Schools to get $104 million windfall from tobacco settlement sale
BATON ROUGE, La. (AP) -- Louisiana elementary and secondary schools will get a $104 million windfall when the state sells 60 percent of its tobacco settlement.
The windfall, however, should be put in a trust fund with the interest used to expand the new preschool program that starts in January, Commissioner of Administration Mark Drennen, said Thursday.
Drennen, a member of the State Bond Commission, told his colleagues that the trust fund idea belongs to Gov. Mike Foster.
The commissioner said he believes educators will go along.
Louisiana, over a 25-year period, is supposed to get over $4 billion from tobacco companies that settled lawsuits filed by 46 states. The money comes in annual installments.
The Legislature decided this year to sell 60 percent of the settlement for upfront cash as a hedge against possible collapse of the tobacco industry.
In 1999, Louisiana's voters approved a constitutional amendment that puts most of the settlement money in a trust fund. The interest earned from the trust is spent on various education and health care enhancements.
The Legislature gets some of the installment for annual appropriations, also limited mostly to education and health care.
For a limited time, school systems get 10 percent.
The state plans to sell $2.4 billion of the settlement, getting about 50 cents on the dollar -- $1.2 billion.
The school systems' share is the $104 million.
The law says the school systems must spend the money only on enhanced programs such as preschool or remedial classes. Any programs must be approved by the state department of education and the Joint Legislative Budget Committee.
The budget committee and the department generally agree with the governor.
Foster also pushed the plan that puts $15 million of federal funds in preschool for children in poverty. The money will serve about 3,000 children.
If the windfall is placed in trust, the money may earn as much as $10 million a year -- enough to provide preschool for another 2,000, state Treasurer John Kennedy said.