By Mike Shields
May 22, 2013

Officials at Kansas Action for Children say Kansas Attorney General Derek Schmidt has responded to their request for documents regarding the state’s annual tobacco settlement receipts but that the disclosures raised more questions for them than they answered and the response came too late to perhaps matter for this session’s legislative budget deliberations.

“We received these documents (Tuesday) right before the budget conference agreement that sweeps $9.5 million from the Children’s Initiatives Fund to the State General Fund,” said Shannon Cotsoradis, chief executive of Kansas Action for Children, a Topeka-based advocacy group.

Cotsoradis also serves on the Kansas Children’s Cabinet, which advises the governor and the Legislature on how to spend the millions in tobacco settlement dollars that the state receives each year.

“Our frustration is that we didn’t have a chance to thoroughly review or thoroughly digest the information before the committee had an agreement,” she said. “Policymakers, by and large, have no idea what’s in these documents and what the state has agreed to in this (arbitration) settlement.”

The documents released by the Attorney General’s Office included more than 30 heavily redacted pages from an April 25 report from PricewaterhouseCoopers, the accounting firm that serves as independent auditor for the so-called Master Settlement Agreement that was reached in 1998 by cigarette manufacturers and attorneys general from 46 states, including Kansas, to resolve a lawsuit filed by the states seeking to recoup the costs of treating sick smokers.

Kansas and some other states that were party to the settlement recently through arbitration settled a dispute arising over the settlement’s enforcement provisions and the documents released by the Attorney General’s Office pertain to that arbitration, which had bearing on the amount of tobacco dollars Kansas received this year and perhaps in future years.

Kansas has averaged about $56 million annually in settlement payments, which typically have been earmarked for programs that help at-risk children and their families.

Cotsoradis said she and other children’s advocates were surprised last month when the Kansas Legislative Research Department announced that it expected the state to receive an additional $4.4 million in tobacco company payments this year. Then, soon after that, Gov. Sam Brownback’s office pushed the estimate to about $12.2 million. Both projections were based on input from the Attorney General’s Office, the state’s lead agency in the arbitration negotiations and the tobacco settlement.

Kansas Action for Children for weeks had been urging legislators to press Schmidt for a full explanation of the arbitration that resolved tobacco company allegations that Kansas had failed to hold up its part of the settlement. Kansas was one of 17 states that signed off on the arbitration agreement. At least 27 states have not.

On May 1, the group filed a formal request for information with the attorney general, citing the state’s Open Records law. When the group’s attorney concluded the attorney general was slower in responding than the law requires, Kansas Action for Children filed suit in Shawnee County District Court.

Cotsoradis today said the group intended to press forward with the suit, despite the information released Tuesday, but was waiting for a hearing date.

She said the group learned some answers from the released documents including the schedule and sums of payments Kansas has received so far this year:

  • $48,189,666.83 on April 16,
  • $11,989, 629.02 on April 18
  • and then $7,818,662.89 on April 25, the same date as the PricewaterhouseCoopers report.

But the documents didn’t answer some other questions, including:

How much of the money the state received was from the original settlement versus how much was from the arbitration and whether the attorney general requested all the state’s money from the arbitration this year or whether it will be delivered over the course of two years, an option some other states have chosen, Cotsoradis said.

“What’s very clear from the documents is that we (Kansas) will see a reduction” in tobacco dollars in coming years, she said.

How big a reduction is in store can’t be determined from the information provided, Cotsoradis said, but if the attorney general would share more information, those figures could be known and policymakers could better plan and budget for children’s programs.

Cotsoradis said Kansas Action for Children filed a follow-up Open Records request with the Attorney General’s Office today seeking the additional information.

Don Brown, a spokesperson for the attorney general, said he needed to consult with the agency’s attorneys who have been involved with the issue before responding to questions about the payments that were submitted by KHI News Service.

He did not comment today on the agency’s legal dispute with Kansas Action for Children. But in earlier statements about the group’s information requests, he noted that the agency would make public what it could but that “no final (arbitration) settlement agreement document has yet been signed, that at least (eight) lawsuits challenging this settlement have been filed and remain pending.”

He also said that Kansas’ future annual tobacco payments “remain undetermined because they result from sales and other events that have not yet occurred.”

Read more from the Kansas Health Institute.