15% Litigating Subdivision Account Share
Where do these monies live?
Fifteen percent (15%) of Pennsylvania’s opioid settlement funds are deposited into the Pennsylvania Opioid Misuse and Addiction Abatement Trust’s (PA Abatement Trust) Litigating Subdivision Account,[1] then distributed to participating litigating subdivisions, who are defined to include counties, district attorneys, cities, townships, boroughs, school districts, and municipal authorities that filed their opioid litigation by July 2021.[2]
A quarter of these funds — or 3.75% of the statewide total — is allocated to Delaware County, Carbon County, and the City of Philadelphia for their “substantial work to advance litigation against the settling defendants.”[3]
Participating district attorneys (DAs) will receive a share based on half of the population of the county that they serve.[4]
The remaining funds are distributed to participating litigating subdivisions by population,[5] subject to certain minimum payment amounts.[6]
What can this share be spent on?
With limited exceptions,[7] subdivisions must spend their shares on the uses described in the national settlement agreement’s (non-exhaustive) Exhibit E,[8] which includes prevention, harm reduction, treatment, recovery, and other strategies.
Any beneficiary of the Trust may also petition the court overseeing the Trust to “allow spending on an item of abatement not contained in Exhibit E, provided such spending is deemed by the Court to reduce incidence or rate of opioid addiction and overdose deaths in the Commonwealth.”[9]
The PA Abatement Trust has indicated in an FAQ that “any type of policing activity would not be considered allowable spending.”[10]
Who ultimately decides how to spend this share (and how)?
Local officials decide autonomously (but must certify proper uses). Counties, participating DAs, and other participating subdivisions (including cities, townships, boroughs, school districts, and municipal authorities) will ultimately decide for themselves how to spend their monies on Exhibit E uses, whether directly or as grants to organizations.[11] However, each must annually certify that their shares will be spent on approved abatement uses in order to receive their funds.[12] County recipients of funds are also required to report expenditures to the PA Abatement Trust and encouraged to spend their funds “equitably across the County.”[13]
Local governments’ certifications and reports of spend are reviewed by the PA Abatement Trust’s Board of Trustees,[14] which governs the trust.[15] The Board may reduce or withhold payments from local governments that use settlement funds for non-approved purposes or fail to comply with annual reporting requirements.[16] The Board provides technical assistance to Trust recipients but is “not specifically authorized to provide advance input to recipients of distributions of Trust funds.”[17]
Monies from the litigating subdivision account share must be spent within 18 months of receipt unless dedicated to a multi-year capital project.[18]
Is this share attached to an explicit bar against supplantation?
No, supplantation is not prohibited. Like most states, Pennsylvania does not explicitly prohibit supplantation uses of its opioid settlement funds. This means that the Litigating Subdivision Account share may be spent in ways that replace (or “supplant”) — rather than supplement — existing resources. However, the Pennsylvania Opioid Misuse and Addiction Abatement Trust has published guidance describing counties’ uses of settlement funds to pay for services that a county is already required to provide as impermissible uses of their shares.[19]
Can I see how this share has been spent?
Eventually (public reporting required for counties and Philadelphia only). Counties and the City of Philadelphia (i.e., not all litigating subdivisions, which defined to include all participating DAs, cities, townships, boroughs, school districts, and municipal authorities) must report expenditures to the PA Abatement Trust,[20] and the Trust must publish an “annual report and accounting.”[21] Bookmark the Trust’s Payment, Spending & Reporting page and view its interim reporting.
Visit OpioidSettlementTracker.com’s Expenditure Report Tracker for an updated collection of states’ and localities’ available expenditure reports.
What else should I know?
Not applicable.
Citations
Pennsylvania Opioid Misuse and Addiction Abatement Trust Court Order (Allocation Order) Para. II.A(1)(c) (“The Litigating Subdivision Account shall consist of Fifteen (15) % of the Trust Funds to be distributed and shall be paid directly to the Litigating Subdivisions in the manner described in the Allocation Section at ¶VII(B) below”) and Para. VII.B (“The funds designated for the Litigating Subdivision Account shall be distributed directly to participating Litigating Subdivisions based on population according to the 2020 Census…”). ↑
Allocation Order Para. III.I (defining “[l]itigating subdivisions”) and Para. III.G (defining “[c]ounty subdivisions”). ↑
Allocation Order Para. VII.B(1) (these counties are “[i]n the case of the Distributors and J&J Settlements”). ↑
Allocation Order Para. VII.B(2). Funds allocated to a district attorney that is not participating in the settlement agreements are redistributed to participating district attorneys. Para. VII.D. ↑
Allocation Order Para. VII.B(4)(a)-(d). These minimum payment amounts are (a) $100,000 for subdivisions with a population of less than 10,000; (b) $250,000 for subdivisions with a population between 10,000 and 50,000; (c) $500,000 for subdivisions with a population between 50,001 and 100,000; and (d) $1 million for subdivisions with populations greater than 100,000. These minimum payments pertain to monies from the Distributor and Janssen settlements. Litigating special districts will receive a share based on 10% of the population they serve. Allocation Order Para. VII.B(3). Notably, the Allocation Order does not otherwise define “Litigating Special Districts.” ↑
