The tobacco trust’s money has grown. So has the desire to decide how it is spent.
By Tim Allen, Managing Editor
It’s human nature. When something appealing sits just out of reach, the desire to possess it grows strong. As the years pass, the object becomes even more desirable and the urge to have it only increases.
Such is the case with Oklahoma’s Legislature and the state’s Tobacco Settlement Endowment Trust Fund.
The fund, aka TSET, was created in 2000 after voters approved State Question 692. Over time, the lion’s share of the state’s annual payments from the national tobacco settlement has been deposited into it.
Earnings from the fund are used for cancer research, tobacco prevention and other health programs, reflecting the health concerns behind Oklahoma’s tobacco lawsuit.
The fund is invested, and only the earnings may be spent. In fiscal 2025, it generated about $143 million in earnings available for certification. Its latest audited balance was more than $2 billion.
Talk about enticing.
The lock voters built
But nearly 26 years ago, a fund of that magnitude was only a concept. Drew Edmondson, Oklahoma’s attorney general at the time, and Robert Butkin, the state treasurer, had the foresight to see what was coming, and they knew it would become a glowing object of desire.
The state question they helped write passed with 69% of the vote. It put investments under a board chaired by the state treasurer, while spending decisions went to a separate, appointed board of directors. Legislative leaders could appoint some members, but they could not control TSET’s investment or spending.
I was on the treasurer’s staff as the Board of Investors got underway after the vote. I remember the work that went into choosing a financial consultant, adopting an investment policy and making sure the fund could operate transparently and efficiently. It worked then and has done so for decades.
In 2020, voters rejected a proposal to direct more of the future tobacco settlement payments toward Medicaid funding and less into TSET.
Last year, lawmakers tried to make members of TSET’s Board of Directors removable at will by the officials who appointed them. The Oklahoma Supreme Court struck down the law in January. The Constitution gives members fixed terms.
So much money, so much need
Enter Trey Caldwell.
As chairman of the House Appropriations and Budget Committee, Caldwell, R-Faxon, sees better than most the tremendous need for state funding and the limits on available money. People bring him good ideas for spending state money all year long, and there is never enough to fund them all.
That pressure is nothing new. It grows when state leaders are talking about major tax cuts, too.
As we reported Wednesday, Caldwell proposed protecting TSET’s existing principal while halving its share of future settlement payments. He also wanted to direct most of its earnings toward Oklahoma’s Promise scholarships and the state’s education reform fund. His plan would have eliminated TSET’s Board of Directors and given the Board of Investors responsibility for distributing the money.
The House approved the proposal. The Senate never brought it to a vote, so the question never reached the people.
Caldwell hasn’t forgotten that part. In our 34-minute conversation this week, he returned to the Senate’s failure to vote seven times. I didn’t ask him about it. He brought it up himself.
At one point, I joked that he sounded a little pissed off.
“No comment,” Caldwell said, playing along.
For now, he says he’ll give TSET’s board time to work more closely with lawmakers before deciding whether to try again. He calls himself “cautiously optimistic.” He also points out that he has four years left in the Legislature.
The decision belongs to voters
Perhaps this is a conversation worth having. More than a quarter-century is a long time. A whole generation of Oklahomans has grown up since voters created TSET. It’s not a bad thing to ask whether its earnings are being put to the best possible use.
There’s a strong case for continuing TSET’s health programs. The problems they address haven’t gone away. There’s also a case for helping more Oklahoma students afford college or career training. Those priorities can coexist; the argument is over how to pay for them.
If lawmakers want to change who controls TSET or what the Constitution allows it to fund, the decision belongs to voters.
Edmondson thinks the Legislature may finally understand that. “If they’re able to read tea leaves at all, they’ve probably given up on being able to indirectly control it,” he told me, “and realize they’re just going to have to change the constitutional language if they want to make any progress on that.”
It appears lawmakers have figured that out. Caldwell’s latest proposal was written as a question for voters. The House voted to send it to them. The Senate let it die in committee.
If he tries again, the Legislature will first have to agree on a question. Then Oklahomans will decide whether the answer they gave in 2000 still stands.
