Tobacco Settlement Agreement Fund Oversight Committee




<MeetMDY1> December 12, 2006


The<MeetNo2> meeting of the Tobacco Settlement Agreement Fund Oversight Committee was held on<Day> Tuesday,<MeetMDY2> December 12, 2006, at<MeetTime> 1:00 PM, in<Room> Room 125 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; Senators Charlie Borders, David E Boswell, Dan Kelly, and Joey Pendleton; Representatives Adrian K Arnold, James R Comer Jr, Charlie Hoffman, Thomas M McKee, and Tommy Turner.


Guests:  Laurie Dudgeon and Allen Love, Office of Drug Control Policy; Keith Rogers, Brian Furnish, Tim Hughes, and Bill McCloskey, Governor's Office of Agricultural Policy; Nathan Brown, Community Farm Alliance; and Ted Mason, Kentucky Grocer's Association.


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


Minutes of the November 14 meeting were approved, without objection, by a voice vote upon a motion by Sen. Boswell and seconded by Rep. McKee.


Following approval of the minutes, the committee approved the report of the 2006 Tobacco Settlement Agreement Fund Oversight Committee by voice vote on a motion by Sen. Pendleton and seconded by Rep. McKee. The presiding chair, Senator McGaha, indicated the report would be forwarded to the Legislative Research Commission.


Chairman McGaha next asked Mr. Keith Rogers and Mr. Brian Furnish, executive director and deputy director respectively of the Governor’s 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 indicated there were few model and non-model projects to report because the ADB spent much of its last meeting reviewing and acting on policies. Mr. Rogers reviewed three projects receiving formal Agricultural Development Board approval -- the Clinton County Farm Bureau, Carroll County Agriculture Development Fund, and Estill County Cattlemen’s Association. Committee members raised no questions about the projects.


Next, Mr. Rogers turned to some of the policy issues addressed at the earlier ADB meeting, starting with the Kentucky Center for Agricultural Development and Entrepreneurship.


One of the activities the KCADE funded was the Kentucky Entrepreneurial Coaches Institute, which graduated its second and final class in November. The program was geared toward building entrepreneurial capacity in 19 northeastern Kentucky counties.


Responding to Representative McKee, Mr. Rogers said they anticipated another application from the program next year. But he said the program, if funded, would operate in southcentral/southeast Kentucky. He told Representative McKee that program graduates had committed to a specific number of hours in their communities. He said he had seen some ADB projects evolve out of the program. Also, some graduates had sought public office in their communities.


Next, Mr. Rogers turned to an board’s energy policy statement. According to the policy, the ADB would continue providing seed money to biofuel endeavors, but would require that farmers have substantial ownership and financial investment in such projects. He also discussed the board’s interest in fuel production from biomass.


In discussion initiated by Representative Hoffman, Mr. Rogers reviewed the merits of the various plants and materials that could be used to produce biomass. They said the U.S. Department of Energy had identified Kentucky as a central location with biomass possibilities. As for one of the potential biomass plants, switch grass was difficult to establish, but could have potential, they said. They also said wood chips had potential as a biomass raw material.


Senator Boswell asked about the cost-efficiencies of producing biofuels. Mr. Rogers responded that it took one unit of energy to produce 1.34 units of energy from corn, while cellulose converted one unit to 2.62-5 units of energy depending on the feed stock. Mr. Furnish said large oil companies were experimenting with cellulose because it was not consumed by humans.


Following that discussion, Mr. Rogers reviewed other policies taken up by the Agricultural Development Board.


In terms of county fund investment policies, the board directed that county councils update their comprehensive plans. Mr. Rogers said they expected to have some guidelines regarding those updates in January.


Mr. Rogers then reviewed some of the model, menu, and pilot program policy changes. He noted the board directed that, beginning in January, producers must have their state premise identification before funds would be dispersed to applicants in all model programs. He said the Department of Agriculture requested such a policy.


Next, he discussed some new compliance policies to encourage fund administrators to follow guidelines and legal agreements. According to Mr. Rogers, there would be two categories – “watch list status” and “probation status” that would allow GOAP staff to enforce guidelines for administrators.


Mr. Rogers also went over plans for the agri-tourism competitive awards program and farmers’ market competitive program.


Following that discussion, Senator Boswell asked about the status of the defunct Western Kentucky Growers Cooperative. Mr. Rogers said a company had taken over the cooperative in a lease arrangement. He said they would be selling some excess property that could not be declared state surplus.


Chairman McGaha next invited representatives of the Kentucky Agency for Substance Abuse Policy (KY-ASAP) to appear before the committee. Speaking to the panel were Laurie Dudgeon, Executive Director of the Office of Drug Control Policy, and Mr. Allen Love, State KY-ASAP Coordinator.


Ms. Dudgeon presented a report which contained information on board members and board meetings during 2006, a financial overview, including local board expenditures, staffing, “hot spot” funding for areas at risk for substance abuse, and a proposed strategic plan.


The KY-ASAP board had a full complement of members, according to Ms. Dudgeon. She said the next meeting was planned for Thursday, December 14. She said the board was supposed to meet every six months, but had been meeting quarterly.


She then reviewed board activity, staffing, and finances. One Committee member asked for more information on fund transfers totaling over $3.2 million in FY 2003 and FY 2004. Mr. Love said they were still trying to determine the history of the transfers. Ms. Dudgeon said that presumably, the funds went to local boards.


Chairman McGaha verified that an aspect of Mr. Love’s work would be to monitor the KY-ASAP finances.


Mr. Love indicated that local boards mostly receive $20,000 as start-up funds. He went on to explain to Representative Comer that local boards do a needs assessment regarding what they perceive to be significant substance abuse problems in their area. The witnesses mentioned such things as smoking cessation efforts and anti-drug work.


They said some local boards were better positioned than others in terms of supplemental funds from their communities. The pointed out to Senator Boswell that some counties function under a multicounty umbrella.


As discussion progressed, the KY-ASAP representatives discussed the concept of “hot spot” counties. Chairman McGaha asked if they coordinated with other organizations such as Operation UNITE. Mr. Love said they do. He said they make an effort to identify all entities involved in combating substance abuse and working to attack the problem. Ms. Dudgeon said some counties use the local KY-ASAP organization as a “springboard.”


Representative Arnold asked about the evaluation of individual counties. As discussion continued, Chairman McGaha asked if the organization was able to determine if there were positive outcomes from the program. Mr. Love said they had encouraged their boards to be specific as to usage of funds. He added that they would be looking at instituting outcome measures to determine if funds were properly used.


The meeting ended with a resolution honoring Representative Arnold in his retirement from the General Assembly. Several members praised the representative for his many years of service. Representative Arnold said he had enjoyed his years in the General Assembly. He mentioned his service on the Agriculture and Natural Resources Committee and his co-sponsorship of House Bill 611, which, among other things, created the Tobacco Settlement Agreement Fund Oversight Committee.