The Children First Trust Fund (CFTF) was initiated in the mid 1990's by a group of advocates and legislators who wanted to improve the lives of children in Alabama. Efforts focused on increasing cigarette taxes to fund a wide array of needed programs and services. For several years the Children First legislation was introduced but not passed, each year gaining more credibility and supporters. During the same period, negotiations were being conducted between tobacco companies and the states to settle lawsuits stemming from the health costs of smoking. At the end of the legislative session in 1998, any potential tobacco settlement funds were linked to Children First. Later that year, the landmark agreement between the states and big tobacco companies was reached and settlement dollars began to come to the state in late 2000.
The 21st Century Fund was set up to receive the settlement and distribute funds to pay for economic development books, medical care, and programs for the elderly, with the majority of the settlement going to the Children First Trust Fund. When tobacco settlement dollars come to Alabama, they are deposited into the 21st Century Fund, where the first $13,000,000 is used for debt service on economic development bonds. Assisting Honda and Hyundai to locate in Alabama is one of several economic efforts funded through these bonds. The remaining tobacco dollars are then split between Children First (approximately 52%), Medicaid (approximately 31%), and several other small funds. Once money comes to Children First, the fund is then divided among twelve agencies for specific programs as instructed by law (Section 41-15B-2.2). Once funds are deposited into the Children First Trust Fund, they cannot be spent until the Legislature appropriates them to the agency. Until then, the funds cannot be used for other purposes. Unspent money remains within the fund and individual departments accrue a balance. An annual report is prepared which details the expenditures of the Children First Trust Fund dollars.