Nebraska lawmakers are celebrating 25 years since the state established an official Health Care Cash Fund—a state-managed reserve dedicated to supporting healthcare-related programs across the state.
Created in 2001 through LB692, sponsored by the late former Sen. Dennis Byars of Gage County, the pool takes in dollars from three sources: the Nebraska Tobacco Settlement Trust Fund, excess federal Medicaid funds, and cigarette taxes.
The cash fund has grown significantly since it was established over two decades ago. Its ending balance for fiscal year 2001 exceeded $182 million. Despite yearly ebbs and flows, the fund has grown to nearly $650 million by the end of fiscal year 2025.
A variety of healthcare programs, beyond tobacco-use prevention, are supported by the fund’s flexible dollars. The state’s local Health Departments use received funds to help sustain services, bolster emergency response, and improve access to care. Further uses include—but are not limited to—research funding, respite care, and treatment for mental health and substance use disorders.
Speaker John Arch of La Vista – District 14 (Photo: Nebraska Unicameral Information Office)
While all states entered into the settlement agreement with major tobacco companies in 1998, state lawmakers said Friday that Nebraska was one of few states that prioritized healthcare spending with the funds, as opposed to short term infrastructural investments.
“I applaud the 2001 legislature for having the vision to use these dollars for healthcare,” said Speaker Jon Arch of La Vista. “There was an opportunity to use them for roads or other infrastructure, whatever the general fund might need at the time, but this state chose to use this to improve healthcare… It is visionary.”
Sen. Brad von Gillern of Elkhorn said these funds also provide a return on investment (ROI), purporting that each dollar in research funding can yield up to $2.46 in economic activity. Many of these dollars are matched through federal, private, and philanthropic sources.
“ROI means a lot to me,” said Von Gillern. “I love investing dollars in things that return and when I see the impact that this relatively small fund has had on health care and outcomes in our community, I’m really impressed. These funds attract researchers to come to Nebraska, to work here, to live here. It has had a dramatic multiplying effect.”
As lawmakers grapple this session with a projected $471 million budget shortfall, Von Gillern said he’ll be working with Arch to “do everything we can to protect” the program. KLIN News asked how the deficit may impact the fund; the senator stopped short of ruling out transfers to the general fund.
Senator Brad von Gillern of Elkhorn – District 4 (Photo: Nebraska Unicameral Information Office)
“I think we can safely say that everything is being considered this year,” Von Gillern said. “Everything is being looked at. Everything is being inspected to make sure that those dollars are being spent wisely.”
Recent cuts to federal healthcare programs are likely to challenge lawmakers in 2026, too. Dr. Dele Davies, interim chancellor of the University of Nebraska Medical Center (UNMC), said the fund has helped insulate Nebraska from funding uncertainty.
“This health care cash fund has been a great protection for us in many ways. We’ve already taken budget cuts. We would have had to take more if not for the health care cash fund,” said Dr. Davies. “These funds have allowed us to recruit researchers from all over the world, all over the United States. And the ROI, I would say, has been at least 5-to-1, or more.”
Susan Bockrath, Executive Director of the Nebraska Association of Local Health Directors, told KLIN News that the Health Care Cash Fund is “really a core piece of how health departments make sure that they’ve got the infrastructure in place to do the kind of work that attracts federal and private dollars.”
In fiscal year 2025, over $56 million was distributed from the fund. For fiscal year 2026, those appropriations grew to over $67 million. An interim study cautioned that this, combined with a $100 million transfer from the Tobacco Master Settlement for Project Health, “may affect the long-term sustainability of the fund.”
Nebraska lawmaker and healthcare advocates gather in the state capitol rotunda to celebrate 25 years since the Nebraska Health Care Cash Fund’s founding. (Photo: Chase Porter, KLIN News)
Nebraska Local Health Departments Map (Courtesy Photo)