In November 1998, Attorney General Betty Montgomery held a press conference to announce that Ohio would end its lawsuit against the country's five largest cigarette manufacturers by joining 45 other states in a master settlement. At the press conference, Montgomery gave her views on the appropriate use of the settlement money.
"The reason we got in this fight was to protect public health and prevent underage smoking," she said. "A significant portion of this money should go toward these causes."
But Ohio lawmakers recently dedicated less than 13 percent of the settlement to such causes. An estimated $1.2 billion will be used to combat tobacco usage, especially among minors, with media campaigns, community, school and mentoring programs, and by focusing education and enforcement efforts on retailers.
$13.87 million, just over 0.1 percent of the total award, might be used to treat smoking-related illnesses. If the federal government, however, allocates funds to Ohio for similar purposes, the state will redirect this allotment to other programs.
And each of these allocations could end up being much smaller. In the legislation, these commitments are expressed as percentages of the tobacco payments Ohio receives, which are based on cigarette sales in the U.S. If those sales decline, so will Ohio's much-publicized $10.1 billion windfall.
The Legislative Budget Office, the state agency responsible for forecasting the economic impact of legislation, estimates that a 1 percent annual reduction in U.S. cigarette sales will slash Ohio's receipts by $1.2 billion. Federal and state anti-smoking legislation and possible federal regulation of tobacco could bring about significant decreases in U.S. cigarette consumption.
But lawmakers protected certain prized initiatives from such uncertainties. Of the $4.5 billion earmarked for educational facilities, $2.5 billion is expressed in specific dollar amounts, not percentages.
Some believe that the legislature's recent, uncharacteristic urgency to fund school buildings has been inspired by the Ohio Supreme Court's upcoming decision on the constitutionality of the state's education financing practices. In the 1997 decision that first declared these practices unconstitutional, the court ruled that the state consistently underfunded school building construction and upkeep.
"It's as if the legislature is in the Statehouse, holding a banner out the window to the justices saying, 'Hey, look, we put tobacco money into the school facility program,' " said William Phillis, executive director of the Ohio Coalition for Equity and Adequacy of School Funding, the group that organized the judicial challenge to Ohio's school funding formula.
Perhaps supportive of Phillis' claims, less than two weeks after Gov. Bob Taft introduced his 12-year, $23-billion school building plan, much of which is funded by the tobacco settlement, he submitted it to the court for consideration in the education financing lawsuit. Likewise, the state recently filed a request to submit Senate Bill 192, the legislation that allocates nearly half of the tobacco settlement to schools, for consideration by the court.
But, according to Phillis, both Taft's 12-year plan and SB 192 have major problems the court should consider. The first is that, since more than half of the $23 billion in Taft's plan is to be raised by local school districts, the plan depends too heavily on local property taxes. In the 1997 ruling, the court held that the state's funding formula adversely affected poor districts by relying too much on local money.
Phillis also believes that these plans stretch the spending out too far to effectively address the ongoing decay of Ohio's school buildings.
"Over 50 percent of Ohio's schools are at least 60 years old," he said. "We need a 6-8 year spending plan to effectively halt the decay."
Perhaps most unsettling about the intersection of the education financing and tobacco lawsuits is that, because SB 192 is not binding on subsequent lawmakers, tobacco funds now dedicated to school facilities could soon be redirected elsewhere.
As made obvious by the reams of evidence in court, Ohio's leaders have consistently placed a low priority on public education. The legislature decided to return $1.7 billion to taxpayers instead of spending the state revenue surplus, money they held in their hands, on schools. They're now attempting to show their dedication to the state's schoolchildren by spreading this spending over the next quarter of a century and using money over which they have no real control.
