Agency Wounded in Battle Over Anti-Tobacco Funds

Northlich Lays Off 27 After Lawmakers Seize Nonprofit's Endowment

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COLUMBUS, Ohio (AdAge.com) -- Ohio has dismantled a foundation that paid for a statewide anti-smoking campaign, prompting the advertising agency that handled the account to lay off 27 employees May 5.

Northlich, Cincinnati, has handled the creative and media efforts for the Ohio Tobacco Prevention Foundation since 2002, winning a review against other shops in late 2007.

"It's a tragedy that such a successful program may not continue," Northlich CEO Kathy Selker said in a statement. "I can't begin to express the depth of the personal and professional commitments our people made. ... When you know that 40% fewer teens smoke today than when we began this program, you know we've made a true difference."

Digging for dollars
As job losses mount in Ohio, legislators raided the foundation's coffers to find extra cash to fund a $1.5 billion economic-stimulus package. Lawmakers took $230 million of the $270 million in the foundation's endowment. Just $40 million will be left to fund anti-smoking efforts in the state, and any efforts will now be controlled by the Ohio Department of Health. State officials estimate that after meeting contractual obligations for 2008, less than $25 million will be available for anti-tobacco programs.

The dismantling of the foundation marks the end of a protracted and ugly feud over the last month between state legislators and foundation officials.

In what The Columbus Dispatch called a "huge miscalculation," the foundation even tried to keep lawmakers' hands off the money by transferring the cash to the coffers of the Campaign for Tobacco-Free Kids, a nonprofit based in Washington.

Ohio lawmakers reacted swiftly and angrily, passing a law to confiscate the money. The foundation fought back, suing the state and sparking a court battle. A judge then froze the funding. The clash ended when lawmakers simply passed a law to disband the foundation's operations and dismiss its staff of 17.

Final blow
The battle's denouement also marks the end to what had been a slow drain over the years of what was to be a $1.2 billion endowment created by Ohio's share of the national tobacco litigation settlement.

Since Ohio lawmakers created the foundation in 2000, there have been frequent raids on the cash totaling $560 million to plug various holes in the state budget.

Without the grabs for cash by lawmakers, anti-smoking campaigns might have run indefinitely in the state, where 18,600 people die from tobacco use each year.

Northlich's 2008 contract with the foundation included $13 million to fund "The Stand" campaign, which consisted mostly of billboard and TV ads. The rest of the money was spent on a quit line and counseling programs managed by the foundation.

Foundation officials issued a statement that emphasized the success of its program, claiming they have led to a 40% decline in smoking rates among youth and a 15% decline among adults. It called the tobacco industry "a formidable opponent" that spends "$724 million a year in Ohio alone to market products that kill Ohioans."