Tobacco Settlement Agreement Fund Oversight Committee




<MeetMDY1> July 7, 2010


Call to Order and Roll Call

The<MeetNo2> meeting of the Tobacco Settlement Agreement Fund Oversight Committee was held on<Day> Wednesday,<MeetMDY2> July 7, 2010, 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 Dottie Sims, Co-Chair; Senators David E. Boswell, and Vernie McGaha; Representatives Royce W. Adams, James R. Comer Jr., Charlie Hoffman, Tom McKee, and Tommy Turner.


Guests:  Roger Thomas, Michael Judge, Joel Neaveill, Jennifer Hudnall, Christi Marksbury, and Angela Blank, Governor’s Office of Agricultural Policy; Rodney Dick, Agricultural Development Board member; Annette Bridges, Division of Early Childhood Development; Patrick Smith, REACH of Louisville.


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


Minutes of the June 2 meeting was approved by voice vote and without objection on a motion made by Senator Boswell and seconded by Chairman Gibson.


Governor’s Office of Agricultural Policy Report

Mr. Roger Thomas, Executive Director, Governor’s Office of Agricultural Policy (GOAP), Mr. Joel Neaveill, GOAP Chief of Staff, and Mr. Michael Judge, GOAP Director of Operations reported on the actions of the Agricultural Development Board (ADB) at its June meeting.


Following a survey of the County Agricultural Investment Program (CAIP) and Share-use Equipment Program projects from the previous month, Mr. Judge reviewed the state projects approved by the board in its previous session.


During the Cumberland Farm Products Association discussion, Representative Comer questioned the need for the project, for which the board approved $20,000 to remodel an existing warehouse for lease to a full-service farm supply store. The Wayne County Council identified a general farm supply store as their No. 1 priority, Mr. Judge explained.


The GOAP officials responded to several questions, mainly from Senator McGaha, Representative McKee, and Chairman Gibson about the need and manner of funding for the Breckinridge County project, which was granted $6,120 by the board to develop a welding training program for area farm producers. According to Mr. Judge, the total budget for the project was actually $21,300, with a large portion of that amount to be made up of in-kind services contributed by welding instructors and administrators.


GOAP staff members also revealed to the committee that they had discussed creation of a stand-alone program for counties that desire to fund the welding classes.


Discussion also turned to the guidelines that county councils use in determining what preference must be given to current or former tobacco growers who apply for tobacco settlement funds locally. The GOAP officials indicated they would forward a copy of their CAIP tobacco-dependency policy to committee members.


They responded to Chairman Gibson’s observation regarding the lack of membership turnover on county councils. Mr. Thomas pointed out that legislation enacted in the 2009 legislative session established a process to require rotation of council member terms and to achieve more diversity on councils. Those changes were to take effect in July of this year.


A project that was denied funding, the Owen County Historical Society, and one that the board delayed for additional information, the Kentucky Association of Food Banks, both prompted committee discussion.


The GOAP officials responded to several questions from Representative Adams regarding the board’s denial of funding for the Owen County applicant, which had sought $4,000 in tobacco settlement funds to pay for some murals that would be painted on barns as part of a tobacco heritage trail. The board agreed with a GOAP staff recommendation of no funding because of lack of direct producer impact.


Representative Adams explained that the funds would have benefitted a tourism project to attract visitors to Owen County. According to Representative Adams, the tobacco heritage trail had been studied extensively and had considerable backing from Owen County community leaders. 


Later in the meeting, Mr. Thomas said they would provide information about the Owen County project to committee members and indicated a desire to work with the applicants should they desire to reapply.


The GOAP staff members also responded to several questions from committee members about the Kentucky Association of Food Banks proposal to purchase Kentucky-grown surplus produce and distribute the food commodities to low-income clients. GOAP staff had originally recommended funding the application for $150,000 in state funds, with the applicant urged to secure remaining funds of $100,000 from county councils. But the board delayed the project.


