Tobacco Settlement Agreement Fund Oversight Committee




<MeetMDY1> October 6, 2010


Call to Order and Roll Call

The<MeetNo2> 8th meeting of the Tobacco Settlement Agreement Fund Oversight Committee was held on<Day> Wednesday,<MeetMDY2> October 6, 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 Givens, Vernie McGaha, Joey Pendleton, and Damon Thayer; Representatives Royce W. Adams, James R. Comer Jr., Charlie Hoffman, Tom McKee, and Tommy Turner.


Guests:  Roger Thomas, Bill McCloskey, and Tim Hughes, Governor’s Office of Agricultural Policy; and Steve Coleman, Kentucky Division of Conservation.


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


Minutes of the August 6, 2010 meeting were approved by voice vote and without objection on a motion made by Senator McGaha and seconded by Senator Pendleton.


The presiding chair, Senator Gibson, also accepted a motion and second to formally receive written reports from the Markey and Brown cancer centers, which were scheduled for presentation at the September committee meeting.


Governor’s Office of Agricultural Policy Report

Mr. Roger Thomas, Executive Director, Governor’s Office of Agricultural Policy (GOAP) and Mr. Bill McCloskey, GOAP Director of Financial Services, reported on the actions of the Agricultural Development Board (ADB) at its August and September meetings.


 Regarding a cleanup project for the East Buck Creek Watershed Conservancy District they explained to Co-chair Gibson that funding, awarded in the August ADB meeting, would help the district aid producers in clearing debris from waterways in McLean County. Some of the debris resulted from an earlier ice storm. Mr. Thomas indicated he would provide additional information to the co-chair regarding what, if any, federal funds were granted to pay for ice storm damage in that area.


Representative Comer lauded the board for approving funds to the Cumberland County Extension District Board to construct a demonstration certified kitchen for processors of home-grown foodstuffs. The representative said the funding will allow small farmers in that area to be profitable. Mr. Thomas noted the board had approved funding for several certified kitchen projects in the state.


The presenters responded to committee members’ questions about the ADB’s award of $164,900 to the Kentucky Pork Producers, Kentucky Cattlemen’s, and Kentucky Aquaculture associations to build new cooking facilities at the Kentucky Exposition Center (KEC). The associations had originally sought $155,000, but one construction bid came in higher than anticipated.


Mr. Thomas assured Representative Sims that pork producers from throughout the state would be able to use the facility to prepare food. The presenters indicated to Senator Givens that the overall increase in the cost of the facilities also meant the associations’ matching funds increased. Even though the facilities would be dedicated to the KEC, the associations would have exclusive use of the facilities for a decade. They explained that some funds could be reimbursed to the ADB, should construction costs come in lower than anticipated.


Two projects approved in the September ADB meeting prompted some questions and discussion – the Owensboro Community and Technical College welding and computer instruction project for Daviess County producers, and the Breckinridge County Board of Education project to offer welding training to area producers. Regarding the Daviess County project, funded at $22,696, Co-chair Gibson suggested that tobacco settlement funding from other surrounding counties also could have been committed to the endeavor. Responding to Senator McGaha, the GOAP officials explained how the Owensboro project would be using matching funds from the Kentucky Workforce Investment Network System (KYWINS). They pointed out that funding levels could be lower, should fewer people than anticipated enroll in the Owensboro program. During discussion of the Breckinridge County project, the GOAP officials explained that the per-student cost of the training could be lower for that project compared to the Owensboro project because of overhead and the like.


The Kentucky Agricultural Development Fund balance sheet showing county account amounts, distributed at the meeting, also prompted some discussion. The balance sheet showed all county accounts totaled almost $12.8 million following receipt of the Master Settlement Agreement payment in the spring, and also showed over $8.8 million available for distribution by counties as of mid-September.


Regarding the account balances, Mr. Thomas responded to Senator Givens that no pressure is put on counties to immediately spend their funds. Mr. Thomas did explain that they would like to see funds directed at entrepreneurial endeavors.


Mr. Thomas also responded to Co-chair Gibson’s observation that funds in the county accounts could be drawing more interest if they were held and invested for a longer period of time. But Mr. Thomas indicated that process would slow funds in “getting out the door.” He said he could foresee county objections to holding the funds for longer periods of time. Senator Pendleton said his experience on other boards showed that interest earned on funds is low at this time. Representative McKee urged caution, noting that it took a long time to build confidence in county decision-making regarding the use of the MSA funds.


Finally, Mr. Thomas noted the board has changed the way it goes about initial review of project applications, creating three board member panels that will each meet during successive four-month periods this year and next year.


Division of Conservation

            Mr. Steve Coleman, Director, Kentucky Division of Conservation, reported on the soil and water quality cost share, and soil stewardship programs, which receive tobacco settlement funds. Mr. Coleman talked about the history of the program, funding through the years, the types of soil and water practices that are eligible for funding, and current funding levels. He also discussed the Agricultural Water Quality Act, the Green River Conservation Reserve Enhancement Program, partnerships with other agencies, and the status of the new Mississippi River Basin Healthy Watersheds Initiative 2010.


            Mr. Coleman responded to Co-chair Gibson that the Mississippi River Basin program grew out of the current Farm Bill and is aimed at combating pollution accumulating in the Gulf of Mexico from runoff in the basin, which includes parts of Western Kentucky. He explained to the senator that tributaries of the Ohio River also are considered pertinent to the Mississippi River Basin program.


He pointed out to the committee that his office will be able to use the experience of the Green River program as it begins work on the Mississippi River Basin program.


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


The meeting adjourned at approximately 11:30 a.m.