Tobacco Settlement Agreement Fund Oversight Committee




<MeetMDY1> July 5, 2007


The<MeetNo2> Tobacco Settlement Agreement Fund Oversight Committee met on<Day> Thursday,<MeetMDY2> July 5, 2007, at<MeetTime> 10:00 AM, in<Room> Room 129 of the Capitol Annex. Representative Mike Denham, 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; Senator Joey Pendleton; Representatives Royce W. Adams, James R. Comer Jr, Charlie Hoffman, Tom McKee, and Tommy Turner.


Guests:  Keith Rogers, Director, Governor's Office of Agricultural Policy; D.J. Wasson, Acting Deputy Director, Kentucky Office of Insurance; Tonya Parsons, Director, Kentucky Access; Laurie Dudgeon, Executive Director, Office of Drug Control Policy.


LRC Staff:  Lowell Atchley and Lindsey Velasquez.


Minutes of the June 6, 2007 meeting were approved, without objection, by voice voted upon the motion by Sen. Gibson and seconded by Sen. Pendleton.


The presiding co-chair, Representative Mike Denham, next asked Mr. Keith Rogers and Mr. Tim Hughes, Executive Director and Deputy Executive Director respectively of the Governor’s Office of Agricultural Policy, to review the list of projects considered for funding during the June Agricultural Development Board (ADB) meeting.


Before beginning the projects review, Mr. Rogers reported on GOAP personnel changes that came about because of staff either leaving public service or moving to other Executive Branch positions.


Mr. Rogers also distributed a state map showing a realignment of areas of responsibility covered by GOAP project analysts. Responding to Senator Gibson, Mr. Rogers said they took into account funds allocated to all counties in the areas, the number of counties, and proximity of major roads. According to Mr. Rogers, most of the analysts live in or near their areas of responsibility.


As Mr. Rogers’ report turned to state-funded projects, Senator Gibson asked a series of questions surrounding the ADB’s approval of $825,716 in state funds for the Kentucky Poultry Federation to offer a statewide poultry house evaluation service and establish an education program.


The GOAP executive director first explained in greater detail how money would be used for employee salaries in the poultry house evaluations and in the creation of a poultry manual.


Senator Gibson asked to what extent would individual poultry companies, or “integrators” be involved in funding poultry house evaluations. According to Mr. Rogers, the evaluations would be aimed at evaluating heating and cooling systems and making evaluations regarding energy efficiencies. He said some integrators had incentive programs available to farmers to make changes based on the poultry house evaluations. But they would not be paying any of the direct costs for the evaluations, according to Mr. Rogers.


During the review of state projects, Co-chair Denham asked for more information regarding the Kentucky Agriculture Council, which received $25,000 in Kentucky Center for Agricultural Development and Entrepreneurship funds to support the task force in developing a “strategic plan for action for agriculture.” The strategic plan was the outgrowth of the Governor’s recent summit on agriculture.


According to Mr. Rogers, the council was created in the 1980s and stood as an umbrella organization for agricultural groups. Dr. Tony Brannon, dean of the School of Agriculture at Murray State University, chaired the organization. Mr. Rogers indicated that the council was chosen as the vehicle to support the task force because of its ties to agriculture and the fact that it was not a state agency.


After reviewing the projects, Mr. Rogers invited Committee members to attend some combined Agricultural Development Board-Kentucky Agricultural Finance Corporation meetings and field trips in northern Kentucky on July 19-20.


Next, Co-chair Denham asked Ms. D.J. Wasson, Acting Deputy Director, Kentucky Office of Insurance, and Ms. Tonya Parsons, Director, Kentucky Access, to report on the Kentucky Health Care Improvement Authority (HCIA) and the Kentucky Access high risk insurance program.


First, Ms. Wasson gave the Committee an overview of the HCIA, created by statute. According to Ms. Wasson’s report, HICA established priorities for programs and for the review of expenditures of tobacco settlement funds. The organization also established procedures for accountability and developed mechanisms to measure the success of programs that receive allocated funds in accordance with criteria and instructions provided by the General Assembly.


During a discussion of funding sources for the various programs under the authority, Senator Pendleton asked why the Kentucky Lung Cancer Research Program had received no grants during the current fiscal year. Ms. Wasson replied she was uncertain, but would get the information. According to Senator Pendleton, the organization should be rigorous in pursuing grant funding.