Senator McGaha and Representative Comer questioned the benefits of the project to producers. Senator McGaha indicated it might be a better process to give $250,000 directly to county councils and have them purchase the food and distribute it. Representative Comer mentioned the desirability of obtaining county commitments.


Representative McKee noted that the project is related to legislation passed in 2009 creating a statewide program aimed at distributing farm produce to food banks. He described the program as a “win-win” undertaking, but allowed that current budget constraints are problematic.


Mr. Thomas mentioned a similar, albeit smaller, pilot project that operated with tobacco settlement funds last year. During the discussion, he also mentioned that GOAP staff had met with the applicants in an attempt to scale down the budget for the latest project.


Senator McGaha indicated he did not want to appear callous, but he said the amount sought would not be significant on a statewide basis. He suggested that local gardeners could make available their surplus foodstuffs.


The discussion prompted a suggestion from Senator Gibson, who proposed that regional detention centers could grow produce that ultimately could be donated to local food banks.


On other issues, the GOAP officials described their recent fact-finding trip to North Carolina to visit with officials with the Gold Leaf Foundation, which was established to provide tobacco settlement funds for economic impact assistance to economically distressed or tobacco-dependent regions that state. It also was revealed that Mr. Judge will be leaving the GOAP to return to Eastern Kentucky University, where he taught for several years before joining the Department of Agriculture and then later the GOAP.


Division of Early Childhood Development Report

Ms. Annette Bridges, Director, Division of Early Childhood Development, reported on the activities of the agency. Joining her was Mr. Patrick Smith, a Community Planner and Evaluation Researcher with REACH of Louisville, who discussed an economic evaluation of KIDS NOW, a major part of the Early Childhood Development Initiative.    


            In remarks preceding Mr. Smith’s presentation, Ms. Bridges gave an overview of the Early Childhood Development Initiative and its three main components – Assuring Maternal and Child Health, Supporting Families, and Enhancing Early Care and Education.


            Next, Mr. Smith provided an overview of the study, which was sought by the Kentucky Department of Education and the Early Childhood Development Authority. The report focused mainly on the direct cost savings, such as savings achieved through the avoidance of medical treatments, hospital costs, or reduction of special education costs.


            Mr. Smith told the committee that their study estimated $88 million in cost savings (costs avoided) for KIDS NOW programs for which data were available in 2008. He noted that they applied conservative estimates in their work.


            Following Mr. Smith’s segment, Ms. Bridges responded to committee members’ questions. She indicated she would need to respond later to Chairman Gibson’s question regarding many people work for the Early Childhood Development program, both in the Department of Education and in the Cabinet for Health and Family Services. She responded the Senator Gibson that they hoped there is no overlap or duplication of other programs, although the initiative may partially pay for services offered by other programs.


            Co-chair Sims pointed out that agencies will appear before committees and many times are unable to provide administrative costs for legislators. Later in the meeting, Ms. Bridges pointed out that Mr. Smith’s research showed the initiative’s administrative costs were 6 percent.


            Responding to Representative Adams, Ms. Bridges said their programs extend statewide. Also, grants funds are given out on a proportional basis, based on the size of counties.


            She responded to Senator McGaha, who followed up on Senator Gibson’s questions, saying that, while Early Childhood Development receives approximately $25 million per year in tobacco settlement funds, those funds are used in tandem with, or an extension of, other funds received by programs.


            Senator McGaha pointed out that a budget sheet provided to the committee did not list the separate programs, although the sheet showed month-by-month revenues and expenses. Noting a copying problem, Ms. Bridges promised to get a new budget sheet to committee members.


            Responding also to Senator McGaha, she described how funds are spent to correct dental caries that develop in younger children.


            Representative McKee said the $88 million in savings was “very impressive.”


            As the meeting was ending, Ms. Bridges responded to Chairman Gibson, who asked what would happen if $25 million in tobacco settlement funds were no longer available. Ms. Bridges said they hoped to “make a case” for funding, but indicated that they realize the tobacco funds will not last forever. If funds are spent on early childhood development, then perhaps the state will avoid some costs later, she indicated to the committee, pointing out that coordination will need to improve.


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