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Some States Receive Money Annually From The Master Tobacco Settlement

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A 1998 lawsuit filed against tobacco companies by 46 states in the USA resulted in a settlement called the Master Settlement Agreement.  Each state was to receive billions of dollars over the course of 20+ years. Each April, the states receive their funding unless the state securitized their settlement early on and now receive virtually no dollars.

Oklahoma and Kansas did not securitize their settlement income stream.  This year, Oklahoma will receive  $1.25 billion into its Tobacco Settlement Endowment Trust Fund which specifies that the earnings from the trust fund may be spent on programs to improve the health and well-being of Oklahoma residents.  Read more on the article here.

In Kansas, their share is going to be just over $62.4 million in 2015 from the same settlement.  The annual payments support the Children’s Initiative Fund, which supports early childhood development programs.  Read more on the article here.

GASP comment: Under then Governor McGreevey, New Jersey securitized its future payments for New Jersey’s master settlement agreement with the tobacco industry. By securitizing the payments, New Jersey only received 10% of the full value of the payment stream, due to Governor McGreevey wanting the a reduced sum of money upfront in the first years of the settlement. New Jersey was to receive approximately $7.2 billion from the settlement over the course of 20 years. But the State securitized the funds years ago and only received 10 cents on each dollar. The tobacco industry brought up many of the bonds that were securitized, in effect buying back their own future payments to the State, but for a fraction of the cost that they were to pay out over the 20+ years.