REPORT TITLE:
Tobacco Settlement

DESCRIPTION:
Creates a special fund for tobacco settlement moneys, a Hawaii
tobacco prevention and control endowment fund, and a rainy day
fund.  (SD1)

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


                   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.  The purpose of this Act is to establish a
 
 2 special fund with the moneys received from settlements from a
 
 3 class action lawsuit against tobacco companies.  The fund will be
 
 4 established as the Hawaii tobacco prevention and control
 
 5 endowment fund to serve as a medium for a public-private
 
 6 partnership to reduce tobacco consumption in Hawaii to control,
 
 7 to prevent chronic diseases where tobacco is a risk factor, to
 
 8 promote healthy lifestyles through better nutrition and improved
 
 9 physical activity, and to promote children's health.
 
10      Research has shown that cigarette smoking and tobacco use
 
11 are the single leading cause of preventable morbidity and
 
12 mortality in Hawaii and the nation.  In Hawaii, more than 1,300
 
13 residents die annually as a result of tobacco-related illness,
 
14 which accounts for sixteen per cent of resident deaths and more
 
15 than $320,000,000 in economic impact.  Maternal smoking is highly
 
16 correlated with miscarriages, premature births, hospitalized
 
17 child abuse cases, learning disabilities, and behavior problems,
 
18 and represents a major cause of illness and death among infants
 
19 and children. 
 

 
Page 2                                                     1034
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1      Federal and state health objectives for the years 2000 and
 
 2 2001, which offer a vision for the new century, call for
 
 3 improvements in health status.  These improvements are achieved
 
 4 through preventive interventions and reductions in preventable
 
 5 death and disability, enhanced quality of life, and reduced
 
 6 disparities in the health of populations within Hawaii, the
 
 7 Pacific, and the nation.
 
 8      Besides tobacco prevention programs, early childhood
 
 9 education programs are vitally important.  Every child deserves a
 
10 good beginning.  When children get the right start, the risk that
 
11 they will become teen delinquents or adult criminals plummets, as
 
12 does the risk that they will smoke, use drugs, or become pregnant
 
13 while teenagers.  Early childhood education programs have proven
 
14 to work to reduce these risks. 
 
15      In addition to early childhood education programs, early
 
16 childhood intervention services are important for infants and
 
17 toddlers with developmental delays or at risk because of child
 
18 abuse and neglect or economic factors, which cause problems in
 
19 human brain development in the early years.  Research has shown
 
20 that parental nurturing and the quality of caregiver and infant
 
21 relationship are key ingredients for healthy psycho-social
 
22 development, resulting in a larger brain size.  A child who has
 
23 been abused bears scars that are indelible, or extremely
 

 
Page 3                                                     1034
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 difficult to erase. 
 
 2      The fund shall serve as a mechanism to maximize financial
 
 3 resources for tobacco prevention and control, health promotion
 
 4 and disease prevention programs, and children's health programs,
 
 5 and as a long-term source of stable funding for prevention-
 
 6 oriented public health efforts.
 
 7      SECTION 2.  The Hawaii Revised Statutes is amended by adding
 
 8 a new chapter to be appropriately designated and to read as
 
 9 follows:
 
10                             "CHAPTER
 
11                 HAWAII TOBACCO SETTLEMENT MONEYS
 
12      §   -1 Definitions.  Whenever used in this chapter, unless
 
13 the context otherwise requires:
 
14      "Department" means the department of health.
 
15      "Director" means the director of health.
 
16      "Health promotion and disease prevention programs" means
 
17 public health programs that attempt to reduce resources spent on
 
18 treating preventable illness and functional impairment, enhance
 
19 the quality of life, and reduce disparities in the health status
 
20 of populations.
 
21      "Tobacco settlement" means moneys received by the State from
 
22 any tobacco litigation case, whether by settlement or award,
 
23 regardless of whether the State is a named party or a class
 

 
Page 4                                                     1034
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 action party.
 
 2      "Tobacco prevention and control programs" means those public
 
 3 health programs that attempt to reduce tobacco consumption.
 
 4      §  -2  Creation of the Hawaii tobacco settlement special
 
 5 fund. There is established in the state treasury a special fund
 
 6 to be known as the Hawaii tobacco settlement special fund into
 
 7 which shall be deposited, upon receipt from time to time,
 
 8            per cent of the moneys received by the State from all
 
 9 tobacco settlements.  The special fund shall be administered by
 
10 the department of budget and finance.  The fund shall be used for
 
11 the purpose of allocating tobacco settlement moneys under section
 
12     -4 and shall have no other function.
 
