Tobacco Settlement Agreement Fund Oversight Committee




<MeetMDY1> April 13, 2011


Call to Order and Roll Call

The<MeetNo2> meeting of the Tobacco Settlement Agreement Fund Oversight Committee was held on<Day> Wednesday,<MeetMDY2> April 13, 2011, at<MeetTime> 10:00 AM, in<Room> Room 129 of the Capitol Annex. Lowell Atchley, LRC Staff, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Paul Hornback, Co-Chair; Representative Wilson Stone, Co-Chair; Senators Carroll Gibson, Dennis Parrett, and Joey Pendleton; Representatives Royce W. Adams, James R. Comer Jr., Tom McKee, Fred Nesler, and Tommy Turner.


Guests: Roger Thomas, Joel Neaveill, Bill McCloskey, Cyndi Hall, Jennifer Hudnall, Christy Marksbury, and Mike Tobin.


LRC Staff: Lowell Atchley, Lashae Kittinger, and Kelly Blevins.


Co-chair Election

Following roll call and confirmation of a quorum, staff opened the meeting by conducting elections for Senate and House co-chairs. A motion was made by Senator Pendleton that Senator Paul Hornback serve as the Senate co-chair, replacing Senator Carroll Gibson, who chose to step down as co-chair. The motion was seconded. A motion then was made and seconded that nominations cease for the position of Senate co-chair and that Senator Hornback be elected by acclamation. The motion passed.


Representative McKee moved that Representative Wilson Stone be re-elected as House co-chair. The motion was seconded. A motion was then made and seconded that nominations cease for the position of House co-chair and that Representative Stone be elected by acclamation. The motion passed.


Minutes and Announcements

With Representative Stone presiding, the February 2, 2011 minutes were approved by voice vote and without objection, on a motion by Senator Pendleton that was seconded by Representative Nesler.


At the co-chairs request, the committee had moment of silence Representative Dewayne Bunch, recently hurt in a school-related incident. Representative Comer announced the birth of his third child, Aniston Lucille. Also, the committee formally recognized that the meeting marked the first for Senator Hornback, who replaced Senator Damon Thayer on the committee.


Senator Gibson mentioned his tenure as co-chair and complimented Mr. Roger Thomas, Executive Director of the Governorís Office Agricultural Policy, and his staff for a positive working relationship. He also predicted that Senator Hornback will perform well as a co-chair.




Governorís Office of Agricultural Policy

Chairman Stone called on Mr. Thomas, and Mr. Joel Neaveill, GOAP Chief of Staff, and Bill McCloskey, GOAP Director of Financial Services, to give their monthly report to the committee.


†Before reporting on projects acted on by the Agriculture Development Board during its February and March meetings, Mr. Thomas announced a series of forums to gain input in the future use of the Kentucky Agricultural Development Fund (KADF) to continue strengthening Kentuckyís agricultural economy.


The idea for the forums would be to consider ways that the Agricultural Development Fund can be used to entice proposals that create or expand markets for farmers, build on core agricultural assets in the various regions of the state or foster agricultural entrepreneurship and agribusiness development, according to Mr. Thomas, who said there would be eight of the forums throughout the state. He encouraged legislators to attend.


Mr. Neaveill reported on the County Agricultural Improvement, Deceased Farm Animal Disposal Assistance, and Share-use Equipment programs funded by various counties.


Some committee members, including Representatives Adams and McKee, inquired about the future of funding for the dead farm animal program. Mr. Thomas pointed out the ADB would like to see a permanent solution to the issue, which arose several months ago as a result of tighter federal restrictions regarding the end use of livestock carcasses. He said the Kentucky Farm Bureau is looking at the problem as well. Co-chair Stone observed that the public as a whole is concerned about the issue.


Mr. Neaveill summarized the state and regional projects that were approved for funding during the recent ADB meetings. They included the Kentucky Association of Food Banks, which was approved for $163,000 in state funds to buy produce from Kentucky producers and distribute the commodities to seven food banks in the state, and the Kentucky Agricultural Council, which received $125,000 in state funds to continue its agricultural promotion work. The board denied funding for two projects, the Central Cumberland Young Farmers, which sought the funds to conduct farm tractor restoration classes, and the Jeffersontown Farmers Market, which applied for funds to buy a water station for the market.


In reviewing the Kentucky Association of Food Banks project, Mr. Neaveill mentioned the 2009 legislation that created a program to acquire lesser quality farm produce and distribute the commodities through local food banks.


Responding to questions from Senator Parrett, Mr. Neaveill indicated that there are five produce auction markets in Kentucky where the commodities are purchased. He said commodity buyers will track and verify that Kentucky farmers are supplying the foodstuffs. As discussion continued, the witnesses reported that almost $137,000 of the grant would be used to purchase produce. The other portion would be used to cover transportation costs.


Representative Nesler asked about the locations of the food banks and wondered aloud if the commodities would reach food banks in all regions of the state. Citing an example of a farmer who may have commodities that could be used in the program, Representative Nesler told about a sweet potato grower in his area who lets some of the tubers go to waste in the fields in the fall.


Mr. Thomas had a map showing food bank regions distributed to the committee.


Regarding the project denials, the GOAP officials describe the various ways that projects do not receive positive funding recommendations.


Agricultural Finance Corporation Report

††††††††††† The committee heard an update on the Kentucky Agricultural Finance Corporation (KAFC), which uses Agricultural Development Fund moneys in a variety of loan programs.


Mr. McCloskey reported on the background of the KAFC and discussed how each program works. Benefits of KAFC loans, according to Mr. McCloskey, are below market financing, the use of existing community lenders, a simple and streamlined application process, flexible payment terms, and a quick loan turnaround.††††††


††††††††††† To date, some 354 loans totaling almost $38 million have been approved through the KAFC, according to the report. A total of 67 lenders have participated with the KAFC.


††††††††††† Mr. McCloskey reviewed for the committee the KAFC programs, which include the Beginning Farm Loan Program, the Agricultural Infrastructure Loan Program, the Large/Food animal Veterinary Loan Program, the Diversification through Entrepreneurship in Agriculture Loan Program, the Agricultural Processing Loan Program, and the Coordinated Value-added Assistance Loan Program.


††††††††††† Mr. McCloskey discussed each program and illustrated his remarks with personal stories about how loan recipients are using the funds.


††††††††††† For example, Mr. Thomas noted that a $3 million loan to the Siemer Milling Co. facility in Hopkinsville under the Agricultural Processing Loan Program has far-reaching implications because of the amount of grain the company uses from area producers. Co-chair Stone indicated the arrangement is a good example of how funds benefit local economies.


††††††††††† As the meeting ended, Mr. Thomas responded to Co-chair Stone that Kentuckyís payment from tobacco companies participating in the Master Settlement Agreement should be received on time (generally by mid- to late-April) and the payment probably will be slightly less than the 2010 payment.


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