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entitled 'Tobacco Settlement: States' Allocations of Fiscal Year 2005 
and Expected Fiscal Year 2006 Payments' which was released on April 11, 
2006. 

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Report to Congressional Requesters: 

April 2006: 

Tobacco Settlement: 

States' Allocations of Fiscal Year 2005 and Expected Fiscal Year 2006 
Payments: 

GAO-06-502: 

GAO Highlights: 

Highlights of GAO-06-502, a report to congressional requesters: 

Why GAO Did This Study: 

In the 1990’s, states sued major tobacco companies to obtain 
reimbursement for health impairments caused by the public’s use of 
tobacco. In 1998, four of the nation’s largest tobacco companies signed 
a Master Settlement Agreement (MSA) to make annual payments to 46 
states in perpetuity as reimbursement for past tobacco-related health 
care costs. Some states have arranged to receive advance proceeds based 
on the amounts that tobacco companies owe by issuing bonds backed by 
future payments. 

The Farm Security and Rural Investment Act of 2002 requires GAO to 
report annually, through fiscal year 2006, on how states use MSA 
payments made by tobacco companies. To conduct this study, GAO surveys 
the 46 states. This is the fifth and final of a series of reports that 
provides information on 

* the payments the 46 states received in fiscal year 2005 and expect to 
receive in fiscal year 2006 and 
* states’ allocations of these funds to various program categories and 
changes from prior years. 

What GAO Found: 

The 46 states that are party to the MSA reported receiving about $5.8 
billion in fiscal year 2005 and expect to receive about $5.4 billion in 
fiscal year 2006. Over the previous 5 years, on average, states 
received $9.3 billion annually. The recent decrease in tobacco 
settlement funds provided to states has occurred because securitized 
proceeds—payments states obtained from the sale of bonds backed by 
future MSA payments—have declined. Proceeds declined because only one 
state (Virginia) chose to issue a bond and receive proceeds in fiscal 
year 2005, and the two states (California and New York) with the 
largest payments issued bonds in prior years. In fiscal year 2006, 
states reported that all of the tobacco settlement funds they expect to 
receive will be payments from tobacco companies, and none from 
securitized proceeds. 

The MSA allows states to use their tobacco settlement payments for any 
purpose. States reported that they used the largest portion of the 
fiscal year 2005 payments and proceeds (32 percent) to fund health-
related programs and the next largest portion (24 percent) to fund debt 
service on securitized proceeds. States expect health programs to 
account for the same proportion of funds in fiscal year 2006, while 
they expect debt service to increase to 29 percent. 

Categories to Which States Allocated the Largest Portions of Tobacco 
Settlement Payments and Securitized Proceeds (Fiscal Year 2005 and 
Expected Fiscal Year 2006): 

[See PDF for image] 

[End of figure] 

www.gao.gov/cgi-bin/getrpt?GAO-06-502. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Robert A. Robinson at 
(202) 512-3841 or robinsonr@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

States Received About $5.8 Billion in MSA Payments and Securitized 
Proceeds in Fiscal Year 2005 and Expect to Receive Somewhat Less in 
Fiscal Year 2006: 

States Allocated the Largest Portion of Their Funds to Address Health- 
Related Programs and Debt Service on Securitized Proceeds in Fiscal 
Year 2005 and Expect to Do the Same in Fiscal Year 2006: 

Appendixes: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Allocations of MSA Payments for 46 States: 

Appendix III: States' Allocations of Combined MSA Payments and 
Securitized Proceeds for Fiscal Years 2000 through 2006: 

Appendix IV: State-Specific Information on Amounts of MSA Payments and 
Securitized Proceeds Received and Allocated: 

Appendix V: GAO Survey on States' Allocations of Fiscal Years 2005 and 
2006 MSA Payments: 

Appendix VI: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: MSA Payments and Securitized Proceeds States Reported 
Receiving in Fiscal Year 2005 and Expect to Receive in Fiscal Year 
2006: 

Table 2: MSA Payments and Securitized Proceeds Received by the 46 
States Since Fiscal Year 2000: 

Table 3: Total Amount of Securitized Proceeds Received by States, 
Fiscal Years 2000-2005: 

Table 4: Allocation of States' Combined MSA Payments and Securitized 
Proceeds, Fiscal Year 2005: 

Table 5: Expected Allocation of States' Combined MSA Payments and 
Securitized Proceeds, Fiscal Year 2006: 

Table 6: Allocations of MSA Payments for 46 States: 

Table 7: Alabama's MSA Payment Allocations: 

Table 8: Alaska's MSA Payment Allocations: 

Table 9: Arizona's MSA Payment Allocations: 

Table 10: Arkansas' MSA Payment Allocations: 

Table 11: California's MSA Payment Allocations: 

Table 12: Colorado's MSA Payment Allocations: 

Table 13: Connecticut's MSA Payment Allocations: 

Table 14: Delaware's MSA Payment Allocations: 

Table 15: Georgia's MSA Payment Allocations: 

Table 16: Hawaii's MSA Payment Allocations: 

Table 17: Idaho's MSA Payment Allocations: 

Table 18: Illinois' MSA Payment Allocations: 

Table 19: Indiana's MSA Payment Allocations: 

Table 20: Iowa's Allocations of MSA Payments and Securitized Proceeds: 

Table 21: Kansas' MSA Payment Allocations: 

Table 22: Kentucky's MSA Payment Allocations: 

Table 23: Louisiana's MSA Payment Allocations: 

Table 24: Maine's MSA Payment Allocations: 

Table 25: Maryland's MSA Payment Allocations: 

Table 26: Massachusetts' MSA Payment Allocations: 

Table 27: Michigan's MSA Payment Allocations: 

Table 28: Missouri's MSA Payment Allocations: 

Table 29: Montana's MSA Payment Allocations: 

Table 30: Nebraska's MSA Payment Allocations: 

Table 31: Nevada's MSA Payment Allocations: 

Table 32: New Hampshire's MSA Payment Allocations: 

Table 33: New Jersey's MSA Payment Allocations: 

Table 34: New Mexico's MSA Payment Allocations: 

Table 35: New York's Allocations of MSA Payments and Securitized 
Proceeds: 

Table 36: North Carolina's MSA Payment Allocations: 

Table 37: North Dakota's MSA Payment Allocations: 

Table 38: Ohio's MSA Payment Allocations: 

Table 39: Oklahoma's MSA Payment Allocations: 

Table 40: Oregon's MSA Payment Allocations: 

Table 41: Pennsylvania's MSA Payment Allocations: 

Table 42: Rhode Island's MSA Payment Allocations: 

Table 43: South Carolina's MSA Payment Allocations: 

Table 44: South Dakota's Allocations of MSA Payments and Securitized 
Proceeds: 

Table 45: Tennessee's MSA Payment Allocations: 

Table 46: Utah's MSA Payment Allocations: 

Table 47: Vermont's MSA Payment Allocations: 

Table 48: Virginia's Allocations of MSA Payment and Securitized 
Proceeds: 

Table 49: Washington's MSA Payment Allocations: 

Table 50: West Virginia's MSA Payment Allocations: 

Table 51: Wisconsin's MSA Payment Allocations: 

Table 52: Wyoming's MSA Payment Allocations: 

Figure: 

Figure 1: States' Allocations of Combined MSA Payments and Securitized 
Proceeds for Fiscal Years 2000 through 2005, and Expected Allocations 
for Fiscal Year 2006: 

Abbreviations: 

MSA: Master Settlement Agreement: 

Letter April 11, 2006: 

Congressional Requesters: 

In the 1990s, states sued major tobacco companies to obtain 
reimbursement for health impairments caused by the public's use of 
tobacco. During 1997 and 1998, four states--Florida, Minnesota, 
Mississippi, and Texas--settled their lawsuits with the tobacco 
industry by negotiating independent agreements.[Footnote 1] In November 
1998, four of the nation's largest tobacco companies--Philip Morris, 
USA;[Footnote 2] R.J. Reynolds Tobacco Company; Brown & Williamson 
Tobacco Corporation; and Lorillard Tobacco Company--negotiated and 
signed an agreement with the attorneys general of the remaining 46 
states, the District of Columbia, and the five U.S. territories, 
thereby settling a number of lawsuits brought by these parties against 
the companies.[Footnote 3] This agreement is known as the Master 
Settlement Agreement (MSA).[Footnote 4] The MSA commits the tobacco 
companies to make annual payments to the 46 states and the 
aforementioned entities in perpetuity as reimbursement for health care 
costs, such as Medicaid expenditures, related to tobacco use.[Footnote 
5] Each state receives a share of the annual MSA payments based on a 
fixed percentage identified in the MSA. These percentages were 
negotiated during the settlement and were based, in part, on smoking- 
related health care costs for each state. The total payment fluctuates 
annually based on a formula that considers participating manufacturers' 
annual U.S. shipments of tobacco as compared with those of 1997, as 
well as other factors such as inflation. The MSA imposed no 
requirements on how states spend their payments. 

The Farm Security and Rural Investment Act of 2002 (the 2002 Farm Bill) 
requires GAO to report annually, from fiscal years 2002 through 2006, 
on how states use MSA payments made by tobacco companies. In addition 
to these payments, 15 of the 46 states have received substantial 
advance proceeds based on the amounts that tobacco companies owe by 
issuing bonds backed by payments to be made in the future, a process 
known as securitization.[Footnote 6] States can securitize the expected 
payment stream to receive funds up front rather than over time as MSA 
payments are made. This report also includes information about states' 
receipt and allocation of these securitized proceeds.[Footnote 7] This 
report is the fifth and final in a series of reports responding to the 
2002 Farm Bill requirement.[Footnote 8]In addition, we previously 
reported in June 2001 on states' receipt and use of MSA payments for 
fiscal years 2000 and 2001.[Footnote 9] 

This report discusses the (1) amount of payments, including securitized 
proceeds, received by the 46 states party to the MSA during fiscal year 
2005, the amount of payments these states expect to receive in fiscal 
year 2006, and (2) states' allocation of these funds to various program 
categories for fiscal year 2005 and expected allocations for fiscal 
year 2006. 

To address our objectives, we surveyed state budget offices, or their 
designees, in each of the 46 states to obtain MSA payment and 
allocation information for fiscal years 2005 and 2006.[Footnote 
10],[Footnote 11] We asked the states to categorize their MSA payment 
allocations for fiscal year 2005 and their expected allocations for 
fiscal year 2006 using 13 categories. In addition, we asked states if 
they securitized their payments and, if so, the amount of proceeds they 
received from securitization and the categories to which they allocated 
the securitized proceeds. We took several steps to assess the 
reliability of the states' data, including independently corroborating 
the data to the extent possible. We determined that the data were 
reliable enough for our purposes. In addition, we compared the data we 
received for fiscal years 2005 and 2006 with the payment and allocation 
information we collected from states for our earlier reports.[Footnote 
12] We conducted our work from September 2005 through March 2006 in 
accordance with generally accepted government auditing standards. See 
appendix I for more information on our scope and methodology and for 
detailed definitions of the categories used in this report.[Footnote 
13] Appendix II shows each state's percentage share of annual MSA 
payments. 

Results in Brief: 

The 46 states party to the MSA expect to receive a total of about $11.3 
billion in fiscal years 2005 and 2006, mostly from payments made by 
tobacco companies. These states reported receiving over $5.8 billion in 
fiscal year 2005 and expect to receive $5.4 billion in fiscal year 
2006. These amounts are substantially less than those of previous 
years, when total payments and proceeds averaged about $9.3 billion 
annually. The decreases occurred because only one state, Virginia, 
chose to issue a bond and receive securitized proceeds ($390 million) 
in 2005, and none plan to do so in 2006. Since the MSA was signed, 15 
of the 46 states securitized all or part of their payments, including 
the two states (California and New York) with the largest payments, 
which alone received $6.7 billion in securitized proceeds in 2 prior 
years. Of the $46.7 billion states reported receiving over the first 5 
years, about $31.1 billion were MSA payments from the tobacco companies 
and about $15.6 billion were securitized proceeds. 

States allocated the largest portions of their fiscal year 2005 tobacco 
settlement funds to health-related programs (32 percent) and debt 
service on securitized proceeds (24 percent). They expect health 
programs to remain about 32 percent and debt service to increase to 29 
percent for fiscal year 2006. These two categories increased 
substantially from fiscal year 2004, when health-related programs 
represented 20 percent and debt service was 9 percent. However, while 
the percentage allocations to some program categories increased in 
fiscal year 2005, the dollars allocated to these categories decreased 
because of the nearly $4 billion decrease in securitized proceeds from 
fiscal year 2004 to 2005. 

States Received About $5.8 Billion in MSA Payments and Securitized 
Proceeds in Fiscal Year 2005 and Expect to Receive Somewhat Less in 
Fiscal Year 2006: 

The 46 states party to the MSA reported receiving about $5.5 billion in 
MSA payments from the tobacco companies and about $390 million in 
securitized proceeds for 2005. For fiscal year 2006, these 46 states 
expect to receive close to the same amount of MSA payments;[Footnote 
14] however no states expect to receive securitized proceeds. While the 
fiscal year 2005 and expected fiscal year 2006 MSA payments are similar 
to those of 2004, the securitized proceeds for the 2 years are about $4 
billion and $4.4 billion less than in fiscal year 2004, respectively. 
Table 1 shows the payments and proceeds for each state for fiscal years 
2005 and 2006. 

Table 1: MSA Payments and Securitized Proceeds States Reported 
Receiving in Fiscal Year 2005 and Expect to Receive in Fiscal Year 
2006: 

State: Alabama; 
Fiscal year 2005: MSA payments received: $101,871,492; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $101,871,492; 
Expected fiscal year 2006: MSA payments expected to be received: 
$101,871,679; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $101,871,679. 

State: Alaska; 
Fiscal year 2005: MSA payments received: $21,759,260; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $21,759,260; 
Expected fiscal year 2006: MSA payments expected to be received: 
$22,133,477; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $22,133,477. 

State: Arizona; 
Fiscal year 2005: MSA payments received: $93,933,400; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $93,933,400; 
Expected fiscal year 2006: MSA payments expected to be received: 
$89,553,200; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $89,553,200. 

State: Arkansas; 
Fiscal year 2005: MSA payments received: $52,774,224; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $52,774,224; 
Expected fiscal year 2006: MSA payments expected to be received: 
$49,500,000; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $49,500,000. 

State: California[A]; 
Fiscal year 2005: MSA payments received: $406,932,000; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $406,932,000; 
Expected fiscal year 2006: MSA payments expected to be received: 
$401,637,000; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $401,637,000. 

State: Colorado; 
Fiscal year 2005: MSA payments received: $87,367,598; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $87,367,598; 
Expected fiscal year 2006: MSA payments expected to be received: 
$88,934,450; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $88,934,450. 