13      §   -3 Creation of the Hawaii tobacco prevention and
 
14 control endowment fund.  (a)  There is established a Hawaii
 
15 tobacco prevention and control endowment fund as a separate fund
 
16 of the Hawaii Community Foundation, a Hawaii nonprofit
 
17 corporation.  Moneys received from the state, county, or federal
 
18 government, and private contributions of cash and other property,
 
19 and the income and capital gains earned by the fund shall
 
20 constitute the trust fund assets.
 
21      (b)  The Hawaii Community Foundation shall have the
 
22 responsibility for the expenditure of moneys from the endowment
 
23 fund under subsection (a) for the purposes of subsection (c).
 

 
Page 5                                                     1034
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1      (c)  Moneys in the fund shall be expended to fund public and
 
 2 private partnerships to establish tobacco prevention and control
 
 3 programs, and shall not cause a reduction in the amount of moneys
 
 4 appropriated to any like program or related budget items of the
 
 5 department.
 
 6      (d)  The Hawaii Community Foundation may contract with and
 
 7 transfer money from the endowment fund to interest-bearing
 
 8 accounts or to a private entity for investment until such time as
 
 9 moneys may be needed for the purposes of this section.  All
 
10 interests accruing from the investment of these moneys shall be
 
11 credited to this endowment fund.
 
12      (e)  The endowment fund may receive legislative
 
13 appropriations, and private contributions, grants, endowments, or
 
14 gifts in cash or otherwise from any source.
 
15      (f)  The aggregate principal sum deposited in the Hawaii
 
16 tobacco prevention and control endowment fund, and any income and
 
17 capital gains earned by the fund but not expended for grantmaking
 
18 or administration, shall be invested in accordance with the
 
19 direction of the Hawaii Community Foundation in a manner intended
 
20 to maximize the rate of return on investment of the fund
 
21 consistent with the objective of preserving the fund's principal.
 
22      (g)  The department shall serve as the lead agency for the
 
23 public sector and, in conjunction with the Hawaii Community
 

 
Page 6                                                     1034
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 Foundation, may provide staffing for the board, the coalition,
 
 2 and advisory committee.
 
 3      (h)  Results of the annual audit of the Hawaii Community
 
 4 Foundation shall be submitted to the department not later than
 
 5 thirty days from the date the Hawaii Community Foundation
 
 6 receives the audit results.  The Hawaii Community Foundation
 
 7 shall retain for three years all documents, papers, books,
 
 8 records, and other material pertinent to the fund and audit.  The
 
 9 Hawaii Community Foundation shall permit the department of
 
10 health, the department of accounting and general services, the
 
11 legislature, and the auditor, or their authorized
 
12 representatives, to inspect and have access to any of these
 
13 materials.
 
14      (i)  In the event of the termination of the fund or the
 
15 dissolution of the Hawaii Community Foundation, the unspent
 
16 appropriations made by the State, if any, shall revert back to
 
17 the State.  Any other amounts remaining in the Hawaii tobacco
 
18 prevention and control endowment fund shall be distributed at the
 
19 recommendation of the Hawaii Community Foundation.
 
20      §  -4 Allocation of tobacco settlement moneys.(a)  For
 
21 fiscal year 1999-2000 and for fiscal year 2000-2001, the
 
22 department shall allocate tobacco settlement moneys deposited
 
23 into the tobacco settlement special fund under section     -2, as
 

 
Page 7                                                     1034
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 follows:
 
 2      (1)             per cent to be transferred to the rainy day
 
 3           fund created under section 36-    ;
 
 4      (2)             per cent to be transferred to the Hawaii
 
 5           tobacco prevention and control endowment created under
 
 6           section     -3;
 
 7      (3)             per cent to be transferred to the early
 
 8           intervention special fund created under
 
 9           section 321-355;
 
10      (4)             per cent to be transferred to the department
 
11           of human services for children's health insurance
 
12           programs; 
 
13      (5)             per cent to be transferred to the department
 
14           of human services for early childhood education and
 
15           care programs to be expended as follows:
 
16           (A)         per cent for child care subsidies; and
 
17           (B)         per cent for programs to expand the quality
 
18                of early childhood education and care; and
 
19      (6)             per cent to be retained by the department
 
20           for the following purposes:
 
21           (A)  To reduce cigarette smoking and tobacco use among
 
22                youth and adults through education and enforcement
 
23                activities;
 

 
Page 8                                                     1034
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1           (B)  To control and prevent chronic diseases where
 
 2                tobacco is a risk factor;
 
 3           (C)  To promote healthy lifestyles through better
 
 4                nutrition and improved physical activity;
 
 5           (D)  To assess the effectiveness of health promotion
 
 6                and disease prevention, and tobacco prevention and
 
 7                control programs; and
 
 8           (E)  To assist survivors of second-hand smoke and
 
 9                tobacco use.
 
