REPORT TITLE:
Tobacco Settlement

DESCRIPTION:
Creates the Hawaii tobacco settlement trust fund, rainy day fund,
and Hawaii tobacco prevention and control trust fund; specifies
how tobacco settlement moneys are to be transferred and used.
(CD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        1034
THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 1999                                H.D. 2
STATE OF HAWAII                                            C.D. 1
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO THE HAWAII TOBACCO SETTLEMENT SPECIAL FUND.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Research has shown that cigarette smoking and
 
 2 tobacco use are the leading causes of preventable morbidity and
 
 3 mortality in Hawaii and the nation.  In Hawaii, more than 1,300
 
 4 residents die annually as a result of tobacco-related illness
 
 5 which is sixteen per cent of all resident deaths.  Tobacco-
 
 6 related illnesses also account for more than $320,000,000 in
 
 7 health care costs and expenditures of about $40,000,000 in
 
 8 Medicaid payments.  The economic impact is substantial.
 
 9      Smoking by women during pregnancy is likewise correlated
 
10 with miscarriages, premature births, hospitalized child abuse
 
11 cases, learning disabilities, and behavioral problems, and
 
12 represents a major cause of illness and death among infants and
 
13 children.  Federal and state health objectives for the years 2000
 
14 and 2010, which offer a vision for the new century, call for
 
15 improvements in health status.  These improvements can be
 
16 achieved through prevention, intervention, reductions in
 
17 preventable death and disability, enhanced quality of life, and
 
18 reduced disparities in the health of populations within Hawaii,
 
19 the Pacific, and the nation.
 

 
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 1      The purpose of this Act is to establish the Hawaii tobacco
 
 2 settlement special fund with moneys received from the settlement
 
 3 from a class action lawsuit against the tobacco companies.  The
 
 4 fund will serve as a medium for a public-private partnership to:
 
 5      (1)  Reduce tobacco consumption in Hawaii;
 
 6      (2)  Control and prevent chronic diseases where tobacco is a
 
 7           risk factor;
 
 8      (3)  Promote healthy lifestyles through better nutrition and
 
 9           improved physical activity; and
 
10      (4)  Promote children's health.
 
11      The fund shall serve as a mechanism to maximize financial
 
12 resources for tobacco prevention and control, health promotion
 
13 and disease prevention programs, children's health programs, and
 
14 to serve as a long-term source of stable funding for
 
15 prevention-oriented public health efforts.  
 
16      An emergency and budget reserve account is also established
 
17 to provide the State with a financial reserve to be used when
 
18 there is an emergency or economic downturn. 
 
19      SECTION 2.  The Hawaii Revised Statutes is amended by adding
 
20 a new chapter to be appropriately designated and to read as
 
21 follows:
 
22                             "CHAPTER
 
23                 HAWAII TOBACCO SETTLEMENT MONEYS
 

 
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 1      �    -1 Definitions.  Whenever used in this chapter, unless
 
 2 the context otherwise requires:
 
 3      "Children's health program" means health care for needy
 
 4 children.
 
 5      "Department" means the department of health.
 
 6      "Director" means the director of health.
 
 7      "Health promotion and disease prevention programs" means
 
 8 those public health programs that attempt to reduce resources
 
 9 spent on treating preventable illness and functional impairment,
 
10 enhance the quality of life, and reduce disparities in the health
 
11 status of populations.
 
12      "Tobacco prevention and control" means activities or
 
13 programs that attempt to reduce tobacco consumption.
 
14      "Tobacco settlement moneys" refers to moneys received by the
 
15 State pursuant to the tobacco master settlement agreement.
 
16      �   -2  Hawaii tobacco settlement special fund.(a)  There
 
17 is established in the state treasury the Hawaii tobacco
 
18 settlement special fund into which shall be deposited:
 
19      (1)  All tobacco settlement moneys; and
 
20      (2)  All interest and earnings accruing from the investment
 
21           of moneys in the fund.
 
22 The Hawaii tobacco settlement special fund shall be administered
 
23 by the department.
 

 
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 1      (b)  The fund shall be used for the purpose of receiving and
 
 2 appropriating the tobacco settlement moneys as follows:
 
 3      (1)  Forty per cent shall be appropriated into the emergency
 
 4           and budget reserve fund under section   -3;
 
 5      (2)  Thirty-five per cent shall be appropriated to the
 
 6           department for purpose of section   -4; and
 
 7      (3)  Twenty-five per cent shall be appropriated into the
 
 8           Hawaii tobacco prevention and control trust fund under
 
 9           section    -5.
 
