Kentucky Local Governments Have Spent Only 10% of Opioid Settlement Dollars Despite Crisis

Between 2022 and 2038, Kentucky will receive more than a billion dollars from national opioid settlements with pharmaceutical companies complicit in starting the epidemic. Yet a new analysis reveals a startling reality: local governments have spent only about 10% of the funds distributed to them, leaving over $109 million sitting unused while communities continue to grapple with overdose deaths.

The report, published by the Kentucky Center for Economic Policy on June 29, 2026, examined fiscal year 2025 expenditures and found that 90% of the $122.4 million received by counties and cities remained unspent. At a time when federal funding for addiction services faces significant cuts, the findings raise urgent questions about whether local governments are equipped to deploy these critical resources effectively.

The Scale of Unspent Funds

Kentucky's opioid settlement structure directs half of all proceeds to the state government and half directly to the state's 120 counties and 149 cities. The distribution formula weighs three factors: the number of opioid-related deaths in each jurisdiction, the volume of prescription opioids shipped there, and the prevalence of opioid use disorder among residents.

By June 30, 2025, counties had received $94.5 million and cities $28 million. Yet counties spent just 8.5% of their allocations, while cities performed slightly better at 16.8%. The result: $109.8 million in unspent funds, including accrued interest.

The inaction was widespread. Half of all reporting local governments—138 out of 269—spent zero dollars in fiscal year 2025. Among counties, 42% reported no expenditures; among cities, that figure rose to 59%.

When asked to explain the lack of spending, roughly one-third of localities offered no explanation at all. More than a quarter said they were still in the planning process. Several counties admitted they remained unclear about what expenditures were allowable, while others said they simply couldn't identify relevant projects. Some cities explicitly stated they were saving the money for future use.

What "Good Spending" Looks Like

The report draws on the recently released 2026 National Roadmap for Spending Opioid Settlement Funds, developed by organizations working on the frontlines of the overdose crisis and endorsed by more than 230 groups nationwide. The roadmap distinguishes between evidence-based investments that save lives and problematic spending that wastes resources or causes harm.

Effective uses of settlement funds, according to the roadmap, include medication for opioid use disorder, harm reduction services like naloxone distribution and syringe exchange programs, supportive housing, and initiatives that address the racial and economic harms of the failed War on Drugs.

Jefferson County, which spent $5.9 million across 26 different recipients—the highest amount in the state—funded a Feed Louisville/C.A.R.E. project that provides harm reduction supplies, overdose prevention education, and basic wound care to people experiencing homelessness. The program also connects individuals to recovery facilities and permanent housing.

Floyd County allocated $100,000 to its school district's Family Resource and Youth Services Center to assist children being raised by grandparents or other family members due to parental opioid abuse. The funds provided beds for children sleeping on floors, kept electricity on in households facing shutoffs, and covered basic needs like food, clothing, and shoes.

Several counties, including Letcher, Lee, Owsley, and Whitley, funded community resource "hubs" that combine harm reduction services, treatment navigation, peer support, and assistance with IDs, housing, transportation, and employment.

Problematic Spending Patterns

The analysis identified at least $1.7 million in "problematic spending"—investments in ineffective, unproven, or harmful responses to drug use and addiction. While this represents a small fraction of total expenditures, it illustrates the challenges local governments face in distinguishing evidence-based approaches from politically popular but ineffective ones.

Problematic spending categories include abstinence-only treatment programs without medication support, general "public education" campaigns not targeted at high-risk populations, and emergency response funding that replaces existing budgets rather than expanding services. The report also flags law enforcement expenditures that don't directly address overdose prevention or connect people to care.

Kentucky law allows these types of expenditures, which creates tension with public health best practices. While the Kentucky Opioid Abatement Advisory Council has adopted Johns Hopkins University's principles discouraging such spending, state statute does not explicitly prohibit it.

The Accountability Gap

The unspent billions represent both a missed opportunity and a governance challenge. Kentucky has made significant progress in reducing overdose deaths—2025 saw a 23% decline to 1,110 deaths, the fourth consecutive year of decreases. But with 1,110 lives still lost annually and federal funding for addiction services under threat, the urgency of deploying settlement funds has never been greater.

The report's authors note that local governments have access to extensive guidance on effective spending, including resources from the Kentucky Association of Counties and the National Roadmap. The issue appears to be less about information and more about capacity, political will, and bureaucratic inertia.

Some localities are taking innovative approaches. Letcher County's hub model brings together health departments, recovery community centers, and peer support specialists in a coordinated effort to reduce overdose deaths. These community-based, non-police-led initiatives represent the kind of comprehensive approach that public health experts recommend.

What Happens Next

With payments continuing through 2038, Kentucky local governments will ultimately receive around half a billion dollars in settlement funds. The current spending rate suggests that without intervention, hundreds of millions of dollars could remain unspent for years while preventable deaths continue.

The Kentucky Center for Economic Policy has developed a model ordinance establishing county opioid abatement advisory councils to help guide spending decisions. The model emphasizes transparency, community input, and evidence-based approaches over punitive or ineffective programs.

For people struggling with opioid addiction, the unspent funds represent delayed access to treatment, housing, and harm reduction services that could save their lives. The report's findings serve as a wake-up call not just for Kentucky, but for states across the country grappling with similar challenges in deploying opioid settlement dollars effectively.

The overdose crisis demands urgency. Communities cannot afford to let restitution funds sit in bank accounts while people die. As federal resources dwindle, the effective deployment of settlement funds may determine whether Kentucky's progress in reducing overdose deaths can be sustained—or whether the state will backslide into a new wave of preventable tragedies.