Friday, February 20, 2015
Ind. Gov't. - "When States Win Lawsuits, Where Does the Money Go?"
In this long Feb. 4th post, the ILB asked "What will become of Indiana's $21.5 million share of the S&P settlement?"
In answer to a question directed to the AG's public information officer about how much of the S&P settlement would go to the general fund and specifically how would the balance be distributed, the ILB received a response that included this language: "Specific allocations of the remaining balance will be determined consistent with the parameters of the settlement and taking into account claims made by the securities and consumer protection divisions based on their involvement in the settlement." My conclusion:
It is [still] not clear to the ILB how and where settlements (other than the tobacco settlement - see IC 4-12-4) are reflected on the Indiana books, and who has authority to make the decisions.I'd like to say a lot of people expressed interest in the post, and in finding out the answers, but that was not the case.
But yesterday, Feb. 19th, Pew's Stateline posted an article by Jeffrey Stinson, titled "When States Win Lawsuits, Where Does the Money Go?"
It is a long, interesting story, but with no clear answers for Indiana. And there are no details as to whether some other states have specific statutory guidelines (other than for the tobacco fund), or whether there are provisions requiring, for instance, that settlements go to the general fund, to be distributed by the general assembly of the state via the appropriation process. Here is the section of the Pew story headed "Where the Money Goes":
Attorneys general usually keep some settlement money to cover the costs of cases and to help finance future litigation. But distribution of damage recoveries or awards can be set by law, such as reimbursing Medicaid for fraud.
Half the S&P settlement, $687.5 million, will go to the federal government as a penalty. The other half was divided among the states and the District, based on their damages and costs in litigating.
Some states will pay back parties directly damaged by the ratings agency’s practices. That’s the first rule of thumb in distributing money: Try to compensate damaged parties even if you cannot make them whole.
California, for instance, will send $176 million of its $210 million share to the California Public Employees’ Retirement System (CalPERS), which had invested in some of the toxic securities. CalPERS also will get another $125 million from the settlement of its separate suit against S&P.
Washington state will use $3 million of its $21.5 million share to help victims of the mortgage crisis. The bulk, $18 million, will go to the state’s general fund. Democratic Attorney General Bob Ferguson’s office said that S&P’s actions harmed Washington’s economy and ultimately cost the state tax revenue.
Missouri will put its $21.5 million in the state general fund for legislators to decide how to spend it. The legislatures in Colorado, Delaware and Idaho, along with the District city council, will largely determine how their shares will be disbursed.
Other states will allocate their money in a variety of ways:
In many states, attorneys general have some say in where the money goes, though legislatures often have final word when it’s not earmarked by law or when it’s impractical to identify and reimburse damaged parties.
- In Illinois, the majority of its $52.5 million share will go to the state’s beleaguered public pension system.
- Iowa will send $20 million of its $21.5 million share to seven public employee retirement funds. The attorney general’s litigation fund will get $500,000, and $1 million will go to the state’s Insurance Division for future securities enforcement efforts.
- Maine’s $21.5 million share will go to consumer protection and education efforts.
In Arizona, Republican Attorney General Mark Brnovich’s office said that he, Republican Gov. Doug Ducey and legislative leaders will figure out how to distribute the state’s $21.5 million share among children, family, seniors and public safety programs.
In North Carolina, Democratic Attorney General Roy Cooper’s office said most of the state’s $21.5 million share will go to schools. But he’s asking that some go to college scholarships for students who stay in the state to teach and to retain scientists at the state’s crime lab.
Posted by Marcia Oddi on February 20, 2015 09:42 AM
Posted to Indiana Government