflects interest earned on prior MSA payments.



Since fiscal year 2001, South Dakota changed its decision-making 

framework for MSA funds by establishing the Education Enhancement Trust 

Fund. As of July 1, 2001, all of the state’s MSA payments were to be 

deposited into this trust fund. South Dakota also securitized all of 

its MSA payments in fiscal year 2003 and received $243,596,553. The 

state pledged all of its annual MSA payments into perpetuity to service 

the debt on the bonds issued to procure the securitized funds. 

According to the state budget office, South Dakota allocated all of its 

fiscal year 2003 securitized proceeds for education purposes. The 

proceeds were deposited into the Education Enhancement Trust Fund. 

Interest earned on the trust fund balance is to be appropriated for 

education enhancement programs.



Tennessee:



According to the terms of the MSA, Tennessee receives 2.44 percent of 

the annual payments made by the tobacco companies. Tennessee expects to 

receive a total of $705,061,600 from the MSA through fiscal year 2003. 

This total consists of:



* about $354,356,000 received as of April 2001;



* $180,705,600 received for fiscal year 2002; and:



* $170,000,000 expected to be received for fiscal year 2003.



Table 46 shows the program areas to which Tennessee allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 46: Tennessee’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $188,863,700; Fiscal year 2003: $170,000,000; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

[C].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [C].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [C].



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

[C].



Program areas: Health; Fiscal years 2000 and 2001: 0; Fiscal year 2002: 

0; Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, 

fiscal years 2002 and 2003: [C].



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [C].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [C].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [C].



Program areas: Unallocated; Fiscal years 2000 and 2001: 356,379,000; 

Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [C].



Program areas: Total; Fiscal years 2000 and 2001: $356,379,000; Fiscal 

year 2002: $188,863,700[B]; Fiscal year 2003: $170,000,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [C].



[End of table]



Source: Tennessee Department of Finance & Administration, Budget 

Office.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] This amount is greater than the actual MSA payment received in 

fiscal year 2002 because allocations were based on projected receipts 

for the year.



[C] Data not applicable.



Tennessee reported no changes in its decision-making framework for MSA 

funds since fiscal year 2001.



Utah:



According to the terms of the MSA, Utah receives 0.44 percent of the 

annual payments made by the tobacco companies. Utah expects to receive 

a total of $128,455,567 from the MSA through fiscal year 2003. This 

total consists of:



* about $64,006,000 received as of April 2001;



* $32,551,745 received for fiscal year 2002; and:



* $31,897,882 expected to be received for fiscal year 2003.



Table 47 shows the program areas to which Utah allocated MSA funds for 

fiscal years 2000 and 2001, 2002, and 2003, and the types of programs 

that received these funds.



Table 47: Utah’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $17,800,000; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 2,000,000; Fiscal year 2002: 2,000,000; Fiscal year 2003: 

2,000,000; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: Drug Court, Drug Board Pilot Program.



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 24,141,000; Fiscal year 2002: 16,276,000; Fiscal 

year 2003: [Empty]; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: Tobacco Permanent Endowment Fund.



Program areas: Health; Fiscal years 2000 and 2001: 9,500,000; Fiscal 

year 2002: 11,496,000; Fiscal year 2003: 11,497,000; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Children’s Health 

Insurance Program, cancer research.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 4,000,000; 

Fiscal year 2002: 4,053,000; Fiscal year 2003: 4,061,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Tobacco 

quit line, TV campaign, prevention partnerships.



Program areas: Unallocated; Fiscal years 2000 and 2001: 8,641,000; 

Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $48,282,000; Fiscal 

year 2002: $33,825,000[B]; Fiscal year 2003: $35,358,000[B]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Utah Governor’s Office of Planning and Budget.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] The amounts allocated for fiscal years 2002 and 2003 include carry-

over funds from prior fiscal year MSA payments.



Utah reported increasing its appropriation of MSA payments from the 

permanent trust fund into the state’s general fund since fiscal year 

2001 by about $17.8 million.



Vermont:



According to the terms of the MSA, Vermont receives 0.41 percent of the 

annual payments made by the tobacco companies. Vermont expects to 

receive a total of $117,925,000 from the MSA through fiscal year 2003. 

This total consists of:



* about $57,675,000 received as of April 2001;



* $30,920,000 received for fiscal year 2002; and:



* $29,330,000 expected to be received for fiscal year 2003.



Table 48 shows the program areas to which Vermont allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 48: Vermont’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: 0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 1,490,000; Fiscal year 2003: 810,000; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

Opiate addiction treatment.



