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COVID-19 Exposes TSET’s Uselessness: Let’s Get Rid of It


After more than a month of COVID-19 house arrest, Oklahoma is reopening. However, the government-created economic disaster that shutdown orders have caused will be studied by epidemiologists, economists, and other social scientists for decades to come. In the meantime, we have to deal with the consequences as they occur, everything from a lack of toilet paper on store shelves (hopefully, that’s over) and hair that’s grown too long to what will undoubtedly be a host of bankruptcies. In the meantime, there is a timely question that truly ought to be answered in Oklahoma. Where has TSET (Tobacco Settlement Endowment Trust) been in this time of crisis?

Recall that TSET was created as a quasi-independent government by constitutional amendment as part of the 46-state tobacco settlement wherein tobacco companies agreed to pay states as reimbursement for the Medicaid costs of treating tobacco users for tobacco-induced illnesses. Instead of using the money to reduce taxes for Oklahomans, who presumably were the ones who actually suffered the financial impact of treating tobacco users, we got talked into handing a quarter of each year’s payment to the legislature with the rest to pile up in an endowment - TSET. Investment proceeds are used to make the commercials we see on a regular basis encouraging Oklahomans to stop smoking, stop vaping, and warning about the supposed dangers of secondhand smoke, in addition to admonitions to get out and exercise. Grants are given to local governments, researchers, and schools, among other things.

The state constitution explicitly states that TSET can spend its investment proceeds on tobacco-related cancer research, tobacco-use cessation programs, health programs for children and senior citizens, common and higher education, and administrative costs. The italics emphasize a part of TSET’s mission that is entirely compatible with using its resources during the COVID-19 crisis, namely to give information to the citizens of Oklahoma, and perhaps actually save some lives in so doing. After all, TSET apparently knows how to make commercials.

Throughout the COVID-19 crisis, it has been well known among epidemiologists that the young are at low risk from the disease. Rampaging epidemics through nursing homes, on the other hand, have proven terribly deadly. It should have been a priority for government to inform the general public of who, exactly, was at highest risk from this viral outbreak and what voluntary steps those at risk could take to protect themselves. Mostly, we’ve been fed misinformation through misguided actions, one of the first having been to close the schools, which led people to believe we were all at equal risk, regardless of age or health condition. It turns out, school-age kids are more likely to get the virus from older people than the other way around.

TSET could have set the record straight, perhaps in cooperation with other departments, or by acting entirely independently. Instead, it ran commercials completely unrelated to the current crisis and clearly made long before COVID-19 became an issue. As usual, their commercials focused on tobacco help lines and urging people to get out and exercise (a good idea, really), but not warning anyone to take special care for grandma and grandpa, much less any admonitions to keep one’s social distance. We needed nursing home personnel tested and screened right away. Sure, we could hope an overworked health department would get to it, but there’s TSET sitting on a pile of resources, ready to do … absolutely nothing.

So, the question occurs, just what additional proof does anyone need to show that the creation of TSET was a mistake and that this nearly completely independent and unaccountable waste of resources should be abolished?

The only real question that should be asked now, is what to do with the over $1 billion this error, TSET, is sitting on? Here’s an idea.

On top of the damage the ill-advised economic shutdown due to COVID-19 has done to state revenues, we are also dealing with an oil-price collapse brought on by the Russians and the Saudis (as well as the COVID shutdown). No doubt, this state’s pension funds, just like those of every other state, have taken a hit. It’s not like Oklahoma’s Teacher Retirement System was healthy in the first place. Even before the government-induced recession, the state’s retirement plans were underfunded to the tune of $7.9 billion. Let’s use TSET funds to at least partly catch up on these funds and then switch all new employees to defined contribution (401(k)-style) retirement plans.

We should have a new election about whether to end TSET and transfer its assets to the pension funds. Then, we should also decide what to do with future tobacco settlement funds. Perhaps we should let the legislature, which actually stands for election every two years, unlike the TSET board, decide what to do with the money. Given how evil the income tax is, perhaps they should use the money to drop income tax rates, even if it’s only a modest fraction of a percent.

The bottom line is this. TSET is a useless luxury funding goofy little animated commercials and creating a crony intergovernmental network, taking credit for tobacco-use reductions in the state that likely would have happened anyway. Appropriately enough, it’s been closed due to its nonessential nature. The COVID-19 epidemic has illustrated just how useless TSET is. 

Hey Legislature and Governor Stitt, let’s have a vote, preferably in November.

Byron Schlomach is 1889 Institute Director and can be contacted at bschlomach@1889institute.org.

The opinions expressed in this blog are those of the author, and do not necessarily reflect the official position of 1889 Institute.

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