Tobacco Settlement Agreement Fund Oversight Committee




<MeetMDY1> July 8, 2003


The<MeetNo2> Tobacco Settlement Agreement Fund Oversight Committee met on<Day> Tuesday,<MeetMDY2> July 8, 2003, at<MeetTime> 1:30 PM, in<Room> Room 131 of the Capitol Annex. Representative Roger Thomas, Co-Chair, called the meeting 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, Daniel Kelly, Joey Pendleton, and Richard Sanders Jr; Representatives Adrian Arnold, Carolyn Belcher, James Comer, and Thomas McKee.


Guests:  Karen Jones and Larry Carrico, Kentucky Agency on Substance Abuse Policy; Kevin Devlin and Otis Singleton, Kentucky Auditor of Public Accounts; Brad Wellons, Kara Keeton, Gene Royalty, and David Bratcher, Governor's Office of Agriculture Policy; Mark Farrow and Ann Stewart, Kentucky Department of Agriculture; Peter Hasselbacher, University of Louisville; Sean Cutter, McBrayer, McGinnis, Leslie, and Kirkland.


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


The meeting was called to order and the secretary called the roll. A quorum was noted. A motion and second was then made to approve the minutes of the June 10, 2003 meeting. The motion passed.


The first presenters were Mr. Gene Royalty and Mr. David Bratcher from the Agricultural Development Board. They explained projects presented at the Board's June 20 meeting. During the recitation of projects, Senator Sanders asked if the Board, when making decisions on awarding state funds, considers whether a county has previously been awarded state money. The answer was no, although the Board looks closer at projects proposed for tobacco dependent counties and may be more willing to fund riskier projects in order to begin projects in those counties. Senator Sanders next asked Mr. Bratcher and Mr. Royalty if they could recommend mechanisms to develop viable projects for tobacco dependent counties. Mr. Bratcher replied that to the extent that the office budget allows, Board staff visits with county councils and works with them. However, he said the biggest obstacles remain the lack of entrepreneurial expertise and the financial wherewithal to provide matching funds. Senator Sanders mentioned proposals that would lower the match requirement for applicants in tobacco counties. Mr. Bratcher added that another possibility would be to establish local revolving loan programs.


Senator Boswell said that maybe the Agricultural Development Board should be given additional authorization to recruit agriculturally related businesses into tobacco dependent counties. He further suggested that the Economic Development Cabinet be brought into the effort.


Senator Kelly observed that economic activity generated off-site of an agricultural processing facility should be given greater consideration in granting economic development incentives. He suggested that perhaps economic development statutes should be revised accordingly. He also said he would like to see some ideas presented to the committee to address the problem.


Following a suggestion from Representative Roger Thomas, the committee adopted a motion to ask the Subcommittee on Rural Issues of the Interim Joint Committee on Agriculture and Natural Resources to consider impediments to rural economic development and to suggest the means to overcome the impediments.


Senator Borders expressed his concern that tobacco dependent counties will be left without any options for economic development when the tobacco money runs out. He asked that an effort be made to assist people in tobacco dependent counties to develop viable projects that can be funded while money is available. Mr. Bratcher said there is a new program, developed with assistance from the University of Kentucky, to assist county councils in tobacco dependent counties.


Representative McKee emphasized his support for the model programs funded from county account money. He believes they support and improve existing farm enterprises, like beef cattle.


In a later discussion about projects which were denied funding, Representative McKee suggested that the Agricultural Development Board reconsider its policy of funding greenhouses solely from county account funds. He pointed out that the use of greenhouses in high schools supports agricultural education but not all counties will have sufficient money in county accounts to pay for greenhouses without state help. He asked that the board consider using state funds for these projects.


As a result of questions from Representative Comer, Mr. Bratcher explained that most farmer's markets are local in nature and supported from county account money. He also said that anecdotal evidence seems to indicate that they are successful.


Next, the committee reviewed maps prepared by the Kentucky Infrastructure Authority and staff. Committee members asked that the maps be refined to focus on counties receiving tobacco money for the water line projects and that counties receiving state funds be illustrated in real-time.


Next, the committee received reports on the programs funded by tobacco settlement money via the Kentucky Health Care Improvement Fund. Commissioner Janie Miller, Department of Insurance and Chairperson of the Kentucky Health Care Improvement Authority, reviewed, in correspondence to the committee, the activities of the Authority. Mr. Fred Nelson, Director of Kentucky Access, gave an overview of the program which is designed to provide insurance for individuals who cannot buy insurance in the private market. Mr. Nelson pointed out that as a result of the state insurance plan four new companies now provide insurance in Kentucky when previously only two companies were providing individual coverage.


Next, Mr. Larry Carrico, Executive Director of the Kentucky Agency for Substance Abuse Policy, reported. He gave a brief overview of the $849,800 from the tobacco settlement funds that have been invested in a variety of community substance abuse treatment and prevention programs.


Mr. Carrico was followed by Dr. Rice Leach. In his position as the Commissioner of the Department of Public Health, Dr. Leach oversees smoking cessation programs funded with tobacco settlement money. He noted that with the money allocated to smoking cessation programs aimed at youths, some success has been achieved. He said a survey in 2000 indicated that 37% of youths were smoking but another survey just completed indicated the percent had dropped to 34%.


The last report on the Kentucky Health Care Improvement programs was given by Dr. Alfred Cohen. Dr. Cohen spoke about research on lung cancer. Dr. Cohen said researchers are presently engaged in 54 active projects. He said that as this research shows results, the state will be in a position to apply for federal research money.


The last speaker was Dr. Kim Townley to report on the early childhood development initiatives funded with tobacco settlement money. She illustrated one program, the HANDS Voluntary Home Visiting Program. She said the effort has lead to a lower number of low birth rate and very low birth weight babies in targeted families. She said the current estimate of the cost of savings from healthier babies is $4,776,000 a year.


All the reports presented at this meeting are on file with the committee materials in the LRC library.


The co-chairs said the next meeting would be on August 14 not August 12.


The committee adjourned at approximately 4:15.