Tobacco Settlement Agreement Fund Oversight Committee




<MeetMDY1> July 1, 2009


The<MeetNo2> 5th meeting of the Tobacco Settlement Agreement Fund Oversight Committee was held on<Day> Wednesday,<MeetMDY2> July 1, 2009, at<MeetTime> 10:00 AM, in<Room> Room 131 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 Dottie Sims, Co-Chair; Senators Charlie Borders, David Givens, Vernie McGaha, and Joey Pendleton; Representatives Royce W. Adams, James R. Comer Jr., Charlie Hoffman, Tom McKee, and Tommy Turner.


Guests:  Roger Thomas, Michael Judge, Joel Neaveill, and Angela Blank, Governor’s Office of Agricultural Policy; Irene Centers, Bobby Gray, and Robert Baker, Department for Public Health.


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


Before beginning, the presiding co-chair, Senator Gibson, recognized two additional legislators in attendance, Representatives Fred Nesler and Will Coursey.

The June 3, 2009 minutes were approved by voice vote and without objection, on a motion made by Senator McGaha, seconded by Representative McKee.


Co-chair Gibson asked Mr. Roger Thomas, Executive Director, and Mr. Joel Neaveill, Chief of Staff, and Mr. Mike Judge, Director of Operations, Governor’s Office of Agricultural Policy (GOAP), to report on the projects considered by the Agricultural Development Board (ADB) during its June meeting.


Mr. Judge reviewed the state projects list, beginning with Thoroughbred RC&D Council request for $883,400 in Scott County agricultural development funds to establish a purchase of conservation easements program. The ADB awarded much less, $5,000, because there are ongoing Kentucky and Fayette County farmland preservation programs that are benefitting from a bond issue paid off annually with tobacco settlement funds.


Responding to Representative McKee, Mr. Thomas said the 20-year bond issuance was in the seventh year. Annual payments total over $2 million. Representative McKee expressed a concern that the state PACE program had not received adequate funding, and indicated a hope the program could receive funding in the future.


Senator Givens raised a question related to the next project, a $10,000 Shelby County endeavor to set up a dead livestock removal program through a contract with a pickup service. Responding to the senator’s question whether a pickup service must be certified in some manner, the speakers said such companies are instructed about statutes governing dead animal hauling and disposal.


Next, the speakers reviewed the $60,000 God’s Pantry Food Bank project, based in Fayette County, established to buy and distribute 15 types of Kentucky grown surplus produce for low-income clients in the organization’s 50-county service area. The distribution program will be evaluated in October.


Mr. Judge mentioned HB 344 from the 2009 session that sets up a program in the Department of Agriculture to award grants to non-profit entities that would buy surplus agriculture products and distribute them through food banks.


Representative McKee, the primary sponsor of HB 344, discussed how the legislation came to fruition and noted the importance of using surplus food to feed the hungry, rather than putting it in landfills. He indicated he would be looking forward to learning the results of the evaluation of the program.


According to the speakers, the applicant will buy produce from produce auctions in the area. Apparently, they said, counties committed funds because they have growers residing there.


The next project prompted considerable committee discussion, the Louisville-Jefferson County Metro Government Economic Development Department, which sought $57,750 in state funds plus varying smaller amounts from adjacent counties. Ultimately, the applicant received $87,750 in state funds, plus the county funds.


Mr. Judge explained to Co-chair Gibson that the funds would used to hire a “public interest broker” who would link producers with restaurants, caterers, corporations, and institutions. An additional $60,000 “Wired 65” federal grant could lead to the hiring of two people for a year, or extending the broker position over a longer period. According to the speakers, GOAP staff originally recommended the $57,750 amount for year, whereas the board opted for the higher amount for a longer timeframe.

Responding to Representative Comer, Mr. Thomas said that, in the past, some projects had been funded for two-year cycles, but the GOAP was recommending shorter contracts at this time because of limited Agricultural Development Fund moneys.


According to Representative Comer, the project might be worthwhile, but he said it reminded him of the Allied Food Marketers West project from several months ago that was criticized in an Auditor of Public Accounts audit. The representative said that project wasted funds. He said this project looks similar. He wondered aloud if someone in the Department of Agriculture could do the work. He mentioned the board increased the amount sought under this project and also was supportive of the Allied project.


Mr. Judge pointed out this was a smaller project. The board felt this was a project that would be overseen by the Louisville metro government and would impact Jefferson and surrounding counties, according to Mr. Judge.


They told Representative Comer the broker has not been appointed. Mr. Judge pointed out that requirements of the project call for the applicant to achieve certain goals.


After Representative Comer issued additional words of caution on the project, Mr. Thomas said current project legal agreements, with specific terms, are more stringent than before.


