REPORT OF CONFERENCE COMMITTEE

H.B. No. 519: Tobacco settlement funds; create Health Care Trust Fund for.

SECTION 1. It is declared by the Legislature that the funds received by the State of Mississippi from tobacco companies in settlement of a certain lawsuit brought against those companies by the State of Mississippi, or as a result of the settlement of any lawsuit brought against tobacco companies by another state, should be applied toward improving the health and health care of the citizens and residents of the state. It is the intent of the Legislature by this article to provide the manner and means necessary to carry out those purposes.

SECTION 2. When used in this article, the following definitions shall apply, unless the context requires otherwise:

(a) "Health Care Trust Fund" means the trust fund established by Section 3 of this act for the deposit of the funds received by the State of Mississippi as a result of the tobacco settlement, including income from the investment of those funds.

(b) "Health Care Expendable Fund" means the fund established by Section 4 of this act for the annual transfer of certain funds from the Health Care Trust Fund that are available for appropriation by the Legislature.

(c) "Income" means all interest and dividends derived from the investment of any tobacco settlement funds and any capital gains from the sale or exchange of those investments.

(d) "Tobacco settlement" means the settlement of the case of Mike Moore, Attorney General ex rel. State of Mississippi v. The American Tobacco Company et al. (Chancery Court of Jackson County, Mississippi, Cause No. 94-1429) and the settlement of any case brought against tobacco companies by another state.

SECTION 3. (1) In accordance with the purposes of this article, there is established in the State Treasury the Health Care Trust Fund, into which shall be deposited Two Hundred Eighty Million Dollars ($280,000,000.00) of the funds received by the State of Mississippi as a result of the tobacco settlement as of the end of fiscal year 1999, and all tobacco settlement installment payments made in subsequent years for which the use or purpose for expenditure is not restricted by the terms of the settlement, except as otherwise provided in Section 4(2) of this act. All income from the investment of the funds in the Health Care Trust Fund shall be credited to the account of the Health Care Trust Fund. The funds in the Health Care Trust Fund at the end of a fiscal year shall not lapse into the State General Fund.

(2) The Health Care Trust Fund shall remain inviolate and shall never be expended, except as provided in this subsection. The Legislature shall appropriate from the Health Care Trust Fund such sums as are necessary to recoup any funds lost as a result of any of the following actions:

(a) The federal Health Care Finance Administration, or other agency of the federal government, is successful in recouping tobacco settlement funds from the State of Mississippi;

(b) The federal share of funds for the support of the Mississippi Medicaid Program is reduced directly or indirectly as a result of the tobacco settlement;

(c) Federal funding for any other program is reduced as a result of the tobacco settlement; or

(d) Tobacco cessation programs are mandated by the federal government or court order.

SECTION 4. (1) In accordance with the purposes of this article, there is established in the State Treasury the Health Care Expendable Fund, into which shall be transferred from the Health Care Trust Fund the following sums:

(a) In fiscal year 2000, Fifty Million Dollars ($50,000,000.00);

(b) In fiscal year 2001, Fifty-five Million Dollars ($55,000,000.00);

(c) In fiscal year 2002, Sixty Million Five Hundred Thousand Dollars ($60,500,000.00);

(d) In fiscal year 2003, Sixty-six Million Five Hundred Fifty Thousand Dollars ($66,550,000.00);

(e) In fiscal year 2004 and each subsequent fiscal year, a sum equal to the average annual amount of the income from the investment of the funds in the Health Care Trust Fund since July 1, 1999.

(2) In any fiscal year in which interest and dividends from the investment of the funds in the Health Care Trust Fund are not sufficient to fund the full amount of the annual transfer into the Health Care Expendable Fund as required in subsection (1) of this section, the State Treasurer shall transfer from tobacco settlement installment payments an amount that is sufficient to fully fund the amount of the annual transfer.

(3) All income from the investment of the funds in the Health Care Expendable Fund shall be credited to the account of the Health Care Expendable Fund. Any funds in the Health Care Expendable Fund at the end of a fiscal year shall not lapse into the State General Fund.

(4) The funds in the Health Care Expendable Fund shall be available for expenditure pursuant to specific appropriation by the Legislature beginning in fiscal year 2000, and shall be expended exclusively for health care purposes.

SECTION 5. (1) There is established a board of directors to invest the funds in the Health Care Trust Fund and the Health Care Expendable Fund. The board of directors shall consist of thirteen (13) members as follows:

(a) Seven (7) voting members as follows: the State Treasurer or his designee, the Attorney General or his designee, and one (1) member from each congressional district to be appointed by the Governor with the advice and consent of the Senate. Of the members appointed by the Governor, one (1) member shall be appointed for an initial term that expires on March 1, 2000; one (1) member shall be appointed for an initial term that expires on March 1, 2001; one (1) member shall be appointed for an initial term that expires on March 1, 2002; one (1) member shall be appointed for an initial term that expires on March 1, 2003; and one (1) member shall be appointed for an initial term that expires on March 1, 2004. Upon the expiration of any of the initial terms of office, the Governor shall appoint successors by and with the advice and consent of the Senate for terms of five (5) years from the expiration date of the previous term. Any member appointed by the Governor shall be eligible for reappointment. Each member appointed by the Governor shall possess knowledge, skill and experience in business or financial matters commensurate with the duties and responsibilities of the board of directors in administering the Health Care Trust Fund and the Health Care Expendable Fund.

