Smoking decline cuts U medical education
The good news is, smoking is down.
The bad news is, that means there will be less money for smoking-prevention efforts and medical education at the University of Minnesota.
The matter is likely to come up today at the Board of Regents meeting in Duluth.
When the state and the tobacco companies settled a lawsuit in 1998, the companies agreed to pay the state $6.1 billion. Of that, a projected 1.3 billion was set aside for endowments. One endowment, originally projected to be $378 million, was earmarked for medical education at the university's Academic Health Center. A second endowment, projected to be $590 million, was slated for state smoking-prevention efforts.
The total amount of the endowments was tied to the smoking rates and the tobacco companies' profits. When the tobacco companies shipped 13 percent less product in 1999 than they had in 1997, their payments to the endowments went down. The university had counted on the earnings of about $8 million on its endowment to pay for medical education. Instead, the university learned recently it would get a little more than $7 million to spend on the academic health center for the current school year.
``It's a surprise, and it hurts,'' said Frank Cerra, university senior vice president who heads the Academic Health Center. ``I had to cut about $1 million I had already allocated.''
Four months into the school year, Cerra had to cut all department budgets 12 percent.
Programs that are getting less money this year range from resident training to the Center for Spirituality and Healing to comparative veterinary medicine. The less-than-expected financing could lead to cutbacks in items such as the university's cancer center Web site and information line, which gets 3,000 visitors a month, medical training programs in Minneapolis' Phillips neighborhood, and rural dental clinics, according to university officials.
Cerra said that when the Legislature set up the endowments as a financing mechanism, he did not understand the financing relationship. ``It was never clearly stated that the endowments were tied to tobacco use and profitability,'' he said.
However, the Health Department, which oversees the projected $590 million endowment for smoking prevention, did understand the connection, according to Mary Sheehan, state director of community health services. Instead of an endowment of $590 million, the prevention endowment is likely to be closer to $552 million.
``We saw it coming, so we made some adjustments,'' Sheehan said.
Her agency budgeted fewer dollars for prevention efforts this year. Hennepin County and a coalition of counties in southeastern Minnesota are among the organizations that get tobacco prevention money.
``It's very bad when you're starting out to give local people money, then go back and take some of it away,'' Sheehan said.
Most states that have settled with the tobacco companies are receiving payments based on a formula that considers tobacco use and the companies' profitability, said Michael Ciresi, the lead lawyer for the state and Blue Cross and Blue shield in the tobacco lawsuit.
Ciresi said it makes sense to tie endowment payments for smoking prevention to tobacco use.
``The whole idea of the lawsuit was to reduce smoking because if you reduce smoking you reduce all medical costs,'' Ciresi said.
However, he said, it doesn't make sense to tie medical school support to a financing source that is designed to decline.
In its budget request in the next legislative session, the university has asked the state to address instability of the endowment.
In addition to the endowments, the tobacco companies will pay about $200 million a year to the state general fund. That money has no tie to tobacco use, according to Margaret Kelly, state executive budget officer.