Tobacco Settlement Agreement Fund Oversight Committee




<MeetMDY1> April 18, 2006


The<MeetNo2> Tobacco Settlement Agreement Fund Oversight Committee met on<Day> Tuesday,<MeetMDY2> April 18, 2006, at<MeetTime> 1:00 PM, in<Room> Room 131 of the Capitol Annex. Senator Vernie McGaha, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Vernie McGaha, Co-Chair; Representative Carolyn Belcher, Co-Chair; Senators David E Boswell and Joey Pendleton; Representatives Adrian K Arnold, James R Comer Jr, Charlie Hoffman, Thomas M McKee, and Tommy Turner.


Guests:† Keith Rogers, Brian Furnish, and Tim Hughes, Governor's Office of Agricultural Policy; Jeff Harper, Kentucky Farm Bureau; Teresa Barton, Office of Drug Control Policy; Tonya Chang, Kentucky Heart Association; Shannon Pratt, American Cancer Society; and Michael Kuntz, Kentucky Lung Association.


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


Opening the meeting, the presiding chair, Senator McGaha, asked Mr. Keith Rogers and Mr. Brian Furnish, executive director and deputy director respectively of the Governorís Office of Agricultural Policy (GOAP), to present their monthly report of state and county projects reviewed at the previous Agricultural Development Board (ADB) meeting.

Mr. Rogers reviewed the model program list, noting that funding was down for the reporting period, but would be higher in May based on new tobacco settlement funding that would be available.

As Mr. Rogers reviewed regular state projects, Chairman McGaha posed a question about the Central Kentucky Agritourism Association, which received $10,000 in tobacco funds to market and promote agritourism in central Kentucky. The senator asked if it would not be more cost-effective for such entities to operate under a larger group.

In response, Mr. Rogers said they had found the best marketing approach was at a regional level, with emphasis placed on attractions in that particular region.

Later, responding to a question from Representative McKee about quantifying the associationís impact in fostering agritourism business, Mr. Rogers said a requirement of the grant would be to assess the impact. He noted an ďexplosionĒ in agritourism business in the state, but suggested that agritourism may be profitable for some, but not others.

Mr. Rogers then summarized the Maple Hill Manor project to construct an agritourism fiber education and marketing center, with forgiveness on a $50,000 loan to be predicated on buying Kentucky products. The project description listed fiber from alpacas, llamas, and sheep. In response to Senator McGaha about how a two-year amortization grace period would work, Mr. Rogers responded they would still be given credit of 75 cents forgiven for every dollar value purchased of Kentucky products.

Responding to Senator Boswell, Mr. Rogers said he had not idea of the size of the animal fiber market, although about 60 alpaca farms were identified.

Mr. Rogers then reviewed the Scott County Beef Improvement Association project to use $100,000 in Scott County funds to run a cost-share program for former tobacco tenant farmers wishing to pursue other farming endeavors. He said the Agricultural Development Board approved the funding as a pilot project. Addressing a question from Chairman McGaha, he said they included Bluegrass extension district counties within the scope of the endeavor, although multicounty projects usually include the host county and surrounding counties.

Chairman McGaha also questioned the rationale of† $50,000 funding for the next project on the list, Elk Creek Vineyards. The witnesses explained that University of Kentucky experts had said that wine grape production needed to be enhanced in the state. They said the funding to Elk Creek mainly would go toward food preparation and serving.

Mr. Rogers and Mr. Furnish took some additional time explaining an Agricultural Development Board commitment of $2 million to the Kentucky Agricultural Finance Corporation (KAFC) to establish a beginning farmer loan program for those involved in production agriculture. The ADB also is expected to consider granting the KAFC an additional $3 million to develop a loan program that complements existing loan opportunities available through the Farm Service Agency, banks or other lenders.

Representative McKee expressed his optimism about the beginning farmer loan program. He said the average age of farmers today is rising. According to Mr. Rogers, a 2 percent loan rate for tobacco dependent borrowers would be very attractive.

Senator Pendleton also asked for clarification on a project that was denied funding,† Carlisle County Conservation District, which had sought $5,250 to administer a shade cloth cost-share program for dark tobacco. Mr. Rogers said the denial was in keeping with previous board actions to not allow tobacco settlement funds to be used in tobacco production.

Next, Representative Arnold referred to the passage of HB 669, required state agencies to purchase Kentucky-grown agricultural products if the vendor could meet quality and pricing requirements. He said that, while the Legislature had allotted millions to farmer diversification, there still existed a need for markets. He commented on how requirements in the bill could work. During the discussion, Mr. Rogers said he applauded the General Assembly for passing the measure.

In the final agenda topic, the committee heard a report from Ms. Teresa A. Barton, Executive Director of the Kentucky Agency for Substance Abuse Policy (KY-ASAP), a division of the Office of Drug Control Policy.

During her discussion, Ms. Barton reviewed the status of the KY-ASAP board and board meetings, gave a financial overview that included fund balances, board expenditures, board payments through April 13, 2006, and the budget for FY 2006-2008, local board accomplishments, staffing, and town hall meetings.

According to Ms. Bartonís report, the KY-ASAP board was fully constituted in early April 2006 through gubernatorial appointments. The board planned to meet in mid-May after having not met since July 2005. Ms. Barton told the committee that the board had not been meeting because some terms had expired.

Even though the board was not meeting, the KY-ASAP central office continued processing funding awards to local boards, according to Ms. Barton.

During discussion of local board allocations, both Chairman McGaha and Co-Chairman Belcher questioned the amounts being allotted to administrative/personnel by county or regional KY-ASAP organizations. Ms. Barton said they would be receptive to changing the terms of spending for administration at the county or regional level.

Senator McGaha asked if they had ever assessed the effectiveness of the programs being funded with tobacco money. According to Ms. Barton, the KIP Survey, which has been administered in Kentucky for a number of years by individual school districts through agreements with the Division of Substance Abuse, had shown a drop in teen smoking. While they believe anti-drinking and smoking curricula help, substance abuse prevention would be difficult to quantify.

In subsequent discussion, the KY-ASAP director said local communities write their applications for funding based on an understanding of their local needs. The report included summaries of local board accomplishments.

Ms. Barton also pointed to a listing of town hall meetings coming up in the state to stress the dangers of underage drinking.

As the discussion ended, both co-chairs, Senator McGaha and Representative Belcher, complimented Ms. Barton for the information contained in her report.

Documents distributed during the meeting are available with meeting materials in the LRC Library.

The meeting ended at approximately 3 p.m.