At a recent legislative committee meeting in Nevada, lawmakers engaged in a heated discussion with officials from the governor’s administration regarding significant gaps in the state’s forthcoming budget. The core issue at hand was whether opioid settlement funds—derived from lawsuits against healthcare companies that contributed to the opioid crisis and intended to help states combat addiction—should be allocated to two counties for a safety net program named Temporary Assistance for Needy Families (TANF). This program is designed to support low-income children and families.
The budget proposal indicates that previous funding for TANF will cease to be available after June 30, 2025. At that time, much of the federal COVID-19 relief funds—initially allocated for various programs, including TANF, which addresses emergency aid, job training, and child care—are expected to have run out.
In light of this impending loss, Governor Joe Lombardo’s budget proposal suggests allocating $5 million in opioid settlement funds to reinforce the TANF program in Nevada’s most populous regions, Clark and Washoe counties. As states enter a challenging budget season, similar dilemmas have arisen nationally.
The influx of federal pandemic relief that previously sustained public health, education, food assistance, and child care is beginning to diminish. Concurrently, actions taken during the Trump administration have called into question the reliability of federal funding for numerous social services and healthcare programs. Additionally, Congressional Republicans have signaled potential cuts to Medicaid, which serves many low-income individuals.
As a result of these funding challenges, many states are forced to seek alternative financing to uphold essential services. The possibility of using opioid settlement money appears enticing. Over $10 billion has been allocated to state and local governments in recent years, with additional billions anticipated over the next decade.
However, advocates for recovery, families impacted by addiction, and legal experts emphasize that these funds are designated specifically for addressing addiction and the crisis of overdoses. While $5 million represents a small fraction of the total opioid settlement funds Nevada has acquired, concerns regarding the precedent it sets are noteworthy. Nevada Assembly Speaker Steve Yeager, a Democrat, expressed this apprehension during the February hearing, questioning the lack of a clear connection between the proposed TANF funding and the opioid crisis.
Richard Whitley, director of the state’s Department of Health and Human Services, countered at the hearing by asserting that the expenditures of settlement dollars for TANF were appropriate. He noted that these funds could support relatives caring for children of substance-abusing parents, thereby addressing a crucial need. Elizabeth Ray, a spokesperson for the Republican governor, echoed this sentiment, stating that the use of these funds aims to preserve family stability and reduce the necessity for foster care placements.
Nonetheless, TANF assistance extends to numerous families in poverty, creating ambiguity about how settlement funds would be strategically directed toward families most affected by substance use.
Similar debates have emerged in other states, such as Connecticut, where the Democratic governor is urging lawmakers to reallocate opioid settlement funds towards previously funded social services. Arizona’s legislature faced criticism for diverting $115 million in settlement money towards the state prison system to mitigate a $1.4 billion budget shortfall.
Ryan Hampton, a national recovery advocate, foresees a growing trend of states creatively utilizing these settlement funds to cover budget gaps. Hampton argued that repurposing these funds constitutes a significant misuse, with potentially severe repercussions. He highlighted that despite recent declines in national overdose deaths, a significant number of Americans continue to succumb to overdoses, and the intended purpose of the funds is to urgently save lives.
While the opioid settlements entail more stringent guidelines than those imposed during the tobacco settlements of the 1990s, advocates remain wary. They are reminded of how states initially allocated tobacco settlement funds for anti-smoking measures but gradually redirected them to cover budget shortfalls, ultimately causing long-term harm.
Nevada and Connecticut have instituted explicit restrictions on the practice of using opioid settlement funds to replace existing funding streams, but state officials maintained that their budget proposals do not consider this.
As federal funding challenges continue, Whitley noted the necessity of relying on settlement dollars as other funding sources diminish. This perspective is supported by some experts, who argue that while it is ideal for settlement funds to supplement existing services, certain safety net programs—although not directly addressing addiction—are vital for individuals grappling with substance use disorders.
As funding for addiction recovery initiatives falters, community organizations are similarly feeling the strain, leading to difficult decisions regarding the allocation of limited settlement resources. Some states have proactively reserved opioid settlement funds for “emergency” or “sustainability” purposes, ensuring that they can support addiction services amid dwindling federal aid.
Advocates, however, including Kristen Pendergrass from the nonprofit Shatterproof, urge states to prioritize their rainy day funds before tapping into opioid settlement resources, emphasizing that these funds represent money awarded specifically to alleviate the public health crisis and save lives.
This article is a product of KFF Health News, a national newsroom committed to producing detailed journalism about health issues in the public interest.