State: Connecticut; 
Fiscal year 2005: MSA payments received: $118,320,645; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $118,320,645; 
Expected fiscal year 2006: MSA payments expected to be received: 
$111,000,000; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $111,000,000. 

State: Delaware; 
Fiscal year 2005: MSA payments received: $25,207,000; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $25,207,000; 
Expected fiscal year 2006: MSA payments expected to be received: 
$27,698,000; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $27,698,000. 

State: Georgia; 
Fiscal year 2005: MSA payments received: $156,427,234; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $156,427,234; 
Expected fiscal year 2006: MSA payments expected to be received: 
$146,123,673; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $146,123,673. 

State: Hawaii; 
Fiscal year 2005: MSA payments received: $38,357,999; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $38,357,999; 
Expected fiscal year 2006: MSA payments expected to be received: 
$42,154,625; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $42,154,625. 

State: Idaho; 
Fiscal year 2005: MSA payments received: $23,151,453; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $23,151,453; 
Expected fiscal year 2006: MSA payments expected to be received: 
$24,071,285; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $24,071,285. 

State: Illinois; 
Fiscal year 2005: MSA payments received: $296,629,800; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $296,629,800; 
Expected fiscal year 2006: MSA payments expected to be received: 
$282,459,316; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $282,459,316. 

State: Indiana; 
Fiscal year 2005: MSA payments received: $130,000,535; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $130,000,535; 
Expected fiscal year 2006: MSA payments expected to be received: 
$132,132,122; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $132,132,122. 

State: Iowa; 
Fiscal year 2005: MSA payments received: $55,425,528; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $55,425,528; 
Expected fiscal year 2006: MSA payments expected to be received: 
$56,409,091; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $56,409,091. 

State: Kansas; 
Fiscal year 2005: MSA payments received: $53,131,448; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $53,131,448; 
Expected fiscal year 2006: MSA payments expected to be received: 
$52,000,000; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $52,000,000. 

State: Kentucky; 
Fiscal year 2005: MSA payments received: $112,241,980; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $112,241,980; 
Expected fiscal year 2006: MSA payments expected to be received: 
$108,600,000; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $108,600,000. 

State: Louisiana; 
Fiscal year 2005: MSA payments received: $144,591,814; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $144,591,814; 
Expected fiscal year 2006: MSA payments expected to be received: 
$145,366,560; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $145,366,560. 

State: Maine; 
Fiscal year 2005: MSA payments received: $49,033,129; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $49,033,129; 
Expected fiscal year 2006: MSA payments expected to be received: 
$49,594,690; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $49,594,690. 

State: Maryland; 
Fiscal year 2005: MSA payments received: $151,263,000; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $151,263,000; 
Expected fiscal year 2006: MSA payments expected to be received: 
$149,503,000; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $149,503,000. 

State: Massachusetts; 
Fiscal year 2005: MSA payments received: $257,411,796; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $257,411,796; 
Expected fiscal year 2006: MSA payments expected to be received: 
$253,349,780; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $253,349,780. 

State: Michigan; 
Fiscal year 2005: MSA payments received: $274,326,923; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $274,326,923; 
Expected fiscal year 2006: MSA payments expected to be received: 
$285,500,000; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $285,500,000. 

State: Missouri; 
Fiscal year 2005: MSA payments received: $144,964,644; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $144,964,644; 
Expected fiscal year 2006: MSA payments expected to be received: 
$154,000,000; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $154,000,000. 

State: Montana; 
Fiscal year 2005: MSA payments received: $27,070,703; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $27,070,703; 
Expected fiscal year 2006: MSA payments expected to be received: 
$26,102,000; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $26,102,000. 

State: Nebraska; 
Fiscal year 2005: MSA payments received: $37,919,415; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $37,919,415; 
Expected fiscal year 2006: MSA payments expected to be received: 
$36,273,307; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $36,273,307. 

State: Nevada; 
Fiscal year 2005: MSA payments received: $38,872,322; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $38,872,322; 
Expected fiscal year 2006: MSA payments expected to be received: 
$39,507,406; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $39,507,406. 

State: New Hampshire; 
Fiscal year 2005: MSA payments received: $42,400,000; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $42,400,000; 
Expected fiscal year 2006: MSA payments expected to be received: 
$43,000,000; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $43,000,000. 

State: New Jersey; 
Fiscal year 2005: MSA payments received: $246,462,646; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $246,462,646; 
Expected fiscal year 2006: MSA payments expected to be received: 
$249,152,772; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $249,152,772. 

State: New Mexico; 
Fiscal year 2005: MSA payments received: $38,009,047; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $38,009,047; 
Expected fiscal year 2006: MSA payments expected to be received: 
$29,657,921; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $29,657,921. 

State: New York[A]; 
Fiscal year 2005: MSA payments received: $410,564,424; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $410,564,424; 
Expected fiscal year 2006: MSA payments expected to be received: 
$434,741,632; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $434,741,632. 

State: North Carolina; 
Fiscal year 2005: MSA payments received: $148,640,949; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $148,640,949; 
Expected fiscal year 2006: MSA payments expected to be received: 
$163,353,241; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $163,353,241. 

State: North Dakota; 
Fiscal year 2005: MSA payments received: $23,326,754; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $23,326,754; 
Expected fiscal year 2006: MSA payments expected to be received: 
$22,972,067; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $22,972,067. 

State: Ohio; 
Fiscal year 2005: MSA payments received: $321,050,059; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $321,050,059; 
Expected fiscal year 2006: MSA payments expected to be received: 
$321,050,059[B]; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $321,050,059[B]. 

State: Oklahoma; 
Fiscal year 2005: MSA payments received: $66,034,977; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $66,034,977; 
Expected fiscal year 2006: MSA payments expected to be received: 
$49,348,303; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $49,348,303. 

State: Oregon; 
Fiscal year 2005: MSA payments received: $73,142,434; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $73,142,434; 
Expected fiscal year 2006: MSA payments expected to be received: 
$75,110,359; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $75,110,359. 

State: Pennsylvania; 
Fiscal year 2005: MSA payments received: $366,258,217; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $366,258,217; 
Expected fiscal year 2006: MSA payments expected to be received: 
$351,180,000; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $351,180,000. 

State: Rhode Island; 
Fiscal year 2005: MSA payments received: $45,817,205; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $45,817,205; 
Expected fiscal year 2006: MSA payments expected to be received: 
$47,988,000; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $47,988,000. 

State: South Carolina; 
Fiscal year 2005: MSA payments received: $73,361,299; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $73,361,299; 
Expected fiscal year 2006: MSA payments expected to be received: 
$74,329,662; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $74,329,662. 

State: South Dakota; 
Fiscal year 2005: MSA payments received: $22,238,977; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $22,238,977; 
Expected fiscal year 2006: MSA payments expected to be received: 
$23,232,155; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $23,232,155. 

State: Tennessee; 
Fiscal year 2005: MSA payments received: $156,708,209; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $156,708,209; 
Expected fiscal year 2006: MSA payments expected to be received: 
$153,000,000; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $153,000,000. 

State: Utah; 
Fiscal year 2005: MSA payments received: $28,353,400; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $28,353,400; 
Expected fiscal year 2006: MSA payments expected to be received: 
$29,541,000; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $29,541,000. 

State: Vermont; 
Fiscal year 2005: MSA payments received: $26,205,607; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $26,205,607; 
Expected fiscal year 2006: MSA payments expected to be received: 
$24,500,000; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $24,500,000. 

State: Virginia; 
Fiscal year 2005: MSA payments received: $130,315,484; 
Fiscal year 2005: Securitized proceeds received: $389,977,667; 
Total: $520,293,151; 
Expected fiscal year 2006: MSA payments expected to be received: 
$132,777,945; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $132,777,945. 

State: Washington; 
Fiscal year 2005: MSA payments received: $130,879,000; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $130,879,000; 
Expected fiscal year 2006: MSA payments expected to be received: 
$131,000,000; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $131,000,000. 

State: West Virginia; 
Fiscal year 2005: MSA payments received: $56,495,804; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $56,495,804; 
Expected fiscal year 2006: MSA payments expected to be received: 
$55,400,000; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $55,400,000. 

State: Wisconsin; 
Fiscal year 2005: MSA payments received: $132,054,977; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $132,054,977; 
Expected fiscal year 2006: MSA payments expected to be received: 
$138,929,751; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $138,929,751. 

State: Wyoming; 
Fiscal year 2005: MSA payments received: $15,827,492; 
Fiscal year 2005: Securitized proceeds received: $0; 
Total: $15,827,492; 
Expected fiscal year 2006: MSA payments expected to be received: 
$15,827,492; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $15,827,492. 

State: Total; 
Fiscal year 2005: MSA payments received: $5,453,132,303[]; 
Fiscal year 2005: Securitized proceeds received: $389,977,667; 
Total: $5,843,109,970[A]; 
Expected fiscal year 2006: MSA payments expected to be received: 
$5,441,567,020[A, B]; 
Expected fiscal year 2006: Securitized proceeds expected to be 
received: $0; 
Total: $5,441,567,020[A, B]. 

Sources: State budget offices or their designees. 

[A] The amounts of MSA payments received and expected by California and 
New York do not include MSA payments made to the counties and cities in 
those states. 

[B] We used Ohio's 2005 MSA payment as an estimate for its expected 
2006 payment based on Ohio's budget document, which advises state 
agencies to expect the same or less tobacco funds for that year as was 
received in 2005. In responding to our survey, Ohio declined to provide 
an estimate of its 2006 expected payment because of uncertainties in 
adjustments in MSA payments that may result from changes in 
participating manufacturers' share of the tobacco market. 

[End of table] 

Since fiscal year 2000, states have received a total of about $53 
billion in MSA payments and securitized proceeds; specifically, about 
$37 billion from MSA payments and $16 billion in securitized proceeds 
(see table 2). The amount of total payments and proceeds in fiscal year 
2005 ($5.8 billion) was significantly less than in fiscal year 2004, 
when New York alone received $4.2 billion in securitized proceeds. 
States that have issued bonds backed by MSA payments must pay for debt 
service on these bonds. 

Table 2: MSA Payments and Securitized Proceeds Received by the 46 
States Since Fiscal Year 2000: 

Fiscal year: 2000-01; 
MSA payments: $13,200,000,000; 
Securitized proceeds: $928,900,000; 
Total: $14,128,900,000. 

Fiscal year: 2002; 
MSA payments: $6,238,393,496; 
Securitized proceeds: $3,838,376,465; 
Total: $10,076,769,961. 

Fiscal year: 2003; 
MSA payments: $6,306,329,459; 
Securitized proceeds: $6,482,764,469; 
Total: $12,789,093,928. 

Fiscal year: 2004; 
MSA payments: $5,340,128,223; 
Securitized proceeds: $4,374,698,723; 
Total: $9,714,826,946. 

Fiscal year: 2005; 
MSA payments: $5,453,132,303; 
Securitized proceeds: $389,977,667; 
Total: $5,843,109,970. 

Fiscal year: Total; 
MSA payments: $36,537,983,481; 
Securitized proceeds: $16,014,717,324; 
Total: $52,552,700,805. 

Sources: [Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-01-851], 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-407], [Hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-04-518], [Hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-05-312], state budget offices or 
their designees, and GAO analysis. 

Note: This table does not include payments or proceeds that went to 
cities and counties in California and New York. 

[End of table] 

In fiscal year 2005, Virginia was the only state that received 
securitized proceeds. Fifteen states have received a total of about $16 
billion in proceeds from the sale of bonds since fiscal year 2000, as 
shown in table 3. Five of the states--Alabama, Alaska, Iowa, Oregon and 
Rhode Island--have received proceeds in more than one year. 

Table 3: Total Amount of Securitized Proceeds Received by States, 
Fiscal Years 2000-2005: 

State: Alabama; 
Total securitized proceeds: $153,760,000. 

State: Arkansas; 
Total securitized proceeds: $58,268,549. 

State: Alaska; 
Total securitized proceeds: $203,000,000. 

State: California; 
Total securitized proceeds: $2,485,000,000. 

State: Iowa; 
Total securitized proceeds: $643,108,448. 

State: Louisiana; 
Total securitized proceeds: $1,069,510,894. 

State: New Jersey; 
Total securitized proceeds: $2,751,814,469. 

State: New York; 
Total securitized proceeds: $4,200,000,000. 

State: Oregon; 
Total securitized proceeds: $657,565,000[A]. 

State: Rhode Island; 
Total securitized proceeds: $545,859,897. 

State: South Carolina; 
Total securitized proceeds: $785,900,000. 

State: South Dakota; 
Total securitized proceeds: $278,045,000. 

State: Washington; 
Total securitized proceeds: $517,905,000. 

State: Virginia; 
Total securitized proceeds: $389,977,667. 

State: Wisconsin; 
Total securitized proceeds: $1,275,002,400. 

Total; 
Total securitized proceeds: $16,014,717,324[A]. 

Sources: [Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-01-851], 
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-407], [Hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-04-518], [Hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-05-312], state budget offices or 
their designees, and GAO analysis. 

[A] Oregon issued bonds, but did not securitize them with tobacco 
settlement payments. 

[End of table] 

States Allocated the Largest Portion of Their Funds to Address Health- 
Related Programs and Debt Service on Securitized Proceeds in Fiscal 
Year 2005 and Expect to Do the Same in Fiscal Year 2006: 

The 46 states reported that in fiscal year 2005 they allocated the 
largest portion of their combined MSA payments and securitized proceeds 
(32 percent) to health-related programs, and the next largest portion 
(24 percent) was allocated to debt service on securitized proceeds. In 
fiscal year 2006, the states expected the funding proportion that is 
devoted to health programs to remain at 32 percent and that which is 
devoted to debt service to increase to 29 percent. These two categories 
increased substantially from fiscal year 2004, when health-related 
programs represented 20 percent and debt service was 9 percent. The 
increases were accompanied by substantial decreases in state 
allocations to cover state budget shortfalls. Also, while the 
percentage allocations to some program categories increased in fiscal 
year 2005, the total number of dollars allocated to these categories 
decreased because of the nearly $4 billion decrease in securitized 
proceeds from fiscal year 2004 to 2005. For example, the percentage 
allocation to health care increased from 20 to 32 percent, while the 
dollar amount decreased from about $2.26 billion in fiscal year 2004 to 
$1.87 billion in fiscal year 2005 and is expected to remain about the 
same in fiscal year 2006. Examples of the health-related programs 
included Medicaid, Children's Health Insurance Program, and cancer 
research and prevention. Figure 1 and appendix III provide more details 
on states' allocations of their combined MSA payments and securitized 
proceeds for fiscal years 2000 through 2005, and expected allocations 
for fiscal year 2006. 