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 0; Fiscal year 2002: 6,550,000; Fiscal year 2003: 

3,510,000; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: [Empty].



Program areas: Health; Fiscal years 2000 and 2001: 33,680,000; Fiscal 

year 2002: 17,250,000; Fiscal year 2003: 17,250,000; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Medicaid.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 14,750,000; 

Fiscal year 2002: 6,870,000; Fiscal year 2003: 9,290,000; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: 

Education, youth program, trust fund.



Program areas: Unallocated; Fiscal years 2000 and 2001: 940,000; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $49,370,000; Fiscal 

year 2002: $32,160,000[B]; Fiscal year 2003: $30,860,000[B]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Vermont Department of Finance and Management.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] The amounts allocated for fiscal years 2002 and 2003 include 

interest earned on prior MSA payments.



Since fiscal year 2001, Vermont reduced its use of a dedicated fund by 

transferring MSA funds from the state’s Tobacco Trust Fund to the 

general fund. The state transferred about $6.6 million and about $3.5 

million to the general fund for fiscal years 2002 and 2003, 

respectively.



Virginia:



According to the terms of the MSA, Virginia receives 2.04 percent of 

the annual payments made by the tobacco companies. Virginia expects to 

receive a total of $595,139148,251 from the MSA through fiscal year 

2003. This total consists of:



* about $294,180,000 received as of April 2001;



* $149,613,891 received for fiscal year 2002; and:



* $151,354,360 expected to be received for fiscal year 2003.



Table 49 shows the program areas to which Virginia allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 49: Virginia’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $144,673,000; Fiscal year 

2002: 74,135,594; Fiscal year 2003: 75,677,180; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Economic 

development projects, infrastructure, education and job training, 

research, administrative budget of the Tobacco Indemnification and 

Community Revitalization Commission, and indemnification payments to 

tobacco growers.



Program areas: Education and social services; Fiscal years 2000 and 

2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 115,339,000; Fiscal year 2002: 59,308,475; Fiscal 

year 2003: 60,541,744; [Empty]; Types of programs receiving funds, 

fiscal years 2002 and 2003: Deposited to the state general fund and 

allocated through the budget process.



Program areas: Health; Fiscal years 2000 and 2001: 0; Fiscal year 2002: 

0; Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, 

fiscal years 2002 and 2003: [Empty].



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 28,835,000; 

Fiscal year 2002: 14,827,119; Fiscal year 2003: 15,135,436; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Public 

education campaigns to discourage consumption by minors, research, and 

the administrative budget of the Virginia Tobacco Settlement 

Foundation.



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $288,847,000; Fiscal 

year 2002: $148,271,188[B]; Fiscal year 2003: 151,354,360; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Virginia Department of Planning and Budget.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] The amount allocated for fiscal year 2002 does not equal the amount 

received because actual MSA payments exceeded estimates used for budget 

development.



Virginia passed legislation authorizing the securitization of MSA funds 

in 2002. This legislation authorized the Governor to sell all or a 

portion of Virginia’s proceeds from the MSA dedicated to the Tobacco 

Indemnification and Community Revitalization Fund, which accounts for 

50 percent of the state’s share. The Tobacco Indemnification and 

Community Revitalization Commission has proposed securitization of 

these funds for the spring of 2003, and approval by the Governor is 

pending.



Washington:



According to the terms of the MSA, Washington receives 2.05 percent of 

the annual payments made by the tobacco companies. Washington expects 

to receive a total of $594,401,000 from the MSA through fiscal year 

2003. This total consists of:



* about $295,401,000 received as of April 2001;



* $150,000,000 received for fiscal year 2002; and:



* $149,000,000 expected to be received for fiscal year 2003.



Table 50 shows the program areas to which Washington allocated MSA 

funds for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 50: Washington’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 700,000; Fiscal year 2002: 0; Fiscal year 2003: 0; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

[Empty].



Program areas: Health; Fiscal years 2000 and 2001: 198,464,000; Fiscal 

year 2002: 145,000,000; Fiscal year 2003: 111,800,000; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: Health 

services access for low income residents, plus public health purposes-

including direct distributions to local public health districts and the 

state’s immunization program.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 

100,000,000; Fiscal year 2002: 17,500,000; Fiscal year 2003: 

17,500,000; [Empty]; Types of programs receiving funds, fiscal years 

2002 and 2003: Tobacco prevention and control programs.



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 5,000,000; Fiscal year 2003: 37,200,000; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Set aside for 

potential debt service and sales costs for securitization.



