LANSING – Michigan, and the other 49 states, are moving into the 10th year of the master settlement agreement that allocates money from the nation’s tobacco companies to help states cover some of the costs of tobacco-related illness. And there is still a push in Michigan to have more of those funds go to tobacco-related services.

Michigan collected $2.65 billion from the tobacco settlement between fiscal year and , with the largest portion of that going to the Michigan Merit Award ($1.14 billion). Health care programs have received $829.3 million and economic development programs $268.6 million. Some $415.9 million has been used to balance prior budgets.

The payments have averaged $270 million, and administration officials expect that to continue. But 24.11 percent of each year’s payment has been sold to cover the 21st Century Jobs Fund.

Some groups would like to see more future revenue from the settlement spent on health care programs. But higher education officials said the money has been helpful for reaching the governor’s goals of graduating more people ready for high-tech jobs.

Robert Glandon, executive director of the Michigan Public Health Association, said the state’s ranking in numbers of smokers should be sufficient reason to spend more on smoking cessation programs.

“We’re not leading in this,” he said. “We’re about 23 states behind.”

He said the state should be spending about 9 percent of its combined tobacco settlement and tobacco tax revenues on smoking cessation programs to meet the targets set for the state by the Centers for Disease Control and Prevention.

Mike LaFaive, director of the Morey Fiscal Policy Initiative for the Mackinac Center for Public Policy, said the money would be better used on health care programs given the dramatic rise in costs for those services.

“As long as the master settlement money is going to roll in and be used for something, it should be used for something related to the cost of smoking,” LaFaive said.

He said the state is losing opportunity cost by putting the money into education when health care costs are rising faster. But he also argued that those receiving the education, not the state, should be financing it.

The Mackinac Center has also argued for ending the state’s economic development programs, and he called the programs supported by the tobacco settle “silly.”

But Michael Boulus, executive director of the Presidents Council, State Universities of Michigan, said the funding from the tobacco settlement is helping to make school affordable for more students.

“We’re obviously very pleased from a university and a student perspective that a significant portion of the money is being earmarked for financial aid,” Boulus said.

Mike Hansen, executive director of the Michigan Community College Association, said among his schools as many as 10 percent of students rely on the funds to help with their college expenses.

“It’s a fairly significant program,” Hansen said. “There are a lot of students in that lower middle class where they can’t take advantage of the Pell grants.”

Boulus also argued that voters had rejected a ballot measure to direct the tobacco funds to health care programs.

Hansen said he would like to see ways for students to have more of the funding up front rather than having to find ways to finance school until they receive the state funds.

Boulus said the university presidents would like to see the state consolidate the Michigan Merit Award and its other financial aid programs into a single program. “We probably need to look at our entire financial aid picture, look at a way of blending the money,” he said.

Education saw the most money from the tobacco funds in , at $225.1 million. The smallest amount for education was in , when only $90.5 million went to higher education. The lion’s share of that money was the Michigan Merit Award/Michigan Promise scholarships. But the money also covers administration costs for the scholarship program, as well as the Tuition Incentive Program, the Michigan Education Savings Plan and, since , a general payment to higher education.

Only in did health care account for the largest portion of the settlement funds at $173.8 million, 61.3 percent, with most of that, $142.6 million, propping up the Medicaid budget. That was also the largest health care appropriation from the funds.

The smallest for health care was the first year, when only $20.2 million, 8.5 percent, was spent mostly on long-term and aged care initiatives.

Tobacco settlement funds helped to balance the budget ($165.9 million) and the budget ($64 million). FY also saw a small, $7 million, transfer to the general fund.

The largest payment from the settlement was in , when the state took in $472.1 million. The $180.9 million in was the smallest payment so far.

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