In addition, between fiscal years 2004 and 2005, the portion of funds 
that all states allocated to cover budget shortfalls decreased 
substantially from 44 percent to 4 percent, as shown in figure 1. Our 
analysis shows that changes in the allocations (primarily securitized 
proceeds) by New York and New Jersey were the primary cause of that 
decrease. The funds (about $6.3 billion) allocated by these two states 
accounted for over half of the total funds ($11.4 billion) that all 
states allocated in fiscal year 2004, but these amounts declined 
substantially in fiscal year 2005 and are expected to further decline 
in 2006. Specifically, in fiscal year 2004, New York allocated $3.8 
billion to budget shortfalls while New Jersey allocated $873 million. 
These two states' allocations accounted for about 92 percent of all 
funds allocated to budget shortfalls in fiscal year 2004. In fiscal 
year 2005, however, New York allocated only $354 million to budget 
shortfalls while New Jersey did not allocate any funds to budget 
shortfalls. In fiscal year 2006, neither New York nor New Jersey expect 
to allocate any funds to budget shortfalls. 

Figure 1: States' Allocations of Combined MSA Payments and Securitized 
Proceeds for Fiscal Years 2000 through 2005, and Expected Allocations 
for Fiscal Year 2006: 

[See PDF for image] 

Note: Percentages may not add up to 100 because of rounding. 

[A] We did not obtain data for budget shortfalls and debt service on 
securitized funds for fiscal year 2000 to 2001. 

[End of figure] 

Tables 4 and 5 show the percentage of the combined MSA payments and 
securitized proceeds that individual states allocated, and expect to 
allocate, to various categories in fiscal years 2005 and 2006, 
respectively. 

Table 4: Allocation of States' Combined MSA Payments and Securitized 
Proceeds, Fiscal Year 2005: 

[See PDF for image] 

Sources: State budget offices and their designees (data); GAO 
(analysis). 

Notes: Percentages may not add up to 100 because of rounding. Appendix 
IV shows the dollar amount. 

[End of table] 

Table 5: Expected Allocation of States' Combined MSA Payments and 
Securitized Proceeds, Fiscal Year 2006: 

[See PDF for image] 

Source: State budget offices and their designees (data); GAO 
(analysis): 

Notes: Percentages may not add up to 100 because of rounding. Appendix 
IV shows the dollar amount each state allocated to the various 
categories. 

[End of table] 

We are sending copies of this report to interested congressional 
committees and others upon request. Copies are also available at no 
charge on the GAO Web site at [Hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-3841 or [Hyperlink, robinsonr@gao.gov]. Contact 
points for our Offices of Congressional Relations or Public Affairs may 
be found on the last page of this report. Key contributors to this 
report are listed in appendix VI. 

Signed by: 

Robert A. Robinson: 
Managing Director, Natural Resources and Environment: 

List of Congressional Requesters: 

The Honorable Saxby Chambliss: 
Chairman: 
The Honorable Tom Harkin: 
Ranking Democratic Member: 
Committee on Agriculture, Nutrition, and Forestry: 
United States Senate: 

The Honorable Robert Goodlatte: 
Chairman, Committee on Agriculture: 
House of Representatives: 

The Honorable Jim Bunning: 
United States Senate: 

[End of section] 

Appendixes: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

The Farm Security and Rural Investment Act of 2002 (the 2002 Farm Bill) 
requires GAO to report annually, from fiscal years 2002 through 2006, 
on how states use Master Settlement Agreement (MSA) payments made by 
tobacco companies. This report is the fifth and final in a series of 
reports responding to the 2002 Farm Bill requirement. In December 2002, 
we issued the report Tobacco Settlement: States' Allocations of Phase 
II Funds ([Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-262R]), 
which provides information on the National Tobacco Grower Settlement 
Trust (commonly referred to as the Phase II agreement). In February 
2003, we issued the report Tobacco Settlement: States' Allocations of 
Fiscal Years 2002 and 2003 Master Settlement Agreement Payments 
([Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-407]). In March 
2004, we issued the report Tobacco Settlement: States' Allocations of 
Fiscal Year 2003 and Expected Fiscal Year 2004 Payments ([Hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-04-518]). In March 2005, we 
issued the report Tobacco Settlement: States' Allocations of Fiscal 
Year 2004 and Expected Fiscal Year 2005 Payments ([Hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-05-312]). We also reported on 
states' receipt and use of MSA payments for fiscal years 2000 and 2001 
in a June 2001 report, Tobacco Settlement: States' Use of Master 
Settlement Agreement Payments ([Hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-01-8]). 

To respond to the Farm Bill requirement, the objectives of this study 
were to provide information on (1) the amount of payments received by 
the 46 states party to the MSA during fiscal year 2005 and the amount 
of payments these states expect to receive during fiscal year 2006 and 
(2) states' allocations of MSA funds to various program categories for 
fiscal year 2005 and states' expected allocations for fiscal year 
2006.[Footnote 15],[Footnote 16] 

To address these objectives, we surveyed[Footnote 17] the executive 
budget offices, or their designees, in the 46 states party to the MSA. 
In addition, we performed some reliability testing and independently 
corroborated these data, to the extent possible. We reviewed and 
compared MSA payment data reported by states with amounts provided by 
the National Association of Attorneys General.[Footnote 18] We 
contacted state officials to discuss any data entries on the surveys 
that were questionable, and resolved all discrepancies between the 
survey data and the data provided by National Association of Attorneys 
General. We also reviewed previous GAO reports and other relevant 
studies. Based on this work, we determined that the data were reliable 
enough for our purposes. We conducted our work from September 2005 
through March 2006 in accordance with generally accepted government 
auditing standards. 

Our study focuses on the states' shares of MSA payments and does not 
include information on allocations of MSA payments to cities and 
counties in California and New York.[Footnote 19] In addition, we did 
not collect information on MSA payments made to the District of 
Columbia or the five U.S. territories that are also party to the MSA. 
Because we completed our fieldwork before states received their fiscal 
year 2006 payments, we were unable to obtain final information on the 
actual MSA payments states received during fiscal year 2006. 
Consequently, we obtained information on states' expected fiscal year 
2006 MSA payments. 

Survey Methodology and Categorization of States' Allocations: 

We used a survey instrument similar to the one used to obtain 
information for our March 2005 report. In September 2005, we contacted 
the 46 state budget officials, or their designees, who completed the 
surveys for our March 2005 report. The officials in many of these 
states indicated they would be the respondents for this year's survey 
and several identified new respondents. In September 2005, we E-mailed 
the survey to the identified officials in each of the 46 states party 
to the MSA. We received responses from all 46 states. From these 
responses, we obtained information on MSA payments states received in 
fiscal year 2005 and MSA payments they expect to receive in fiscal year 
2006, and the states' allocations and expected allocations of MSA 
payments in fiscal years 2005 and 2006, respectively. We also obtained 
information on the states' proceeds, if any, from securitization or 
expected securitization in fiscal years 2005 and 2006, respectively, 
and the allocation of the securitized proceeds. Furthermore, in the 
survey, we asked the states to categorize their allocations of MSA 
payments and securitized MSA proceeds for fiscal years 2005 and 2006 
using the 13 program categories developed for our report. (See below 
for the definitions of the 13 categories.) The level of detail for 
individual states varies because we are relying on state-reported 
information. 

There are no sampling errors because this was not a sample survey. 
Nevertheless, the practical difficulties of conducting any survey may 
introduce errors, commonly referred to as nonsampling errors. For 
example, difficulties in how a particular question is interpreted, in 
the sources of information that are available to respondents, or in how 
the data are entered into a database or were analyzed can introduce 
unwanted variability into the survey results. We took steps in the 
development of the survey, the data collection, and the data editing 
and analysis to minimize these nonsampling errors. For example, we 
edited the completed surveys for consistency and contacted state budget 
offices to clarify responses, verified all survey data that were 
entered into our database, and verified that the computer programs were 
written correctly. 

In addition, we took information on MSA payments and securitized 
proceeds received and allocated for fiscal years 2000 through 2004 that 
we collected for previous GAO reports dealing with the MSA[Footnote 20] 
and compared it with receipts and allocations for fiscal years 2005 and 
2006. 

Categories of States' Allocations: 

To standardize the information reported by the 46 states, we developed 
the following categories and definitions for the program areas to which 
states allocated their payments. 

Budget shortfalls: This category is comprised of amounts allocated to 
balance state budgets and close gaps or reduce deficits resulting from 
lower than anticipated revenues or increased mandatory or essential 
expenditures. 

Debt service on securitized funds: This category consists of amounts 
allocated to service the debt on bonds issued when the state 
securitized all or a portion of its MSA payments. 

Economic development for tobacco regions: This category is comprised of 
amounts allocated for economic development projects in tobacco states 
such as infrastructure projects, education and job training programs, 
and research on alternative uses of tobacco and alternative crops. This 
category includes projects specifically designed to benefit tobacco 
growers as well as economic development that may serve a larger 
population within a tobacco state. 

Education: This category is comprised of amounts allocated for 
education programs such as day care, preschool, Head Start, early 
childhood education, elementary and secondary education, after-school 
programs, and higher education. This category does not include money 
for capital projects such as construction of school buildings. 

General purposes: This category is comprised of amounts allocated for 
attorneys' fees and other items, such as law enforcement or community 
development, which could not be placed into a more precise category. 
This category also includes amounts allocated to a state's general fund 
that were not earmarked for any particular purpose. Amounts used to 
balance state budgets and close gaps or reduce deficits should be 
categorized as budget shortfalls rather than general purposes. 

Health: This category is comprised of amounts allocated for direct 
health care services; health insurance, including Medicaid and the 
State Children's Health Insurance Program (SCHIP); hospitals; medical 
technology; public health services; and health research. This category 
does not include money for capital projects such as construction of 
health facilities. 

Infrastructure: This category is comprised of amounts allocated for 
capital projects such as construction and renovation of health care, 
education, and social services facilities; water and transportation 
projects; and municipal and state government buildings. This category 
includes retirement of debt owed on capital projects. 

Payments to tobacco growers: This category is comprised of amounts 
allocated for direct payments to tobacco growers, including subsidies 
and crop conversion programs. 

Reserves/rainy day funds: This category is comprised of amounts 
allocated to state budget reserves such as rainy day and budget 
stabilization funds not earmarked for specific programs. Amounts 
allocated to reserves that are earmarked for specific areas are 
categorized under those areas--e.g., reserve amounts earmarked for 
economic development purposes should be categorized in the economic 
development category. 

Social services: This category is comprised of amounts allocated for 
social services such as programs for the aging, assisted living, Meals 
on Wheels, drug courts, child welfare, and foster care. This category 
also includes amounts allocated to special funds established for 
children's programs. 

Tax reductions: This category is comprised of amounts allocated for tax 
reductions such as property tax rebates and earned income tax credits. 

Tobacco control: This category is comprised of amounts allocated for 
tobacco control programs such as prevention, including youth education, 
enforcement, and cessation services. 

Unallocated: This category is comprised of amounts not allocated for 
any specific purpose, such as amounts allocated to dedicated funds that 
have no specified purpose; amounts states chose not to allocate in the 
year MSA payments were received that will be available for allocation 
in a subsequent fiscal year; interest earned from dedicated funds not 
yet allocated; and amounts that have not been allocated because the 
state had not made a decision on the use of the MSA payments. 

[End of section] 

Appendix II: Allocations of MSA Payments for 46 States: 

Each of the 46 states receives a share of the annual MSA payments based 
on the following fixed percentages identified in the MSA. 

Table 6: Allocations of MSA Payments for 46 States: 

State: Alabama; 
Percent: 1.6161308%. 

State: Alaska; 
Percent: 0.3414187%. 

State: Arizona; 
Percent: 1.4738845%. 

State: Arkansas; 
Percent: 0.8280661%. 

State: California; 
Percent: 12.7639554%. 

State: Colorado; 
Percent: 1.3708614%. 

State: Connecticut; 
Percent: 1.8565373%. 

State: Delaware; 
Percent: 0.3954695%. 

State: Georgia; 
Percent: 2.4544575%. 

State: Hawaii; 
Percent: 0.6018650%. 

State: Idaho; 
Percent: 0.3632632%. 

State: Illinois; 
Percent: 4.6542472%. 

State: Indiana; 
Percent: 2.0398033%. 

State: Iowa; 
Percent: 0.8696670%. 

State: Kansas; 
Percent: 0.8336712%. 

State: Kentucky; 
Percent: 1.7611586%. 

State: Louisiana; 
Percent: 2.2553531%. 

State: Maine; 
Percent: 0.7693505%. 

State: Maryland; 
Percent: 2.2604570%. 

State: Massachusetts; 
Percent: 4.0389790%. 

State: Michigan; 
Percent: 4.3519476%. 

State: Missouri; 
Percent: 2.2746011%. 

State: Montana; 
Percent: 0.4247591%. 

State: Nebraska; 
Percent: 0.5949833%. 

State: Nevada; 
Percent: 0.6099351%. 

State: New Hampshire; 
Percent: 0.6659340%. 

State: New Jersey; 
Percent: 3.8669963%. 

State: New Mexico; 
Percent: 0.5963897%. 

State: New York; 
Percent: 12.7620310%. 

State: North Carolina; 
Percent: 2.3322850%. 

State: North Dakota; 
Percent: 0.3660138%. 

State: Ohio; 
Percent: 5.0375098%. 

State: Oklahoma; 
Percent: 1.0361370%. 

State: Oregon; 
Percent: 1.1476582%. 

State: Pennsylvania; 
Percent: 5.7468588%. 

State: Rhode Island; 
Percent: 0.7189054%. 

State: South Carolina; 
Percent: 1.1763519%. 

State: South Dakota; 
Percent: 0.3489458%. 

State: Tennessee; 
Percent: 2.4408945%. 

State: Utah; 
Percent: 0.4448869%. 

State: Vermont; 
Percent: 0.4111851%. 

State: Virginia; 
Percent: 2.0447451%. 

State: Washington; 
Percent: 2.0532582%. 

State: West Virginia; 
Percent: 0.8864604%. 

State: Wisconsin; 
Percent: 2.0720390%. 

State: Wyoming; 
Percent: 0.2483449%. 

Sources: [Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-312] and 
the MSA. 

[End of table] 

[End of section] 

Appendix III: States' Allocations of Combined MSA Payments and 
Securitized Proceeds for Fiscal Years 2000 through 2006: 

[See PDF for image] 

Sources: [Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-312] and 
state budget offices or their designees (data); GAO (analysis). 

Note: Percentages may not add up to 100 percent and allocations may not 
add up to total allocations due to rounding. The amounts for each year 
are in the current year dollars for that year. Percentages across years 
may be compared but not dollars across years because the dollars are 
not adjusted to a constant base year. 

