Tobacco Settlement Agreement Fund Oversight Committee




<MeetMDY1> June 6, 2007


The Tobacco Settlement Agreement Fund Oversight Committee met on<Day> Wednesday,<MeetMDY2> June 6, 2007, at<MeetTime> 10:00 AM, in<Room> Room 129 of the Capitol Annex. Senator Carroll Gibson, Chair, called the meeting to order, and the secretary called the roll.


Present were:


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


Guests:   Keith Rogers, Director, Brian Furnish, Deputy Director, and Rose Bradshaw, intern, Governor's Office of Agricultural Policy; Kim Townley, Director, Early Childhood Development Initiative; Steve Davis, Department for Public Health; Sandy Canon, Early Childhood Development Authority.


LRC Staff:  Lowell Atchley and Lindsey Velasquez.


Minutes of the May 2, 2007 meeting were approved, without objection, by voice vote upon the motion by Sen. Pendleton and seconded by Rep. Hoffman.


Before turning to Committee business, committee members noted that Representative Royce Adams was recovering from knee replacement surgery. The presiding chair, Senator Carroll Gibson, directed that a get-well card be sent to the representative.


Co-chair Gibson 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 report on the county and state projects reviewed during the May Agricultural Development Board meeting.


After going over the model programs recommended for approval at the recent ADB meeting, Mr. Rogers turned to state and non-model projects. He began with the University of Kentucky Research Foundation project to implement a leadership training program for entrepreneurial coaches. The program, the second of its kind which the ADB had funded, would provide entrepreneurial training to persons living in southern and southeast Kentucky, at a cost of $883,545 for the program itself and a follow-up segment from a previous program serving northeast Kentucky.


During discussion, Representative McKee indicated he was familiar with the program and it appeared successful. He asked what obligations participants had once they graduated. Mr. Rogers responded that graduates must put in 50 hours of additional work, doing such things as conducting seminars on their own or working one-on-one with other entrepreneurs.


Representative Denham expressed a concern about the benefits derived from such a training program. According to Mr. Rogers, the ADB also had questioned the validity of the program. He said the training was a long-term project. He said they were able to look at some projects coming to them and link those back to trainees from the earlier program. According to him, a benefit of the program involved a "change in attitude up there."


According to Representative Denham, while entrepreneurship was good, there needed to be a way to measure the efficiency and effectiveness of the training.


Co-chair Gibson asked what accounted for the reduction in the original $1.4 million that was requested. Mr. Rogers said most of the difference came from the elimination of some salaries for UK personnel, plus not funding a trip outside the U.S.


Responding to another question regarding the type of instruction offered by the program, Mr. Rogers said there would be two classes, with 30 people in each class. Each class would last for 18 months, with a total of nine seminars, most of them three days long. Some of the classes would feature instruction by nationally recognized "super coaches."


Following that discussion, Mr. Rogers turned to another application approved for funding at the May ADB meeting, a $290,000 Kentucky Grape and Wine Council project to continue funding for a state viticulturist, enologist, and technical support person. Co-chair Gibson asked about the salaries of those named. Mr. Rogers did not have their salary amounts off-hand, but said he would get that information.


Mr. Rogers next reviewed the $34,483 Kentucky Corn Growers Association project to fund coordinators who would educate grain growers primarily in Western Kentucky counties. Representative McKee asked about offering the program to Central Kentucky grain producers. Mr. Rogers responded that the program was a pilot project in those areas and the intent ultimately would be to offer the grain-growing education statewide.


As the reviews continued, Representative Denham praised a Fleming County Board of Education project to expand and improve a Fleming County High FFA and agricultural livestock facility totaling $18,623.


Following description of some projects emanating from Woodford County, Senator Boswell asked about that county’s ranking in terms of tobacco production. Mr. Furnish noted that the projects described all were funded with county tobacco settlement funds. He said Woodford County would rank in the top 5 in tobacco production. Mr. Rogers pointed out that Woodford received $361,624 in county tobacco settlement funds this year.


Mr. Rogers also reviewed the circumstances in several projects that were denied funding. Representative Denham asked if those denials indicated any problems between county councils and those seeking the funds. But Mr. Furnish said they mainly were situations in which there simply were not enough funds available. Mr. Rogers likened it to an "indication of success."


As discussion continued, Representative McKee said county councils did not have authority at the beginning of the state agricultural development effort, but now were able to exert more power. Many volunteers put in time on the county councils, he said. According to Representative McKee, the denials meant nothing was wrong with the projects, but that others had greater priority.


At the end of his report, Mr. Rogers announced to the Committee that Mr. Furnish would be leaving GOAP on June 30 to return to farming full-time. He complimented Mr. Furnish for the work that he had accomplished during his tenure with the agency.


