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Third Substitute S.B. 15
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5 AN ACT RELATING TO THE TOBACCO SETTLEMENT ACCOUNT; CREATING THE
6 TOBACCO SETTLEMENT ENDOWMENT AND RENAMING THE TOBACCO
7 SETTLEMENT ACCOUNT; APPORTIONING TOBACCO SETTLEMENT FUNDS BETWEEN
8 THE ACCOUNT AND THE ENDOWMENT; REQUIRING THAT FUNDS IN THE TOBACCO
9 SETTLEMENT RESTRICTED ACCOUNT BE ALLOCATED EACH YEAR IN THE
10 FOLLOWING ORDER: $5,500,000 FOR THE CHILDREN'S HEALTH INSURANCE
11 PROGRAM, $3,000,000 FOR TOBACCO AND SUBSTANCE ABUSE PREVENTION,
12 $3,000,000 FOR THE DRUG COURT PROGRAM, AND $4,000,000 FOR THE UNIVERSITY
13 OF UTAH HEALTH SCIENCES CENTER; IMPOSING AN ANNUAL REPORTING
14 REQUIREMENT; DIRECTING THE APPROPRIATION OF FUNDS FOR FISCAL YEAR
15 2000-01; REPEALING THE HOSPITAL PROVIDER ASSESSMENT; PROVIDING AN
16 EFFECTIVE DATE; AND PROVIDING A COORDINATING CLAUSE TO ALLOCATE
17 TOBACCO SETTLEMENT FUNDS TO A CONSTITUTIONALLY CREATED TRUST FUND.
18 This act affects sections of Utah Code Annotated 1953 as follows:
19 AMENDS:
20 26-40-102, as enacted by Chapter 360, Laws of Utah 1998
21 26-40-103, as last amended by Chapters 21 and 61, Laws of Utah 1999
22 63-97-101, as enacted by Chapter 78, Laws of Utah 1999
23 ENACTS:
24 52-7-12.1, Utah Code Annotated 1953
25 63-97-301, Utah Code Annotated 1953
26 RENUMBERS AND AMENDS:
27 63-97-201, (Renumbered from 63-97-102, as enacted by Chapter 78, Laws of Utah 1999)
28 REPEALS:
29 26-40-111, as enacted by Chapter 360, Laws of Utah 1998
30 26-40-112, as last amended by Chapter 78, Laws of Utah 1999
31 26-40-113, as enacted by Chapter 360, Laws of Utah 1998
32 26-40-114, as enacted by Chapter 360, Laws of Utah 1998
33 Be it enacted by the Legislature of the state of Utah:
34 Section 1. Section 26-40-102 is amended to read:
35 26-40-102. Definitions.
36 As used in this chapter:
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41 provided in Section 26-40-105 .
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61 of Health and Human Services pursuant to 42 U.S.C. Sec. 1397ff.
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63 chapter.
64 Section 3. Section 26-40-103 is amended to read:
65 26-40-103. Creation and administration of the Utah Children's Health Insurance
66 Program.
67 (1) There is created the Utah Children's Health Insurance Program to be administered by
68 the department in accordance with the provisions of:
69 (a) this chapter; and
70 (b) the State Children's Health Insurance Program, 42 U.S.C. Sec. 1397aa et seq.
71 (2) The department shall:
72 (a) prepare and submit the state's children's health insurance plan before May 1, 1998, and
73 any amendments to the federal Department of Health and Human Services in accordance with 42
74 U.S.C. Sec. 1397ff; and
75 (b) make rules in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking
76 Act regarding:
77 (i) eligibility requirements consistent with Subsection 26-18-3 (6);
78 (ii) program benefits;
79 (iii) the level of coverage for each program benefit;
80 (iv) cost-sharing requirements for enrollees, which may not:
81 (A) exceed the guidelines set forth in 42 U.S.C. Sec. 1397ee; or
82 (B) impose deductible, copayment, or coinsurance requirements on an enrollee for
83 well-child, well-baby, and immunizations; and
84 (v) the administration of the program[
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93 (3) Before July 1, 2001, the Governor's Office of Planning and Budget shall study the
94 effectiveness of the department's administration of the program and report any findings to:
95 (a) the Health and Human Services Interim Committee of the Legislature;
96 (b) the Health Policy Commission; and
97 (c) the department.