10      �  -3  Emergency and budget reserve fund.(a)  There is
 
11 established in the state treasury the emergency budget and
 
12 reserve fund which shall be a special fund administered by the
 
13 director of finance, into which shall be deposited:
 
14      (1)  Forty per cent of the moneys received from the tobacco
 
15           settlement moneys under section   -2(b)(1);
 
16      (2)  Appropriations made by the legislature to the fund.
 
17      (b)  All interest earned from moneys in the emergency and
 
18 budget reserve fund shall be credited to the general fund.
 
19      (c)  Expenditures from the emergency and budget reserve fund
 
20 shall be a temporary supplemental source of funding for the State
 
21 during times of emergency, economic downturn, or unforeseen
 
22 reduction in revenues.  No expenditures shall be made from the
 
23 emergency and budget reserve fund except pursuant to
 

 
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 1 appropriations.  The general appropriations bill or the
 
 2 supplemental appropriations bill, as defined in section 9 of
 
 3 article VII of the Constitution of the State of Hawaii, shall not
 
 4 be used to appropriate moneys from the emergency and budget
 
 5 reserve fund.  The governor, through an appropriations bill, may
 
 6 recommend expenditures from the emergency and budget reserve fund
 
 7 by setting forth the purposes of the expenditures consistent with
 
 8 subsection (d), the amounts, and the reasons justifying the
 
 9 necessity for the appropriations.
 
10      (d)  The legislature may make appropriations from the fund
 
11 for the following purposes:
 
12      (1)  To maintain levels of programs determined to be
 
13           essential to the public health, safety, and welfare;
 
14      (2)  To provide for counter cyclical economic and employment
 
15           programs in periods of economic downturn;
 
16      (3)  To restore facilities destroyed or damaged or services
 
17           disrupted by disaster in any county; and
 
18      (4)  To meet other emergencies when declared by the governor
 
19           or determined to be urgent by the legislature.
 
20      Any act making appropriations from the emergency and budget
 
21 reserve fund shall include a declaration of findings and purposes
 
22 setting forth the purposes, the amounts, and the reasons why the
 
23 appropriations are necessary and shall require a two-thirds
 

 
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 1 majority vote of each house of the legislature.
 
 2      (e)  Appropriations for the following purposes from the
 
 3 emergency and budget reserve fund are specifically prohibited:
 
 4      (1)  To meet expenses of the legislature; 
 
 5      (2)  To provide for salary adjustments for officials
 
 6           appointed pursuant to article V, section 6 or article
 
 7           VI, section 3 of the Constitution of the State of
 
 8           Hawaii and for others whose salaries are directly
 
 9           related to salaries of these officials; and
 
10      (3)  To fund cost items in any collective bargaining
 
11           contract.
 
12      �  -4  Use of funds appropriated to the department.  The
 
13 department, immediately upon receipt of the thirty-five per cent
 
14 of moneys appropriated pursuant to section   -2(b)(2) shall:
 
15      (1)  Transfer up to ten per cent of the total moneys
 
16           received by the State from tobacco settlement moneys to
 
17           the department of human services for the children's
 
18           health insurance program; and
 
19      (2)  Expend the remainder of the moneys received by the
 
20           department for health promotion and disease prevention
 
21           programs, including but not limited to, maternal child
 
22           health and child development programs, promotion of
 
23           healthy lifestyles (including fitness, nutrition, and
 

 
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 1           tobacco control), and prevention oriented public health
 
 2           programs.
 
 3      For purposes of paragraph (2), the director shall convene an
 
 4 advisory group that shall be separate from the tobacco prevention
 
 5 and control advisory board, to strategically plan the development
 
 6 and implementation of preventive systems to achieve measurable
 
 7 outcomes and to make recommendations for the expenditure of these
 
 8 moneys.  The advisory group shall be composed of nine members
 
 9 with expertise in the programs under paragraph (2), and shall be
 
10 selected at the discretion of the director.
 
11      �    -5 Hawaii tobacco prevention and control trust fund.
 
