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Anti-smoking lobby fumes:

D.C. mishandling tobacco settlement money

(Published August 12, 2002)

By JOHN DeVAULT

Staff Writer

Though it has the highest overall cancer rate in the United States, including extremely high rates of lung and bronchial cancer, the District is spending none of its multimillion dollar share of proceeds from the 1998 tobacco settlement on anti-smoking efforts, a recent report says.

In fact, in the face of growing evidence that adequately funded anti-smoking programs save both lives and money, the city is spending none of its own money at all on such programs.

The city has a minimally staffed tobacco control office through its Department of Health. But that office’s scant funding comes mainly from a $500,000 grant from the federal Centers for Disease Control (CDC).

Its activities are limited to maintaining a web site, producing pamphlets for doctors’ offices and health fairs and, according to Cheryl Eason, until recently the office’s acting director, "giving out information if people call us."

"We can’t do smoking cessation programs, only promote them" because of the office’s low level of funding, Eason said. The office refers D.C. residents to programs at the American Lung Association and other anti-smoking organizations, she said.

Last month’s report ranks the District 51st in anti-smoking spending among the 50 states and the District of Columbia. Michigan, Missouri and Tennessee are the only other U.S. jurisdictions currently spending no money at all on anti-tobacco efforts.

The report was issued jointly by the Campaign for Tobacco-Free Kids, the American Cancer Society, the American Lung Association and the American Heart Association.

Local officials of those groups contend that D.C. officials recently cut a deal that guarantees the city will continue to spend no money on anti-smoking efforts from tobacco settlement funds for at least another two years.

The deal, between the administration of Mayor Anthony A. Williams and the city council, re-routed tobacco settlement proceeds over the next two years to cover a budget gap – created primarily by the city’s failure to properly bill the federal government for reimbursable Medicaid expenses, administration officials acknowledge.

As part of that deal, critics charge, both the council and the Williams administration turned their backs on a new, proposed three-year anti-smoking campaign designed by the city’s health department and anti-smoking groups – a plan originally ordered up by the mayor – to be funded at about the minimum CDC-recommended level.

"I’m furious, as a D.C. resident and as somebody who’s worked for years to fund anti-smoking programs," said Sara Hutchinson, an advocate at the Campaign for Tobacco-Free Kids.

"The spirit of the settlement agreement is that this money is to be used to help cure tobacco addiction, and especially children’s addiction," she said. "But they’re using this money in a way that’s just not necessary, because the city health care bureaucracy can’t figure out how to do the paperwork (on Medicaid reimbursements) after 30 years."

The CDC regularly publishes recommendations of the minimum-to-optimal amounts of money that the states and the District need to spend on anti-smoking efforts to make significant progress, based on studies of successful state programs.

The CDC’s minimum recommendation for the District is $7.5 million a year. The optimal level, they say, is $14.5 million.

Maryland recently raised its anti-tobacco spending from $20.05 million a year to $30 million, its CDC-recommended minimum.

Dr. Michael Richardson, the D.C. Department of Health official who administers the city’s tobacco control program, acknowledged last week, "We have the highest cancer rates in the nation."

According to federal data, overall cancer morbidity in the District stands at 606 persons per 100,000, higher than in any other jurisdiction in the United States. The District’s rates for lung and bronchial cancer, the cancers most closely associated with cigarette smoking, are among the highest in the country, according to federal statistics.

Richardson noted that the top two causes of death in the District, cancer and cardiovascular disease, both occur locally at almost twice the national average.

"And both are smoking related," he said.

Anti-smoking group officials last week charged that D.C. officials have mishandled the city’s proceeds from the nationwide tobacco settlement from the beginning – starting with the decision, proposed by the mayor and approved by the council, to "securitize" its share of the award.

That is, the District sold off the rights to its $1.2 billion pot of settlement cash, originally to be paid out in 25 installments of about $40 to $50 million a year, in exchange for a much smaller one-time, up-front payment of $521 million.

"It’s not the smartest thing to do. You don’t cash out your retirement funds at 25," Hutchinson said. "That was a pretty substantial yearly source of income that got eliminated."

American Cancer Society official Jan Whitley agreed that the city’s action "was a bad idea."

"You get a very low return on your dollar," she said.

But city officials continue to defend the move. They say it took away the risk that tobacco companies might not be able to keep up with payments in the future, and it gave the city a chance to pay down its large municipal debt.

"We made a very wise decision by securitizing," said Gregory McCarthy, a top policy official in the mayor’s office.

The District received the settlement money last year, and after applying the entire amount against the debt, the administration and the council then formally dedicated half of the resulting annual debt savings – $50.8 million in fiscal 2003 – to public health and children’s programs, including youth and adult anti-smoking efforts. The other half was to go to a "rainy day fund" for the city’s future.

