Lacey City Council approves pooling of opioid settlement funds with partner cities and county

The Lacey City Council unanimously approved the First Amendment Interlocal Agreement (ILA) for the Opioid Abatement Council (OAC) Independent Subcommittee. 

The move authorizes City Manager Rick Walk to execute the amended ILA with Thurston County, Olympia and Tumwater. The council made the decision at a meeting on March 3.

According to a staff report, Lacey has accumulated $418,850.72 in opioid settlement funds to date. 

The funds stem from a $518 million settlement with distributors McKesson, AmerisourceBergen and Cardinal Health in September 2022, as well as a $434 million settlement with pharmacy chains Walgreens, CVS and Walmart, and manufacturers Teva and Allergan in March 2023. 

Washington state's share of the pharmacy chain settlement totals $217 million, divided evenly between the state and cities, with payments structured over 15 years. 

The amendment revises the original ILA executed on July 20, 2023, which established the subcommittee to oversee funds but lacked a pooling mechanism. The amendment addresses the issue. 

The council first reviewed the proposed changes at a Feb. 24 work session, where City Attorney David Schneider outlined revisions to Section 5 that allows fund pooling and the addition of Section 6, which designates Thurston County as the lead agency. 

Council members then directed staff to bring the amended ILA forward for formal action at the March 3 meeting. 

Funding structure 

Each jurisdiction must declare by June 30 of each year its contribution amount to the regional pool, defaulting to the prior year's amount if the deadline is missed. 

Thurston County committed to pooling $500,000 annually for 2026 and 2027, and may retain up to 10% of pooled funds for administrative costs related to contract and fiscal management.

That is separate from the 10% cap already reserved under the One Washington Memorandum of Understanding for OAC operations. 

The Thurston County and Cities Independent Subcommittee will submit funding recommendations to the Thurston County Board of County Commissioners. 

The board may approve or reject recommendations in full, but cannot modify them. If the board rejects a recommendation, it returns to the subcommittee for revision before being resubmitted. Should the board reject it a second time, pooled funds revert to each jurisdiction for independent use. 

Council discussion 

Council member Lenny Greenstein, Lacey’s appointed representative on the OAC, said negotiations over the amendment had continued for more than a year. 

During a city council work session on Feb. 24, Greenstein said the subcommittee had been unable to take substantive action without the amended agreement in place, including the issuing of requests for proposals for opioid response programs.

He said the subcommittee's most recently scheduled meeting was canceled pending execution of the amended agreement by all four jurisdictions. 

"None of that money has been able to be used for any good," Greenstein said. "It's just sitting there at this point." 

Greenstein said he expects the remaining jurisdictions to act in March. The subcommittee could begin issuing requests for proposals as early as April. 

Mayor Andy Ryder asked during the March 3 meeting whether Thurston County, as fiscal agent, could invest pooled funds and retain interest while holding them.

Neither city staff nor Lacey Finance Director Troy Woo could address the county’s investment policies. Greenstein said the subcommittee intends to move the funds into programs as quickly as possible. 

Thurston County has operated under an opioid public health crisis declaration since 2018. As reported by The JOLT in January, county health officials said fatal overdose rates have begun to stabilize and decrease over the past two years. 

Council member Nicolas Dunning, however, said no amount of settlement money could undo the damage already done. 

"Hundreds of thousands of lives were lost and destroyed because of these companies, and no one went to jail for it," Dunning said. "Hopefully, it'll do some good, but it's nothing compared to the damage that's been done."