In his remarks to the Committee, Mr. Furnish praised the General Assembly for designating the tobacco settlement funds for agriculture. He said the funds were making a difference and indicated other states wished they could do the same thing with their tobacco settlement funds.


Several Committee members lauded Mr. Furnish. Representative McKee complimenting him on his work with the GOAP. He said Mr. Furnish had always answered his questions. Senator Boswell pointed out that Mr. Furnish exemplified what it meant to be a "public servant."


Turning to another matter, Co-chair Gibson spoke of a recent meeting he had with Mr. Rogers. He asked Mr. Rogers to expound on how the GOAP monitors and tracks  applicants’ use of tobacco settlement funds.


As described by Mr. Rogers, the GOAP begins monitoring compliance from the very outset of a contract signing. He said contracts set out terms and conditions of a project, including reporting procedures. Three GOAP staff persons work in the compliance division, one of them full-time and two, part-time. “The reports required are monitored when they come in,” he told the Committee, noting that generally a staff person would review those to assure that all requirements were met. They also made sure that reports were filed in a timely manner and followed up if they are not in on time.


According to Mr. Rogers, they paid particular attention to compliance on forgivable loans.


Also, Mr. Rogers said the ADB recently formed a compliance committee chaired by board member Vicki Yates Brown. The committee would serve as a type of hearing panel on compliance and reporting issues.


During his discussion, Mr. Rogers noted he reported on the status of forgivable loans last fall. At that time, he said, three entities with forgivable loans were out of compliance. Mr. Rogers said one of the reasons for formation of the compliance committee was to allow it to deal with a company that so far had refused to comply with GOAP staff directives.


On another issue, responding to Senator Boswell, Mr. Rogers said a company called Cabbage Inc. had taken over the former West Kentucky Growers Cooperative operation in Owensboro. The company also was working with the Central Kentucky Growers Cooperative in Georgetown. According to Mr. Rogers, Cabbage Inc. was interested in making Kentucky a prominent part of their production network.


Next, Co-chair Gibson asked Dr. Kim Townley, Director, Division of Early Childhood Development, to present the annual report of that agency, which received 25 percent of tobacco settlement funds coming to Kentucky through the Master Settlement Agreement. Joining her at the table were Dr. Steve Davis, Deputy Commissioner, Department for Public Health, and Sandra Noble Canon, Director, Division of Child Care, Department for Community Based Services.


Dr. Townley first gave a status report on the Early Childhood Development Authority, a panel that acts on policy and budgetary issues for the program. Next, she reviewed the status of the many programs within the Early Childhood Initiative and went over budgetary figures.


Responding to a series of questions from Representative Denham, Dr. Townley said some funding was cut from the Early Childhood councils, but part of that would be restored with the receipt of additional tobacco settlement funding. According to Dr. Townley, some Early Childhood funding was awarded on a competitive basis, but there were always more proposals than could funds available.


Dr. Davis responded to Representative Denham’s questions regarding immunizations. Dr. Davis said Kentucky was able to immunize 96-97 percent of children entering school for the first time. Those immunizations covered a range of diseases. He said the immunization funds were directed mainly toward under-insured families. Representative Denham complimented the group for their work in the Early Childhood Initiative.


Senator Pendleton asked about the status of medical examiners working with child advocacy centers. Dr. Davis responded that they were working with the University of Louisville in developing a medical examiner-type program for pediatric residents. The speakers said they were unaware of some regulations being promulgated on that issue, but would find out.


Responding to Senator Gibson, Dr. Townley described how they came to develop and establish the programs that made up the initiative. She said there was always room for improvement. She mentioned that a scholarship program for child care providers ran out of funds. But another program providing money for eye examinations had largely gone unused. “As long as we are having good results and as long as we can show the programs make a difference, then they’re worthy of funding,” she told the Committee.


Representative McKee asked if Kentucky was still a leader in the area of funding for early childhood health and education. While it was in the forefront, the state in recent years had fallen behind, the speakers said. Dr. Townley said many of the states that stand out in early childhood funding were located in the South. Also, Ms. Canon said the Arizona legislature recently passed a cigarette tax that would put $100-$150 million into an early childhood initiative there. Senator Pendleton likened Kentucky’s effort to a horse race, getting out ahead at the starting gate, but then running out of steam.


Dr. Townley, who acknowledged that she would be leaving the program on June 30 to return to UK as an instructor, said she hoped Kentucky would maintain its momentum in the area of early childhood development, and when the tobacco settlement dollars decline, would continue the appropriations with general fund dollars.


In other discussion, Committee members agreed to accept an invitation to conduct an upcoming meeting at the University of Louisville.


Documents distributed during the Committee meeting are available with meeting materials in the LRC Library. The meeting ended at approximately 11:45 a.m.