San Diego County government will get more than $400 million this month to fund health programs.

The county will get the lump sum through a transaction in which it sold its rights to a long-term stream of money from the settlement of a nationwide tobacco lawsuit. The county would have collected more money if it took payments over time, but officials said the upfront infusion will do more good. "This is good news for the county, for people getting improved access to health care," said county Supervisor Ron Roberts. "The benefits of this are enormous." In November 1998, 46 states, including California, negotiated a settlement in which the four major U.S. cigarette manufacturers -- Philip Morris Inc., R.J. Reynolds Tobacco Co., Brown & Williamson Tobacco Corp. and Lorillard Tobacco Co. -- agreed to pay the states about $206 billion over 25 years. California agreed to distribute its share of the settlement to its counties based on population figures. Under that formula, San Diego County was to receive about $945 million over the 25 years. The Board of Supervisors voted in October to collect the money upfront instead of taking annual payments. To do that, the county sold bonds to raise money upfront and bond holders will be paid back with the long-term settlement payments. About $466 million in bonds were sold Dec. 12 and 13 to institutional and individual investors. "They all went, and went pretty fast," said William Kelly, the county's chief financial officer. The county is expected to get the money this month and will invest it in government bonds. About $46 million will be set aside for fees and expenses related to the bond issue. Kelly estimates the interest from the remainder will generate about $27 million a year. That will be used to fund health programs and services. Officials could not provide specific information yesterday on what programs will receive funds. They said that in general, it will go toward programs dealing with mental health, suicide prevention, in-home support for the elderly and disabled, HIV/AIDS prevention, family violence prevention, tobacco education, chronic disease treatment, alcohol and drug abuse prevention and reimbursements for medical expenses of about 200,000 poor people. The bond sale was welcomed by Sandra McBrayer, chief executive officer of an advocacy group called The Children's Initiative and vice chairwoman of a county commission that parcels out state tobacco tax funds to local agencies. "There are families and children with needs today," McBrayer said. "It's not fair to turn to them and say, 'This is what you'll get later.' Who knows what's going to be in 25 years?" County officials said selling the bonds made sense, noting that inflation would eat up the value of the settlement over 25 years and that tobacco companies could go out of business. Also, by selling the bonds and getting money from investors, the county will not be relying on the success of tobacco companies to collect future payments. "If you think about it, if you're a municipality and you have health services you fund, do you really want to be in a business where you're hoping tobacco sales are going really well?" said Neil Rossi, chief deputy treasurer. San Diego County is not alone in selling its tobacco settlement rights. Sacramento County sold $190 million in bonds in August. Municipalities in Alabama, New York, Louisiana and South Carolina also sold tobacco bonds in 2001.

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