12 (a)  There is established the Hawaii tobacco prevention and
 
13 control trust fund as a separate fund of a nonprofit entity
 
14 having a board of directors and qualifying under section
 
15 501(c)(3) of the Internal Revenue Code of 1986, as amended, into
 
16 which shall be deposited twenty-five per cent of moneys received
 
17 as provided under section  -2(b)(3).  The director of health with
 
18 the concurrence of the governor, shall select, in accordance with
 
19 law, the entity based upon the proven record of accomplishment of
 
20 the entity in administering a similar trust fund. 
 
21      (b)  Notwithstanding that the Hawaii tobacco and prevention
 
22 and control trust fund is established within a private entity,
 
23 the department of budget and finance shall have oversight
 

 
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 1 authority over the fund and may make periodic financial audits of
 
 2 the fund; provided that the director of finance may contract with
 
 3 a certified public accountancy firm for this purpose.  The
 
 4 director of health with the concurrence of the governor in their
 
 5 sole discretion may rescind the selection of the entity.  If the
 
 6 selection of the entity in rescinded, moneys in the trust fund
 
 7 shall revert back to the State and shall be deemed to be trust
 
 8 moneys.
 
 9      (c)  The entity selected under subsection (a) shall expend
 
10 moneys from the Hawaii tobacco prevention and control trust fund
 
11 for tobacco prevention and control, including but not limited to,
 
12 reducing cigarette smoking and tobacco use among youth and adults
 
13 through education and enforcement activities, and controlling and
 
14 preventing chronic diseases where tobacco use is a risk factor.
 
15      (d)  The Hawaii tobacco prevention and control trust fund
 
16 may receive appropriations, contributions, grants, endowments, or
 
17 gifts in cash or otherwise from any source, including the State,
 
18 corporations or other businesses, foundations, government,
 
19 individuals, and other interested parties; provided that any
 
20 appropriations made by the State shall not supplant or diminish
 
21 the funding of existing tobacco prevention and control programs
 
22 or any health related programs funded in whole or in part by the
 
23 State.
 

 
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 1      (e)  The assets of the Hawaii tobacco prevention and control
 
 2 trust fund shall consist of:
 
 3      (1)  Moneys appropriated under section  -2(b)(3);
 
 4      (2)  Moneys appropriated to the Hawaii tobacco prevention
 
 5           and control trust fund by the state, county, or federal
 
 6           government;
 
 7      (3)  Private contributions of cash or property; and
 
 8      (4)  Income and capital gains earned by the trust fund.
 
 9      (f)  The aggregate principal sum deposited in the Hawaii
 
10 tobacco prevention and control trust fund shall be invested by
 
11 the entity selected under subsection (a) in a manner intended to
 
12 maximize the rate of return on investment of the trust fund
 
13 consistent with the objective of preserving the trust fund's
 
14 principal.
 
15      (g)  If the entity selected under subsection (a) is
 
16 dissolved, the director of health, with the concurrence of the
 
17 governor, shall select a successor entity.  If the Hawaii tobacco
 
18 prevention and control trust fund is terminated, the moneys
 
19 remaining in the trust fund shall revert back to the State and
 
20 shall be deemed to be trust moneys.
 
21      (h)  The administration of the Hawaii tobacco prevention and
 
22 control trust fund shall be advised by the tobacco prevention and
 
23 control advisory board created under section   -6.
 

 
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 1      �   -6 Tobacco prevention and control advisory board.(a)
 
 2 There is established a tobacco prevention and control advisory
 
 3 board under the department for administrative purposes.
 
 4      (b)  The tobacco prevention and control advisory board shall
 
 5 consist of members who are involved in tobacco prevention and
 
 6 control.  Membership of the board shall be as follows:
 
 7      (1)  One member of the governor's staff, appointed by the
 
 8           governor;
 
 9      (2)  One member to be appointed by the governor from a list
 
10           of two names submitted by the president of the senate;
 
11      (3)  One member to be appointed by the governor from a list
 
12           of two names submitted by the speaker of the house of
 
13           representatives;
 
14      (4)  The director or the director's designee;
 
15      (5)  The superintendent of education or the superintendent's
 
16           designee;
 
17      (6)  Three members having demonstrated interest in and
 
18           having backgrounds beneficial to controlling and
 
19           preventing the use of tobacco, appointed by the
 
20           director of health; and
 
21      (7)  Three members representing populations at risk for
 
22           tobacco use, appointed by the governor.
 