98 Section 2. Section 51-7-12.1 is enacted to read:
99 51-7-12.1. Deposit or investment of Tobacco Settlement Endowment -- Authorized
100 deposits and investment -- Asset manager.
101 (1) Notwithstanding the requirements of Section 51-7-11 , monies in the Tobacco
102 Settlement Endowment established by Section 63-97-301 shall be deposited or invested only in
103 the following:
104 (a) any deposit or investment authorized by Section 51-7-11 ;
105 (b) equity securities, including common and preferred stock issued by corporations listed
106 on a major securities exchange, in accordance with the following criteria applied at the time of
107 investment:
108 (i) the treasurer may not invest more than 5%, determined on a cost basis, of the total
109 endowment assets in the securities of any one issuer;
110 (ii) the treasurer may not invest more than 25%, determined on a cost basis, of the total
111 endowment assets in a particular industry;
112 (iii) the treasurer may not invest more than 5%, determined on a cost basis, of the total
113 endowment assets in securities of corporations that have been in continuous operation for less than
114 three years;
115 (iv) the endowment may not hold in excess of 5% of the outstanding voting securities of
116 any one corporation; and
117 (v) at least 75% of the corporations in which investments are made under Subsection (1)(b)
118 must appear on the Standard and Poor's 500 Composite Stock Price Index;
119 (c) fixed-income securities, including bonds, notes mortgage securities, zero coupon
120 securities, and convertible securities issued by domestic corporations rated A or higher by Moody's
121 Investor's Service, Inc. or by Standard and Poor's Corporation in accordance with the following
122 criteria applied at the time of investment:
123 (i) the treasurer may not invest more than 5%, determined on a cost basis, of the total
124 endowment assets in the securities of any one issuer;
125 (ii) the treasurer may not invest more than 25%, determined on a cost basis, of the total
126 endowment assets in a particular industry;
127 (iii) the treasurer may not invest more than 5%, determined on a cost basis, of the total
128 fund assets in the securities of corporations that have been in continuous operation for less than
129 three years; and
130 (iv) the dollar-weighted average maturity of fixed-income securities acquired under
131 Subsection (1)(c), may not exceed ten years;
132 (d) fixed-income securities issued by agencies of the United States and
133 government-sponsored organizations, including mortgage-backed pass-through certificates and
134 mortgage-backed bonds;
135 (e) shares of an open-end diversified management investment company established under
136 the Investment Companies Act of 1940; and
137 (f) shares of or deposits in a pooled-investment program.
138 (2) (a) No more than 65% of the total fund assets of any of this endowment, on a cost
139 basis, may be invested in common or preferred stocks at any one time.
140 (b) At least 35% of the total assets of this endowment shall be invested in fixed-income
141 securities authorized by Subsections (1)(a), (c), and (d).
142 (3) The treasurer shall use appropriate investment strategies to protect the principal of the
143 endowment administered under this section during periods of financial market volatility.
144 (4) (a) The treasurer may employ professional asset managers to assist in the investment
145 of assets of the endowment.
146 (b) The treasurer may provide compensation to asset managers from earnings generated
147 by the funds' investments.
148 (5) The council shall give suggestions, advice, and opinions to the treasurer in regard to
149 this section.
150 Section 4. Section 63-97-101 is amended to read:
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152 63-97-101. Title.
153 This chapter is known as the "Tobacco Settlement [
154 Section 5. Section 63-97-201 , which is renumbered from Section 63-97-102 is renumbered
155 and amended to read:
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158 (1) There is created within the General Fund a restricted account known as the Tobacco
159 Settlement Restricted Account.
160 (2) The account shall earn interest.
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162 (a) until July 1, 2003, 50% of all funds of every kind that are received by the state that are
163 related to the settlement agreement that the state entered into with leading tobacco manufacturers
164 on November 23, 1998[
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167 (b) on and after July 1, 2003, 40% of all funds of every kind that are received by the state
168 that are related to the settlement agreement that the state entered into with leading tobacco
169 manufacturers on November 23, 1998; and
170 (c) interest earned on the account.