Program areas: Total; Fiscal years 2000 and 2001: $299,164,000; Fiscal 

year 2002: $167,500,000[B]; Fiscal year 2003: $166,500,000[B]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Washington State Office of Financial Management.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] The amounts allocated for fiscal years 2002 and 2003 include carry-

over funds from prior fiscal years.



Washington reported changes in its decision-making framework for MSA 

funds since fiscal year 2001. Primarily, the state passed legislation 

authorizing the securitization of MSA funds. Washington securitized 30 

percent of its MSA payments in fiscal year 2003 and received $450 

million. The securitization begins in fiscal year 2003 and will 

continue for 30 years. However, the sale of the bonds was structured 

with the expectation that the bonds would be retired in 19 to 21 years 

rather than 30 years. For fiscal year 2003, the state plans to pledge 

between $25 and $30 million from its MSA payment to service the debt on 

the bonds issued to procure the securitized funds. Washington allocated 

all of its fiscal year 2003 securitized proceeds for infrastructure 

purposes. According to the state budget office, these funds are 

earmarked for state debt service, working capital, and capital 

expenditures. Washington also increased the allocation of MSA funds 

into the state’s general fund for future payments on the state’s 

securitized proceeds.



West Virginia:



According to the terms of the MSA, West Virginia receives 0.89 percent 

of the annual payments made by the tobacco companies. West Virginia 

expects to receive a total of $266,787,064 from the MSA through fiscal 

year 2003. This total consists of:



* about $127,534,000 received as of April 2001;



* $64,861,064 received for fiscal year 2002; and:



* $74,392,000 expected to be received for fiscal year 2003.



Table 51 shows the program areas to which West Virginia allocated MSA 

funds for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 51: West Virginia’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

[Empty].



Program areas: Health; Fiscal years 2000 and 2001: 128,089,000; Fiscal 

year 2002: 64,579,940; Fiscal year 2003: 69,345,408; [Empty]; Types of 

programs receiving funds, fiscal years 2002 and 2003: Operation of 

state-run hospitals, Medical Trust Fund[B].



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 5,851,000; 

Fiscal year 2002: 5,850,592; Fiscal year 2003: 5,850,592; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: Funding, 

training, and technical assistance to community groups for prevention 

and cessation.



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $133,940,000; Fiscal 

year 2002: $70,430,532[C]; Fiscal year 2003: $75,196,000[C]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: West Virginia Department of Administration.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] Half of West Virginia’s MSA payments are deposited into a Medical 

Trust Fund (MTF) annually. The principal of the MTF cannot be spent, 

but interest earned can be used for the Public Employee Health 

Insurance Reserve Fund, expansion of Medicaid, funding of public health 

programs, funding for state-owned and operated health facilities. For 

fiscal year 2002, the state deposited $32,430,532 into the MTF, with an 

additional deposit of $37,196,000 in fiscal year 2003.



[C] The amounts allocated for fiscal years 2002 and 2003 include carry-

over funds from prior years.



West Virginia reported no changes in its decision-making framework for 

MSA funds since fiscal year 2001.



Wisconsin:



According to the terms of the MSA, Wisconsin receives 2.07 percent of 

the annual payments made by the tobacco companies. Wisconsin expects to 

receive a total of $604,452,104 from the MSA through fiscal year 2003. 

This total consists of:



* about $290,634,000 received as of April 2001;



* $156,215,304 received for fiscal year 2002; and:



* $157,602,800 expected to be received for fiscal year 2003.



Table 52 shows the program areas to which Wisconsin allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 52: Wisconsin’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 47,952,000; Fiscal year 2002: 149,493,700; Fiscal 

year 2003: 142,257,700; [Empty]; Types of programs receiving funds, 

fiscal years 2002 and 2003: Direct aid to schools and school property 

tax relief, aid to counties, municipalities and technical colleges, 

medical assistance programs, other aid and tax relief to individuals 

and organizations, University of Wisconsin System, correctional system.



Program areas: Health; Fiscal years 2000 and 2001: 219,032,000; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 23,500,000; 

Fiscal year 2002: 6,032,300; Fiscal year 2003: 15,345,100; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $290,484,000; Fiscal 

year 2002: $155,526,000; Fiscal year 2003: $157,602,800; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Wisconsin Department of Administration.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



Wisconsin securitized a portion of its MSA payments in fiscal year 2002 

and received $1,275,002,400. The state pledged all of its annual MSA 

payments through fiscal year 2032 to service the debt on the bonds 

issued to procure the securitized funds. Wisconsin allocated $1.275 

billion of its fiscal year 2002 securitized proceeds to cover budget 

shortfalls. According to the state budget office, the securitized funds 

were allocated as follows:



* $681 million was deposited directly into the state general fund in 

fiscal year 2002, and:



* $594 million was deposited in an endowment fund where the proceeds 

plus any interest earned on the fund will be used to pay for a portion 

of aid to local governments in fiscal year 2003.



