|The Attorney General’s Office previously provided cities and towns with a MOU for the One Arizona Plan, which was approved by the Council on December 7, 2020. It is now time to update and finalize the plan, moving to a distribution agreement. The previous MOU was designed to allow the AG and Local Governments to work together to push for greater settlement sums. Importantly, the higher the participation by local governments in the state, the more settlement money goes to the state (and its local governments).
The negotiations between the cities/towns have continued since the MOU and the latest results contain a favorable local/state split. The final version of the agreement the town is asked to approve, gives a much higher percentage to the local governments (56%) and provides for more guaranteed money for the local governments.
To be clear, there have been no settlements yet. The framework is a key step in exploring alternative ways to obtain funds from the defendants by offering peace (i.e., to end the individual lawsuits), in exchange for significant sums from the defendants. There are two good reasons to approve the agreement, including: 1) higher participation brings in more money to the state that will be dedicated to the local governments (i.e., there is a participation incentive) and 2) signing it doesn’t obligate the town to proceed with settlement now, it just preserves the town's right to partake in it, which means signing it is hedging the town's bets, not ending the case.
While the MOU does not specify any particular settlement with any particular defendant, the distributor defendants (Cardinal Health, AmerisourceBergen, and McKesson), along with manufacturer Johnson & Johnson, are “close” to an agreement. Under the proposed allocation model for this deal, Arizona gets about 2.3% of any settlement funds (which roughly equates to the percentage of population). Under the proposed One Arizona MOU deal, hypothetically $26 Billion nationwide, here is a rough breakdown of distribution:
Potential Settlement: $26 Billion
Arizona’s share: $549,000,000
The Local Government Share (“LG share”) is 56% of that = $307,440,000.
That money then gets divided among counties and subdivided to the cities/towns as depicted in Exhibit B and Exhibit C of the MOU.
Exhibit B is what gets allocated to each county
Exhibit C reflects how the money will be allocated among the county and cities/towns therein, if they don’t come to a separate agreement.
Some things to keep in mind:
- These numbers are proposed (non-final).
- The funds must be spent on abatement uses, but Exhibit A is an extensive list and includes criminal justice costs, as well as education, treatment, research, etc. The categories seemed to be broad enough that many of the town expenditures would be covered under these uses.
- Cities and towns would still need to approve settlement agreements with the Distributors and J&J. This is more of a framework for moving forward and not the final action to accomplish settlement.
NOTE: The deadline to approve the One Arizona Distribution of Opioid Settlement Funds Agreement is November 10, 2021. After the agreement is signed, the town will be provided separate settlement agreements which the town will also need to get signed and submitted electronically before any actual payments occur.