[A] We did not obtain information on allocations for budget shortfalls 
and debt service on securitized funds in fiscal years 2000 and 2001. 

[End of table] 

[End of section] 

Appendix IV State-Specific Information on Amounts of MSA Payments and 
Securitized Proceeds Received and Allocated: 

This appendix presents the following information for each of the 46 
states party to the MSA: 

* the amount of MSA payments received and the categories to which they 
were allocated for fiscal year 2005; 

* the amount of MSA payments expected to be received and the expected 
categories to which they will be allocated for fiscal year 2006; and: 

* the amount of securitized proceeds received or expected to be 
received and the categories to which they were allocated or expected to 
be allocated for fiscal years 2005 and 2006, respectively, if 
applicable (applies to four states). 

Tables 7 through 52 include only those program categories to which a 
state reported allocating funds. If a category is not listed, it means 
the state did not allocate funds to the category. In some cases, the 
total amounts allocated may exceed the actual MSA payments and 
securitized proceeds because the amounts allocated include carry-over 
funds from prior years and/or the interest earned on those funds. Some 
states that allocated funds to a program category did not provide 
examples of programs receiving funds. Only Virginia received 
securitized proceeds in fiscal year 2005; no states expect to receive 
proceeds in fiscal year 2006. However, Iowa, New York, and South Dakota 
allocated or expected to allocate funds composed of securitized 
proceeds received in prior years. In these four cases, we combined 
securitized proceeds with MSA payments. 

Alabama: 

Alabama reported receiving $101,871,492 from MSA payments in fiscal 
year 2005 and expects to receive $101,871,679 in fiscal year 2006. 

Table 7: Alabama's MSA Payment Allocations: 

Program area: Debt service on securitized funds; 
Fiscal year allocation: 2005: $13,000,000; 
Fiscal year allocation: Expected 2006: $13,000,000. 

Program area: Education; 
Fiscal year allocation: 2005: $11,675,163; 
Fiscal year allocation: Expected 2006: $11,675,188; 
Examples of programs receiving or expected to receive allocations: 
Alternative schools, Department of Education. 

Program area: General purposes; 
Fiscal year allocation: 2005: $6,008,160; 
Fiscal year allocation: Expected 2006: $53,008,172; 
Examples of programs receiving or expected to receive allocations: 
Juvenile probation officers, administration, forensic sciences. 

Program area: Health; 
Fiscal year allocation: 2005: $45,449,741; 
Fiscal year allocation: Expected 2006: $45,449,837; 
Examples of programs receiving or expected to receive allocations: 
Public health, mental health, Medicaid, senior services. 

Program area: Social services; 
Fiscal year allocation: 2005: $25,207,739; 
Fiscal year allocation: Expected 2006: $25,207,792; 
Examples of programs receiving or expected to receive allocations: 
Child welfare, children's programs, youth services, rehabilitation 
services. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $530,689; 
Fiscal year allocation: Expected 2006: $530,690; 
Examples of programs receiving or expected to receive allocations: 
Tobacco enforcement for minors. 

Total; 
Fiscal year allocation: 2005: $101,871,492; 
Fiscal year allocation: Expected 2006: $148,871,679[A]. 

Source: Alabama Executive Budget Office. 

[A] Includes carry-over funds. 

[End of table] 

Alaska: 

Alaska reported receiving $21,759,260 from MSA payments in fiscal year 
2005 and expects to receive $22,133,477 in fiscal year 2006. 

Table 8: Alaska's MSA Payment Allocations: 

Program area: Debt service on securitized funds; 
Fiscal year allocation: 2005: $17,407,408; 
Fiscal year allocation: Expected 2006: $16,900,000. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $4,351,852; 
Fiscal year allocation: Expected 2006: $5,085,339; 
Examples of programs receiving or expected to receive allocations: 
Tobacco use prevention programs, use cessation grants, enforcement, 
counter marketing, evaluation of programs. 

Total; 
Fiscal year allocation: 2005: $21,759,260; 
Fiscal year allocation: Expected 2006: $21,985,339. 

Source: Alaska Department of Revenue - Tax Division. 

[End of table] 

Arizona: 

Arizona reported receiving $93,933,400 from MSA payments in fiscal year 
2005 and expects to receive $89,553,200 in fiscal year 2006. 

Table 9: Arizona's MSA Payment Allocations: 

Program area: Health; 
Fiscal year allocation: 2005: $94,142,500; 
Fiscal year allocation: Expected 2006: $89,553,200; 
Examples of programs receiving or expected to receive allocations: 
Health services, including behavioral health. 

Total; 
Fiscal year allocation: 2005: $94,142,500[A]; 
Fiscal year allocation: Expected 2006: $89,553,200. 

Source: Arizona Governor's Budget Office. 

[A] Includes interest earned. 

[End of table] 

Arkansas: 

Arkansas reported receiving $52,774,224 from MSA payments in fiscal 
year 2005 and expects to receive $49,500,000 in fiscal year 2006. 

Table 10: Arkansas' MSA Payment Allocations: 

Program area: Debt service on securitized funds; 
Fiscal year allocation: 2005: $5,000,000; 
Fiscal year allocation: Expected 2006: $5,000,000. 

Program area: Education; 
Fiscal year allocation: 2005: $2,508,007; 
Fiscal year allocation: Expected 2006: $2,337,289; 
Examples of programs receiving or expected to receive allocations: 
University of Arkansas' School of Public Health. 

Program area: Health; 
Fiscal year allocation: 2005: $30,235,237; 
Fiscal year allocation: Expected 2006: $27,230,395; 
Examples of programs receiving or expected to receive allocations: 
Prevention and cessation, biomedical research, Medicaid, minority 
health. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $15,030,980; 
Fiscal year allocation: Expected 2006: $14,932,316; 
Examples of programs receiving or expected to receive allocations: 
Enforcement related to sales to minors. 

Total; 
Fiscal year allocation: 2005: $52,774,224; 
Fiscal year allocation: Expected 2006: $49,500,000. 

Source: Arkansas Department of Finance and Administration. 

[End of table] 

California: 

California reported receiving $406,932,000 from MSA payments in fiscal 
year 2005 and expects to receive $401,637,000 in fiscal year 2006. 

Table 11: California's MSA Payment Allocations: 

Program area: Debt service on securitized funds; 
Fiscal year allocation: 2005: $406,932,000; 
Fiscal year allocation: Expected 2006: $401,637,000. 

Total; 
Fiscal year allocation: 2005: $406,932,000; 
Fiscal year allocation: Expected 2006: $401,637,000. 

Source: California Department of Finance. 

Notes: These MSA payments exclude payments made to California cities 
and counties. Cities and counties in the state received the same amount 
as the state. 

[End of table] 

Colorado: 

Colorado reported receiving $87,367,598 from MSA payments in fiscal 
year 2005 and expects to receive $88,934,450 in fiscal year 2006. 

Table 12: Colorado's MSA Payment Allocations: 

Program area: Education; 
Fiscal year allocation: 2005: $16,355,403; 
Fiscal year allocation: Expected 2006: $4,446,723; 
Examples of programs receiving or expected to receive allocations: Read 
to Achieve. 

Program area: General purposes; 
Fiscal year allocation: 2005: $64,530,052; 
Fiscal year allocation: Expected 2006: $34,909,422. 

Program area: Health; 
Fiscal year allocation: 2005: $36,172,817; 
Fiscal year allocation: Expected 2006: $39,905,273; 
Examples of programs receiving or expected to receive allocations: 
Visiting Nurses, Primary and Preventive Care grants, Children's Health 
Plan Plus and Prenatal Health Care, dental loan repayment, breast and 
cervical cancer, children's mental health, Ryan White AID/HIV, children 
with autism, the Medicaid Management Information System. 

Program area: Infrastructure; 
Fiscal year allocation: 2005: $0; 
Fiscal year allocation: Expected 2006: $7,114,156. 

Program area: Social services; 
Fiscal year allocation: 2005: $4,304,053; 
Fiscal year allocation: Expected 2006: $4,446,723; 
Examples of programs receiving or expected to receive allocations: 
Veteran's Trust Fund, Tony Grampsas Youth Services. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $2,951,553; 
Fiscal year allocation: Expected 2006: $0; 
Examples of programs receiving or expected to receive allocations: 
Tobacco use cessation. 

Total; 
Fiscal year allocation: 2005: $124,313,878[A]; 
Fiscal year allocation: Expected 2006: $90,822,297[B]. 

Source: Colorado Governor's Office of State Planning and Budgeting. 

[A] Includes carry-over funds and interest earned. 

[B] Includes interest earned. 

[End of table] 

Connecticut: 

Connecticut reported receiving $118,320,645 from MSA payments in fiscal 
year 2005 and expects to receive $111,000,000 in fiscal year 2006. 

Table 13: Connecticut's MSA Payment Allocations: 

Program area: General purposes; 
Fiscal year allocation: 2005: $112,984,760; 
Fiscal year allocation: Expected 2006: $94,875,000; 
Examples of programs receiving or expected to receive allocations: 
General Fund. 

Program area: Health; 
Fiscal year allocation: 2005: $2,000,000; 
Fiscal year allocation: Expected 2006: $16,000,000; 
Examples of programs receiving or expected to receive allocations: 
Biomedical Research Trust Fund, Tobacco and Health Trust Fund. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $125,000; 
Fiscal year allocation: Expected 2006: $125,000. 

Program area: Unallocated; 
Fiscal year allocation: 2005: $3,210,885; 
Fiscal year allocation: Expected 2006: $0. 

Total; 
Fiscal year allocation: 2005: $118,320,645; 
Fiscal year allocation: Expected 2006: $111,000,000. 

Source: Connecticut Office of Policy and Management, Fiscal and Program 
Policy Section. 

[End of table] 

Delaware: 

Delaware reported receiving $25,207,000 from MSA payments in fiscal 
year 2005 and expects to receive $27,698,000 in fiscal year 2006. 

Table 14: Delaware's MSA Payment Allocations: 

Program area: Program area: Education; 
Fiscal year allocation: 2005: $1,926,000; 
Fiscal year allocation: $2,188,000; 
Examples of programs receiving or expected to receive allocations: 
Examples of programs receiving or expected to receive allocations: 
Scholarships for nursing students at community college, survey on 
alcohol use, 5-year study and guidelines for lesser known illnesses. 

Program area: Program area: General purposes; 
Fiscal year allocation: 2005: $57,100; 
Fiscal year allocation: $57,100; 
Examples of programs receiving or expected to receive allocations: 
Examples of programs receiving or expected to receive allocations: 
Funding for one full-time staff to assist the Delaware Health Care 
Commission. 

Program area: Program area: Health; 
Fiscal year allocation: 2005: $16,193,400; 
Fiscal year allocation: $16,849,500; 
Examples of programs receiving or expected to receive allocations: 
Examples of programs receiving or expected to receive allocations: 
Delaware Prescription Drug Assistance Program, Medicaid coverage for 
Supplemental Security Income Transition and for Pregnant Women's 
Diabetes Pilot Program, Uninsured Action Plan, various cancer programs, 
Public Access Defibrillation Program. 

Program area: Program area: Social services; 
Fiscal year allocation: 2005: $2,888,700; 
Fiscal year allocation: $2,926,500; 
Examples of programs receiving or expected to receive allocations: 
Examples of programs receiving or expected to receive allocations: 
Supplemental Security Income supplement, substance abuse transitional 
housing, Heroin Residential Program, assisted living, attendant care 
services, caregiver support. 

Program area: Program area: Tobacco control; 
Fiscal year allocation: 2005: $4,684,500; 
Fiscal year allocation: $4,684,500; 
Examples of programs receiving or expected to receive allocations: 
Examples of programs receiving or expected to receive allocations: 
Tobacco use prevention education, enforcement activities, Smoking 
Cessation Quitline. 

Program area: Program area: Unallocated; 
Fiscal year allocation: 2005: $542,700; 
Fiscal year allocation: $992,400. 

Program area: Total; 
Fiscal year allocation: 2005: $26,292,400[A]; 
Fiscal year allocation: $27,698,000. 

Source: Delaware Department of Health and Social Services. 

[A] Includes carry-over funds. 

[End of table] 

Georgia: 

Georgia reported receiving $156,427,234 from MSA payments in fiscal 
year 2005 and expects to receive $146,123,673 in fiscal year 2006. 

Table 15: Georgia's MSA Payment Allocations: 

Program area: Economic development for tobacco regions; 
Fiscal year allocation: 2005: $47,123,333; 
Fiscal year allocation: Expected 2006: $47,123,333; 
Examples of programs receiving or expected to receive allocations: One 
Georgia Authority. 

Program area: Health; 
Fiscal year allocation: 2005: $89,362,868; 
Fiscal year allocation: Expected 2006: $99,148,370; 
Examples of programs receiving or expected to receive allocations: 
Medicaid, state children's health insurance programs, critical access 
hospital reimbursement, public health, Medicaid home and community- 
based waiver programs, Georgia Cancer Coalition (includes the Georgia 
Cancer Coalition Eminent Cancer Scientists and Clinicians Program for 
Cancer Research). 

Program area: Social services; 
Fiscal year allocation: 2005: $7,149,804; 
Fiscal year allocation: Expected 2006: $7,149,804; 
Examples of programs receiving or expected to receive allocations: Home 
and community-based services to the elderly, early intervention for 
families at risk for child abuse. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $12,733,995; 
Fiscal year allocation: Expected 2006: $3,205,245; 
Examples of programs receiving or expected to receive allocations: 
Tobacco Use Prevention Program, compliance and enforcement for underage 
smokers. 

Program area: Unallocated; 
Fiscal year allocation: 2005: $5,723. 

Total; 
Fiscal year allocation: 2005: $156,375,723[A]; 
Fiscal year allocation: Expected 2006: $156,626,752[B]. 

Source: Georgia Office of Planning and Budget. 

[A] Payments received in fiscal year 2004 were budgeted for fiscal year 
2005. 

[B] Payments received in fiscal year 2005 were budgeted for fiscal year 
2006. 

[End of table] 

Hawaii: 

Hawaii reported receiving $38,357,999 from MSA payments in fiscal year 
2005 and expects to receive $42,154,625 in fiscal year 2006. 

Table 16: Hawaii's MSA Payment Allocations: 

Program area: General purposes; 
Fiscal year allocation: 2005: $2,784,010; 
Fiscal year allocation: Expected 2006: $3,027,143; 
Examples of programs receiving or expected to receive allocations: 
Centralized administrative services, Tobacco Enforcement Special Fund 
for the Attorney General's Office for MSA Enforcement. 

