Tobacco Settlement Agreement Fund Oversight Committee




<MeetMDY1> May 13, 2003


The<MeetNo2> May meeting of the Tobacco Settlement Agreement Fund Oversight Committee was held on<Day> Tuesday,<MeetMDY2> May 13, 2003, at<MeetTime> 1:30 PM, in<Room> Room 131 of the Capitol Annex. The meeting was called to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Vernie McGaha, Co-Chair; Representative Roger Thomas, Co-Chair; Senators Charlie Borders, David Boswell, Joey Pendleton, and Richard Sanders Jr; Representatives Adrian Arnold, Carolyn Belcher, James Comer, Thomas McKee, and Tommy Turner.


Guests:  John Nelson and John Vahaly, University of Louisville; Brad Wellons, Kara Keeton, Joel Neveille, Jeff Harper, and John-Mark Hack, Governor's Office of Agriculture Policy; Mr. Wayne Hunt, Agricultural Development Board; Bill Fandrich, Senator Jim Bunning Office; and Gay Dwyer, Kentucky Retail Federation.


LRC Staff:  Dan Risch, DeVon Hankins, Biff Baker, Perry Nutt, Becky Barnes, and Kelly Blevins.


The first meeting of the Tobacco Settlement Agreement Fund Oversight Committee was called to order, a roll call was taken, and a quorum established. A motion was made by Representative Adrian Arnold that Representative Roger Thomas serve as the House co-chair. The motion was seconded. A motion then was made and seconded that nominations cease for the position of House co-chair and that Representative Thomas be elected by acclamation. The motion passed.


Senator Richie Sanders then moved that Senator Vernie McGaha should be elected as Senate co-chair. The motion was seconded. A motion was then made and seconded that nominations cease for the position of Senate co-chair and that Senator McGaha be elected by acclamation. The motion passed.


The co-chairs introduced the staff for the committee. Then staffperson DeVon Hankins, explained the background material made available to the members.


Next, Representative Thomas noted the role of the committee in monitoring the use of tobacco settlement money. He stated that the committee should serve to provide official input into the state's programs for agriculture development.


Senator McGaha said the committee will play an important role as there are radical changes occurring in agriculture. The committee will oversee the efficient and effective use of tobacco settlement money.


Next, Mr. John Mark Hack, the Executive Director of the Agricultural Development Board, introduced Agricultural Development Board member Mr. Wayne Hunt and explained the development of the report, Kentucky's Long-Term Plan for Agricultural Development. Copies of Mr. Hack's presentation materials are on file in the LRC Library and include: 1. A PowerPoint presentation of his remarks; 2. A booklet summarizing County Model Programs; 3. A cumulative event calendar of the Kentucky Center for Agricultural Development and Entrepreneurship (KCADE); 4. An accounting of grants awarded by the KCADE; and 5. An accounting of county account activity.


Senator David Boswell asked how the Board will determine who is being helped by the Agriculture Development Board programs. Mr. Hack responded by saying that an agreement has been entered into with University of Louisville researchers who are to determine the economic and development impact of the Board's investments. He said a preliminary draft of the report will be due later in the year.


Senator Pendleton asked how the use of tobacco settlement money can be sustained. Senator Sanders suggested that the county account funds could be pooled and then loaned at no or low interest in a revolving loan fund. Representative Thomas wondered if the Kentucky Agricultural Finance Corporation could be used for such a fund. He pointed out that giving such a responsibility to the KAFC would require a legislative change. Senator Sanders said that Area Development Districts might be helpful in setting up any revolving loan funds.


Mr. Hack made several observations about Kentucky's approach to administering tobacco settlement money. He said Kentucky is the only state to have set up county councils to obtain a local perspective on using the money. He added that the local councils had been instrumental in setting the focus of the county model programs. He also pointed out that with the financial push from Agriculture Development Board funding, Kentucky has become the country's third largest goat meat producer. He also suggested the committee may want to consider making funding available to tenant farmers and farm managers.


Mr. Hack concluded his remarks with an explanation of the board's project application process and the criteria used to decide funding requests. He said the three primary criteria are the expected impact on net farm income, the number of farmers affected by the project relative to the amount of funding, and the economic sustainability of a project.


Senator Charlie Borders and Representative Adrian Arnold asked if the board or the Small Business Development Center can provide more help to county councils and assistance in developing business plans for project applicants. Representative Tom McKee drew attention to the delay that sometimes occurs in getting money to approved applicants. Mr. Hack acknowledged the delay can occur and said it sometimes happens because a required match of money can't be raised by the applicant.


Mr. Wayne Hunt, the Agricultural Development Board member present, suggested that a more aggressive strategy may need to be employed to develop ideas for tobacco impacted counties. He also weighed in on the idea of creating a revolving loan fund. He said it may be worthwhile to combine the functions of the KAFC and the Agricultural Development Board committee on financial access.


Finally, Mr. Hack reviewed information that was requested by the committee. First, developing communication with county councils on loan programs. Second, conducting a survey of banks to gauge their interest to participate in loan programs. Third, returning to the committee a list of projects that had received a high priority from a county council but which were not approved for funding. Fourth, providing an accounting of how much of the total funds approved for projects have been paid to project applicants. Fifth, analyzing model program grant recipients to determine if applicants are receiving more than one grant. Last, providing a list of counties and the state money received by each and how much state money has been requested by each.


            The meeting adjourned at approximately 3:45 p.m.