Colorado Legislative Council Staff

STATE and LOCAL

REVISED FISCAL IMPACT

(replaces fiscal impact dated April 30, 1999)

TITLE:            CONCERNING USE OF MONEYS RECEIVED PURSUANT TO THE TOBACCO LITIGATION SETTLEMENT.

             * See State Expenditures section of fiscal note on Medicaid costs and General Fund impact.

NOTE:  As amended by the House Appropriations Committee, May 3, 1999, the bill provides that the programs newly created in SB99-132 shall receive funding beginning in FY 2002-03. SB99-231 requires: (1) that all moneys received in the first tobacco settlement payment be placed in the Tobacco Litigation Settlement Trust Fund; and (2) that 20% of each subsequent payment be placed in the Trust Fund. Thus, the fiscal note assumes that the first three payments, totaling $215,710,665, will be placed in the Tobacco Litigation Settlement Trust Fund. The Trust Fund total, including interest earned, is estimated at $261,346,769 for FY 2002-03.

Program expenditures under SB99-132, plus 20% to the Tobacco Litigation Settlement Trust Fund pursuant to SB 99-231, equal $140,126,315 in FY 2002-03.

A schedule of payments and distribution of tobacco settlement moneys is provided on page 5 of this fiscal note. It must be noted that payments will be adjusted to reflection inflation and volume of cigarette sales.

Summary of Legislation

            The reengrossed bill includes the following provisions:

            •   defines "settlement moneys" to be moneys received pursuant to the master settlement agreement;

            •   defines "tobacco settlement programs" to be any program that receives appropriations from moneys received by the state pursuant to the master settlement agreement;

            •   requires that no tobacco settlement moneys shall be used for a tobacco settlement program unless such program is expressly authorized by statute or is within the authority of the department or local government requesting funding;

            •   provides that a portion of settlement moneys may be dedicated to local governments for tobacco use prevention, cessation and related health programs;

            •   provides that all moneys received from the master settlement agreement shall be dedicated to improving the health of the citizens of Colorado;

            •   provides that moneys received by the state under the master settlement agreement are intended to supplement any moneys appropriated to health-related programs established prior to the effective date of the act;

            •   provides that a portion of the settlement moneys shall be placed in an endowment trust fund with the principle and interest reinvested in the fund for 25 years.

            As amended by the House HEWI Committee (4/29/99) and the House Appropriations Committees (5/3/99), the bill includes the following provisions:

            •   provides that programs created in SB99-132 be implemented in FY 2002-03;

            •   deletes the Tobacco Prevention, Education, and Cessation Programs in Schools, Grants for Public Programs, and Tobacco-Related Mental Health Treatment Services Programs and consolidates them into a single Tobacco Education, Prevention, and Cessation Program in the Department of Public Health and Environment;

            •   provides that moneys appropriated to the Fitzsimons Trust Fund begin in FY 2002-03 and continue through FY 2006-07;

            •   creates the Read to Achieve Grant Program in the Office of the Governor (10%);

            •   creates the School Violence Prevention Program to receive 3 percent or $3.0 million (whichever is lesser);

            •   creates the Twenty-First Century School Revolving Loan Fund in the Treasury Department for the purpose of K-12 capital construction — funding received begins at 10 percent and decreasing by 2 percentage points annually to a minimum funding level of 2 percent;

            •   establishes and changes percentage amounts for programs receiving tobacco settlement moneys:

                   — Nurse Home Visitor Program (starts at 2% grows to maximum of 10%)

                   — see Table 1 for percentage allocations; and

            •   provides that at least 10 percent of moneys allocated to the Children's Basic Health Plan Trust Fund, not necessary for providing services to enrollees, shall be allocated to the Department of Health Care Policy and Financing to offset Medicaid costs incurred.

State Expenditures

            Table 1 on page 5 includes an overview of expenditures under SB 99-132. Please refer to the fiscal notes dated April 9 and April 28, 1999, for a narrative discussion of the programs created in the bill as introduced.

            Medicaid Costs Under SB 99-132. The fiscal note includes an estimate of Medicaid-related costs incurred under the bill. Due to the bill's effective date of July 1, 2002, it is safe to assume the actual caseload impact will be different than the projections used in this fiscal note. Due to the number of factors which affect the Medicaid caseload, assumptions used today may not hold valid four fiscal years out.

            The total cost to modify the asset test for children eligible for Medicaid to that of the asset test for the Colorado Works Program is estimated at $1,480,080 in FY 2002-03. Of this amount, $541,260 is General Fund. The expansion of children into existing Medicaid eligibility categories as a result CBHP expansion is estimated at $31,175,443. Of this amount, $15,558,130 is General Fund. The Department of Health Care Policy and Financing estimates that Medicaid caseload increases resulting from CBHP expansion may range from 13,800 to 22,800; this fiscal note assumes the high range. Because the bill provides tobacco settlement moneys to offset General Fund costs for Medicaid expansion, a minimum of $3.4 million will be available from tobacco settlement moneys to address Medicaid backfill. It is estimated that for FY 2002-03, approximately $13.0 million of the total $34.2 million will be required for CBHP expansion. Thus, adequate tobacco settlement moneys should be available in FY 2002-03 to backfill all General Fund moneys required.

            FTE Under SB99-132. The fiscal note reflects only the moneys required under SB 99-132. No additional FTE are noted for FY 2002-03. It is assumed that any FTE required due to the creation of these new programs will be addressed through the annual budget process.

Local Government Impact

            The counties' 20 percent share for performing Medicaid eligibility determinations and case management services is estimated at $309,155 in FY 2002-03.

State Appropriations

            None required in FY 1999-00.

Departments Contacted

Education                   Health Care Policy and Financing                Higher Education

Human Services         Legislature, State Auditor                              Law

                                    Public Health and Environment                     Treasury