Program area: Health; 
Fiscal year allocation: 2005: $12,450,896; 
Fiscal year allocation: Expected 2006: $13,694,619; 
Examples of programs receiving or expected to receive allocations: 
Department of Health's public health programs, Department of Human 
Service's children's health insurance programs. 

Program area: Infrastructure; 
Fiscal year allocation: 2005: $9,960,717; 
Fiscal year allocation: Expected 2006: $10,955,695; 
Examples of programs receiving or expected to receive allocations: Debt 
service on University of Hawaii revenue bonds issued for the new Health 
and Wellness Center, to include a new biomedical research center and 
medical school. 

Program area: Reserves/rainy day fund; 
Fiscal year allocation: 2005: $8,715,627; 
Fiscal year allocation: Expected 2006: $9,586,233; 
Examples of programs receiving or expected to receive allocations: 
State of Hawaii's Emergency and Budget Reserve Fund, health and social 
service programs. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $4,446,749; 
Fiscal year allocation: Expected 2006: $4,890,935; 
Examples of programs receiving or expected to receive allocations: 
Tobacco Prevention and Control Trust Fund. 

Total; 
Fiscal year allocation: 2005: $38,357,999; 
Fiscal year allocation: Expected 2006: $42,154,625. 

Source: Hawaii Department of Budget and Finance. 

[End of table] 

Idaho: 

Idaho reported receiving $23,151,453 from MSA payments in fiscal year 
2005 and expects to receive $24,071,285 in fiscal year 2006. 

Table 17: Idaho's MSA Payment Allocations: 

Program area: Health; 
Fiscal year allocation: 2005: $500,000; 
Fiscal year allocation: Expected 2006: $0; 
Examples of programs receiving or expected to receive allocations: 
Catastrophic Health Care Cost Program for tobacco-related disease 
treatment. 

Program area: Social services; 
Fiscal year allocation: 2005: $270,000; 
Fiscal year allocation: Expected 2006: $270,000; 
Examples of programs receiving or expected to receive allocations: 
Youth courts and status offender programs as they relate to tobacco and 
substance abuse issues. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $1,169,700; 
Fiscal year allocation: Expected 2006: $430,000; 
Examples of programs receiving or expected to receive allocations: 
Development of statewide youth coalitions, tobacco counter-marketing, 
public health districts' tobacco use cessation programs, youth tobacco 
investigations. 

Program area: Unallocated; 
Fiscal year allocation: 2005: $21,211,753; 
Fiscal year allocation: Expected 2006: $23,371,285. 

Total; 
Fiscal year allocation: 2005: $23,151,453; 
Fiscal year allocation: Expected 2006: $24,071,285. 

Source: Idaho Division of Financial Management. 

[End of table] 

Illinois: 

Illinois reported receiving $296,629,800 from MSA payments in fiscal 
year 2005 and expects to receive $282,459,316 in fiscal year 2006. 

Table 18: Illinois' MSA Payment Allocations: 

Program area: Education; 
Fiscal year allocation: 2005: $13,800,000; 
Fiscal year allocation: Expected 2006: $13,800,000; 
Examples of programs receiving or expected to receive allocations: 
Payments to Centers for Academic Excellence for medical research. 

Program area: General purposes; 
Fiscal year allocation: 2005: $49,001,698; 
Fiscal year allocation: Expected 2006: $26,553,172; 
Examples of programs receiving or expected to receive allocations: 
Technology marketing, technology centers, administrative fees charged 
to the tobacco fund, audit expenses charged to the tobacco fund, Court 
of Claims awards. 

Program area: Health; 
Fiscal year allocation: 2005: $203,765,481; 
Fiscal year allocation: Expected 2006: $238,414,550; 
Examples of programs receiving or expected to receive allocations: 
Medicaid drugs, drugs for senior citizens. 

Program area: Infrastructure; 
Fiscal year allocation: 2005: $1,817,343; 
Fiscal year allocation: Expected 2006: $7,602,749; 
Examples of programs receiving or expected to receive allocations: 
Capital maintenance on state owned facilities. 

Program area: Social services; 
Fiscal year allocation: 2005: $9,319,189; 
Fiscal year allocation: Expected 2006: $9,990,900; 
Examples of programs receiving or expected to receive allocations: 
Outreach programs to the aging. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $7,539,377; 
Fiscal year allocation: Expected 2006: $12,917,900; 
Examples of programs receiving or expected to receive allocations: 
Tobacco prevention activities of local health departments, tobacco 
control programs, tobacco enforcement of MSA provisions, grant to the 
American Lung Association. 

Total; 
Fiscal year allocation: 2005: $285,243,088[A]; 
Fiscal year allocation: Expected 2006: $309,279,271[A]. 

Source: Illinois Governor's Office of Management and Budget. 

[A] Includes carry-over funds and interest earned. 

[End of table] 

Indiana: 

Indiana reported receiving $130,000,535 from MSA payments in fiscal 
year 2005 and expects to receive $132,132,122 in fiscal year 2006. 

Table 19: Indiana's MSA Payment Allocations: 

Program area: Economic development for tobacco regions; 
Fiscal year allocation: 2005: $46,300,000; 
Fiscal year allocation: Expected 2006: $43,100,000; 
Examples of programs receiving or expected to receive allocations: 
Value Added Research Fund, Rural Development Administration Fund, Rural 
Development Council Fund, Technology Development Grant Fund, 21st 
Century Research and Technology Fund, Commission on Hispanic and Latino 
Affairs. 

Program area: General purposes; 
Fiscal year allocation: 2005: $0; 
Fiscal year allocation: Expected 2006: $300,000; 
Examples of programs receiving or expected to receive allocations: 
Attorney General's Office. 

Program area: Health; 
Fiscal year allocation: 2005: $87,400,000; 
Fiscal year allocation: Expected 2006: $92,200,000; 
Examples of programs receiving or expected to receive allocations: 
Breast cancer education and diagnosis; prostate cancer education and 
diagnosis; sickle cell; State Department of Health Administration; 
cancer registry; minority health initiative; HIV/AIDS services; testing 
for drug-afflicted babies; AIDS education; state chronic diseases; 
Women, Infants, and Children supplement; Maternal and Child Health 
supplement; aid to TB hospitals; Local Health Maintenance Fund; Local 
Health Department Trust Account; Community Health Centers; minority 
epidemiology; Children's Health Insurance Program; Prescription Drug 
Account/Hoosier Rx; Community Health Centers. 

Program area: Infrastructure; 
Fiscal year allocation: 2005: $2,900,000; 
Fiscal year allocation: Expected 2006: $8,200,000; 
Examples of programs receiving or expected to receive allocations: 
Regional health care construction. 

Program area: Social services; 
Fiscal year allocation: 2005: $28,300,000; 
Fiscal year allocation: Expected 2006: $33,900,000; 
Examples of programs receiving or expected to receive allocations: 
Developmentally Disabled Client Services, Division of Disability, Aging 
and Rehabilitative Services; Social Services Block Grant. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $10,800,000; 
Fiscal year allocation: Expected 2006: $10,100,000; 
Examples of programs receiving or expected to receive allocations: 
Tobacco use prevention and cessation. 

Total; 
Fiscal year allocation: 2005: $175,700,000[A]; 
Fiscal year allocation: Expected 2006: $187,800,000[A]. 

Source: Indiana State Budget Agency. 

[A] Includes carry-over funds and interest earned. 

[End of table] 

Iowa: 

Iowa reported receiving $55,425,528 from MSA payments in fiscal year 
2005 and expects to receive $56,409,091 in fiscal year 2006. In 
addition, Iowa reported $63,852,236 was available in fiscal year 2005 
from a fund composed of (1) securitized proceeds received in prior 
years and (2) interest earned on these proceeds. Iowa expects 
$66,284,236 to be available from this fund in fiscal year 2006. 

Table 20: Iowa's Allocations of MSA Payments and Securitized Proceeds: 

Program area: Debt service on securitized funds; 
Fiscal year allocation: 2005: $42,978,000; 
Fiscal year allocation: Expected 2006: $43,680,000. 

Program area: Education; 
Fiscal year allocation: 2005: $2,153,250; 
Fiscal year allocation: Expected 2006: $2,153,250; 
Examples of programs receiving or expected to receive allocations: 
Early childhood development. 

Program area: General purposes; 
Fiscal year allocation: 2005: $2,297,285; 
Fiscal year allocation: Expected 2006: $3,331,285; 
Examples of programs receiving or expected to receive allocations: 
Correctional programs. 

Program area: Health; 
Fiscal year allocation: 2005: $66,837,664; 
Fiscal year allocation: Expected 2006: $68,517,227; 
Examples of programs receiving or expected to receive allocations: 
Medicaid, substance abuse. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $5,011,565; 
Fiscal year allocation: Expected 2006: $5,011,565; 
Examples of programs receiving or expected to receive allocations: 
Tobacco use, control, cessation programs. 

Total; 
Fiscal year allocation: 2005: $119,277,764[A]; 
Fiscal year allocation: Expected 2006: $122,693,327[A]. 

Source: Iowa Department of Management. 

[A] Includes carry-over funds and interest earned. 

[End of table] 

Kansas: 

Kansas reported receiving $53,131,448 from MSA payments in fiscal year 
2005 and expects to receive $52,000,000 in fiscal year 2006. 

Table 21: Kansas' MSA Payment Allocations: 

Program area: Education; 
Fiscal year allocation: 2005: $8,684,755; 
Fiscal year allocation: Expected 2006: $9,329,045; 
Examples of programs receiving or expected to receive allocations: 
Parent education, 4-year olds at risk, vision research, special 
education. 

Program area: General purposes; 
Fiscal year allocation: 2005: $752,882; 
Fiscal year allocation: Expected 2006: $252,882; 
Examples of programs receiving or expected to receive allocations: 
State General Fund, Children's Cabinet Administration. 

Program area: Health; 
Fiscal year allocation: 2005: $1,337,792; 
Fiscal year allocation: Expected 2006: $1,300,000; 
Examples of programs receiving or expected to receive allocations: 
Healthy Start Home Visitor, Telekid Health Care Link. 

Program area: Social services; 
Fiscal year allocation: 2005: $41,865,293; 
Fiscal year allocation: Expected 2006: $41,863,081; 
Examples of programs receiving or expected to receive allocations: 
Juvenile justice prevention and sanction grants, children's mental 
health initiative, family-centered systems of care, therapeutic 
preschool, childcare and child welfare community services, Healthwave, 
Medicaid, Smart Start Kansas (early childhood care and education), 
immunization outreach, school violence prevention, family preservation, 
attendant care for independent living. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $500,000; 
Fiscal year allocation: Expected 2006: $1,000,000; 
Examples of programs receiving or expected to receive allocations: 
Smoking prevention and cessation. 

Total; 
Fiscal year allocation: 2005: $53,140,722[ A]; 
Fiscal year allocation: Expected 2006: $53,745,008[A]. 

Source: Kansas Division of the Budget. 

[A] Includes interest earned. 

[End of table] 

Kentucky: 

Kentucky reported receiving $112,241,980 from MSA payments in fiscal 
year 2005 and expects to receive $108,600,000 in fiscal year 2006. 

Table 22: Kentucky's MSA Payment Allocations: 

Program area: Economic development for tobacco regions; 
Fiscal year allocation: 2005: $48,195,900; 
Fiscal year allocation: Expected 2006: $33,541300; 
Examples of programs receiving or expected to receive allocations: 
Governor's Office for Agricultural Policy, Conservation: Environmental 
Stewardship. 

Program area: Education; 
Fiscal year allocation: 2005: $10,908,800; 
Fiscal year allocation: Expected 2006: $10,908,800; 
Examples of programs receiving or expected to receive allocations: 
Families and Children: Early Childhood Development Program, Governor's 
Office of Early Childhood Development Program; Kentucky Higher 
Education Assistance Authority: Early Childhood Scholarship Program. 

Program area: General purposes; 
Fiscal year allocation: 2005: $3,616,980; 
Fiscal year allocation: Expected 2006: $175,000; 
Examples of programs receiving or expected to receive allocations: 
General Fund, Department of Revenue: enforcement. 

Program area: Health; 
Fiscal year allocation: 2005: $38,461,300; 
Fiscal year allocation: Expected 2006: $38,370,400; 
Examples of programs receiving or expected to receive allocations: 
Public Health: Health Access Nurturing Development Service, Folic Acid 
Distribution, Healthy Start, Universal Children's Immunization, Child 
Advocacy Centers, Early Childhood Mental and Oral Health; Mental 
Health: Substance Abuse Services to Medicaid-Eligible Women with 
Dependent Children; Children With Special Health Care Needs: Universal 
Newborn Hearing Testing and Vision Screening; Council on Postsecondary 
Education: Lung Cancer Research Program; Insurance: Kentucky Access 
(High Risk Individual Insurance Pool). 

Program area: Infrastructure; 
Fiscal year allocation: 2005: $6,116,600; 
Fiscal year allocation: Expected 2006: $20,671,200; 
Examples of programs receiving or expected to receive allocations: Debt 
Service: Water Resource Development, Rural Development Bond Fund. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $4,942,400; 
Fiscal year allocation: Expected 2006: $4,933,300; 
Examples of programs receiving or expected to receive allocations: 
Smoking cessation. 

Total; 
Fiscal year allocation: 2005: $112,241,980; 
Fiscal year allocation: Expected 2006: $108,600,000. 

Source: Kentucky Governor's Office for Policy Research. 

[End of table] 

Louisiana: 

Louisiana reported receiving $144,591,814 from MSA payments in fiscal 
year 2005 and expects to receive $145,366,560 in fiscal year 2006. 

Table 23: Louisiana's MSA Payment Allocations: 

Program area: Debt service on securitized funds; 
Fiscal year allocation: 2005: $86,242,759; 
Fiscal year allocation: Expected 2006: $87,148,112. 

Program area: General purposes; 
Fiscal year allocation: 2005: $350,000; 
Fiscal year allocation: Expected 2006: $350,000; 
Examples of programs receiving or expected to receive allocations: 
Attorney General enforcement programs. 

Program area: Health; 
Fiscal year allocation: 2005: $14,377,675; 
Fiscal year allocation: Expected 2006: $13,758,480; 
Examples of programs receiving or expected to receive allocations: 
Medicaid, School-based Health Centers, Louisiana Children's Health 
Insurance Programs, health care science grants. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $500,000; 
Fiscal year allocation: Expected 2006: $500,000; 
Examples of programs receiving or expected to receive allocations: 
Smoking prevention and cessation grants. 

Program area: Unallocated; 
Fiscal year allocation: 2005: $43,121,380; 
Fiscal year allocation: Expected 2006: $43,609,968. 

Total; 
Fiscal year allocation: 2005: $144,591,814[A]; 
Fiscal year allocation: Expected 2006: $145,366,560. 

