Appeals Court Approves Transfer of Ohio Anti-Smoking Funds

 At the end of 2009 the 10th District Court overturned a trial judge's ruling last August that blocked state leaders from liquidating the Ohio Tobacco Use Prevention and Control Endowment Fund. At stake in the litigation was use of money the state received from a settlement with national tobacco product manufacturers. This ruling is subject to a potential appeal to the Ohio Supreme Court. Appellate judges said in their 3-0 opinion that the General Assembly retains its power to legislate with respect to custodial accounts such as the endowment fund unless the accounts have specifically been posted off-limits through a constitutional amendment. 

The appellate panel said that while no Ohio court has directly addressed the issue, case law from at least one other jurisdiction confirms that a state legislature cannot create an irrevocable public trust. The General Assembly initially diverted the tobacco money in 2008 for high-tech industrial development as part of a $1.57 billion state economic stimulus plan. The money was subsequently earmarked for various health care initiatives in the current Medicaid budget. When state leaders agreed last year to move the money, the tobacco foundation balked. It tried to transfer about $190 million to the American Legacy Foundation, a group that seeks to counter smoking and tobacco use. State officials responded by eliminating the foundation and moving anti-smoking efforts to the Ohio Department of Health. The 10th District on Thursday agreed with the trial judge that the contract between American Legacy and the state foundation was not valid or enforceable. The American Legacy Foundation plans to move quickly to determine whether or not to seek an Ohio Supreme Court review of a ruling.