In addition to the state’s other fiscal problems, Louisiana now may have to repay, in short order, millions of dollars received in error from multi-billion dollar settlement with cigarette manufacturers.
In letter delivered late Thursday, Attorney General Buddy Caldwell informed top state officials that because of an accounting error, Louisiana was overpaid and may be on the hook for about $17 million – “although there has not yet been a final calculation.”
The underpaid states cannot wait until next year, meaning Louisiana will be expected to reimbursed the overpaid amount, the letter said.
PricewaterhouseCoopers, the international accounting firm headquartered in London, “made significant errors in determining the 2015 annual” payments from the Master Settlement Agreement into which tobacco companies pay each year as part of a deal to end lawsuits filed by the states in the 1990s over health problems the caused by cigarette smoking. PricewaterhouseCoopers, or PwC, is tasked with calculating annual payments to the states.
“Specifically, PwC appears to have underpaid approximately half the states and overpaid the remaining half. Louisiana is among those states receiving an overpayment,” Caldwell stated in the letter written by Assistant Attorney General Gol Sheikhivigeh Hannaman.
The letter was officially sent to Commissioner of Administration Kristy Nichols and State Treasurer John N. Kennedy, and copied to eight other top state officials.
Neither Nichols nor Kennedy had seen letter, which was released after office hours.
Louisiana should have received $138.3 million as its share of the tobacco settlement on April 15 and April 17. The state actually got $155.6 million.
Because the state sold 60 percent of the settlement for a cash payment in 2001, about $93.4 million was sent directly to repay that bond. The remaining portion of the 2015 payment, about $62.2 million, was electronically transferred to Treasurer Kennedy. Of that amount, about $46.7 million is deposited with the Millennium Trust to help pay for TOPS, the popular scholarship that covers tuition in state colleges and universities for qualified students. The rest went into the Louisiana Fund.
The news comes as legislators are being pushed by the Jindal administration to sell the remainder of the tobacco settlement fund for about $750 million.