HARRISBURG — A political tug-of-war could be looming over a settlement that will bring as much as three-quarters of a billion dollars into Pennsylvania.
The state is set to receive anywhere from $516 million to $729 million from Meta, the owner of Facebook and Instagram, over the next ten years as part of a multistate lawsuit.
The settlement directs the money to a fund controlled by the Office of Attorney General, led by Republican Dave Sunday, and allows it to be spent on youth crisis hotlines, after-school or summer programs, youth mental health programming, digital wellness education, other public health initiatives, or additional social media investigations.
However, the settlement clashes with language in the commonwealth’s fiscal code, which directs how money allocated in the state budget is spent. It says that “money received by an agency as a result of a settlement, litigation or an enforcement action shall be deemed funds of the Commonwealth and shall, upon receipt, be deposited into the General Fund.”
The General Fund essentially functions as the commonwealth’s checking account and is largely used by Pennsylvania lawmakers to pay for public education, health insurance, and other human services obligations.
Any influx of cash is significant for lawmakers as they construct Pennsylvania’s budget. The commonwealth is expected to run a $5 billion structural deficit this fiscal year, and the politically divided state legislature has failed to meaningfully tackle the problem by approving new revenue sources or cutting spending.
Lawmakers in both parties told Spotlight PA they want a say in what happens with the settlement money, but didn’t say where they think the money would be best directed.
State Senate Majority Leader Joe Pittman (R., Indiana) said it’s “a bit of an open question” who has the authority to handle the money because past settlements have “taken different trajectories.”
“I would certainly hope and ultimately expect that there will be legislative engagement because it's a huge number,” he said.
State House Appropriations Chair Jordan Harris (D., Philadelphia) told reporters in the Capitol this week that he expects his chamber and Gov. Josh Shapiro’s office to be involved in deciding how the money is spent, though he noted there haven’t been “any firm decisions.”
“I think everybody will have a view and opinion on how we are going to reinvest these resources to the best use of the commonwealth, and that’ll include conversations with the AG,” Harris said. “There's no disconnect there from us.”
Pittman told Spotlight PA in mid-September that his office had met with Sunday’s to discuss what to do with the Meta funds. A spokesperson for state House Majority Leader Matt Bradford (D., Montgomery) said Democrats had not had discussions with the attorney general as of the beginning of October.
Brett Hambright, a spokesperson for Sunday, did not answer a question from Spotlight PA about whether the attorney general’s office has the legal authority to keep and use the money.
Instead, Hambright said in a statement that the office is partaking in “necessary stakeholder outreach that is required with a sudden influx of funds. Transparency and accountability are critical as we move forward to ensure these funds are used to do the most good for those harmed by these platforms and further protect Pennsylvanians.”
Pennsylvania is slated to receive its first payment on Jan. 15 next year. By that point, the legislature could look different. Democrats hope to maintain control of the governor’s mansion, grow their majority in the state House, and flip the Senate on Nov. 3. Should the party achieve all three goals, Republicans would have significantly less power in the Capitol.
Lawmakers have disagreed over what to do with settlement money in the past.
The legislature took about two years to reach a deal to create a special fund for the billions Pennsylvania received from a multistate settlement with major tobacco companies. Since that 2001 legislation was first adopted, lawmakers have amended it to send those dollars out to several health-related programs. As part of the 2017-18 budget, lawmakers tapped into the fund to address the state’s structural deficit.
Pennsylvania has also seen hundreds of millions of dollars from a group of legal settlements involving opioid manufacturers and developers. An independent oversight board, created by Commonwealth Court, decides how to disperse the cash among the state, the 67 counties, and other local governments (its members have routinely operated behind closed doors).
State House Majority Whip Mike Schlossberg (D., Lehigh) told PennLive he supports creating an independent board to oversee the Meta funds. “If we’re going to make sure the dollars are actually spent in the way the settlement intends, we have to make sure we have people watching those dollars,” he said.
The Meta case is one of several efforts by Sunday’s office to crack down on social media companies’ influence over kids. It’s possible Pennsylvania could receive more money from similar lawsuits.
Pittman said he’s against using the Meta funds to create any programs that require recurring funding, given the settlement money is finite — though he noted that lawmakers need to be “organic and flexible” in how they choose to use the funds because of how “dynamic” an issue social media regulation has become.
“My hope is that we'll make use of these dollars to address the very issue and reason the settlement occurred,” Pittman said. “This is a huge issue, and it speaks to what we need to do to get our arms around the development of artificial intelligence, the development of social media, the access to it to minors, and the implications that it has.”
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