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For Immediate Release
Contact: Steve Halvonik 717-787-1381
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Auditor General Jack Wagner Releases Results of Public Hearings about Misdirected Tobacco Settlement Dollars

Says the public has spoken and wants the General Assembly to listen

HARRISBURG, PA, June 2, 2011 – Auditor General Jack Wagner today released a special report with the results of five statewide public hearings about how millions of incoming tobacco settlement dollars should be used. He said that public testimony was clear: the Governor and General Assembly should use settlement dollars for health-related programs as mandated by the Tobacco Settlement Act, Act 77 of 2001.

“The people who testified represent millions of Pennsylvanians, and they don’t want settlement monies used to plug holes in the state budget as previously was done, or to fund a new loan program,” Wagner said.

Governor Tom Ridge and a bipartisan General Assembly got it right in 2001 after considerable public input that tobacco settlement dollars should be utilized to reduce the negative health effects of smoking, Wagner said.

He added that time is running out for the General Assembly to act on this matter as members make critical decisions about the state’s budget. He noted that Pennsylvania still has a chance, for example, to save the recently terminated adultBasic health insurance program for which 41,000 low-income working Pennsylvanians paid a small fee, and also to fund tobacco control programs at the levels set by Act 77.

“The primary mission of government is to protect its citizens, and it’s my duty as fiscal watchdog to make sure that government is doing the right thing,” Wagner said. “With the General Assembly set to convene next week to negotiate a state budget to serve the residents of this commonwealth, now is the time for the leadership to step to the plate and ensure that Pennsylvania keeps its commitment to the mandates of the Tobacco Settlement Act.”

Wagner’s special report summarizes the nearly 1,000 pages of testimony from social service organizations and individuals who attended his hearings in Pittsburgh, Erie, Scranton, Harrisburg, and Philadelphia. Testifiers from all hearings voiced their support for utilizing Tobacco Settlement Funds for health-related purposes.

Wagner is submitting the results of this special report to the General Assembly for their use during the state budget negotiation process, and a copy will also be provided to Gov. Corbett.

In a special report released in March, Wagner reported that the General Assembly quietly diverted $1.34 billion, or 30 percent, of the Tobacco Settlement Fund payments the commonwealth has received since 1999 without getting public input on how the funds should be used.

At that time, Wagner called on Gov. Corbett and the General Assembly to hold immediate statewide public hearings to discuss the long-term use of approximately $5.4 billion or more of incoming tobacco settlement dollars the state is set to receive over at least the next 15 years. Tobacco companies agreed to pay the dollars to settle a lawsuit filed by Pennsylvania and 45 other states to recover health care costs associated with tobacco illnesses. After several weeks of inaction by the governor and the General Assembly, with the exception of one policy committee hearing related solely to adultBasic, Wagner took it upon himself in April to convene his own hearings to determine how the public wants incoming settlement dollars to be spent.

Testimony at the public hearings confirmed and expanded many of the issues raised in the March 11 report:

  • Smoking is the number one cause of preventable deaths. Residents of the commonwealth spend about $5 billion a year treating smoking-related illnesses, and more than 20,000 Pennsylvanians die each year from a smoking-related illness. Funding for tobacco prevention and cessation declined from $50.5 million in 2002-03 to $14.7 million in 2010-11.
  • The termination of the adultBasic program in February not only left 41,000 working Pennsylvanians without insurance, it also killed the chance for the more than 500,000 on the waiting list to get adultBasic. Testifiers said that uninsured Pennsylvanians tend to put off preventative health care and often are just one medical event away from medical/financial disaster.
  • Pennsylvania could lose federal dollars if it doesn’t reduce children’s access to tobacco, which is another reason to restore funding for tobacco control programs.
  • The termination of adultBasic is in effect cost shifting because the state will pick up the tab through increased uncompensated care payments when more people begin to show up in hospital emergency rooms for care. Testifiers said that the Pennsylvania state budget is more than just a financial document; it is also a moral document that illustrates how Pennsylvania treats its residents.
  • After Capital Blue Cross, Highmark, Independence Blue Cross and Blue Cross of Northeastern Pennsylvania ceased making annual contributions to adultBasic as a substitute for the state’s funding, they should have been tapped to continue the funding.

“Now is not the time to take away vital services that impact the health of Pennsylvania residents,” Wagner said. “With Pennsylvania mired in the worst economic downturn since the Great Depression and families struggling to make ends meet, government officials must look at new and innovative ways to address the fiscal challenges of the commonwealth, while inflicting as little pain as necessary on the residents of this great state.”

Wagner has advocated for the General Assembly and Gov. Corbett to seek a combination of public and private financing to continue adultBasic funding until national health care begins in January 2014. Tobacco settlement funds, the Blues, private health insurers, and the foundation community all represent potential funding sources.

Wagner’s special reports on the Tobacco Settlement Fund are available to the public at www.auditorgen.state.pa.us.

Auditor General Jack Wagner is responsible for ensuring that all state money is spent legally and properly. He is the commonwealth’s elected independent fiscal watchdog, conducting financial audits, performance audits and special investigations. The Department of the Auditor General conducts thousands of audits each year. To learn more about the Department of the Auditor General, taxpayers are encouraged to visit the department’s website at www.auditorgen.state.pa.us.

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