Ms. Wasson reviewed some of the accomplishments of the HICA agencies receiving tobacco funding. As she proceeded, Ms. Wasson responded to Co-chair Denham that Kentucky Access was soliciting other insurers to offer coverage, both in the individual and small group market.


Responding to Co-chair Denham, Ms. Wasson said most of the programs were “education-driven” and “treatment-driven.”


In terms of challenges for the programs, Ms. Wasson mentioned the uncertainty of funding and lack of quorums for HICA meetings. Concerning the HICA membership and the problem with quorums, Ms. Wasson told Senator Gibson that new proxy option seemed to be working well by allowing someone to attend a HICA meeting on the member’s behalf.


Following Ms. Wasson, the Committee heard from Ms. Parsons, who reported on the status of Kentucky Access. In her testimony, she discussed applicant data generally, demographics, coverage choices, and budgetary matters. According to Ms. Parsons, Kentucky Access, as of May 31, insured 4,111 Kentuckians who were unable to obtain health insurance in the private market.


During questioning, Ms. Parsons told Representative Adams that Anthem Blue Cross-Blue Shield served as the third party administrator for Kentucky Access and a company called “ATM” conducted day-to-day operations.


In terms of the budget, in FY 2006, Tobacco Settlement Agreement funds totaled almost $16.8 million. Also, as of April 30, tobacco settlement funds took care of 42 percent of Access claims expenses.


Responding to questions from the co-chairs, Ms. Parsons said that, as tobacco settlement fund amounts decline, premiums and insurance company assessments would increase. She said they received a $2 million grant, which was helpful. Ms. Parsons said any excess funds remaining at the end of the fiscal year were kept in reserve for future needs.


Responding to Representative McKee, Ms. Parsons said she would provide a recap of revenues and expenses for Kentucky Access covering the life of the insurance program.


In answering Co-chair Denham about problems facing Kentucky Access, Ms. Parsons indicated those covered by the program were hard-pressed to meet premium costs, even though they were lower than the premiums on the open market. She said they planned to use the federal grant to undertake a “disease management plan” for members.


Ms. Wasson, responding to a similar question, said she was concerned about the stability of funding for the HICA programs.


Senator Gibson, referring to low Kentucky Access participation in Eastern Kentucky, suggested that federal funds be dedicated to assisting people in that area who might have difficulty in paying their insurance premiums.


Next, Co-chair Denham introduced Ms. Dudgeon for a report on the Kentucky Agency for Substance Abuse Policy (KY-ASAP). Before beginning, Ms. Dudgeon introduced Ms. Amy Andrews, the new ASAP coordinator.


Ms. Dudgeon’s report discussed the activity of local boards set up to dispense KY-ASAP funds and accomplishments of those boards. She said there were 73 boards currently covering 111 counties in the state.


According to Ms. Dudgeon’s report, 2008 funding allocations to individual counties, or multicounty organizations, would total over $1.6 million. In her presentation, she stressed that some boards were doing an excellent job while others needed some guidance.


Representative McKee asked why the combined Bourbon-Harrison board received only $20,000 in ASAP funding, although it applied for $40,000. Ms. Dudgeon said she was unable to answer the question without seeing the board’s application. She said the applications were scored based on certain criteria.


She assured Representative Adams that representation of urban and rural counties on regional boards was balanced.


Ms. Dudgeon told Co-chairman Denham that KY-ASAP personnel received numerous calls from county and regional board members regarding statutory requirements and compliance. She mentioned the turnover that occurred among boards. Ms. Dudgeon said they had reduced their administrative costs at the same time as the number of ASAP boards had grown. She also said a new federal grant would be helpful in measuring the success of their substance abuse programs.


During continuing discussion, Representative McKee encouraged the KY-ASAP officials to take on the issue of prescription drug abuse. According to Ms. Dudgeon, KY-ASAP had authorized one-time additional funding allocations for “hot spots” battling different types of substance abuse, including prescription drug abuse. Ms. Dudgeon responded to Senator Gibson that surveys were used to identify the hot spot areas. She said federal funding would be used to tackle some of the problems identified in those counties and regions.


Finally, Ms. Dudgeon assured Representative Comer that a funding discrepancy discussed when they last appeared before the Committee had been resolved as an outgrowth of an audit.


Documents distributed during the Committee meeting are available with meeting materials in the LRC Library. The meeting ended at approximately 11:40 a.m.