Tobacco Settlement Agreement Fund Oversight Committee




<MeetMDY1> April 11, 2007


The<MeetNo2> Tobacco Settlement Agreement Fund Oversight Committee met on<Day> Wednesday,<MeetMDY2> April 11, 2007, at<MeetTime> 1:00 PM, in<Room> Room 129 of the Capitol Annex. Senator Carroll Gibson, Co-chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Carroll Gibson and Representative Mike Denham, Co-chairs; Senators David E. Boswell, Joey Pendleton, and Richie Sanders Jr; Representatives Royce W. Adams, James R. Comer Jr, Charlie Hoffman, Tom McKee, and Tommy Turner.


Guests:† Keith Rogers, Executive Director of the Governorís Office of Agricultural Policy; Brian Furnish, Deputy Director, Governorís Office of Agricultural Policy; Larry Snell, Executive Director of the Kentucky Center for Agriculture and Rural Development; Dr. Craig Infanger and Dr. Richard Maurer, University of Kentucky College of Agriculture.


LRC Staff:† Lowell Atchley, Tanya Monsanto, and Susan Spoonamore, Committee Assistant.

Following roll call, Senate and House committee members chose their respective co-chairs to preside over upcoming meetings. Senator Boswell made the motion, seconded by Senator Pendleton, to elect Senator Gibson to the position of Senate co-chair. A motion was made by Senator Boswell and seconded by Senator Pendleton that nominations cease. Representative Hoffman made the motion to elect Representative Denham as the House co-chair; Representative McKee seconded the motion. A motion was then made by Representative Hoffman and seconded by Representative McKee that nominations cease.

Minutes of the March 7, 2007 meeting were approved, without objection, by† voice vote upon motion by Sen. Boswell and seconded by Sen. Pendleton.


Mr. Keith Rogers and Mr. Brian Furnish, Executive Director and Deputy Director, Governorís Office of Agricultural Policy (GOAP), reported on the state and county projects reviewed during the March meeting of the Agricultural Development Board.

Following a discussion of the model programs list, Mr. Rogers responded to questions from Representative McKee. Mr. Rogers said that once county councils received their part of their 2007 Master Settlement Agreement payment, he expected to see an increase in county account spending by June,

Mr. Rogers explained the county projects approved for funding, some that included multiple model programs lumped under a ďmenu.Ē Responding to Representative Denham,† Mr. Rogers and Mr. Furnish explained the menu approach, which entailed listing multiple model programs under one funding umbrella. The menu approach allowed producers to choose funding opportunities under several model funds, not just one. For example, using a menu approach, a cattle operation could apply for funds under the hay, straw and commodity, the farm livestock fencing, the cattle handling, and cattle genetics improvement programs. The county councils decide what model programs they desire to place under a menu approach.

In further discussion, Mr. Rogers also responded to a series of questions from Co-chair Gibson regarding about $231 million in Agricultural Development Fund spending at the county and state level.

Next, the committee heard a presentation by Mr. Larry Snell, Executive Director of the Kentucky Center for Agriculture and Rural Development (KCARD), located at Elizabethtown.

According to Mr. Snellís presentation, KCARDís mission was to provide technical assistance and business support services to existing and emerging Kentucky agribusinesses. KCARD had an annual operating budget of $400,000, with 50 percent of that coming from the Agricultural Development Board.

Mr. Snell told the committee that KCARDís assistance and services consisted of: business management and operations analyses, business plan development, feasibility studies and market assessments, educational opportunities, management, staff and board training, business recordkeeping development, legal/accounting referrals and assistance, and continue hands-on professional business consultations. Mr. Snell also reviewed the businesses that KCARD had assisted, including producer cooperatives, value-added grain facilities, value-added meat marketers, farmers markets, various marketing cooperatives, as well as other ventures.

Mr. Snell concluded his presentation by outlining some of the positives and negatives for Kentucky agribusiness. Among the positives mentioned were strong legislative and political support, along with support from the educational sector, strong agricultural leadership, plus a demand for locally grown food. Among the negatives, he said, were not recognizing that change was inevitable, poor planning, failure to invest in management and technology, lack of equity capital commitment, and short-changing management functions.

Responding to Representative Denham, Mr. Snell said KCARD did not charge fees, but would be considering that in the future. He said a fee structure probably would be based on a companyís financial situation and ability to pay.

Representative Denham also asked what were some of the problems for businesses in rural communities. Mr. Snell said inexperienced management seemed to be a detriment for some local businesses.

According to Representative McKee, the assistance provided by KCARD was in line with the original intent of HB 611. †Representative McKee asked how they received referrals. Mr. Snell responded that many came from the staff of the Governorís Office of Agricultural Policy (GOAP), and others. He also mentioned that legislators could make referrals.

In closing, Mr. Snell said their hope was to help create jobs in communities. According to Mr. Snell, successes in one part of the state could be replicated in other parts.

Next,† Co-chair Gibson introduced Dr. Craig Infanger and Dr. Richard Maurer, of the University of Kentucky, who discussed their proposal to evaluate the effectiveness of the tobacco settlement fund investments in agriculture, agribusiness, and leadership since the outset of the program. The ADB approved the study in March at a cost of $218,000. Dr. Infanger said they agreed to undertake the study after GOAP officials approached them. The study would focus mainly on state non-model projects.

Dr. Infanger told the committee that they would address four key questions: where would Kentuckyís agriculture be without the ADB investments; what had been the quantitative and qualitative impacts of ADB investments; how had ADB investments leveraged other resources; and how had ADB programs affected county leadership and entrepreneurial leadership?

According to Dr. Maurer, the evaluation strategy would involve groupings or key focus areas. For evaluation purposes, the projects would be evaluated within small, medium or large categories, based on the size of the investments. Also, projects would be reviewed based on direct clientele use, such as production and value-added processing,† or indirect use, such as assistance provided through an intermediary.

Following their presentation, Co-chair Gibson said he hoped that if the researchers spotted negative aspects, they would note those.

Responding to Representative McKee, Mr. Rogers said the study was one that he had wanted done for some time. He told the committee that the cost of the study would come from restricted funds, and not from the general Agricultural Development Fund.

Representative Hoffman asked Mr. Rogers to update the committee at the next meeting on the losses sustained by Kentucky agriculture in the wake of the recent cold snap.

In an informal discussion, the committee agreed to begin meeting on the morning of the first Wednesday of the month, rather than the second Tuesday afternoon. The change was to begin with the May meeting.

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

The meeting ended at approximately 3 p.m.