- Michael Tonn
In 1998, Attorney General Bill Sorrell announced that he and his counterparts in 45 other states had reached a landmark deal with cigarette companies. The states had sued to recover the cost of providing health care to smokers. Under the agreement, Vermont would receive between $24 million and $30 million every year in perpetuity.
Since then, Vermont has reaped more than $500 million, and the state will get millions more as long as the tobacco companies stay in business. Most of that money goes to Medicaid to cover the cost of treating smoking-related illnesses of low-income Vermonters. The rest finances state programs to discourage tobacco use and a trust fund to ensure their viability.
Yet since the Great Recession, settlement money bound for the trust fund and smoking-prevention programs has been steadily raided to help balance the state's budget. The amount allocated for smoking prevention has dropped from a first-year high of $6.5 million to $3.7 million.
Now Gov. Peter Shumlin's proposed budget for next year would essentially defund the independent board that oversees the state's tobacco-control initiatives; instead of getting $224,000 to carry out its work, the Vermont Tobacco Evaluation and Review Board would receive $25,000, eliminating the tobacco board's paid administrator and the experts who help evaluate the state's tobacco-control programs.
The governor's plan would also drain a trust fund that five years ago was valued at more than $30 million. It's since dropped to $836,205.
"It shocked all of us," said Rebecca Ryan, an official with the American Lung Association of the Northeast.
How did the independent body that oversees and evaluates anti-tobacco initiatives wind up on the chopping block?
In 1999, then-governor Howard Dean and the legislature appointed a task force — which consulted national experts and held seven public forums — to determine how Vermont should put the windfall of tobacco proceeds to use. It recommended dividing the money in thirds between Medicaid, the trust fund, and the state's prevention and cessation programs.
"Again and again at the forums, task force members heard Vermonters say they didn't want all the program decisions to come from the legislature or from a state agency," the task force report stated. "They didn't want the annual settlement money to be raided for tax cuts or for other non-tobacco-related programs, however worthwhile."
The task force called for an independent board to administer the tobacco-prevention programs to assure their effectiveness.
In 2001, the legislature created the independent Vermont Tobacco Evaluation and Review Board but abandoned the three-way split in favor of allocating about two-thirds of the money to Medicaid. It created a trust fund and banked $19.5 million from the first couple of settlement payments but never made any additional contributions. The state treasurer invested the money, which grew to $30 million by 2005.
That's when annual settlement payments, which are tied to cigarette sales, started dropping, and the administration of former governor Jim Douglas started tapping the fund's annual investment growth to make up the difference. For four years, the fund maintained a $30 million balance. Then in 2009, mid-recession, lawmakers authorized taking more than it was earning.
Ted Marcy, a professor emeritus at the University of Vermont's College of Medicine and longtime member of the tobacco evaluation board, said he was disappointed, but not surprised. "It was sitting there like a cookie jar full of cookies," he said.
The depletion continued even when Vermont started receiving an additional $12 million a year from cigarette makers in 2008 — part of a 10-year deal for states that were key players in the tobacco lawsuit. Vermont has directed all the extra money to Medicaid, but in two years those payments will stop.
"It is a $12 million problem waiting for you to solve," Stephanie Barrett, associate fiscal officer to the legislature, advised the House Appropriations Committee last week during a briefing on the tobacco trust fund.
In 2013, lawmakers directed the Shumlin administration and the Vermont Tobacco Evaluation and Review Board to come up with a three-year funding plan "to maintain the gains made in preventing and reducing tobacco use." Legislators agreed to the board's recommendation to give anti-tobacco programs $3.9 million annually through next year.
The deal didn't last long. In mid-2014, the administration and lawmakers trimmed $68,000 of the board's funding, and they maintained the reduced level this year.
The board's current budget is $224,698, which includes $90,000 for the salary and benefits of the administrator and $120,000 for its contract with RTI International, the firm that evaluates state programs.
Shumlin's proposed cuts would put the board administrator Kathryn O'Neill and RTI out of their jobs and rely on the Vermont Department of Health to evaluate the state's tobacco-control programs, which include television campaigns, a smoking-cessation hotline and website, nicotine-patch giveaways, antismoking education in schools, and enforcement of sales restrictions.
State Health Commissioner Dr. Harry Chen defended the governor's recommendation, calling attention to the $113 million revenue shortfall state government faces in the coming year. "One of the things government has to do in times of shortages is look at what is the most effective use of dollars," he said. He also expressed confidence that his employees could handle what was once outsourced to RTI. Program reviews are routine, he said, referencing a 33-page September Tobacco Stat document that evaluates the tobacco-control program. He said his department makes use of an internal management process that "promotes data-driven decision making, relentless follow-through and a focus on accountability."
The tobacco board's budget covers office costs and $50-per-meeting stipends and mileage for some of the 14 board members. The governor, the speaker of the House and the Senate Committee on Committees choose 10 of those board members. Slots are earmarked for a nonprofit anti-tobacco organization, a counter-marketing expert, a tobacco researcher, a health care provider, a low-income Vermonter, a person under age 30, an educator and two lawmakers. Representatives of the departments of health and liquor control, the attorney general, and the agency of education serve as ex-officio members.
The group currently has a lot of say in how the tobacco-control money is used at the Department of Health, Agency of Education and Department of Liquor Control, but the administration wants to limit its authority to an advisory role.
"We wouldn't pay any less attention to their opinion," Chen assured.
Board member Marcy isn't convinced. He recounted how Douglas wanted to use the $12 million bonus payments for a scholarship program, but the tobacco evaluation board objected. "This is the value of an independent board," said Marcy, who was chairman at the time. "It can stand up and say no when there are bad ideas."
Over the years, the same board has scrutinized a plan to pay pregnant women not to smoke and questioned the viability of one-on-one cessation counseling compared to telephone and online sessions. It also got $200,000 moved from the Agency of Education to the Department of Health to boost spending on cessation and media, based on effectiveness data.
Amy Brewer, current chair of the evaluation board, hopes lawmakers still see value in the independent review process they created 15 years ago. "Results-based accountability has been a theme of the legislature for a long time," Brewer said. "We are designed to do just that."
The House Human Services Committee agrees. They rejected the administration's proposal to make the board advisory, saying in a letter to House budget writers, "The General Assembly intentionally developed the board to act as an independent entity and this change defeats that purpose." The House budget bill maintains an independent board, but leaves it unfunded.
The board's future now rests with the Senate.
Senate Appropriations clerk Diane Snelling (R-Chittenden) has long championed performance measures for government programs. "You need someone outside government to say if the program is working," she said. The board's funding and independence are now before her committee. Her prediction: "There is a potential way to resolve this."
Good thing, as smoking continues to plague Vermonters. Eighteen percent of Vermont adults still smoke and 13 percent of youth light up — down from 22 and 33 percent, respectively, in 1999. A new worry is the growing popularity of electronic cigarettes, especially with the younger population.
Ryan, at the American Lung Association, said the state shouldn't let up on its counterattack: "The tobacco industry — they are recruiting new smokers every day."