23      (c)  Members shall:
 

 
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 1      (1)  Be appointed or designated, as applicable, without
 
 2           regard to section 26-34;
 
 3      (2)  Serve without compensation; and
 
 4      (3)  Serve for a term of three years. 
 
 5      (d)  The tobacco prevention and control advisory board, in
 
 6 collaboration with the department, shall develop a strategic plan
 
 7 for tobacco prevention and control, including:
 
 8      (1)  Developing and implementing effective and cost
 
 9           efficient programs, including health promotion and
 
10           disease prevention;
 
11      (2)  Developing adequate standards and benchmarks by which
 
12           measures of program success under paragraph (1) of this
 
13           subsection may be appropriately evaluated; and
 
14      (3)  Assessing the effectiveness of programs engaged in
 
15           health promotion and disease prevention.
 
16      The strategic plan shall be in writing and shall be a public
 
17 document.
 
18      (e)  The tobacco prevention and control advisory board shall
 
19 advise the on the administration of the Hawaii tobacco prevention
 
20 and control trust fund."
 
21      SECTION 3.  Section 36-27, Hawaii Revised Statutes, is
 
22 amended to read as follows:
 
23      "�36-27  Transfers from special funds for central service
 

 


 

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 1 expenses.  Except as provided in this section, and
 
 2 notwithstanding any other law to the contrary, from time to time
 
 3 the director of finance, for the purpose of defraying the
 
 4 prorated estimate of central service expenses of government in
 
 5 relation to all special funds, except the:
 
 6      (1)  Special summer school and intersession fund under
 
 7           section 302A-1310;
 
 8      (2)  School cafeteria special funds of the department of
 
 9           education;
 
10      (3)  Special funds of the University of Hawaii;
 
11      (4)  State educational facilities improvement special fund;
 
12      (5)  Convention center capital special fund under section
 
13           206X-10.5 and the convention center operations special
 
14           fund under section 206X-10.6;
 
15      (6)  Special funds established by section 206E-6;
 
16      (7)  Housing loan program revenue bond special fund;
 
17      (8)  Housing project bond special fund;
 
18      (9)  Aloha Tower fund created by section 206J-17;
 
19     (10)  Domestic violence prevention special fund under section
 
20           321-1.3;
 
21     (11)  Spouse and child abuse special account under section
 
22           346-7.5;
 
23     (12)  Spouse and child abuse special account under section
 

 
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 1           601-3.6;
 
 2     (13)  Funds of the employees' retirement system created by
 
 3           section 88-109;
 
 4     (14)  Unemployment compensation fund established under
 
 5           section 383-121;
 
 6     (15)  Hawaii hurricane relief fund established under chapter
 
 7           431P;
 
 8     (16)  Hawaii health systems corporation special funds;
 
 9     (17)  Boiler and elevator safety revolving fund established
 
10           under section 397-5.5;
 
11     (18)  Tourism special fund established under section
 
12           [[]201B-11[]]; [and]
 
13     (19)  Department of commerce and consumer affairs' special
 
14           funds;
 
15     (20)  Hawaii tobacco settlement special fund under section
 
16               -2; and
 
17     (21)  Emergency budget and reserve fund under section  -3;
 
18 shall deduct five per cent of all receipts of all other special
 
19 funds, which deduction shall be transferred to the general fund
 
20 of the State and become general realizations of the State.  All
 
21 officers of the State and other persons having power to allocate
 
22 or disburse any special funds shall cooperate with the director
 
23 in effecting these transfers.  To determine the proper revenue
 

 
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 1 base upon which the central service assessment is to be
 
 2 calculated, the director shall adopt rules pursuant to chapter 91
 
 3 for the purpose of suspending or limiting the application of the
 
 4 central service assessment of any fund.  No later than twenty
 
 5 days prior to the convening of each regular session of the
 
 6 legislature, the director shall report all central service
 
 7 assessments made during the preceding fiscal year."
 