171 (4) To the extent that funds will be available for appropriation in a given fiscal year, those
172 funds shall be appropriated from the account in the following order:
173 (a) $5,500,000 to the Department of Health for the Children's Health Insurance Program
174 created in Section 26-40-103 ;
175 (b) $2,000,000 to the Department of Health for alcohol, tobacco, and other drug prevention,
176 reduction, cessation, and control programs that promote unified messages and make use of media
177 outlets, including radio, newspaper, billboards and televison, and with a preference in funding
178 given to tobacco-related programs;
179 (c) $1,000,000 to the Department of Health to be distributed to local health departments
180 to continue tobacco prevention, reduction, cessation, and control programs;
181 (d) $297,600 to the Administrative Office of the Courts and $1,991,300 to the Department
182 of Human Services for the statewide expansion of the drug court program;
183 (e) $77,400 to the Board of Pardons, $108,700 to the Department of Corrections, and
184 $525,000 to the Department of Human Service for a drug board pilot program;
185 (f) $4,000,000 to the State Board of Regents for the University of Utah Health Sciences
186 Center to benefit the health and well-being of Utah citizens through in-state research, treatment,
187 and educational activities; and
188 (g) any remaining funds as directed by the Legislature through appropriation.
189 (5) (a) If tobacco funds in dispute for attorneys fees are received by the state, those funds
190 shall be divided and deposited in accordance with Subsection (3) and Section 63-97-301 .
191 (b) The amount appropriated to the Department of Health for alcohol, tobacco, and other
192 drug programs described in Subsection (4)(b), including the funding preference for tobacco-related
193 programs, shall be increased by up to $2,000,000 in a given fiscal year to the extent that funds in
194 dispute for attorneys fees are available to the state for appropriation from the account.
195 (6) Each state agency identified in Subsection (4) shall provide an annual report on the
196 program and activities funded under Subsection (4) to:
197 (a) the Health and Human Services Interim Committee no later than September 1; and
198 (b) the Health and Human Services Joint Appropriations Subcommittee.
199 Section 6. Section 63-97-301 is enacted to read:
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201 63-97-301. Tobacco Settlement Endowment.
202 (1) There is created within the General Fund a restricted account known as the Tobacco
203 Settlement Endowment.
204 (2) Monies in the account shall be deposited or invested pursuant to Section 51-7-12.1 .
205 (3) The account shall consist of:
206 (a) until July 1, 2003, 50% of all funds of every kind that are received by the state that are
207 related to the settlement agreement that the state entered into with leading tobacco manufacturers
208 on November 23, 1998;
209 (b) on and after July 1, 2003, 60% of all funds of every kind that are received by the state
210 that are related to the settlement agreement that the state entered into with leading tobacco
211 manufacturers on November 23, 1998;
212 (c) capital gains on assets in the account; and
213 (d) interest and dividends earned on investments.
214 (4) Tobacco settlement funds and capital gains in the account pursuant to Subsections
215 (3)(a), (b), and (c) shall be treated as principal and may not be appropriated for any purpose, but
216 shall remain in the account for the purpose of earning interest and dividends to be appropriated in
217 accordance with Subsection (5).
218 (5) (a) 50% of the interest and dividends earned annually on the account shall remain in
219 the account and be deposited or invested as principal.
220 (b) Any annual interest earned on the account that remains after Subsection (6)(a) may be
221 appropriated by the Legislature.
222 Section 7. Repealer.
223 This act repeals:
224 Section 26-40-111, Provider assessment.
225 Section 26-40-112, Hospital Provider Assessment Account.
226 Section 26-40-113, Intergovernmental transfers.
227 Section 26-40-114, Repeal of assessment.
228 Section 8. Appropriation.
229 (1) Fifty percent of the tobacco settlement funds in the Tobacco Settlement Account
230 created by Section 63-97-201 as of June 30, 2000, shall be deposited into the Tobacco Settlement
