Report: Kentucky Local Governments Have Spent Only 10% of Opioid Settlement Funds

Three years after Kentucky began receiving opioid settlement funds from pharmaceutical litigation, more than 90% of the money distributed to local governments remains unspent, according to a comprehensive new report from the Kentucky Center for Economic Policy. The analysis reveals that of the $122.4 million granted to cities and counties since 2022, local governments had spent only about $12.6 million by the end of fiscal year 2025—leaving $109.8 million sitting in accounts while communities continue to lose residents to preventable overdoses.

The findings, released June 30, 2026, represent the first detailed examination of local spending patterns since Kentucky began receiving proceeds from national settlements with opioid manufacturers and distributors. Between 2022 and 2038, the Commonwealth is expected to receive more than $1 billion in total settlement funds, with half flowing to state government and half distributed directly to all 120 counties and 149 cities.

Half of Local Governments Spent Nothing in FY 2025

The report's most striking finding concerns the scale of inaction. In fiscal year 2025—the first year detailed reporting was required from local governments—138 of 269 reporting jurisdictions, or 51%, reported spending zero dollars on opioid abatement activities.

Among counties, 50 of 120 (42%) reported no expenditures, with an additional three counties listing only $20 to $30 in bank charges. The situation was even more pronounced among cities: 88 of 149 (59%) reported zero spending, with one city recording only an $8 bank fee.

"Local governments are sitting on their opioid settlement monies rather than making needed investments in their communities while thousands of people continue to die from overdoses," the report states. "It is critically important that counties and cities invest opioid settlement dollars to save more lives in their communities, but too many Kentucky localities are sitting on the opportunity."

Why the Money Remains Untouched

The report identifies several factors contributing to the spending paralysis. When asked to explain their lack of expenditures, roughly one-third of non-spending localities provided no explanation beyond stating they had not spent any money. More than a quarter indicated they were still in the planning process. Several counties explicitly stated they were saving funds for later use, while others expressed uncertainty about what expenditures were allowable.

This confusion persists despite multiple resources available to guide spending decisions, including the Kentucky Association of Counties' opioid settlement guidance, the Johns Hopkins Principles for the Use of Funds from the Opioid Settlements, and the recently released 2026 National Roadmap for Spending Opioid Settlement Funds developed by organizations including Kentucky-based VOCAL-KY and Dream.org.

The settlements themselves require that 85% of funds be used for "opioid abatement," with allowable uses detailed in Exhibit E of each agreement falling into four main categories: prevention through education and community support; harm reduction including naloxone distribution and syringe services; treatment encompassing detoxification, counseling, and medications for opioid use disorder; and recovery support including housing, peer services, and employment assistance.

Problematic Spending Raises Additional Concerns

Of the limited spending that did occur, the Kentucky Center for Economic Policy identified significant concerns about effectiveness. Of the approximately $14.5 million spent by cities and counties in FY 2025, nearly $2 million—roughly 14%—was classified as "problematic spending" on ineffective, unproven, or potentially harmful approaches.

Examples cited in the report include Martin County's expenditure of nearly $25,000 on two "opioid deputies" plus $29,000 for their vehicle fuel; Grayson County's payment of $25,000 to basketball player Lamar Odom for a single high school speaking engagement; and Wayne County's purchase of more than $36,000 worth of vape detectors for middle and high school bathrooms.

Perry County recorded $91,362 for payroll of fiscal court employees working in the "opioid department" and $3,500 for water and waste services for a city building—expenditures that appear to supplement existing government operations rather than expand addiction services.

"Based on the brief descriptions provided in these reports, spending that did occur in many cases does not appear to have been on impactful, evidence-based approaches to preventing overdose deaths and repairing other harms of the opioid crisis," the report concludes.

Models of Effective Investment

Despite the overall pattern of inaction and misspending, the report highlights approximately $7 million in "good spending" across 76 county expenditures that align with evidence-based practices. These investments prioritize public health and harm reduction services, housing and supportive services, and initiatives addressing racial and economic harms from the failed War on Drugs.

Jefferson County allocated $130,796 to Feed Louisville's C.A.R.E. program, which provides outreach to people experiencing homelessness including harm reduction supplies, safer use education, wound care, and connections to treatment. The program operates as a formal community partner of the Louisville Metro Department of Public Health and Wellness's syringe exchange, distributing naloxone and test strips while linking individuals to recovery facilities and permanent housing.

Floyd County directed $100,000 to its school district's Family Resource and Youth Services Center to support children and families affected by opioid use, addressing basic needs including food, clothing, bedding, and utilities for households where addiction has disrupted family stability.

Several eastern Kentucky counties—including Letcher, Lee, Owsley, and Whitley—are funding community resource "hubs" that provide harm reduction services, treatment navigation, peer support, and assistance with housing, transportation, and employment barriers. These hubs, operated through the Kentucky River District Health Department, have been recognized as national best practices by the National Association of County and City Health Officials.

The Stakes of Delayed Action

The report arrives at a critical moment for Kentucky's overdose crisis response. While the state has achieved four consecutive years of declining overdose deaths—with fatalities dropping 23% to 1,110 in 2025—advocates warn that recent federal funding cuts to health and human services programs threaten this progress.

Settlement funds were intended to provide sustained resources for addressing the overdose crisis as one-time federal pandemic relief dollars expired. The money represents what Attorney General Russell Coleman has called "blood money"—restitution extracted from pharmaceutical companies found liable for fueling the addiction epidemic through deceptive marketing practices that downplayed the risks of prescription opioids.

"These funds are considered restitution for lives lost and are intended to address communities' active needs related to the overdose crisis," the report notes. "It is essential that local governments invest these dollars wisely to save more lives in their communities."

Looking Forward

The Kentucky Center for Economic Policy has collaborated with partners to produce a model ordinance establishing county opioid abatement advisory councils, designed to help local governments develop strategic approaches to settlement fund deployment. The organization emphasizes that counties and cities must move from planning to action, ensuring that settlement dollars reach evidence-based programs capable of reducing overdose deaths and supporting recovery.

Between now and 2038, Kentucky local governments will receive approximately half a billion dollars in total settlement funds. Whether those resources translate into measurable reductions in addiction-related harms depends on whether local officials move quickly to invest in proven interventions—or continue holding funds in bank accounts while preventable deaths continue.

For communities that have already lost thousands of residents to the opioid crisis, the question is not whether settlement money should be spent, but whether it will be spent in time to save the lives still hanging in the balance.

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If you or someone you know is struggling with substance use, contact SAMHSA's National Helpline at 1-800-662-HELP (4357) for free, confidential, 24/7 treatment referral and information.