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AG Schmidt: Kansas receives $62.2 million payment from tobacco settlement

TOPEKA – (April 18, 2014) – Kansas has received its annual tobacco settlement payment totaling $62.2 million, Attorney General Derek Schmidt announced today.

The final installment of the state’s annual payment was verified today. The $62.2 million total is within the range of payments received by Kansas in recent years. Schmidt said that was the intended result of a legal settlement term sheet Kansas entered into in 2012 with several tobacco companies to resolve a long-running dispute that had put future years’ payments at risk. The settlement term sheet was approved by an arbitration panel composed of retired federal judges in 2013. Absent settlement, the dispute had threatened to cause a catastrophic reduction in future years’ payments to Kansas.

“As we said last year, the settlement in principle is having the effect of stabilizing Kansas’ annual payments,” Schmidt said. “We are managing the settlement proceeds in a way calculated to minimize the spikes or drops in receipts from year to year so that legislators and other Kansans can plan reliably.”

As it does each year, the annual payment will reimburse the state for funds previously appropriated by the Legislature to pay the current fiscal year’s cost of programs financed from tobacco settlement proceeds. Because of the timing of the annual tobacco payment in comparison with the state budget cycle, the Legislature each year appropriates the funds that will not be received until the following April and then reimburses that amount when the annual payment is received.

Each April, Kansas receives a payment pursuant to the 1998 Master Settlement Agreement. The amount of the payment fluctuates based on several variables, including annual sales of certain tobacco products.