 8      SECTION 4.  Section 36-30, Hawaii Revised Statutes, is
 
 9 amended by amending subsection (a) to read as follows:
 
10      "(a)  Each special fund, except the:
 
11      (1)  Transportation use special fund established by section
 
12           261D-1;
 
13      (2)  Special summer school and intersession fund under
 
14           section 302A-1310;
 
15      (3)  School cafeteria special funds of the department of
 
16           education;
 
17      (4)  Special funds of the University of Hawaii;
 
18      (5)  State educational facilities improvement special fund;
 
19      (6)  Special funds established by section 206E-6;
 
20      (7)  Aloha Tower fund created by section 206J-17;
 
21      (8)  Domestic violence prevention special fund under section
 
22           321-1.3;
 
23      (9)  Spouse and child abuse special account under section
 

 
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 1           346-7.5;
 
 2     (10)  Spouse and child abuse special account under section
 
 3           601-3.6;
 
 4     (11)  Funds of the employees' retirement system created by
 
 5           section 88-109;
 
 6     (12)  Unemployment compensation fund established under
 
 7           section 383-121;
 
 8     (13)  Hawaii hurricane relief fund established under chapter
 
 9           431P;
 
10     (14)  Convention center capital special fund established
 
11           under section 206X-10.5 and the convention center
 
12           operations special fund established under section
 
13           206X-10.6;
 
14     (15)  Hawaii health systems corporation special funds; [and]
 
15     (16)  Tourism special fund established under section
 
16           [[]201B-11[]];
 
17     (17)  Hawaii tobacco settlement special fund under section
 
18               -2; and
 
19     (18)  Emergency and budget reserve fund under section     -3;
 
20 shall be responsible for its pro rata share of the administrative
 
21 expenses incurred by the department responsible for the
 
22 operations supported by the special fund concerned."
 
23      SECTION 5.  There is appropriated out of the Hawaii tobacco
 

 
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 1 settlement special fund the sum of $5,777,903, or so much thereof
 
 2 as may be necessary, for fiscal year 1999-2000, and the sum of
 
 3 $15,436,031, or so much thereof as may be necessary, for fiscal
 
 4 year 2000-2001, to be deposited into the the emergency and budget
 
 5 reserve fund.
 
 6      SECTION 6.  There is appropriated out of the Hawaii tobacco
 
 7 settlement special fund the sum of $5,055,665, or so much thereof
 
 8 as may be necessary, for fiscal year 1999-2001, and the sum of
 
 9 $13,506,527, or so much thereof as may be necessary, for fiscal
 
10 year 2000-2001,  to the department of health to be expended for
 
11 the purposes specified in section   -4, Hawaii Revised Statutes.
 
12 The sums appropriated shall be expended by the department of
 
13 health.
 
14      Of the appropriation for fiscal years 1999-2000, up to the
 
15 sum of $1,400,000, and for fiscal year 2000-2001, up to the sum
 
16 of $3,859,000, shall be transferred to the department of human
 
17 services to be expended for the children's health insurance
 
18 program; provided that the amount of moneys to be transferred
 
19 shall not exceed the amount of moneys needed by the childrens
 
20 health insurance program.
 
21      SECTION 7.  There is appropriated out of the Hawaii tobacco
 
22 settlement special fund the sum of $3,611,189, or so much thereof
 
23 as may be necessary, for fiscal year 1999-2000, and the sum of
 

 
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 1 $9,647,519, or so much thereof as may be necessary, for fiscal
 
 2 year 2000-2001, to be deposited into the Hawaii tobacco
 
 3 prevention and control trust fund.
 
 4      SECTION 8. If any provision of this Act, or its application
 
 5 to any person or circumstance is held invalid, the invalidity
 
 6 shall not affect other provisions or applications of the Act
 
 7 which may be given effect without the invalid provision or
 
 8 application, and to this end the provisions of this Act are
 
 9 severable.
 
10      SECTION 9.  Statutory material to be repealed is bracketed.
 
11 New statutory material is underscored.
 
12      SECTION 10.  This Act shall take effect on July 1, 1999;
 
13 provided that:
 
14      (1)  The amendments made to sections 36-27 and 36-30, Hawaii
 
15           Revised Statutes, by this Act shall not be repealed
 
16           when those sections are reenacted on July 1, 2000,
 
17           pursuant to section 13 of Act 216, Session Laws of
 
18           Hawaii 1997; and
 
19      (2)  The amendments made to section 36-27, Hawaii Revised
 
20           Statutes, by this Act shall not be repealed when that
 
21           section is reenacted on July 31, 2003, pursuant to
 
22           section 9 of Act 142, Session Laws of Hawaii 1998.