Wisconsin also reported that it decreased the use of dedicated funds 

and passed legislation allowing the use of the entire securitized MSA 

proceeds to address the state’s budget deficit. Initially, the state’s 

securitized proceeds were to be deposited in an endowment fund, but 

subsequently went to the state’s general fund for budget shortfalls.



Wyoming:



According to the terms of the MSA, Wyoming receives 0.25 percent of the 

annual payments made by the tobacco companies. Wyoming expects to 

receive a total of $66,358,967 from the MSA through fiscal year 2003. 

This total consists of:



* about $34,834,000 received as of April 2001;



* $18,735,007 received for fiscal year 2002; and:



* $12,789,960 expected to be received for fiscal year 2003.



Table 53 shows the program areas to which Wyoming allocated MSA funds 

for fiscal years 2000 and 2001, 2002, and 2003, and the types of 

programs that received these funds.



Table 53: Wyoming’s MSA Payment Allocations:



Program areas: Budget shortfall; Fiscal years 2000 and 2001: [A]; 

Fiscal year 2002: $0; Fiscal year 2003: $0; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: [Empty].



Program areas: Economic development for tobacco regions and payment to 

tobacco growers; Fiscal years 2000 and 2001: $0; Fiscal year 2002: 0; 

Fiscal year 2003: 0; [Empty]; Types of programs receiving funds, fiscal 

years 2002 and 2003: [Empty].



Program areas: Education and social services; Fiscal years 2000 

and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 9,789,960; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: 

Substance Abuse Treatment Plan.



Program areas: General purposes and reserves/rainy day funds; Fiscal 

years 2000 and 2001: 0; Fiscal year 2002: 0; Fiscal year 2003: 0; 

[Empty]; Types of programs receiving funds, fiscal years 2002 and 2003: 

[Empty].



Program areas: Health; Fiscal years 2000 and 2001: 0; Fiscal year 2002: 

18,735,007; Fiscal year 2003: 3,000,000; [Empty]; Types of programs 

receiving funds, fiscal years 2002 and 2003: MSA payment deposited into 

a Trust Fund currently earmarked for future health and tobacco 

prevention spending.



Program areas: Infrastructure; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tax reduction; Fiscal years 2000 and 2001: 0; Fiscal 

year 2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Tobacco control; Fiscal years 2000 and 2001: 38,155,000; 

Fiscal year 2002: 900,000; Fiscal year 2003: 3,000,000; [Empty]; Types 

of programs receiving funds, fiscal years 2002 and 2003: Tobacco 

prevention in reducing sales to minors, regional prenatal programs, 

community tobacco prevention activities.



Program areas: Unallocated; Fiscal years 2000 and 2001: 0; Fiscal year 

2002: 0; Fiscal year 2003: 0; [Empty]; Types of programs receiving 

funds, fiscal years 2002 and 2003: [Empty].



Program areas: Total; Fiscal years 2000 and 2001: $38,155,000; Fiscal 

year 2002: $19,635,007[B]; Fiscal year 2003: $15,789,960[C]; [Empty]; 

Types of programs receiving funds, fiscal years 2002 and 2003: [Empty].



[End of table]



Source: Wyoming Office of the Attorney General.



[A] We did not obtain information on allocations for budget shortfalls 

in fiscal years 2000 and 2001.



[B] For fiscal year 2002, Wyoming budgeted its entire MSA payment to a 

trust fund earmarked for future health and tobacco prevention programs. 

The interest earned on the trust fund, totaling $900,000, was available 

to the state for allocation to tobacco control programs in fiscal year 

2002.



[C] For fiscal year 2003, Wyoming budgeted about $9.8 million of its 

MSA payment to the Substance Abuse Treatment Plan and for other social 

services programs. The remaining $3 million was deposited into a trust 

fund earmarked for future health and tobacco prevention programs. The 

interest earned on the trust fund was available to the state for 

allocation to tobacco control in fiscal year 2002.



Since fiscal year 2001, Wyoming passed legislation granting rulemaking 

authority for the Department of Health. The legislation allows the 

Department of Health to establish treatment and prevention standards, 

known as a Substance Abuse Plan, by amending revenue streams and using 

funds received under the MSA. Because of the state’s new Substance 

Abuse Plan, the amount of MSA payments allocated to the state’s trust 

fund decreased.