Source: Louisiana Division of Administration, Office of Planning and 
Budget. 

[A] Includes carry-over funds. 

[End of table] 

Maine: 

Maine reported receiving $49,033,129 from MSA payments in fiscal year 
2005 and expects to receive $49,594,690 in fiscal year 2006. 

Table 24: Maine's MSA Payment Allocations: 

Program area: Budget shortfalls; 
Fiscal year allocation: 2005: $55,218; 
Fiscal year allocation: Expected 2006: $451,010. 

Program area: Education; 
Fiscal year allocation: 2005: $10,423,452; 
Fiscal year allocation: Expected 2006: $10,793,711; 
Examples of programs receiving or expected to receive allocations: 
Child care and development activities, after-school services, Head 
Start. 

Program area: General purposes; 
Fiscal year allocation: 2005: $56,552; 
Fiscal year allocation: Expected 2006: $65,747; 
Examples of programs receiving or expected to receive allocations: 
Attorney General enforcement and administration. 

Program area: Health; 
Fiscal year allocation: 2005: $17,883,261; 
Fiscal year allocation: Expected 2006: $17,920,623; 
Examples of programs receiving or expected to receive allocations: 
Prescription drugs, Medicaid, other health initiatives. 

Program area: Social services; 
Fiscal year allocation: 2005: $5,658,262; 
Fiscal year allocation: Expected 2006: $5,741,915; 
Examples of programs receiving or expected to receive allocations: 
Substance abuse prevention, intervention, testing, treatment. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $15,159,818; 
Fiscal year allocation: Expected 2006: $15,295,990; 
Examples of programs receiving or expected to receive allocations: 
Community and school grants and statewide coordination to reduce 
tobacco addiction and use; tobacco prevention, control, treatment. 

Total; 
Fiscal year allocation: 2005: $49,236,563[A]; 
Fiscal year allocation: Expected 2006: $50,268,996[A]. 

Source: Maine Department of Administrative and Financial Services, 
Bureau of the Budget. 

[A] Includes carry-over funds and interest earned. 

[End of table] 

Maryland: 

Maryland reported receiving $151,263,000 from MSA payments in fiscal 
year 2005 and expects to receive $149,503,000 in fiscal year 2006. 

Table 25: Maryland's MSA Payment Allocations: 

Program area: Education; 
Fiscal year allocation: 2005: $3,000,000; 
Fiscal year allocation: Expected 2006: $3,000,000; 
Examples of programs receiving or expected to receive allocations: Text 
books for nonpublic schools. 

Program area: General purposes; 
Fiscal year allocation: 2005: $30,169,000; 
Fiscal year allocation: Expected 2006: $30,052,000; 
Examples of programs receiving or expected to receive allocations: 
Legal fees (settlement with outside counsel), Attorney General's Office 
for Nonparticipating Manufacturers' Enforcement. 

Program area: Health; 
Fiscal year allocation: 2005: $99,924,000; 
Fiscal year allocation: Expected 2006: $104,362,000; 
Examples of programs receiving or expected to receive allocations: 
Medicaid, cancer prevention, screening and treatment; heart and lung 
disease; breast and cervical cancer; management; drug addiction. 

Program area: Payments to tobacco growers; 
Fiscal year allocation: 2005: $5,653,000; 
Fiscal year allocation: Expected 2006: $5,956,000; 
Examples of programs receiving or expected to receive allocations: Tri-
County Council of Southern Maryland. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $9,854,000; 
Fiscal year allocation: Expected 2006: $9,230,000; 
Examples of programs receiving or expected to receive allocations: 
Countermarketing, minority outreach and technical assistance, 
surveillance and evaluation, administration. 

Program area: Unallocated; 
Fiscal year allocation: 2005: $2,663,000; 
Fiscal year allocation: Expected 2006: $0. 

Total; 
Fiscal year allocation: 2005: $151,263,000; 
Fiscal year allocation: Expected 2006: $152,600,000[A]. 

Source: Maryland Department of Budget and Management. 

[A] Includes carry-over funds. 

[End of table] 

Massachusetts: 

Massachusetts reported receiving $254,593,761 from MSA payments in 
fiscal year 2005 and expects to receive $253,349,780 in fiscal year 
2006. 

Table 26: Massachusetts' MSA Payment Allocations: 

Program area: General purposes; 
Fiscal year allocation: 2005: $254,593,761; 
Fiscal year allocation: Expected 2006: $253,349,780; 
Examples of programs receiving or expected to receive allocations: 
Commonwealth's General Fund. 

Total; 
Fiscal year allocation: 2005: $254,593,761; 
Fiscal year allocation: Expected 2006: $253,349,780. 

Source: Massachusetts Executive Office of Administration and Finance. 

[End of table] 

Michigan: 

Michigan reported receiving $274,326,923 from MSA payments in fiscal 
year 2005 and expects to receive $285,500,000 in fiscal year 2006. 

Table 27: Michigan's MSA Payment Allocations: 

Program area: Budget shortfalls; 
Fiscal year allocation: 2005: $7,000,000; 
Fiscal year allocation: Expected 2006: $0. 

Program area: Education; 
Fiscal year allocation: 2005: $99,300,000; 
Fiscal year allocation: Expected 2006: $166,300,000; 
Examples of programs receiving or expected to receive allocations: 
Merit Award scholarships and tuition incentive grants for higher 
education students, Michigan Educational Assessment Program testing for 
K-12 students, nursing scholarships, Michigan Education Savings Plan, 
general higher education support. 

Program area: General purposes; 
Fiscal year allocation: 2005: $368,200; 
Fiscal year allocation: Expected 2006: $386,800; 
Examples of programs receiving or expected to receive allocations: 
Attorney General administration. 

Program area: Health; 
Fiscal year allocation: 2005: $185,100,000; 
Fiscal year allocation: Expected 2006: $122,300,000; 
Examples of programs receiving or expected to receive allocations: 
Elder pharmaceutical assistance, Medicaid personal needs allowance, 
respite care, Medicaid support, biomedical research and development. 

Total; 
Fiscal year allocation: 2005: $291,768,200[A]; 
Fiscal year allocation: Expected 2006: $288,986,800[A]. 

Source: Michigan Office of Health and Human Services, State Budget 
Office. 

[A] Includes carry-over funds and interest earned. 

[End of table] 

Missouri: 

Missouri reported receiving $144,964,644 from MSA payments in fiscal 
year 2005 and expects to receive $154,000,000 in fiscal year 2006. 

Table 28: Missouri's MSA Payment Allocations: 

Program area: Budget shortfalls; 
Fiscal year allocation: 2005: $72,149,994; 
Fiscal year allocation: Expected 2006: $84,089,532. 

Program area: General purposes; 
Fiscal year allocation: 2005: $2,375,886; 
Fiscal year allocation: Expected 2006: $2,145,573; 
Examples of programs receiving or expected to receive allocations: 
General revenue fund to support programs such as education, Medicaid, 
corrections. 

Program area: Health; 
Fiscal year allocation: 2005: $70,369,652; 
Fiscal year allocation: Expected 2006: $67,282,481; 
Examples of programs receiving or expected to receive allocations: 
Payments to Medicaid providers, grants to hospitals for graduate 
medical education, prescription drug assistance for low-income seniors 
through the Missouri Senior Rx Program. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $482,414; 
Fiscal year allocation: Expected 2006: $482,414; 
Examples of programs receiving or expected to receive allocations: 
Enforcement of state laws on underage tobacco use. 

Total; 
Fiscal year allocation: 2005: $145,377,946[A]; 
Fiscal year allocation: Expected 2006: $154,000,000. 

Source: Missouri Division of Budget and Planning. 

[A] Includes carry-over funds. 

[End of table] 

Montana: 

Montana reported receiving $27,070,703 from MSA payments in fiscal year 
2005 and expects to receive $26,102,000 in fiscal year 2006. 

Table 29: Montana's MSA Payment Allocations: 

Program area: General purposes; 
Fiscal year allocation: 2005: $2,977,777; 
Fiscal year allocation: Expected 2006: $2,871,220; 
Examples of programs receiving or expected to receive allocations: 
General Fund. 

Program area: Health; 
Fiscal year allocation: 2005: $19,263,236; 
Fiscal year allocation: Expected 2006: $14,065,685; 
Examples of programs receiving or expected to receive allocations: 
State Children's Health Insurance Program (SCHIP), Medicaid, Mental 
Health Services, Hospice and Home Health, Tobacco Trust Fund, Montana 
Comprehensive Health Insurance. 

Program area: Social services; 
Fiscal year allocation: 2005: $2,844,884; 
Fiscal year allocation: Expected 2006: $0; 
Examples of programs receiving or expected to receive allocations: 
Childcare, child support enforcement, infant mortality abatement, 
poison control, AIDS prevention, independent living, extended 
employment. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $2,509,368; 
Fiscal year allocation: Expected 2006: $6,825,385; 
Examples of programs receiving or expected to receive allocations: 
Tobacco prevention. 

Program area: Unallocated; 
Fiscal year allocation: 2005: $524,562; 
Fiscal year allocation: Expected 2006: $2,339,710. 

Total; 
Fiscal year allocation: 2005: $28,119,823[ A]; 
Fiscal year allocation: Expected 2006: $26,102,000. 

Source: Montana Office of Budget and Program Planning. 

[A] Includes carry over funds. 

[End of table] 

Nebraska: 

Nebraska reported receiving $37,919,415 from MSA payments in fiscal 
year 2005 and expects to receive $36,273,307 in fiscal year 2006. 

Table 30: Nebraska's MSA Payment Allocations: 

Program area: General purposes; 
Fiscal year allocation: 2005: $86,595; 
Fiscal year allocation: Expected 2006: $88,437; 
Examples of programs receiving or expected to receive allocations: MSA 
and tobacco tax law enforcement. 

Program area: Health; 
Fiscal year allocation: 2005: $20,216,433; 
Fiscal year allocation: Expected 2006: $21,678,570; 
Examples of programs receiving or expected to receive allocations: 
Behavioral health (Medicaid and non-Medicaid), public health, State 
Children's Health Insurance Program, biomedical research. 

Program area: Social services; 
Fiscal year allocation: 2005: $2,848,200; 
Fiscal year allocation: Expected 2006: $2,983,029; 
Examples of programs receiving or expected to receive allocations: 
Community-based developmental disability services, respite care 
assistance. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $2,500,000; 
Fiscal year allocation: Expected 2006: $2,500,000; 
Examples of programs receiving or expected to receive allocations: 
Tobacco use prevention, control, and cessation programs for youth and 
adults. 

Program area: Unallocated; 
Fiscal year allocation: 2005: $12,268,187; 
Fiscal year allocation: Expected 2006: $9,023,271. 

Total; 
Fiscal year allocation: 2005: $37,919,415; 
Fiscal year allocation: Expected 2006: $36,273,307. 

Source: Nebraska Department of Administrative Services-Budget Division. 

[End of table] 

Nevada: 

Nevada reported receiving $38,872,322 from MSA payments in fiscal year 
2005 and expects to receive $39,507,406 in fiscal year 2006. 

Table 31: Nevada's MSA Payment Allocations: 

Program area: Education; 
Fiscal year allocation: 2005: $33,003,114; 
Fiscal year allocation: Expected 2006: $16,250,000; 
Examples of programs receiving or expected to receive allocations: 
Scholarship program for Nevada students who attend a Nevada higher 
education institution. 

Program area: General purposes; 
Fiscal year allocation: 2005: $286,523; 
Fiscal year allocation: Expected 2006: $427,350; 
Examples of programs receiving or expected to receive allocations: 
Attorney General's tobacco retail enforcement and master settlement 
legal expenses. 

Program area: Health; 
Fiscal year allocation: 2005: $12,990,070; 
Fiscal year allocation: Expected 2006: $12,523,141; 
Examples of programs receiving or expected to receive allocations: 
Grants to improve health services for children and persons with 
disabilities, prescription drugs and pharmaceutical services for low- 
income seniors, endowment fund to provide grants for the promotion of 
public health. 

Program area: Social services; 
Fiscal year allocation: 2005: $10,121,699; 
Fiscal year allocation: Expected 2006: $5,757,637; 
Examples of programs receiving or expected to receive allocations: 
Grants that assist senior citizens to live independent of care 
facilities, senior services, homemaker program. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $4,680,754; 
Fiscal year allocation: Expected 2006: $4,528,847; 
Examples of programs receiving or expected to receive allocations: 
Grants to help fund tobacco cessation programs. 

Total; 
Fiscal year allocation: 2005: $61,082,160[A]; 
Fiscal year allocation: Expected 2006: $39,486,975[A]. 

Source: State Treasurer's Office. 

[A] Includes carry-over funds and interest earned. 

[End of table] 

New Hampshire: 

New Hampshire reported receiving $42,400,000 from MSA payments in 
fiscal year 2005 and expects to receive $43,000,000 in fiscal year 
2006. 

Table 32: New Hampshire's MSA Payment Allocations: 

Program area: Education; 
Fiscal year allocation: 2005: $40,000,000; 
Fiscal year allocation: Expected 2006: $43,000,000; 
Examples of programs receiving or expected to receive allocations: 
Education Trust Fund, which distributes grants to school districts. 

Program area: General purposes; 
Fiscal year allocation: 2005: $2,400,000; 
Fiscal year allocation: Expected 2006: $0; 
Examples of programs receiving or expected to receive allocations: 
General Fund. 

Total; 
Fiscal year allocation: 2005: $42,400,000; 
Fiscal year allocation: Expected 2006: $43,000,000. 

Source: New Hampshire Office of Legislative Budget Assistant. 

[End of table] 

New Jersey: 

New Jersey reported receiving $246,462,646 from MSA payments in fiscal 
year 2005 and expects to receive $249,152,772 in fiscal year 2006. 

Table 33: New Jersey's MSA Payment Allocations: 

Program area: Debt service on securitized funds; 
Fiscal year allocation: 2005: $245,110,225; 
Fiscal year allocation: Expected 2006: $249,152,772. 

Program area: Health; 
Fiscal year allocation: 2005: $135,242; 
Fiscal year allocation: Expected 2006: $0; 
Examples of programs receiving or expected to receive allocations: New 
Jersey Family Care, new and expanded Community Options for Seniors, 
expansion of Cancer Initiative, Senior Gold Pharmaceutical Assistance. 

Total; 
Fiscal year allocation: 2005: $245,245,467; 
Fiscal year allocation: Expected 2006: $249,152,772. 

Source: New Jersey Office of Management and Budget. 

[End of table] 

New Mexico: 

New Mexico reported receiving $38,009,047 from MSA payments in fiscal 
year 2005 and expects to receive $29,657,921 in fiscal year 2006. 

