Over the next two decades, Arizona is in line to receive a transformational pipeline of funds to combat the opioid crisis. It is important that leaders in the Grand Canyon state don’t squander this opportunity.
A series of nationwide opioid settlement agreements reached between state governments and pharmaceutical manufacturers, distributors, and pharmacies, has left Arizona in line to receive more than $1.1 billion dollars. This is a lot of money, to be sure, but similarly large master settlements in the past – think tobacco and asbestos – resulted in missed opportunities where the funds were used to pay for general budget obligations instead of to help with the abatement of the underlying issue.
In order to prevent the same mistakes from happening again, the terms of these settlements rested sole authority with state Attorneys General to distribute the funds and required that they be used for combatting the opioid crisis. It was concerning, and a bit disheartening then, to see the state legislature in the most recently approved budget direct the first $115 million dollars in opioid settlement funds it received to the Arizona Department of Corrections, Rehabilitation and Reentry (ADCRR) over the objections of Attorney General Kris Mayes.
While these funds have supposedly been earmarked for drug rehabilitation in the state’s prisons, there are fears that legislators have merely engaged in a “sweeping” of the funds to help balance the $1.4 billion deficit they faced in the most recent budget. Earmarking some of these funds for opioid abuse abatement in prisons may be helpful, but directing $115 million in opioid relief money would seem to be overkill for an agency that only requested $160 million in operating funds for FY 2025. The Agency will likely have a difficult time absorbing such a large injection of capital and administering it properly. In any event, this will probably not allow for the most efficient use of resources and may lead to waste, fraud, or abuse.
Given these concerns, Attorney General Mayes sued to stop the sweep, accusing the legislature and Governor Katie Hobbs of illegally using settlement funds to backfill budget holes. Among her concerns was the fact that the terms of the settlement dictate that at least 85% of funds must be spent on authorized uses. Failure to do so, she continued, would jeopardize future settlement payments and could allow for the claw back of some or all of what has been paid out to date, leaving “nothing for the poor epidemic’s victims.”
Surprisingly, just days after a temporary restraining order was issued in the case, a Maricopa County judge ruled that the funds could be spent as budgeted. His reasoning? No evidence yet existed that the money would be used in ways that conflicted with the settlement agreement. That may be a technical win, but it is hardly a ringing endorsement.
How this bodes for the viability of future settlement payments is yet to be seen. The underlying budget bill states that “the state department of corrections shall use the monies only for past and current department costs for care, treatment, programs and other expenditures for individuals with opioid use disorder.” But Mayes, for her part, “will be closely monitoring each penny of spending by ADCRR” as she believes that “this move in a very real way puts at risk future settlement payments.”
The Arizona State Legislature, Governor Hobbs and now the courts are standing behind the decision to direct these funds to the prison system. But regardless of the legality of this decision it is hard not to see how much of this money could have been better spent elsewhere and on programs that may have benefitted the general public more broadly.
In the coming years it may be wise for the Governor and the legislature to consider using subsequent tranches of settlement funds to support drug rehabilitation and diversionary programs that would help curtail drug abuse before incarceration, instead of engaging in an apparent sleight of hand to plug budget holes. It may also behoove our leaders to take a portion of these funds and direct them towards rural counties struggling with the most severe drug problems in their communities. Only through such strategic allocations can Arizona truly maximize the impact of this historic settlement and make meaningful progress in combating the opioid crisis that has devastated so many of its communities.
Lori Klein is a former Arizona State Senator who previously was a member on the Committee on Appropriations and chaired the Subcommittee on Healthcare.
