Louisiana Senate panel approves dedicating tobacco settlement money for college scholarships

The Senate Finance Committee voted 6-2 to send Senate Bill 53 to the floor for debate after rejecting an amendment that would have steered 30 percent of the tobacco proceeds to need-based scholarships. The committee also approved Senate Bill 52, a companion measure.
The bills by Sen. John Alario, R-Westwego, are a critical part of the budget puzzle, as Gov. Bobby Jindal's 2011-12 spending recommendations already assume that the Legislature will go along with the plan and that statewide voters will give their approval in the fall.
Supporters of the amendment said it has a twofold purpose: to provide a steady financing stream for the Taylor Opportunity Program for Students, which pays in-state college tuition for any qualifying Louisiana high school graduate, and to free up state general-fund dollars that otherwise would be used for TOPS.
The program is costing the state about $130 million this year, but that's projected to climb to $174 million in the upcoming fiscal year because of tuition increases that have either been approved or are in the works.
"A solution is certainly needed to establish the stability of this program," said Phyllis Taylor, whose husband, the late New Orleans oilman Pat Taylor, helped launch the program.
But opponents said the amendment would end up usurping money that otherwise would be used to support health-care programs, charter schools and other programs that currently get a cut of the tobacco proceeds.
"The question is, what do you want to constitutionally protect?" said Sen. Karen Carter Peterson, D-New Orleans, who said she would rather have the money spent on health care.
Louisiana's 1998 agreement with cigarette makers calls for the state to receive $4.6 billion during the first 25 years, spread out in annual payments. Three years later, in 2001, the state elected to sell 60 percent of the income stream to investors for an up-front payment of $1.2 billion, most of which was placed in the Millennium Trust.
Interest earnings from the trust fund, which also receives the remaining 40 percent of the tobacco income stream, are currently spread evenly among three education and health care programs.
Alario's amendment would cap the Millennium Trust at $1.38 billion -- the balance it had at the start of this fiscal year -- and dedicate the future income stream to TOPS.