Fiscal Research Division _ Natural and Economic Resources
2011 Legislative Changes to the Master
Settlement Agreement Entities
Fiscal Brief May 2, 2012
Legislation enacted during the 2011 legislative session directs future Master
Settlement Agreement funds to the General Fund, abolishes the Health & Wellness
Trust Fund, changes the funding structure of the Tobacco Trust Fund, and diverts
funds from Golden LEAF to the General Fund for the biennium.
Executive Summary
During the 2011 legislative session, the North Carolina
General Assembly fundamentally changed how North
Carolina allocates its Master Settlement Agreement
(MSA) funds. Under the MSA, tobacco product
manufacturers agreed to a number of conditions, from
restrictions on advertising to annual payments to
states, and received immunity from state liability
claims over harm caused by tobacco.' North Carolina
is expected to receive in excess of $4.5 billion from
tobacco product manufacturers over the first 25 years
of the agreement, 2000 to 2025.
Beginning in FY 2011-12, North Carolina’s MSA
funds that are not obligated for (1) debt service
authorized in S.L. 2004-179 or (2) payments to the
University Cancer Research Fund (G.S. 1 16-29.1) will
be transferred to the General Fund to be used for the
benefit of tobacco producers, tobacco allotment
holders, and persons engaged in tobacco-related
businesses, and for the benefit of health -related
programs and initiatives. The General Assembly also
abolished the Health and Wellness Trust Fund and its
governing commission, and intercepted over $17.5
million in MSA funds that otherwise would have been
distributed to the nonprofit foundation Golden LEAF
(Long-term Economic Advancement Foundation).
The provisions enacting these changes can be found in
S.L. 2011-145. Section 6.11 and S.L. 2011-391.
Sections 7(a), 7(b) and 8. This brief summarizes the
major changes enacted during the 2011 legislative
session and serves as an update to the Division’s
February 2011 fiscal brief, A Review of the First 10
Years of the Master Settlement Agreement.
1 For a summary of the conditions of the MSA, click here.
Background
In 1999, the North Carolina General Assembly created
three grant-making entities to administer the State’s
Master Settlement Agreement (MSA) funds: two State
Commissions - the Health & Wellness Trust Fund
Commission (HWTF) and the Tobacco Trust Fund
Commission (TTF) - and one economic development
nonprofit organization, Golden LEAF (Long-term
Economic Advancement Foundation). Under S.L.
1999-2. Golden LEAF received 50 percent of the
State’s annual MSA funds while HWTF and TTF each
received 25 percent annually. Since FY 1999-2000,
North Carolina has received nearly $1.9 billion in
MSA receipts from tobacco product manufacturers and
has used these funds for grants, debt service, cancer
research, and General Fund availability. The table
below shows the amount of MSA funds allocated to
each entity and the total funding received by the State
since the settlement.
Table 1. MSA Funds Received by Entity
$ in thousands
Fiscal Year
HWTF
TTF
Golden
LEAF
Total
1999-2000
$
47,351
$
47.351
$
94,701 $
189,402
2000-01
$
35,068
$
35,068
$
70,137 $
140,274
2001-021
S
43,959
$
43,959
$
87,918 $
175,836
2002-03
$
42,300
$
42.300
$
86.628 $
171228
2003-04
$
37,627
$
37,627
$
73,226 $
148.480
2004-05
$
37,160
$
37,160
$
74,320 $
148,641
2005-06
$
34,113
$
34,113
$
68,227 $
136,453
2006-07
$
35.706
$
35.706
$
71,413 $
142.825
2007-08
$
39,988
$
39.988
$
79.977 $
159.954
2008-09
$
43,797
$
43,797
$
87,593 $
175,187
2009-10
$
36,590
$
36.590
$
73,179 $
146,358
2010-11
s
34,564
$
34,564
$
69,128 $
138256
Total
$
468,223
$
468,223
$
936,447 $
1,872,894