(b) Two (2) nonvoting, advisory members of the Senate shall be appointed by the Lieutenant Governor, and one (1) nonvoting, advisory representative of the health care community shall be appointed by the Lieutenant Governor, who shall serve for the length of the term of the appointing official and shall be eligible for reappointment.

(c) Two (2) nonvoting, advisory members of the House of Representatives shall be appointed by the Speaker of the House, and one (1) nonvoting, advisory representative of the health care community shall be appointed by the Speaker of the House, who shall serve for the length of the term of the appointing official and shall be eligible for reappointment.

(d) Any person appointed to fill a vacancy on the board of directors shall be appointed in the same manner as for a regular appointment and shall serve for the remainder of the unexpired term only.

(2) Nonlegislative members of the board of directors shall serve without compensation, but shall be reimbursed for each day's official duties of the board at the same per diem as established by Section 25-3-69, and actual travel and lodging expenses as established by Section 25-3-41. Legislative members of the board of directors shall receive the same per diem and expense reimbursement as for attending committee meetings when the Legislature is not in regular session.

(3) The State Treasurer shall be the chairman of the board of directors. The board of directors shall annually elect one (1) member to serve as vice chairman of the board. The vice chairman shall act as chairman in the absence of or upon the disability of the chairman or if there is a vacancy in the office of chairman.

(4) All expenses of the board of directors in carrying out its duties and responsibilities under this article, including the payment of per diem and expenses of the nonlegislative members of the board, shall be paid from funds appropriated to the State Treasurer's Office for that purpose.

(5) The board of directors shall invest the funds in the Health Care Trust Fund and the Health Care Expendable Fund in any of the investments authorized for the Mississippi Prepaid Affordable College Tuition Program under Section 37-155-9, and those investments shall be subject to the limitations prescribed by Section 37-155-9.

(6) In furtherance of the powers granted under subsection (5) of this section, the board of directors shall have such powers as necessary or convenient to carry out the purposes and provisions of this article, including, but not limited to, the following express powers:

(a) To contract for necessary goods and services, to employ necessary personnel, and to engage the services of consultants for administrative and technical assistance in carrying out its duties and responsibilities in administering the Health Care Trust Fund and the Health Care Expendable Fund;

(b) To administer the Health Care Trust Fund and the Health Care Expendable Fund in a manner that is sufficiently actuarially sound to meet the obligations of this article and to establish a comprehensive investment plan for the purposes of this article, which shall specify the investment policies to be utilized by the board of directors in administering the funds;

(c) Subject to the terms, conditions, limitations and restrictions specified in Section 37-155-9, the board of directors shall have power to sell, assign, transfer and dispose of any of the securities and investments of the Health Care Trust Fund and the Health Care Expendable Fund, provided that any such sale, assignment or transfer has the majority approval of the entire board; and

(d) To annually prepare or cause to be prepared a report setting forth in appropriate detail an accounting of the Health Care Trust Fund and the Health Care Expendable Fund and a description of the financial condition of the funds at the close of each fiscal year, including any recommendations for legislation regarding the investment authority of the board of directors over the funds. The report shall be submitted to the Governor and the Legislative Budget Office on or before September 1 of each fiscal year.

SECTION 6. Sections 1 through 5 of this act shall be inserted as a new article in Title 43, Chapter 13, Mississippi Code of 1972.

SECTION 7. This act shall take effect and be in force from and after its passage.

AN ACT TO ESTABLISH A HEALTH CARE TRUST FUND IN THE STATE TREASURY INTO WHICH SHALL BE DEPOSITED THE FUNDS FROM THE SETTLEMENT OF THE LAWSUIT AGAINST TOBACCO COMPANIES BY THE STATE OF MISSISSIPPI, INCLUDING INCOME FROM THE INVESTMENT OF THOSE FUNDS; TO PROVIDE THAT THE TRUST FUND SHALL REMAIN INVIOLATE AND SHALL NEVER BE EXPENDED, WITH CERTAIN EXCEPTIONS; TO ESTABLISH A HEALTH CARE EXPENDABLE FUND IN THE STATE TREASURY INTO WHICH SHALL BE TRANSFERRED ANNUALLY CERTAIN MONIES IN THE HEALTH CARE TRUST FUND; TO PROVIDE THAT THE FUNDS IN THE HEALTH CARE EXPENDABLE FUND SHALL BE AVAILABLE FOR APPROPRIATION BY THE LEGISLATURE, AND SHALL BE EXPENDED EXCLUSIVELY FOR HEALTH CARE PURPOSES; TO ESTABLISH A BOARD OF DIRECTORS TO INVEST THE FUNDS IN THE HEALTH CARE TRUST FUND AND THE HEALTH CARE EXPENDABLE FUND; TO PROVIDE FOR THE MEMBERSHIP OF THE BOARD AND PRESCRIBE ITS POWERS AND DUTIES; TO PROVIDE THAT THE BOARD SHALL INVEST THE FUNDS IN THE HEALTH CARE TRUST FUND AND THE HEALTH CARE EXPENDABLE FUND IN ANY OF THE INVESTMENTS AUTHORIZED FOR THE MISSISSIPPI PREPAID AFFORDABLE COLLEGE TUITION PROGRAM; AND FOR RELATED PURPOSES.