Allocation Order Para. II.A(1) (“After the payment by the Trust of Attorneys’ Fees and Expenses as described in Section IX, Exhibit 4 … , the Trust Funds shall be divided into three accounts: The Commonwealth Account, the County Abatement Account and the Litigating Subdivision Account”), Para. V.D(9) (“The Board of Trustees may use up to 1% of the Trust funds to retain such persons or firms to manage the investment, and distributions”), and Exhibit 4 Para. I.A (“The amount of the Pennsylvania Opioid Fee Fund shall not exceed 6.6% of all base and incentive payments governmental entities will receive”). See also Report to the Commonwealth Court of Pennsylvania filed November 7, 2023. Pennsylvania Opioid Misuse and Addiction Abatement Trust (PA Abatement Trust). Accessed August 25, 2024. (“Distributions for attorneys’ fees and expenses under Paragraph IX and Exhibit 4 of the Trust Order totaled $28,167,022”; “The Board plans to use income generated by the Trust Funds to pay for administrative services needed for Trust operations. No fees were paid to Wilmington Trust during the Reporting Period”) and Distributor Settlement Agreement I.SS (“Exhibit E provides a non-exhaustive list of expenditures that qualify as being paid for Opioid Remediation. Qualifying expenditures may include reasonable related administrative expenses”). ↑
Allocation Order Para. V.B (“The funds obtained and ultimately paid by the Trust shall be distributed to the Commonwealth and its Participating Subdivisions only for the purposes set forth in Exhibit E to the Settlements and the Trust shall review expenditures by subdivisions which receive Trust Funds to insure that such spending was consistent with Exhibit E. Exhibit E is incorporated into this Order by reference and all spending of funds allocated by this Order shall be consistent with the requirements of Exhibit E”) and Para. III.K (defining “Participating Subdivisions” to include counties, DAs, and county subdivisions of “more than 10,000 in population”). See also Report to the Commonwealth Court of Pennsylvania filed November 7, 2023. PA Abatement Trust. Accessed August 24, 2024 (“Paragraph V(B) restricts the purposes for which funds distributed by the Trust to Distributees may be used. This paragraph limits use of distributed funds ‘only for the purposes set forth in Exhibit E to the Settlements.’ Exhibit E is one of the lettered exhibits attached to both the J&J Respondents’ and Distributor Respondents’ Settlement Agreements”).
Settlements.” Exhibit E is one of the lettered exhibits attached to both the J&J Respondents’ and Distributor Respondents’ Settlement Agreements”). ↑
Frequently Asked Questions. PA Abatement Trust. Accessed August 25, 2024 (see, e.g., response to the question, “Can a small portion of settlement funds be used to support a county Drug Task Force?”). ↑
See, e.g., Nicole Leonard. Philadelphia awards bulk of $3 million in opioid settlement grants to nonprofits working in North Philly and Kensington. WHYY. June 13, 2024. Accessed August 25, 2024. ↑
Allocation Order Para. V.D(4) (providing that “by November 15 of each year, in order for funds to be paid from the Litigating Subdivision Account, each Litigating Subdivision shall submit to the Trust the certification attached as Exhibit 3 and list the payees and respective addresses to which the County Abatement Check shall be sent in accordance with ¶ (VII)(B). Multiple Litigating Subdivisions may file joint certifications for some or all of the funds allocated to them”) and Allocation Order Exhibit 3 (requiring certification that funds from the Litigating Subdivision Account “will be used in a manner consistent with the Abatement uses described in Exhibit E”). See also Allocation Order Para. VIII.B (“The Trust shall not pay any Participating Subdivision in any year in which the subdivision fails to submit a certification by December 10 of the year in which the Trust has funds to distribute”). ↑
Allocation Order Para. V.D(11) (Each County or the Health Department of the city of the First Class shall submit a report to the Board of Trustees by March 15 beginning in the year 2023 year, showing the actual expenditures of such funds and the amount of funds received but not spent by the close of the previous calendar year. Funds should be spent equitably across the County in a way that most effectively abates the effects of the Opioid misuse and addiction within the judgment of the County Commissioners, County Executive and County Council. The Board of Trustees shall set the requirements of such reporting, with input from qualified academic researchers”). ↑
Allocation Order Para. VI.A(2)-(3) (“The Trust shall have the following responsibilities … “[r]eviewing certifications in accordance with the terms specified by this document” and “[r]eviewing annual reports on spending to ensure compliance with the settlement terms”). ↑
Allocation Order Para. V.C (“The Trust shall be governed by a Board of Trustees”). ↑
Allocation Order Para. X.C(1) (requiring the PA Abatement Trust Board of Trustees to withhold counties’ or litigating subdivisions’ payments for the next year if they fail to properly spend their shares or fail to submit their annual reports). A local government has up to 3 months to “cure” any misspending or the failure to submit a report of spending. ↑
Requests for Technical Assistance and Trust Inquiries. PA Abatement Trust. Accessed August 25, 2024. ↑
Allocation Order Para. V.D(10) (“All funds must be spent within 18 months of receipt by the recipient unless a Subdivision elects to use such funds for a multi-year capital project in accordance with Exhibit E of Settlements”). The use of “subdivision” here is interpreted by this Guide as a general reference to local government beneficiaries of the Trust. ↑
See, e.g., Frequently Asked Questions. PA Opioid Misuse and Addiction Abatement Trust. Accessed September 1, 2024 (see “Can settlement funds be used to partially fund an assistant public defender? Since the services of an assistant public defender are required to be provided by the counties, the costs associated with their position would not be considered an abatement strategy”). ↑
Allocation Order Para. V.D(11) (Each County or the Health Department of the city of the First Class shall submit a report to the Board of Trustees by March 15 beginning in the year 2023 year, showing the actual expenditures of such funds and the amount of funds received but not spent by the close of the previous calendar year. Funds should be spent equitably across the County in a way that most effectively abates the effects of the Opioid misuse and addiction within the judgment of the County Commissioners, County Executive and County Council. The Board of Trustees shall set the requirements of such reporting, with input from qualified academic researchers”). ↑
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