Approval of the One Arizona settlement funds distribution agreement which sets forth terms for distributing and spending of opioid settlement funds resulting from the State of Arizona’s proposed settlement agreement with national opioid drug companies.

ADOPT RESOLUTION NO. 2021-2185 APPROVING THE ONE ARIZONA OPIOID DISTRIBUTION SETTLEMENT FUNDS AGREEMENT; PROVIDE AUTHORIZATION FOR THE CITY ATTORNEY AND CITY MANAGER OR HER DESIGNEE TO TAKE ANY AND ALL ACTIONS NECESSARY IN FURTHERANCE OF THIS AGREEMENT; AND PROVIDING FOR AN EFFECTIVE DATE. (Lisa Maxie-Mullins, Assistant City Attorney)
 

The receipt of settlement funds will not require any matching funds or expenditures from the city. Any future settlement amounts received will be budgeted appropriately and utilized as set forth in the agreement to combat the opioid epidemic.

On December 14, 2020, City Council approved the One Arizona Plan Memorandum of Understanding (MOU). The MOU outlined the approach for joint settlement negotiations between the State of Arizona and opioid drug companies. The MOU also included proposed settlement fund allocations among government entities and set forth approved uses after settlement funds were received. The MOU emphasized that less than 100% participation by all Maricopa County cities and towns would reduce the amount of money received by Maricopa County from any global opioid settlement. According to the Arizona Attorney General’s Office (AGO), every county and 90 of the 91 Arizona cities and towns executed the MOU.  

Subsequently, the State of Arizona reached a proposed settlement agreement with several of the opioid drug companies in August 2021. The proposed settlement agreement amount for Arizona is estimated at around $549 million.  In September 2021, the Arizona Attorney General’s Office (AGO) requested that all local governments finalize the distribution agreement and execute the One Arizona Distribution of the Opioid Settlement Funds Agreement (Agreement).

The Agreement sets forth the distribution amounts and the approved uses after settlement funds are received from several opioid drug companies. The Agreement contains terms similar to the terms outlined in the 2020 MOU approved by on Council. The following material terms have not been changed and were included in both the MOU and the current Agreement: 

• Of the $549 million of settlement funds, the State will receive 44% and the local governments will receive 56%.
  • Maricopa County’s Allocation is 57% of the 56% local government allocation.
    • The county’s percentage allocation is based upon the following factors: (a) the amount of opioids shipped to the county (b) number of opioid deaths in the county and (c) number of people who suffer opioid use disorder within the county
  • City of Goodyear allocation of the Maricopa County’s portion is .76%
    • The city’s percentage allocation is based on the city’s historical federal data concerning opioid-related expenditures utilizing certain census data. 
    • This amount could decrease if less than 100% of Maricopa County cities participate in the final settlement distribution.
• The city may utilize the funds to meet locality needs to abate the opioid epidemic in accordance with the approved uses set forth in the agreement.     
• State authorization is not required for local government expenditure of funds, but local governments are required to annually report expenditures. 
• If less than 100% of the cities within Maricopa participate then the funding for the county will be reduced based on a formula outlined in the Agreement.
• All funding will be managed and expended by a Trustee.  
• Any funds received must be used for local and community opioid abatement purposes and programs.  This includes law enforcement expenditures related to the opioid epidemic.
• These funds could be used directly by the city or the city could provide the funding via grants to local organizations that provide drug prevention related services, educational programs, or treatment.
• The city will have to verify and report that funds are being used for approved programs. 

The updated Agreement contains the following modifications (which differ from the 2020 MOU):

• Allows direct pay by the settlement fund administrator to the local government entity
• Clarification regarding payment of attorney fees for outside counsel, which will be taken from the gross proceeds prior to distribution to the State and local governments.  

The approval of this Agreement by enough Arizona counties, cities and towns will enable the proposed $549 million dollar settlement to move forward authorizing the distribution of settlement proceeds to mitigate the negative impacts of the opioid crisis in 2022. The city has not directly participated in any litigation concerning opioid distribution and manufacturing. However, approval of this Agreement will allow the city to receive a settlement payout from opioid drug companies that can be utilized within the city to abate the opioid drug epidemic. If approved, the initial settlement payout may occur within the second quarter of 2022.