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Tobacco Settlement Proceeds
Purchaser: Texas Department of Health
Program: Health care charityTobacco settlement proceeds to local political subdivisions

Description: Texas plans to distribute funds to local political subdivisions as defined in the July 18, 1998 tobacco lawsuit settlement. The settlement defines local political subdivisions as "all hospital districts, other local political subdivisions owning and maintaining public hospitals and counties of the State of Texas responsible for providing indigent care to the general public."

About $2.3 billion, before adjustments, will be paid by the tobacco companies for the benefit of local jurisdictions, under the terms of the Tobacco Settlement Lawsuit. Included in this amount is $450 million to be deposited into a lump sum trust account and distributed annually to local entities from January 1999 to April 2001. The remaining $1.8 billion, before adjustments, will be invested according to terms in the settlement agreement into a permanent trust account. About $445 million was invested in the permanent trust in December 1999 after adjusting for declining tobacco sales and inflation. Additional future payments are to be made by January 2003.

Texas Total: The lump sum trust account distributed $300 million in January 1999 and $100 million in April 2000. The account will distribute $50 million in April 2001. Earnings from the permanent fund will be distributed beginning in April 2001.

Source: Texas Department of Health