The Joint Committee on
Performance Evaluation and Expenditure Review
Report # 456
A Review of the Legality of the Chancery Court Order Directing Annual Payments of Twenty Million Dollars in Perpetuity to the Partnership for a Healthy Mississippi
Executive Summary
Introduction
PEER reviewed the legality of a December 22, 2000, Jackson County Chancery Court order directing that $20 million in tobacco settlement funds be deposited to the credit of the Partnership for a Healthy Mississippi, a not-for-profit corporation organized under the laws of the State of Mississippi.
Background
On October 17, 1997, the tobacco companies finalized a settlement agreement with the State of Mississippi. As part of the settlement, the tobacco companies agreed to make annual payments to the state according to a specified formula that takes into account inflation and the volume of domestic tobacco product sales. The payments are to be made to the state “in perpetuity” (i.e., until the tobacco companies cease to exist or in the event the settlement is modified). Subsequent to the settlement agreement, the Legislature created the Health Care Trust Fund to receive funds from the settlement agreement.
The agreement included a supplemental provision for a separate $61.8 million to support and fund a youth tobacco cessation pilot program. In June 1998, the Jackson County Chancery Court approved the pilot program and delegated its administration to the Partnership for a Healthy Mississippi, a non-profit corporation. In December 2000, the Jackson County Chancery Court ordered continued annual funding for the partnership, directing $20 million from tobacco settlement payments each year.
Court Action to Continue Funding the Partnership for a Healthy Mississippi
The December 2000 court order’s directing of $20 million of tobacco settlement funds annually into the Partnership for a Healthy Mississippi is not in compliance with state law.
Although state law provided that cessation programs could be funded by legislative appropriation of trust fund monies, the Attorney General submitted a proposal to the court to provide continued funding by issuance of a court order to direct funds to the partnership rather than by legislative appropriation.
The Legislature had created the Mississippi Health Care Trust Fund to define the ends to which Mississippi’s tobacco settlement funds could be directed. According to MISS. CODE ANN. Section 43-13-405 (1972), the trust fund was to receive annual tobacco settlement funds and remain inviolate. The portion of the court order related to the funding of tobacco cessation programs is not in compliance with the statute because the law specifically provides that funds from the trust may be legislatively appropriated to recoup any funds that may have been lost as a result of a court-ordered smoking cessation program.
Expansion of the Partnership’s Mission
The court, in the December 2000 order, also authorized the continuation and expansion of the partnership’s mission from youth tobacco use to include other substance abuse. This portion of the order is also not in compliance with state law.
In addition to authorizing continued funding for the tobacco cessation program, the court in its December 2000 order broadened the program’s mission to address other substance abuse by youths. In addition to tobacco cessation, the partnership plans to expand activities to effect behavioral change in the fields of alcohol and other drug prevention.
The portion of the court order funding substance abuse programs is not in compliance with the statute because CODE Section 43-13-405 does not specifically provide that trust fund monies may be used to fund substance abuse programs.
Recommendation
The Attorney General should seek dissolution of the December 2000 chancery court order that directed annual payments of $20 million to the Partnership for a Healthy Mississippi. In the event that the Attorney General does not seek dissolution of the order, the Legislature should direct the Health Care Trust Fund to employ counsel as necessary to pursue any civil action necessary to either set aside the order or proceed against any person or persons who may have violated their fiduciary duty to the trust by advocating the order directing the payment of twenty million dollars to the Partnership for a Healthy Mississippi.