[End of section]



Appendix III: Survey of States’ Use of Master Settlement Agreement 

Payments:



[See PDF for image] - graphic text:



[End of figure] - graphic text:



[End of section]



Appendix IV GAO Contact and Staff Acknowledgments:



GAO Contact:



Anu K. Mittal 202-512-3841:



Acknowledgments:



Gary Brown, Stuart Kaufman, Judy Pagano, and Kristy Williams made key 

contributions to this report. Thomas James, Rosellen McCarthy, and 

Amelia Shachoy also made important contributions.



FOOTNOTES



[1] The District of Columbia and the 5 U.S. territories are also 

included in the agreement; however, this study only reports on the 

46 states that are party to the agreement.



[2] The $206 billion includes $204.5 billion in estimated total 

payments to the 46 states, the District of Columbia, and the 5 U.S. 

territories and an additional $1.8 billion for other initiatives agreed 

to in the MSA, including a national foundation dedicated to 

significantly reducing the use of tobacco products by youth and 

administrative costs of the National Association of Attorneys General.



[3] U.S. General Accounting Office, Tobacco Settlement: States’ Use of 

Master Settlement Agreement Payments, GAO-01-851 (Washington, D.C.: 

June 29, 2001).



[4] Throughout this report, fiscal year refers to the state’s fiscal 

year. In most states, the fiscal year begins on July 1 and ends on June 

30; the exceptions are Alabama and Michigan, where the fiscal year 

begins on October 1, and New York where the fiscal year begins on 

April 1.



[5] Several other tobacco companies have joined the MSA since the time 

of the agreement.



[6] GAO-01-851.



[7] The $13.2 billion received through April 2001 does not include the 

payment New York received in April 2001. Because New York’s fiscal year 

2002 began on April 1, 2001, the state’s April 2001 payment is included 

in the amount states received during fiscal year 2002. In addition, as 

of April 2001, Missouri had not yet received any MSA payments because 

the state did not receive approval of the MSA from its state court 

until late April 2001. 



[8] This amount does not include MSA payments made to the counties and 

cities in California.



[9] “Securitization” is the process of selling future tobacco 

settlement revenue streams to a special purpose entity established for 

the purpose of issuing bonds backed by these funds and paying the debt 

service on the bonds.



[10] In June 2001, we reported that three states--Alabama, Alaska and 

South Carolina--had securitized all or a portion of their MSA payments. 

See appendix II for information on individual states’ use of 

securitization.



[11] For fiscal year 2002, Rhode Island and Wisconsin were the only 

two states that allocated securitized proceed to cover budget 

shortfalls. For fiscal year 2003, California and New Jersey were the 

only two states that allocated securitized proceeds to cover 

budget shortfalls.



[12] The National Association of Attorneys General monitors the actual 

payments made to states as determined by an independent auditor.



[13] As we reported in 2001, California counties, 4 California cities, 

New York counties, and New York City each receive a share of MSA 

payments.



[14] See appendix III for a copy of the survey that we sent to each of 

the 46 states.



[15] In some instances, states may later revise reported allocations. 



[16] While we asked states to classify their allocations by program 

category for this report, we used state budget documents to classify 

states’ allocations by program category for the 2001 report.



[17] These MSA payments include only payments made to the state, which 

amount to 50 percent of the annual payments made by the tobacco 

companies to California. Four cities and the 58 counties in the state 

receive the other 50 percent of the annual MSA payments to California.



[18] This amount does not include $88,325,000 in additional tobacco 

settlement payments that the state received as a result of the 

settlement of a dispute with the outside attorneys who represented the 

state in MSA negotiations. According to the state budget office, all of 

these funds will be allocated in fiscal year 2003 to the state’s 

Medicaid program.



[19] Missouri did not receive state specific finality until late April 

2001, so its total payments were not included in the total payments 

received through April 2001 in our June 2001 report. The payments 

received for fiscal year 2001 are as of the end of the fiscal year.



[20] These MSA payments include only payments made to the state, which 

amount to about 51 percent of the annual payments made by the tobacco 

companies to New York. New York City and the 57 counties in the state 

receive the other 49 percent of the annual MSA payments to New York. In 

addition, the $651.8 million received through April 2001 does not 

include $261 million that New York received in April 2001. Because New 

York’s fiscal year 2002 began on April 1, 2001, this $261 million is 

included in the $399 million New York received during fiscal year 2002. 





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