Louisiana: Tobacco Goes to College

The Louisiana State Senate voted 31 to 5 yesterday to spend future tobacco settlement money on its popular Taylor Opportunity Program for Students (TOPS) program, which provides free college for many Louisiana students.

According to an Associated Press article in the Daily Comet:

A Jindal administration push to dedicate a portion of future tobacco settlement funding to the state’s popular free college tuition program received Senate backing in a 31-5 vote today.

The measure would take a slice of tobacco settlement money received after April 2011, dollars that are currently set to be divided between health care and education trust funds, and dedicate that money to TOPS. That would give the program $92 million in the upcoming fiscal year.

By a 1998 agreement with cigarette manufacturers, Louisiana receives $4.6 billion by 2023; this money was to be spread out into annual payments. In 2001 the state sold 60 percent of that settlement to investors in order to receive $1.2 billion in one lump sum. By the new Senate law, which still must get the approval of the state’s House of Representatives and governor, future money will go to go to college scholarships.

Leaving aside the questionable ethical implications of using tobacco money to pay for college scholarships—the tobacco settlement came out of lawsuits in the 1990s by 46 states against Philip Morris USA, R.J. Reynolds Tobacco Company, Brown & Williamson Tobacco Corp. and Lorillard Tobacco Co. that maintained that since cigarettes produced health problems, those problems incurred high costs to the states’ public health systems; that’s why the tobacco companies had to pay state’s money, to offset health costs—there’s another problem with using the money to pay for college: What happens when the money’s gone?

The trouble with the Louisiana plan is that Louisiana TOPS may come to resemble Georgia’s HOPE, a generous state college scholarship program funded by the state lottery.

The problem that if a state sets up the expectation of free college without making taxpayers fund it, they get used to free college without consequences. What happens once Louisiana uses the tobacco settlement money up?

When Georgia found that the lottery no longer covered the cost of college, it had to dramatically scale back the program. And now Georgians have to pay for college again, much more expensive college.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer