How California Local Governments Are Using Opioid Settlement Payments

Sonja Verdugo lost her husband to an opioid overdose last year. She regularly delivers medical supplies to drug users living—and dying—on the streets of Los Angeles. And she advocates at Los Angeles City Hall for policies to address addiction and homelessness.

Yet Verdugo didn’t know that hundreds of millions of dollars are flowing into California communities each year to combat the opioid crisis. These payments began in 2022 and will continue through 2038.

The money comes from pharmaceutical companies that made, distributed or sold prescription opioid painkillers and that agreed to pay about $50 billion nationwide to settle lawsuits over their role in the overdose epidemic. Although a recent Supreme Court decision a settlement overthrown In addition to OxyContin maker Purdue Pharma, many other companies have already started paying out and will continue to do so for years to come.

California, the state with the most population, is about to more than $4 billion.

“You can walk down the street and every corner you see someone who's addicted — I mean, it's just everywhere,” Verdugo said. “And I've never heard of the funds. And that's crazy to me.”

Much of this windfall has been shrouded in secrecy across the country, with many jurisdictions offering little transparency about how they spend the money, despite repeated questions from people in recovery and families who have lost loved ones to addiction.

Meanwhile, there is a lot of jockeying over how the money should be used. Companies lobby for spending on products ranging from lockable medicine bottles to full-body scanners to screen people entering prisons. Local officials often advocate for the sectors they represent, whether it’s treatment, prevention or harm reduction. And some governments use it to close budget deficits.

In California, local governments must report how they spend the settlement funds to the state Department of Health Care Services, but there is no requirement that the reports be made public.

KFF Health News obtained copies of the documents through a public records request and is now making available for the first time 265 local government spending reports for the 2022-23 budget year. These are the most recent reports filed.

The reports provide a snapshot of initial spending priorities and the tensions that arose.

Naloxone an early winner

As of June 2023, the majority of opioid settlement funds administered by California cities and counties — more than $200 million — had not been spent, the reports show. It's a theme resonance throughout the country while the officials take time to deliberate.

The city And district The city of Los Angeles accounted for nearly a fifth of the total unspent money, nearly $39 million. Since the report was filed, officials said they have begun reallocating the money to recovery housing and programs to connect homeless people with residential addiction treatment.

Among local governments that did use the money in the first fiscal year, the most popular item of expenditure was naloxone, a drug that reverses opioid overdoses and is often known by the brand name Narcan. The drug accounted for more than $2 million in spending across 19 projects.

One such project was in Union City, in the San Francisco Bay Area. The community of about 72,000 residents had five suspected fentanyl overdosestwo of which were fatal, within 24 hours in September.

The money from the opioid settlement was “priceless,” said Corina Hahn, the city’s director of community and recreational services. said in her report“Having these resources available allowed us to educate, train and distribute the Narcan kits to parents, youth and school staff.”

Union City purchased 500 kits, each containing two doses of naloxone. The kits cost about $13,500, with another $56,000 earmarked for similar projects, including backpacks containing Narcan kits and training materials for high school students.

Union City also plans to expand its homeless outreach to fund drug education and recovery services, including addiction counseling.

According to Verdugo, the Los Angeles attorney, these kinds of lifesaving services are desperately needed as the number of people living on the streets grows.

She lost her husband of 46, Jesse Baumgartner, in June 2023 to an addiction that began after he was prescribed painkillers for a high school wrestling injury. He tried to kick his habit with methadone for six years, but each time prescribers lowered his dosage, cravings drove him back to illegal drugs.

“It was just a horrible roller coaster that he couldn't get off of,” Verdugo said.

A woman holds a framed photo of a man and a woman

Sonja Verdugo lost her 46-year-old husband, Jesse Baumgartner, to complications from opioid addiction in June 2023. She is now a community organizer for Ground Game LA.

(Arlene Mejorado / For KFF Health News)

The couple had been homeless for 4½ years and had been living in stable housing for about two years.

Fentanyl use, particularly among the homeless, “is just rampant,” she said. People are sometimes unknowingly exposed to the cheap, highly addictive substance when it’s mixed with something else.

“Once they use it, it's like there's no going back,” said Verdugo, who works as a community organizer for Ground game LA.

That's why she leaves boxes of naloxone at homeless camps in the hopes of saving lives.

“They are definitely taking advantage of it because it is really needed now. They can't wait for an ambulance to come,” she said.

Cities pull back on law enforcement spending

In contrast, the cities of Irvine And Riverside stated plans to prioritize law enforcement by purchasing portable drug analyzersalthough neither city did so in its first budget year, 2022-23. Their tendency mirrored patterns elsewhere in the country, with millions in settlement funds who flow into police stations and prisons.

But such uses of the money have sparked controversy, and both cities have backed out of purchasing the drug analyzer after the Department of Health Care Services issued rules that opioid settlement funds may not be used for certain law enforcement actions. The rules specifically excluded “evidence collection equipment for prosecution, such as the TruNarc Handheld Narcotics Analyzer.”

In Hawthorne, the police department had already spent about $25,000 in settlement money on an initial installment to purchase 80 BolaWraps, devices that shoot Kevlar cables to wrap someone's limbs or torso.

After the state declared BolaWraps not an allowable expense, the city indicated it would find other sources of funding to pay the remaining installments.

Santa Rosa, in California's wine country, nearly $30,000 spent about the well-being and support of police officers.

Thanks to the funds, the police were able to contracted welfare coordinator from a part-time to a full-time position, and to purchase a mobile machine to measure electrical activity in the brain, said Sgt. Patricia Seffens, a spokeswoman.

The goal is to deploy the technology to police officers to “help assess the traumatic impact of responding to increasing overdose calls,” Seffens said in an email.

In Dublin, east of San Francisco, officials are using part of their $62,000 settlement for a DARE program.

DARE, which stands for Education on resistance to drug abuseis a series of lessons taught in schools by police officers to encourage students to avoid drugs. It was originally developed during the Campaign 'Just Say No' in 1980.

Research has shown inconsistent results from the program and no long term effects about drug use, leading many researchers to dismiss it as “ineffective.”

But on its website, DARE cites studies since the program was updated in 2009 showing that “a positive effect“on fifth graders and”statistically significant reductions“with drinking and smoking approximately four months after completing the program.

“When the DARE program first came out, it looked very different than it does now,” said Dublin Police Chief Nate Schmidt.

Schmidt said the additional money from the settlement will be used to distribute naloxone to residents and to stock it in schools and municipal facilities.

Other local governments in California spent modest amounts on a wide range of addiction-related measures. Ukiah, in Mendocino County, north of San Francisco, $11,000 spent for a new heating and air conditioning system for a local drug treatment center. Orange And Saint Mateo counties spent settlement funds in part on medication-assisted treatment for people in their jails. The city of Oceanside $16,000 spent to display drug prevention art and videos created by high school students in local movie theaters, public spaces, and on buses and taxis.

The Health Ministry said it plans to publish a national report on how the funds have been spent, as well as reports from individual cities and counties, by the end of the year.

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