Table 34: New Mexico's MSA Payment Allocations: 

Program area: General Purposes; 
Fiscal year allocation: 2005: $26,139,047; 
Fiscal year allocation: Expected 2006: $17,787,921. 

Program area: Health; 
Fiscal year allocation: 2005: $11,870,000; 
Fiscal year allocation: Expected 2006: $11,870,000; 
Examples of programs receiving or expected to receive allocations: Lung 
and tobacco illness research, poison control. 

Total; 
Fiscal year allocation: 2005: $38,009,047; 
Fiscal year allocation: Expected 2006: $29,657,921. 

Source: New Mexico Department of Finance and Administration. 

[End of table] 

New York: 

New York reported receiving $410,564,424 from MSA payments in fiscal 
year 2005 and expects to receive $434,741,632 in fiscal year 2006. 
These MSA payments include only the payments made to the state, which 
amount to about 51 percent of the annual payments made by the tobacco 
companies to New York. New York City and counties in the state receive 
the other 49 percent of the annual MSA payments to New York. 

Table 35: New York's Allocations of MSA Payments and Securitized 
Proceeds: 

Program area: Budget shortfalls; 
Fiscal year allocation: 2005: $354,313,266; 
Fiscal year allocation: Expected 2006: $0. 

Program area: Debt service on securitized funds; 
Fiscal year allocation: 2005: $447,946,434; 
Fiscal year allocation: Expected 2006: $434,741,632. 

Total; 
Fiscal year allocation: 2005: $802,259,700[A]; 
Fiscal year allocation: Expected 2006: $434,741,632. 

Source: New York State Division of the Budget. 

[A] This amount includes securitized proceeds received in fiscal year 
2004. 

[End of table] 

North Carolina: 

North Carolina reported receiving $148,640,949 from MSA payments in 
fiscal year 2005 and expects to receive $163,353,241 in fiscal year 
2006. 

Table 36: North Carolina's MSA Payment Allocations: 

Program area: Debt service on securitized funds; 
Fiscal year allocation: 2005: $0; 
Fiscal year allocation: Expected 2006: $1,979,096. 

Program area: Economic development for tobacco regions; 
Fiscal year allocation: 2005: $27,200,505; 
Fiscal year allocation: Expected 2006: $5,059,214; 
Examples of programs receiving or expected to receive allocations: 
Aerospace Alliance Initiative Awards, Economic Catalyst Awards, 
Diversification Initiatives, Agri-Economic Development, Workforce 
Development, Conservation of Natural Resources. 

Program area: Education; 
Fiscal year allocation: 2005: $0; 
Fiscal year allocation: Expected 2006: $2,000,000; 
Examples of programs receiving or expected to receive allocations: 
Golden Leaf Foundation. 

Program area: General purposes; 
Fiscal year allocation: 2005: $60,000,000; 
Fiscal year allocation: Expected 2006: $34,000,000; 
Examples of programs receiving or expected to receive allocations: 
General Fund. 

Program area: Health; 
Fiscal year allocation: 2005: $53,500,000; 
Fiscal year allocation: Expected 2006: $40,245,278; 
Examples of programs receiving or expected to receive allocations: 
Senior Care Prescription Drug Program, Childhood Obesity Reduction, 
Medication Assistance Program, Health Disparities. 

Program area: Infrastructure; 
Fiscal year allocation: 2005: $0; 
Fiscal year allocation: Expected 2006: $1,979,096; 
Examples of programs receiving or expected to receive allocations: 
Tobacco Trust fund transfer. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $15,000,000; 
Fiscal year allocation: Expected 2006: $15,000,000; 
Examples of programs receiving or expected to receive allocations: 
Youth tobacco use prevention and cessation, enforcement of tobacco laws 
prohibiting sales to minors. 

Total; 
Fiscal year allocation: 2005: $155,700,505[A]; 
Fiscal year allocation: Expected 2006: $100,262,684[A]. 

Source: North Carolina Office of State Budget and Management. 

[A] Includes carry-over funds and interest earned. In addition, 
officials reported that they excluded the allocation for administrative 
expenses for fiscal year 2005 because the data were not available. 

[End of table] 

North Dakota: 

North Dakota reported receiving $23,326,754 from MSA payments in fiscal 
year 2005 and expects to receive $22,972,067 in fiscal year 2006. 

Table 37: North Dakota's MSA Payment Allocations: 

Program area: Education; 
Fiscal year allocation: 2005: $10,497,039; 
Fiscal year allocation: Expected 2006: $10,337,430; 
Examples of programs receiving or expected to receive allocations: 45 
percent of the MSA Funds are deposited in the common schools trust fund 
and interest earned on the fund is used for K-12 education. 

Program area: Health; 
Fiscal year allocation: 2005: $489,862; 
Fiscal year allocation: Expected 2006: $229,721; 
Examples of programs receiving or expected to receive allocations: 
Dental loan repayment program, breast and cervical cancer screening. 

Program area: Infrastructure; 
Fiscal year allocation: 2005: $10,497,039; 
Fiscal year allocation: Expected 2006: $10,337,430; 
Examples of programs receiving or expected to receive allocations: 
Water projects. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $1,842,814; 
Fiscal year allocation: Expected 2006: $2,067,486; 
Examples of programs receiving or expected to receive allocations: 
Tobacco cessation programs. 

Total; 
Fiscal year allocation: 2005: $23,326,754; 
Fiscal year allocation: Expected 2006: $22,972,067. 

Source: North Dakota Office of Management and Budget, Fiscal Management 
Division. 

[End of table] 

Ohio: 

Ohio reported receiving $321,050,059 from MSA payments in fiscal year 
2005. We used Ohio's 2005 MSA payment as an estimate for its expected 
2006 payment based on Ohio's budget documents, which advise state 
agencies to expect the same or less tobacco funds for that year as was 
received in 2005. In responding to our survey, Ohio declined to provide 
an estimate of their 2006 expected payment because of uncertainties in 
adjustments in MSA payments that may result from changes in 
participating manufacturers' share of the tobacco market. 

Table 38: Ohio's MSA Payment Allocations: 

Program area: Economic development for tobacco regions; 
Fiscal year allocation: 2005: $15,584,593; 
Fiscal year allocation: Expected 2006: $13,030,277; 
Examples of programs receiving or expected to receive allocations: 
Programs to increase the variety, quantity, and value of nontobacco 
agricultural products, strategic investment in communities adversely 
impacted by a reduction in tobacco demand, education and training for 
tobacco growers. 

Program area: Education; 
Fiscal year allocation: 2005: $9,277,865; 
Fiscal year allocation: Expected 2006: $6,274,109; 
Examples of programs receiving or expected to receive allocations: 
Technology enhancements in schools. 

Program area: General purposes; 
Fiscal year allocation: 2005: $9,533,109; 
Fiscal year allocation: Expected 2006: $17,971,831; 
Examples of programs receiving or expected to receive allocations: 
Administration, oversight, and enforcement activities related to the 
MSA, law enforcement facilities improvements. 

Program area: Health; 
Fiscal year allocation: 2005: $37,307,790; 
Fiscal year allocation: Expected 2006: $52,080,892; 
Examples of programs receiving or expected to receive allocations: 
Minority health programs, alcohol and drug abuse prevention, biomedical 
technology transfer, support for children's hospitals, lung cancer and 
disease research and prevention. 

Program area: Infrastructure; 
Fiscal year allocation: 2005: $0; 
Fiscal year allocation: Expected 2006: $245,922,706; 
Examples of programs receiving or expected to receive allocations: 
School construction. 

Program area: Social services; 
Fiscal year allocation: 2005: $3,725,000; 
Fiscal year allocation: Expected 2006: $3,982,451; 
Examples of programs receiving or expected to receive allocations: 
Funding for uncompensated health care of uninsured. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $37,050,428; 
Fiscal year allocation: Expected 2006: $47,905,890; 
Examples of programs receiving or expected to receive allocations: 
Underage tobacco enforcement, use prevention and cessation programs. 

Total; 
Fiscal year allocation: 2005: $112,478,785[A]; 
Fiscal year allocation: Expected 2006: $387,168,156[A]. 

Source: Ohio Office of Budget and Management. 

[A] Ohio supports each year's programs with MSA payments received 
during the prior fiscal year as well as interest earned. 

[End of table] 

Oklahoma: 

Oklahoma reported receiving $66,034,977 from MSA payments in fiscal 
year 2005 and expects to receive $49,348,303 in fiscal year 2006. 

Table 39: Oklahoma's MSA Payment Allocations: 

Program area: General purposes; 
Fiscal year allocation: 2005: $1,806,502; 
Fiscal year allocation: Expected 2006: $1,500,000; 
Examples of programs receiving or expected to receive allocations: 
Attorney General's Evidence Fund. 

Program area: Health; 
Fiscal year allocation: 2005: $40,445,047; 
Fiscal year allocation: Expected 2006: $32,649,026; 
Examples of programs receiving or expected to receive allocations: 
Medicaid, Tobacco Settlement Endowment Trust Fund (to be used for 
health programs). 

Program area: Social services; 
Fiscal year allocation: 2005: $0; 
Fiscal year allocation: Expected 2006: $4,345,788; 
Examples of programs receiving or expected to receive allocations: 
Child welfare, foster care services for homebound elders, senior 
nutrition. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $18,886,011; 
Fiscal year allocation: Expected 2006: $15,199,277; 
Examples of programs receiving or expected to receive allocations: 
Tobacco Settlement Endowment Trust Fund (to be used for control 
programs). 

Program area: Unallocated; 
Fiscal year allocation: 2005: $4,897,417; 
Fiscal year allocation: Expected 2006: $0. 

Total; 
Fiscal year allocation: 2005: $66,034,977; 
Fiscal year allocation: Expected 2006: $53,694,091[A]. 

Source: Oklahoma Office of State Finance. 

[A] Includes carry-over funds. 

[End of table] 

Oregon: 

Oregon reported receiving $73,142,434 from MSA payments in fiscal year 
2005 and expects to receive $75,110,359 in fiscal year 2006. 

Table 40: Oregon's MSA Payment Allocations: 

Program area: Debt service; 
Fiscal year allocation: 2005: $43,770,304; 
Fiscal year allocation: Expected 2006: $58,737,984. 

Program area: Health; 
Fiscal year allocation: 2005: $27,600,000; 
Fiscal year allocation: Expected 2006: $12,250,000; 
Examples of programs receiving or expected to receive allocations: 
Oregon Health Plan, the state's Medicaid acute health care delivery 
system. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $700,000; 
Fiscal year allocation: Expected 2006: $0. 

Program area: Unallocated; 
Fiscal year allocation: 2005: $50,925,577; 
Fiscal year allocation: Expected 2006: $4,122,375. 

Total; 
Fiscal year allocation: 2005: $122,995,881[A]; 
Fiscal year allocation: Expected 2006: $75,110,359. 

Source: Oregon Department of Administrative Services. 

[A] Includes carry-over funds. 

[End of table] 

Pennsylvania: 

Pennsylvania reported receiving $366,258,217 from MSA payments in 
fiscal year 2005 and expects to receive $351,180,000 in fiscal year 
2006. 

Table 41: Pennsylvania's MSA Payment Allocations: 

Program area: Health[A]; 
Fiscal year allocation: 2005: $326,354,000; 
Fiscal year allocation: Expected 2006: $333,295,000; 
Examples of programs receiving or expected to receive allocations: 
Health research, adult health insurance, uncompensated care, medical 
assistance for workers with disabilities, community medical assistance. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $44,503,000; 
Fiscal year allocation: Expected 2006: $32,963,000; 
Examples of programs receiving or expected to receive allocations: 
Tobacco use prevention and cessation. 

Total; 
Fiscal year allocation: 2005: $370,857,000[ A]; 
Fiscal year allocation: Expected 2006: $366,258,000[A]. 

Source: Pennsylvania Governor's Office of the Budget. 

[A] Includes carry-over funds. 

[End of table] 

Rhode Island: 

Rhode Island reported receiving $45,817,205 from MSA payments in fiscal 
year 2005 and expects to receive $47,988,000 in fiscal year 2006. 

Table 42: Rhode Island's MSA Payment Allocations: 

Program area: Debt service on securitized funds; 
Fiscal year allocation: 2005: $45,315,618; 
Fiscal year allocation: Expected 2006: $47,988,000. 

Total; 
Fiscal year allocation: 2005: $45,315,618; 
Fiscal year allocation: Expected 2006: $47,988,000. 

Source: State of Rhode Island Budget Office. 

[End of table] 

South Carolina: 

South Carolina reported receiving $73,361,299 from MSA payments in 
fiscal year 2005 and expects to receive $74,329,662 in fiscal year 
2006. 

Table 43: South Carolina's MSA Payment Allocations: 

Program area: Debt service on securitized funds; 
Fiscal year allocation: 2005: $73,361,299; 
Fiscal year allocation: Expected 2006: $74,329,662. 

Total; 
Fiscal year allocation: 2005: $73,361,299; 
Fiscal year allocation: Expected 2006: $74,329,662. 

Source: South Carolina Office of State Budget. 

[End of table] 

South Dakota: 

South Dakota reported receiving $22,238,977 from MSA payments in fiscal 
year 2005 and expects to receive $23,232,155 in fiscal year 2006. In 
addition, South Dakota reported $14,322,737 was available in fiscal 
year 2005 from a fund composed of (1) securitized proceeds received in 
prior years and (2) interest earned on these proceeds. South Dakota 
expects $15,005,263 to be available from this fund in fiscal year 2006. 

Table 44: South Dakota's Allocations of MSA Payments and Securitized 
Proceeds: 

Program area: Debt service on securitized funds[A]; 
Fiscal year allocation: 2005: $23,222,138; 
Fiscal year allocation: Expected 2006: $17,167,994. 

Program area: Education[B]; 
Fiscal year allocation: 2005: $13,572,737; 
Fiscal year allocation: Expected 2006: $15,005,263; 
Examples of programs receiving or expected to receive allocations: 
General and special education, technology in schools, scholarships, 
postsecondary vocational education. 

Program area: Tobacco control[B]; 
Fiscal year allocation: 2005: $750,000; 
Fiscal year allocation: Expected 2006: $0; 
Examples of programs receiving or expected to receive allocations: 
Tobacco prevention and reduction plan. 

Total; 
Fiscal year allocation: 2005: $37,544,875; 
Fiscal year allocation: Expected 2006: $32,173,257. 

Source: South Dakota Bureau of Finance and Management and South Dakota 
Health and Education Facilities Authority. 

[A] The Education Enhancement Funding Corporation pays for the debt 
service on securitized funds because the MSA payments are issued 
directly to the corporation rather than to the state. 

[B] The state allocates these funds based on interest earned. 