10      (b)  Any moneys allocated under this section for the benefit
 
11 of specific programs shall not cause a reduction in the amount of
 
12 moneys appropriated to those programs or any like program or
 
13 related budget items of the department or of the department of
 
14 human services.
 
15      §  -5 Advisory board to develop strategic plan.(a)  The
 
16 department shall convene an advisory board to develop a strategic
 
17 plan and to make recommendations to assist the:
 
18      (1)  Department to expend tobacco settlement moneys received
 
19           by the department under section     -4(a); and
 
20      (2)  Hawaii Community Foundation on making expenditures
 
21           under section     -3(c).
 
22      (b)  Members of the advisory board shall not exceed fifteen
 
23 and be appointed by the director in consultation with the
 

 
Page 9                                                     1034
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 director of human services, and shall include, but not be limited
 
 2 to:
 
 3      (1)  The director of health or a designee;
 
 4      (2)  A representative of the Hawaii Community Foundation;
 
 5      (3)  The chair of the senate committee that has jurisdiction
 
 6           over health matters;
 
 7      (4)  The chair of the house of representatives committee
 
 8           that has jurisdiction over health matters;
 
 9      (5)  The governor or a designee; and
 
10      (6)  A representative of the Coalition for a Tobacco Free
 
11           Hawaii or a successor organization.
 
12 The director shall convene the initial meeting of the advisory
 
13 board.
 
14      (c)  The advisory board shall exist for as long as tobacco
 
15 settlement moneys are received by the State.
 
16      (d)  The strategic plan under subsection (a) shall assess
 
17 the current status and effectiveness of programs relating to
 
18 health promotion and disease prevention, and tobacco prevention
 
19 and control and shall include detailed recommendations for the
 
20 implementation of specific programs deemed necessary to further
 
21 carry out the purposes of the chapter.  The plan shall also
 
22 contain sufficient standards and benchmarks by which measures of
 
23 program success may be appropriately evaluated."
 

 
Page 10                                                    1034
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1      SECTION 3.  Chapter 36, Hawaii Revised Statutes, is amended
 
 2 by adding a new section to be appropriately designated and to
 
 3 read as follows:
 
 4      "§36-      Creation of the rainy day fund.  There is
 
 5 established in the state treasury a special fund to be known as
 
 6 the rainy day fund, into which shall be deposited, upon receipt
 
 7 from time to time, fifteen per cent of the total moneys received
 
 8 by the State from all tobacco settlements.  Moneys in the fund
 
 9 may be allocated or expended by the governor at the governor's
 
10 discretion if it becomes necessary to make up for decreased state
 
11 revenues.  The governor shall report to the legislature before
 
12 the convening of each regular session of the legislature on the
 
13 activities of the fund for the previous year, including the
 
14 current and projected balance at the end of the year in which the
 
15 legislature convenes in regular session for which the report is
 
16 made.  The legislature may appropriate moneys from the rainy day
 
17 fund to the same extent as the governor may allocate or expend
 
18 those moneys."
 
19      SECTION 4.  The department of health shall report on the
 
20 formation and implementation of the strategic plan under
 
21 section 2 of this Act no later than twenty days prior to the
 
22 convening of the regular session of 2000.
 
23      SECTION 5.  (a)  The auditor shall conduct a financial audit
 

 
Page 11                                                    1034
                                     S.B. NO.           S.D. 1
                                                        
                                                        

 
 1 of the Hawaii tobacco prevention and control endowment fund.  The
 
 2 auditor shall report findings and recommendations to the
 
 3 legislature and the governor no later than twenty days prior to
 
 4 the convening of the regular session of 2002.
 
 5      (b)  The auditor shall conduct an audit of the effectiveness
 
 6 of program expenditures of the Hawaii tobacco prevention and
 
 7 control endowment fund.  The auditor shall report findings and
 
 8 recommendations to the legislature and the governor no later than
 
 9 twenty days prior to the convening of the regular session of
 
10 2004.
 
11      SECTION 6.  If any provision of this Act, or its application
 
12 to any person or circumstance is held invalid, the invalidity
 
13 shall not affect other provisions or applications of the Act
 
14 which may be given effect without the invalid provision or
 
15 application, and to this end the provisions of this Act are
 
16 severable.
 
17      SECTION 7.  New statutory material is underscored.
 
18      SECTION 8.  This Act shall take effect on June 30, 2099.