Responding to Representative Hoffman, they indicated that projects of this type would be subject to six-month and annual reviews. They again elaborated on the measures that will be used to evaluate the project. According to the speakers, the public interest broker will attempt to gain access to the various markets in Louisville for producers. In turn, Representative Hoffman discussed efforts by his employer, a grocery chain, to provide wholesome food in the Louisville market.


Senator Givens also urged the GOAP staff to hold the applicant accountable and to measure the impact of the project in terms of what is happening now versus the end result.


Senator Givens alluded to the commitments from adjacent counties in amounts from $250-$500. “I’ve long understood that a regional project springs from multiple counties putting in dollar amounts to create regional impacts, regional buy-in,” he said. But he asked if $500 from those counties was truly a commitment or a token amount.


According to Mr. Thomas, GOAP staff and board members have dealt with what is defined as a “significant commitment” from counties involved in projects. He said they would appreciate committee input on the issue. He also mentioned the dilemma involved in defining a region, or establishing a formula for the size of a county commitment. He later pointed out that the county tobacco settlement fund accounts vary in size.


Senator Givens said it would be interesting if GOAP staff invited members of the committee to one of the agency’s periodic site visits. Mr. Thomas termed that a good suggestion.


Referring to Representative Comer’s criticism of the Allied project, Mr. Thomas pointed out that, even though there were some negative aspects about the project, it increased the level of awareness of the Kentucky Proud program.


Mr. Judge next answered a series of questions from Senator McGaha regarding how much money the applicants sought originally and at what juncture county commitments materialized. Mr. Judge pointed out that applicants, not GOAP staff, approach county councils when seeking out local matching funds. Also, prior to an application coming to the board’s attention, county council commitments must be solidified. He also said they were not made aware of the Wired 65 grant until just before the board considered the project.


The Logan County Extension District Board multipurpose agricultural center project, involving $100,000 in Logan County funds, and $5,000 from Todd County, was the subject of some discussion. The speakers explained to Senator Givens that projects like that had received no state funds in the past, only county funds. He mentioned it would require a policy change by the board to put a different approach in effect.


Senator Pendleton, who represents that area, said the project could be receiving funds from other counties. He said the project had received significant commitments from other entities as well. The senator said the center would be located adjacent to a farmers’ market in Logan County. But he said they still do not have enough money to develop a center to accommodate certain types of activities that require more space.


On other issues, the speakers explained to Senator Givens how county funds are committed by local councils as a result of recent policy changes. Most county projects are funded for one year. County councils also are required to establish primary and secondary investment areas under which different levels of funds are made available. They also said counties have the option of contributing up to 75 percent of the cost of a project.

Responding to Senator Givens, they said most counties that set up dead animal removal programs choose to contract with renderers for pickup, rather than landfill disposal or on-farm burial.


Next, the chair called on Ms. Irene Centers, Program Manager, Tobacco Prevention and Cessation Program, for a report on her agency’s use of tobacco settlement funds.


Before beginning, Ms. Centers introduced Mr. Steve Salt, with the Department for Public Health, an ex-smoker who described his efforts over several years to quit smoking.


Following Mr. Salt’s testimony, Ms. Centers gave the committee an update of the program. Since 2000, she said, the middle school smoking rate in the state has declined 56 percent and the high school rate, 28 percent. She described some of the factors contributing to the declines.


According to her report, tobacco cessation efforts include: Kentucky’s Tobacco Quit Line, the Cooper-Clayton Method to Stop Smoking offered through health departments, an infants and families project that covers several counties, provider education efforts, a hospital in-patient tobacco treatment pilot project, a Medicaid NRT project, nicotine replacement therapy benefits for state employees, and nicotine replacement products available at wholesale through health departments.


She made note of the number of smoke-free municipalities in the state.


In the future, according her report, a quit-smoking Web site will be available for smokers to visit. More emphasis will be put on having 24/7 tobacco-free schools, and integrating cessation with diabetes education.


Responding to questions, Ms. Centers told Senator Pendleton that a $458,106 expense under the “dues and subscriptions” category on a budget chart went toward the cost of participating in the Web-based national campaign, which will involve 13 states.


She responded to Co-chair Gibson that the grant from the Centers for Disease Control requires a match of $1 for every $4. She said they apply yearly, with the CDC considering issues such as how well they implemented their goals from the previous year.


Responding to Co-chair Gibson, Ms. Centers noted that most donations from outside entities, such as the heart or cancer associations go to local health departments, not to the state agency as a whole.


She told the senator that the recent cigarette tax increase had an impact. She said they saw a “tremendous increase” in the volume of calls to the quit line.


Ms. Centers said she would send some studies to Senator Gibson that show a direct correlation in declining smoking rates compared to cigarette tax increases.


Responding to Representative McKee, who asked about adequacy of funding, Ms. Centers said they try to strive for best practices with the funds available. With additional funds, she said, they could offer more medications to people who want to quit and sent more money to local communities.

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