231 Endowment created by Section 63-97-301 on July 1, 2000.
232 (2) Funds remaining in the Tobacco Settlement Account after Subsection (1) are
233 appropriated for fiscal year 2000-01 in the following order:
234 (a) $5,500,000 to the Department of Health for the Children's Health Insurance Program;
235 (b) $2,000,000 to the Department of Health for alcohol, tobacco, and other drug prevention,
236 reduction, cessation, and control programs as described in Section 63-97-201 , including the
237 funding preference for tobacco-related programs;
238 (c) $1,000,000 to the Department of Health to be distributed to local health departments
239 to continue tobacco prevention, reduction, cessation, and control programs;
240 (d) $297,600 to the Administrative Office of the Courts and $1,991,300 to the Department
241 of Human Services for the drug court program as provided in Section 63-97-201 ;
242 (e) $77,400 to the Board of Pardons, $108,700 to the Department of Corrections, and
243 $525,000 to the Department of Human Service for a drug board pilot program; and
244 (f) $4,000,000 to the State Board of Regents for the University of Utah Health Sciences
245 Center as provided in Section 63-97-201 .
246 (3) If tobacco funds in dispute for attorneys fees are received by the state during fiscal year
247 2000-01:
248 (a) those funds shall be divided and deposited in accordance with Section 63-97-201 and
249 63-97-301 ; and
250 (b) the amount appropriated to the Department of Health for alcohol, tobacco, and other
251 drug programs described in Subsection (2)(b), including the funding preference for tobacco-related
252 programs, shall be increased by up to $2,000,000 to the extent that funds in dispute for attorneys
253 fees are available to the state for appropriation from the account created by Section 63-97-201 .
254 (4) It is the intent of the Legislature that funds deposited into the Tobacco Settlement
255 Account after July 1, 2000, and before July 1, 2001, may be used, as they become available, if
256 necessary for the appropriation in Subsection (2).
257 (5) The appropriation in this section is the only appropriation that may be made for
258 tobacco settlement funds for fiscal year 2000-01.
259 (6) Any funds remaining in the Hospital Providers Assessment Account as of June 30,
260 2000, shall lapse into the General Fund.
261 Section 9. Effective date.
262 This act takes effect on July 1, 2000.
263 Section 10. Coordination clause.
264 (1) If this bill and H.B. 390, Endowment Fund for Tobacco Settlement Monies, both pass
265 it is the intent of the Legislature that:
266 (a) The amendments to Section 51-7-12.1 in H.B. 390 supercede the amendments to
267 Section 51-7-12.1 in this bill and that the reference to "Section 63-97-102 " in Section 51-7-12.1
268 in H.B. 390 be amended to read " 63-97-301 ".
269 (b) The renumbering and amendments to Section 63-97-102 in this bill supercede the
270 amendments to Section 63-97-102 in H.B. 390.
271 (2) If this bill passes and if S.J.R.14, Resolution Creating Constitutional Trust Fund,
272 passes the Legislature and is approved by a majority of those voting at the next general election
273 and thus becomes effective on January 1, 2001, it is the intent of the Legislature that effective as
274 of January 1, 2001:
275 (a) Section 63-97-301 be repealed and reenacted to read as follows:
276 "63-97-301. Permanent state trust fund.
277 (1) Until July 1, 2003, 50% of all funds of every kind that are received by the state that are
278 related to the settlement agreement that the state entered into with leading tobacco manufacturers
279 on November 23, 1998, shall be deposited into the permanent state trust fund created by and
280 operated under Utah Constitution Article XXII, Section 4.
281 (2) On and after July 1, 2003, 60% of all funds of every kind that are received by the state
282 that are related to the settlement agreement that the state entered into with leading tobacco
283 manufacturers on November 23, 1998, shall be deposited into the permanent state trust fund
284 created by and operated under Utah Constitution Article XXII, Section 4.
285 (3) Funds in the permanent state trust fund shall be deposited or invested pursuant to
286 Section 51-7-12.1 .
287 (4) (a) 50% of the interest and dividends earned annually from the permanent state trust
288 fund shall remain in the fund to be treated as principal.
289 (b) Any annual interest or dividends earned from the permanent state trust fund that remain
290 after Subsection (4)(a) may be appropriated by the Legislature."
291 (b) The reference to "the Tobacco Settlement Endowment established by Section
292 63-97-301 " in Subsection 51-7-12.1 (1) be amended to read "the permanent state trust fund created
293 by and operated under Utah Constitution Article XXII, Section 4".
294 (c) Any and all funds in the Tobacco Settlement Endowment created in Section 6 of this
295 bill shall be deposited into the permanent state trust fund created by and operated under Utah
296 Constitution Article XXII, Section 4.
297 (d) The Office of Legislative Research and General Counsel shall prepare the database for
298 publication to reflect the statutory changes in Subsections (2)(a) and (b)."
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