Williams administration officials point out that, for the following two budget years, the city was required by congressional legislation to put the full amount of savings into an emergency reserve fund. That, they say, made it impossible to spend any of the money on anti-smoking programs.

But that fund’s prescribed level will be reached this year, so the city was free, in assembling the recently approved fiscal 2003 budget, to slot some portion of about $25 million for anti-tobacco programs.

Instead, the Williams administration proposed, and the council agreed, to spend all of that money, as well as the "rainy day fund" money, on the Medicaid shortfalls and other spending overruns in fiscal 2003 and 2004. (The other main spending gap was for special education programs in the public schools.)

"We hadn’t originally thought those funds would all get spent on Medicaid and special ed," acknowledged council Chairman Linda Cropp. "But those are serious problems, and we had a large hole in the budget."

She defended using funds slated for heath initiatives for Medicaid shortfalls. "You can’t get more health-related than Medicaid," Cropp said.

McCarthy denied that responsibility for managing the cost overruns lies with the Williams administration, even though the administration has been creating the city’s budget for the past three years and Mayor Williams served as the city’s chief financial officer before that.

"Yes, this is a problem that needs attention, and it’s going to get it," McCarthy said.

But, he argued, the mayor doesn’t control the schools budget, where many of the cost overruns originated, and some other problem agencies, like Child and Family Services, were until recently under court-ordered receivership.

City health officials and anti-tobacco advocates say the main casualty of the budget deal was the chance for a serious, solidly funded anti-smoking campaign for the District.

A task force appointed by Mayor Williams designed a three-year plan costing $6.9 million in the first year and rising to $9.8 million in the third year. The plan, targeting some of the District’s major smoking-related health problems, included an advertising campaign and other efforts aimed at young smokers, money for local clinics (a major component of the administration’s health care strategy) for education, screening and treatment, and innovative smoking cessation programs, including new medications and "quit lines" – 24-hour phone lines manned by counselors, modeled on successful drug treatment hotlines.

Richardson said the plan fell apart under budget pressures, and even a stripped-down version to cost $3 million in the first year was shot down.

"Two million dollars got lost," he said.

The council finally found $1 million in residual funds related to the tobacco settlement – "leftovers," Richardson said – for a reconfigured program focused on reducing smoking rates for Latina women and on educating the smoking parents of children with asthma.

McCarthy defended that funding level. "We’re spending more than we ever have before" on anti-smoking programs, he said.

Councilman David Catania, R-At Large, said some council members had doubts about the efficacy of the original plan. "They wanted to see more than just a poster-making campaign," he recalled.

Cropp expressed a seemingly opposite concern about the task force’s plan. "Some of them (among anti-smoking forces) were seeing the settlement as Christmas," she said. "Some folks were talking about programs just because the money was available."

According to data compiled by the states and cited in last month’s report from anti-smoking groups, evidence exists that reasonably funded anti-smoking campaigns can save both lives and money.

Florida’s program, funded at about half the CDC-recommended level, has cut smoking rates among middle school children by 47 percent and among high school students by 30 percent since its start in 1998. According to Florida’s health department, those reductions translate into 75,000 fewer young smokers and a potential 24,000 fewer premature deaths from smoking.

California has the nation’s longest-running program, established by a ballot referendum in 1988. The state reported that since its program’s inception, cigarette consumption has fallen by 58 percent, nearly twice the reduction rate for the United States as a whole.

California says the state has also saved money by its anti-smoking efforts.

The reduction in the number of low-birth-weight babies born to smoking mothers saved California about $100 million in the program’s first seven years, the state said, and overall continuing savings were pegged higher, at about $80 million annually. The state also calculated that it saved $390 million in the program’s first seven years through a decline in smoking-related heart-attacks and strokes, with continuing annual savings of more than $120 million a year.

Overall, the state calculated that it saved $3.60 in smoking-related health care costs for every dollar spent on anti-smoking measures.

Richardson cited studies showing a jurisdiction’s total savings are even higher – about $7 in savings for every dollar spent.

The District currently spends about $190 million annually on medical costs directly related to tobacco use, according to a CDC report published in April.

Cropp said she expects the city to begin funding anti-smoking efforts at a substantial level after the two-year funding deal for Medicaid and special education expires in 2005.

The council is "very concerned and adamant that that spending be temporary," she said.

McCarthy noted the budget deal requires the city to document how it can avoid future cost overruns.

But one council source familiar with the deal expressed doubt that those problems will be solved in two years. Catania, asked if D.C. residents could ever expect to see the tobacco settlement proceeds used to bring down smoking rates in the city, expressed skepticism too.

"It’s certainly going to be difficult to peel money away from Medicare and Medicaid," he said.

Copyright 2002, The Common Denominator