[End of table] 

Tennessee: 

Tennessee reported receiving $156,708,209 from MSA payments in fiscal 
year 2005 and expects to receive $153,000,000 in fiscal year 2006. 

Table 45: Tennessee's MSA Payment Allocations: 

Program area: General purposes; 
Fiscal year allocation: 2005: $156,708,209; 
Fiscal year allocation: Expected 2006: $153,000,000; 
Examples of programs receiving or expected to receive allocations: 
General Fund. 

Total; 
Fiscal year allocation: 2005: $156,708,209; 
Fiscal year allocation: Expected 2006: $153,000,000. 

Source: Tennessee Department of Finance and Administration. 

[End of table] 

Utah: 

Utah reported receiving $28,353,400 from MSA payments in fiscal year 
2005 and expects to receive $29,541,000 in fiscal year 2006. 

Table 46: Utah's MSA Payment Allocations: 

Program area: General purposes; 
Fiscal year allocation: 2005: $100,000; 
Fiscal year allocation: Expected 2006: $100,000; 
Examples of programs receiving or expected to receive allocations: 
Attorney General's Office. 

Program area: Health; 
Fiscal year allocation: 2005: $12,891,800; 
Fiscal year allocation: Expected 2006: $13,002,800; 
Examples of programs receiving or expected to receive allocations: 
State Children's Health Insurance Program, cancer research, 
immunizations, health promotion. 

Program area: Reserves/rainy day funds; 
Fiscal year allocation: 2005: $8,506,000; 
Fiscal year allocation: Expected 2006: $7,385,300; 
Examples of programs receiving or expected to receive allocations: 
Tobacco Permanent Trust Fund (an endowment that allows the Legislature 
to allocate the interest to fund programs). 

Program area: Social services; 
Fiscal year allocation: 2005: $2,000,000; 
Fiscal year allocation: Expected 2006: $2,000,000; 
Examples of programs receiving or expected to receive allocations: Drug 
Courts, Drug Board Pilot Program. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $4,076,000; 
Fiscal year allocation: Expected 2006: $4,062,100; 
Examples of programs receiving or expected to receive allocations: 
Tobacco Quit Line, TV campaign, prevention partnerships. 

Program area: Unallocated; 
Fiscal year allocation: 2005: $779,600; 
Fiscal year allocation: Expected 2006: $2,990,800. 

Total; 
Fiscal year allocation: 2005: $28,353,400; 
Fiscal year allocation: Expected 2006: $29,541,000. 

Source: Utah Governor's Office of Planning and Budget. 

[End of table] 

Vermont: 

Vermont reported receiving $26,205,607 from MSA payments in fiscal year 
2005 and expects to receive $24,500,000 in fiscal year 2006. 

Table 47: Vermont's MSA Payment Allocations: 

Program area: General purposes; 
Fiscal year allocation: 2005: $158,000; 
Fiscal year allocation: Expected 2006: $158,000; 
Examples of programs receiving or expected to receive allocations: Tax 
and Fund administration. 

Program area: Health; 
Fiscal year allocation: 2005: $21,111,951; 
Fiscal year allocation: Expected 2006: $21,233,111; 
Examples of programs receiving or expected to receive allocations: 
State Medicaid Match, drug and alcohol programs. 

Program area: Social services; 
Fiscal year allocation: 2005: $652,349; 
Fiscal year allocation: Expected 2006: $579,000; 
Examples of programs receiving or expected to receive allocations: Safe 
housing (project against domestic violence). 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $4,919,317; 
Fiscal year allocation: Expected 2006: $5,132,698; 
Examples of programs receiving or expected to receive allocations: 
Media campaigns, marketing enforcement. 

Total; 
Fiscal year allocation: 2005: $26,841,617[A]; 
Fiscal year allocation: Expected 2006: $27,102,809[A]. 

Source: Vermont Department of Finance and Management. 

[A] Includes carry-over funds. 

[End of table] 

Virginia: 

Virginia reported receiving $130,315,484 from MSA payments in fiscal 
year 2005 and expects to receive $132,444,540 in fiscal year 2006. In 
addition, Virginia reported receiving $389,977,677 in securitized 
proceeds in fiscal year 2005. 

Table 48: Virginia's Allocations of MSA Payment and Securitized 
Proceeds: 

Program area: Debt service on securitized funds; 
Fiscal year allocation: 2005: $0; 
Fiscal year allocation: Expected 2006: $33,444,540. 

Program area: Economic development for tobacco regions; 
Fiscal year allocation: 2005: $45,157,742; 
Fiscal year allocation: Expected 2006: $75,601,135; 
Examples of programs receiving or expected to receive allocations: 
Economic development projects, infrastructure, education, job training, 
research, administration of the Tobacco Indemnification and Community 
Revitalization Commission. 

Program area: Health; 
Fiscal year allocation: 2005: $52,126,193; 
Fiscal year allocation: Expected 2006: $52,977,816; 
Examples of programs receiving or expected to receive allocations: 
Virginia Health Care Fund for support of the Medicaid program. 

Program area: Payments to tobacco growers; 
Fiscal year allocation: 2005: $20,000,000; 
Fiscal year allocation: Expected 2006: $13,710,000; 
Examples of programs receiving or expected to receive allocations: 
Indemnification payments to tobacco growers. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $13,031,549; 
Fiscal year allocation: Expected 2006: $13,244,454; 
Examples of programs receiving or expected to receive allocations: 
Public education campaigns to discourage tobacco consumption by minors, 
research, administrative budget of the Virginia Tobacco Settlement 
Foundation. 

Total; 
Fiscal year allocation: 2005: $130,315,484; 
Fiscal year allocation: Expected 2006: $188,977,945[A]. 

Source: Virginia Department of Planning and Budget. 

[A] Includes carry-over funds and interest earned. 

[End of table] 

Washington: 

Washington reported receiving $130,879,000 from MSA payments in fiscal 
year 2005 and expects to receive $131,000,000 in fiscal year 2006. 

Table 49: Washington's MSA Payment Allocations: 

Program area: Debt service on securitized funds; 
Fiscal year allocation: 2005: $38,217,000; 
Fiscal year allocation: Expected 2006: $38,252,000. 

Program area: Health; 
Fiscal year allocation: 2005: $92,662,000; 
Fiscal year allocation: Expected 2006: $92,748,000; 
Examples of programs receiving or expected to receive allocations: 
Health services, including state match on optional children's Medicaid 
and State Children's Health Insurance Program; subsidized health 
insurance for low-income state residents; grants to community clinics; 
grants to local public health jurisdictions; statewide public health 
programs such as childhood immunizations. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $16,164,000; 
Fiscal year allocation: Expected 2006: $17,500,000; 
Examples of programs receiving or expected to receive allocations: 
Tobacco prevention and cessation. 

Total; 
Fiscal year allocation: 2005: $147, 043,000[A]; 
Fiscal year allocation: Expected 2006: $148,500,000[A]. 

Source: Washington State Office of Financial Management. 

[A] Includes carryover funds. 

[End of table] 

West Virginia: 

West Virginia reported receiving $56,495,804 from MSA payments in 
fiscal year 2005 and expects to receive $55,400,000 in fiscal year 
2006. 

Table 50: West Virginia's MSA Payment Allocations: 

Program area: General purposes; 
Fiscal year allocation: 2005: $0; 
Fiscal year allocation: Expected 2006: $30,000,000; 
Examples of programs receiving or expected to receive allocations: 
Worker's Compensation Debt Reduction Fund. 

Program area: Health; 
Fiscal year allocation: 2005: $19,549,408; 
Fiscal year allocation: Expected 2006: $20,078,744; 
Examples of programs receiving or expected to receive allocations: 
Institutional facilities operation. 

Program area: Reserves/rainy day funds; 
Fiscal year allocation: 2005: $28,247,902; 
Fiscal year allocation: Expected 2006: $0; 
Examples of programs receiving or expected to receive allocations: 
Medical Trust Fund. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $5,850,592; 
Fiscal year allocation: Expected 2006: $5,850,592; 
Examples of programs receiving or expected to receive allocations: 
Tobacco Education Program, Alcohol Beverage Control Administration's 
Tobacco Retailer Education Program. 

Program area: Unallocated; 
Fiscal year allocation: 2005: $2,847,902; 
Fiscal year allocation: Expected 2006: $0. 

Total; 
Fiscal year allocation: 2005: $56,495,804; 
Fiscal year allocation: Expected 2006: $55,929,336[A]. 

Source: West Virginia Department of Revenue-State Budget Office. 

[A] Includes carry-over funds and interest earned. 

[End of table] 

Wisconsin: 

Wisconsin reported receiving $132,054,977 from MSA payments in fiscal 
year 2005 and expects to receive $138,929,751 in fiscal year 2006. 

Table 51: Wisconsin's MSA Payment Allocations: 

Program area: Debt service on securitized funds; 
Fiscal year allocation: 2005: $132,054,977; 
Fiscal year allocation: Expected 2006: $138,929,751. 

Total; 
Fiscal year allocation: 2005: $132,054,977; 
Fiscal year allocation: Expected 2006: $138,929,751. 

Source: Wisconsin Department of Administration. 

[End of table] 

Wyoming: 

Wyoming reported receiving $15,827,492 from MSA payments in fiscal year 
2005 and expects to receive $15,827,492 in fiscal year 2006. 

Table 52: Wyoming's MSA Payment Allocations: 

Program area: General purposes; 
Fiscal year allocation: 2005: $261,245; 
Fiscal year allocation: Expected 2006: $261,245; 
Examples of programs receiving or expected to receive allocations: 
Alcohol compliance, attorney. 

Program area: Health; 
Fiscal year allocation: 2005: $6,918,275; 
Fiscal year allocation: Expected 2006: $6,918,275; 
Examples of programs receiving or expected to receive allocations: 
Substance abuse treatment and prevention and intervention services. 

Program area: Social services; 
Fiscal year allocation: 2005: $2,967,736; 
Fiscal year allocation: Expected 2006: $2,967,736; 
Examples of programs receiving or expected to receive allocations: Drug 
court-related juvenile and family mentoring, community services, day 
care, intensive supervised probation. 

Program area: Tobacco control; 
Fiscal year allocation: 2005: $5,680,236; 
Fiscal year allocation: Expected 2006: $5,680,236; 
Examples of programs receiving or expected to receive allocations: 
Tobacco prevention, regional prenatal programs, community tobacco 
prevention activities, tobacco cessation, media. 

Total; 
Fiscal year allocation: 2005: $15,827,492[A]; 
Fiscal year allocation: Expected 2006: $15,827,492[A]. 

Source: Wyoming Department of Health, Substance Abuse Division. 

[End of table] 

[End of section] 

Appendix V: GAO Survey on States' Allocations of Fiscal Years 2005 and 
2006 MSA Payments: 

[See PDF for image] 

[End of figure] 

[End of section] 

Appendix VI: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Robert A. Robinson, 202-512-3841: 

Staff Acknowledgments: 

In addition to the contact named above, Charles M. Adams, Assistant 
Director; Beverly Peterson; Bernice H. Dawson; Chuck Bausell; Kevin 
Bray; Stuart Kaufman; and Alison O'Neill made key contributions to this 
report. 

(360634): 

FOOTNOTES 

[1] Under these agreements, tobacco companies will pay these four 
states $40 billion over 25 years. 

[2] Previously known as Philip Morris Incorporated. 

[3] A number of tobacco companies have joined since the agreement was 
signed. 

[4] For additional information on the agreement, refer to our June 2001 
report on the MSA, GAO, Tobacco Settlement: States' Use of Master 
Settlement Agreement Payments, GAO-01-851 (Washington, D.C.: June 29, 
2001). 

[5] Total payments were originally estimated at over $200 billion 
through 2025, but this estimate does not take into account adjustments 
in tobacco companies' payments that have or will occur. 

[6] The bonds for Oregon, 1 of the 15 states, were not securitized with 
tobacco settlement payments. 

[7] While the District of Columbia and the five U.S. territories are 
included in the agreement, this study reports only on the 46 states 
that signed the agreement. 

[8] GAO, Tobacco Settlement: States' Allocations of Phase II Funds, GAO-
03-262R (Washington, D.C.: Dec. 3, 2002); GAO, Tobacco Settlement: 
States' Allocations of Fiscal Years 2002 and 2003 Master Settlement 
Agreement Payments, GAO-03-407 (Washington, D.C.: Feb. 28, 2003); GAO, 
Tobacco Settlement: States' Allocations of Fiscal Year 2003 and 
Expected Fiscal Year 2004 Payments, GAO-04-518 (Washington, D.C.: Mar. 
19, 2004); and GAO, Tobacco Settlement: States' Allocations of Fiscal 
Year 2004 and Expected Fiscal Year 2005 Payments, GAO-05-312 
(Washington, D.C.: Mar. 21, 2005). 

[9] GAO-01-851. 

[10] Throughout this report, "fiscal year" refers to the state's fiscal 
year. In most states, the fiscal year begins on July 1 and ends on June 
30. The exceptions are in Alabama and Michigan, where the fiscal year 
begins on October 1, and in New York, where the fiscal year begins on 
April 1. 

[11] Our study focuses on the states' share of MSA payments and does 
not include information on MSA payments made to counties and cities in 
New York and California. 

[12] GAO-01-851, GAO-03-407, GAO-04-518, and GAO-05-312. 

[13] Categories include such areas as education, health, budget 
shortfalls, and debt service on securitized funds. 

[14] There is a possibility that this amount could be reduced because 
of certain provisions in the MSA. In April 2006, participating 
manufacturers might withhold as much as about $1.1 billion from their 
expected payments for fiscal year 2006 because the MSA was found to be 
a significant factor in the 7.9 percent decline in their share of the 
cigarette market over several years following the MSA. However, 
according to an official from the National Association of Attorneys 
General, the participating manufacturers are not entitled to withhold 
funds from expected payments, and any reductions to 2006 payments, 
based on manufacturers' market share loss, would be provisional pending 
determinations that each state enacted and diligently enforced a 
statute provided in the MSA designed to counterbalance the effects of 
the MSA by requiring nonparticipating manufacturers to pay funds into 
escrow. 

[15] Fiscal year refers to the state's fiscal year. 

[16] Allocation refers to funds appropriated or otherwise designated 
(e.g., earmarked for a trust fund or an endowment that has a specific 
purpose). It also includes funds designated for debt servicing on bonds 
issued when a state securitized all or a portion of MSA funds. 

[17] See appendix V for a copy of the survey that we sent to each of 
the 46 states. 

[18] The National Association of Attorneys General monitors the actual 
payments made to states, as determined by an independent auditor. 

[19] As we reported in 2001, California counties, four California 
cities, New York counties, and New York City each receive a share of 
MSA payments. 

[20] GAO-01-851, GAO-03-407, GAO-04-518, and GAO-05-312. 

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