Tobacco Settlement Agreement Fund Oversight Committee


Minutes of the<MeetNo1> 5th Meeting of the 2004 Interim


<MeetMDY1> August 10, 2004


The<MeetNo2> Tobacco Settlement Agreement Fund Oversight Committee met on<Day> Tuesday,<MeetMDY2> August 10, 2004, at<MeetTime> 1:00 PM, in<Room> Room 131 of the Capitol Annex. Representative Roger Thomas, 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, and Joey Pendleton; Representatives Adrian Arnold, Carolyn Belcher, James Comer, and Thomas McKee.


Guests:  Keith Rogers, Brian Furnish, Sandy Gardner, Catherine Ball, and Tim Hughes, Governor's Office of Agriculture Policy;  Dr. Kim Townley and Nancy Newberry, Division of Early Childhood Development; Steve Coleman, Division of Conservation; Mark Farrow, Kentucky Department of Agriculture; Bobbie Walters, Cabinet for Health and Family Services; and Jeff Harper, Kentucky Farm Bureau.


LRC Staff:  Lowell Atchley, Biff Baker, Tanya Monsanto, and Kelly Blevins.


            Chairman Roger Thomas opened the meeting with a discussion of tobacco funding chart that committee staff developed following the July meeting with the assistance of Governor’s Office of Agricultural Policy (GOAP) staff. Senator Borders explained to the committee how the chart depicts counties with projects that have received tobacco settlement money, the funding amounts, and additional counties affected. Senator Borders, who had asked for the additional information during the July meeting, said the chart could be viewed as a work in progress and represented a good effort. Chairman Thomas indicated that he and Senator Vernie McGaha, co-chair, had also suggested other changes to the map and chart. Staff was expected to prepare something for the committee for its subsequent meeting. Chairman Thomas also indicated the chart could be updated quarterly.

Chairman Thomas then asked GOAP Executive Director Keith Rogers and Deputy Director Brian Furnish to report on Agricultural Development Board (ADB) funding decisions made during the July 2004 meeting. Before beginning, Mr. Rogers introduced two new GOAP staff members, Catherine Ball, legal counsel, and Tim Hughes, the new business and marketing development coordinator for the Agricultural Finance Corporation.

Prior to reviewing individual state-funded projects, Mr. Rogers summarized the county model programs listing, which totaled $1,615,341. He then presented projects receiving Agricultural Development Board approval for state funds or a combination of state and county funds. During a discussion of an Owsley County Conservation District project to purchase a manure spreader and two post hole diggers to enhance an existing equipment lease program, Senator Boswell asked how lease program fees are used. Mr. Rogers responded that such fees are generally used to maintain equipment or build a reserve fund for purchase of added equipment. Responding to a question from Senator McGaha about the trend of approving funds for lease programs, Mr. Rogers indicated such lease programs allow several people to use equipment whereas one person might not have the means to do so. Mr. Rogers said he was unsure how the board will approach similar requests in the future.

The Agricultural Development Board’s approval of $13,434 for the Hopkins County Conservation District to continue an agricultural and environmental education program for local students K-8 drew some committee comment. On questioning by Chairman Thomas, the two GOAP administrators said the funding would be used to partially fund a teacher’s salary. Chairman Thomas asked if there were other similar programs. According to Mr. Rogers, other agricultural education programs have received funding, but apparently with no funds set aside to pay a teacher. Mr. Rogers pointed out, however, that Hopkins County has placed an emphasis on education and the agriculture and environmental education program is in line with that emphasis. Chairman Thomas responded that priority also needs to be placed on working hand-in-hand with agriculture teachers. Mr. Furnish added that a condition of the approval this year is that the instructor must work with other teachers within the school system. Senator Boswell indicated later that he remembered past project approvals that have funded support personnel, such as a marketing specialist.

Another project prompted some discussion, the ADB’s approval of $11,585 for the Anderson County Farm Bureau to establish a share-use lime equipment program in Anderson County. While pointing out that he is a Farm Bureau supporter, Senator Boswell asked if that marked the first time such an organization had applied for funding. Mr. Rogers responded that other Farm Bureau organizations, soil conservation districts, chambers of commerce have received tobacco settlement funds for projects. Asked if the Farm Bureau could benefit from such efforts through enhanced memberships, Mr. Rogers said he did not feel that has occurred, and if it were to happen, there could be repercussions.

The committee also discussed the impact that another project, the Little Kentucky Smokehouse, could have on Kentucky’s hog market. The ADB approved a $1 million forgivable loan to the Little Kentucky Smokehouse to enable the company to expand its meat processing plant in Union County, with an emphasis on pork products that will have an annual capacity of 14 million pounds. During discussion, Senator Borders pointed out that the plant is located in a low tobacco dependency county, and asked why the plant could not have been sited in another county with a higher tobacco dependency. The GOAP representatives said the plant is in the plant owner’s home county, which also has historically been a major hog production county. Responding to a series of questions from Senator McGaha, the GOAP officials said the Little Kentucky Smokehouse buys pork from other states, but attempts to acquire all it can from Kentucky producers. They were unsure what percentage of product is Kentucky-grown.

Mr. Rogers also discussed three other topics. He presented the biographies of the newest ADB members, including recent appointees, John Cleaver, Dennis Griffin, and James Mahan. The GOAP executive director admitted that some statutorily created committees of the Ag Development Board had not been active the past fiscal year, partly because of changes in board membership. He said an effort would be made to reconstitute them. He said other project review committees, and a committee studying farmland preservation have been active. Mr. Rogers also reported the entrepreneurial training institute for 19 northeastern Kentucky counties is getting under way, with 30 participants selected and seminars to begin in September.

Next, Chairman Thomas introduced Dr. Kim Townley, executive director, Kentucky Division of Early Childhood Development. The Early Childhood Development Fund, which includes a wide range of programs, receives 25 percent of the Phase I Master Settlement Agreement distribution, or approximately $27 million in FY 2004. Dr. Townley reviewed various initiatives, including the health babies campaign, the folic acid endeavor, substance abuse treatment for pregnant and postpartum women, hearing, immunization, eye, and oral health programs for children, the HANDs voluntary home visit program, early childhood councils, and various support entities, such as the Early Childhood Development Authority. Dr. Townley did not provide a review of what each facet has received in MSA funds. She promised to provide those to the committee in the near future.

Next, Mr. Steve Coleman reported on activities of the Kentucky soil erosion and water quality cost share program and the soil stewardship program, which received $9 million in MSA funds in FY 2004. Mr. Coleman reviewed the practices that are eligible for financial assistance, and how they rank applications. He said the program has received 3,229 applications in FY 2005, and has approved 741 of those. Since FY 2001, the program has spent $31.3 million in tobacco settlement funds on soil and water projects. That is a significant portion of the approximate $43 million spent in the cost share program since FY 1996.

Materials that Dr. Townley and Mr. Coleman presented are on file with the meeting materials in the LRC library.

The meeting adjourned at approximately 3:20 p.m.