The National Tobacco Settlement - Facts
LEXINGTON - The Master Settlement Agreement (MSA), or the National Tobacco Settlement are two sets of words that are commonly heard yet not so commonly understood.
The MSA was an agreement between the attorneys general from 46 states and four of the major tobacco companies. The settlement was for $206 billion to be paid over a 25 year period.
The settlement came about due to the growing number of lawsuits against the tobacco companies. The states were suing the tobacco companies for the costs of tobacco related illnesses and to recover Medicaid costs. This settlement stopped individual lawsuits against the tobacco companies.
In return, the tobacco companies agreed to give billions of dollars to the states, ban all billboard advertising and promotional giveaways, relocate tobacco products in stores behind the counters, and restrict cigarette vending machines.
Certain guidelines were set forth in the MSA directing the states to use the money in certain areas such as youth access programs and cessation programs. The MSA funds in general will go to the individual state's general fund to be used as they see fit.
The settlement involves two dispersions of money. The first set of money is known as Phase I and includes the aforementioned allocations of money to each state whose legislature determines the spending. The amount of Phase I money is determined by the number of Medicaid patients thus directly reflecting on the population of each state.
The Kentucky legislature passed a bill in 1998 providing for the legislature to be in charge of spending the MSA funds. Of course, there will be many individuals and groups with suggestions on how the money should be spent. The legislature further provided for a committee to make recommendations to the legislature. This committee is called Kentucky Agriculture and Rural Development Authority (KARDA).
The second set of money, Phase II, is given to the tobacco producing states to alleviate the financial stress of the tobacco farmers due to the future decrease of tobacco consumption and production. This money is for quota holders and tobacco growers only.
It is necessary that Phase I and Phase II be thought of separately. They are two different sets of money that are being spent in two very different ways.