Tobacco Settlement Agreement Fund Oversight Committee




<MeetMDY1> July 6, 2011


Call to Order and Roll Call

The<MeetNo2> meeting of the Tobacco Settlement Agreement Fund Oversight Committee was held on<Day> Wednesday,<MeetMDY2> July 6, 2011, at<MeetTime> 10:00 AM, in<Room> Room 129 of the Capitol Annex. Senator Paul Hornback, Chair, 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, Vernie McGaha, Dennis Parrett, and Joey Pendleton; Representatives Royce W. Adams, James R. Comer Jr., Tom McKee, Fred Nesler, and Tommy Turner.


Guests: Annette Bridges, Director, and Division of Early Childhood Development, Kentucky Department of Education; Dr. Jennifer Grisham-Brown, Principal Investigator, KIDS NOW Early Care and Education Evaluation, University of Kentucky; Ruth Ann Shephard, Department of Public Health; Marybeth Jackson, Division of Child Care, Cabinet for Health and Family Services, Roger Thomas, Joel Neaveill, Mike Tobin, Angela Blank, Christi Marksbury, Governor’s Office of Agricultural Policy.


LRC Staff: Lowell Atchley, and Susan Spoonamore, Committee Assistant.


The June 1, 2011 minutes were approved by voice vote and without objection, upon motion made by Senator Pendleton and second by Representative Stone.


Division of Early Childhood Development Report

            The presiding chair, Senator Hornback, called on the first witnesses, representatives of the Division of Early Childhood Development, who reported on division activities during the previous year with the use, in part, of tobacco settlement funds. Speaking to the committee were: Annette Bridges, Division Director, Dr. Jennifer Grisham Brown, Principal Investigator, KIDS NOW, Dr. Ruth Shepherd, Division for Public Health, Cabinet for Health and Family Services, and Marybeth Jackson, Division of Child Care, Cabinet for Health and Family Services.


            Ms. Bridges briefed the committee on the Early Childhood Initiative, putting particular emphasis on the three main programs – Assuring Maternal and Child Health, Supporting Families, and Enhancing Early Child Care and Education.


            Responding to a question from Co-chair Hornback, Ms. Bridges said the initiative no longer offers vision screening for children in the program; vision screening is required as a prerequisite to entering public schools.


            Ms. Bridges and Dr. Shepherd responded to a series of questions from Senator McGaha regarding the standards used to measure positive outcomes under the HANDS program. According to Dr. Shepherd, the program utilizes birth certificate records, demographics, and other criteria in the measurement process. About half of the mothers who qualify seek out services offered by the HANDS program.


            Ms. Jackson described for Senator McGaha and Senator Pendleton the standards used to place child care facilities in the “stars” recognition system. She commented on outcomes in star-rated versus those that are not star-rated. There are quality facilities that are not star-rated. During the discussion, Senator Pendleton emphasized that the groundwork laid in day care centers is important to later success.


            Ms. Bridges and Ms. Jackson responded to Senator Pendleton’s questions regarding the need to assure that pre-schoolers are introduced to healthy foods. He mentioned schools’ ability to used Kentucky Proud commodities. Ms. Bridges indicated the child care centers do not participate per se, although they may have the opportunity to partner with schools in buying farm raised produce. Ms. Jackson noted that the Centers for Disease Control will be offering funds for child care centers to seek out training on health food choices. During the discussion, Senator Pendleton emphasized the need to address the childhood obesity problem in Kentucky. He indicated the need to begin the process in day care centers.


Dr. Grisham-Brown, discussed some of the findings in a KIDS NOW Initiative evaluation conducted by University of Kentucky researchers for FY 2009-10. She indicated to Representative Stone that the evaluation involved licensed private child care facilities, not public school programs. While there are no studies in Kentucky comparing the two types of systems, those could be a potential area of research.


            Responding to Representative McKee, Ms. Bridges said the program realizes the tobacco funds may not last a long time and it is important that KIDS NOW shows the investment is making a difference. Legislative support is needed to assist children and families. She also emphasized the importance, as stressed by a previous director, in periodic program evaluations.


            As the discussion ended, Representative McKee said he recognized their passion regarding the program and expressed optimism about continued legislative support.


Governor’s Office of Agricultural Policy Report

The committee received the monthly report from Mr. Roger Thomas, Executive Director, Mr. Joel Neaveill, Chief of Staff, and Mr. Bill McCloskey, Director of Financial Services, Governor’s Office of Agricultural Policy (GOAP), regarding project funding decisions made by the Agricultural Development Board in its previous meeting.


Mr. Neaveill reported on County Agricultural Improvement, Deceased Farm Animal Disposal Assistance, and Shared-use Equipment programs prior to reviewing statewide and regional projects acted on in the previous ADB meeting. The state and regional projects included: Tim and Wanda Quiggins for a multi-purpose facility in Hart County; Kentucky Beef Network LLC (KBN), a project to develop a management and genetics program for Kentucky beef producers; New Pioneers for a Sustainable Future, a Washington County food and crafts network; and KABA/Select Sires Inc, a project to establish five demonstration dairy herds to use a new technology that detects the estrus cycle in cattle.


The Quiggins project, which received $40,000 in county funds as a part of a $328,350 undertaking, prompted questions and comments from committee members. According to Senator Parrett, youth livestock shows are usually conducted at public fairgrounds and the like. He asked about the precedent being set in funding such a facility on private property. Mr. Thomas noted the board did not commit state funds; rather it abided by positive recommendations from county councils approving county funding. The Kentucky Agricultural Finance Corporation also loaned money to the developers of the facility. Senator Parrett urged that county councils be informed of the precedent being set.


Representative Stone asked about safeguards in case the project did not succeed. He mentioned separating the project facility and the real estate. Mr. McCloskey responded that the developers set aside 10 acres for the facility in the deed. Representative Stone asked about the board’s risk in the event of a foreclosure. Mr. McCloskey said the property has been appraised at $400,000, which is larger than the loan amount. The KAFC loan will involve the participation of a private lender, resulting in a shared risk. KAFC will be subordinate to the lender if a default occurs.


In continuing discussion and in response to Co-chair Hornback, Mr. Thomas noted that the legal agreement will contain provisions on the ownership and maintenance associated with the funds for periods of five and ten years. Another provision will require a pro-rata repayment of outstanding obligations.


Senator Gibson indicated that the endeavor will involve more than just the auctioning of cattle. He saw no difference in that project than with other fund commitments that result in improvements to private property.


            Committee members also posed questions and commented on the next project, the KBN “Mag 60” genetics program, involving the commitment of $310,000 in state funds in a $649,000 endeavor.


            Witnesses indicated to Senator McGaha that the program would last about two years, with breeding results evident in 15-17 months. Mr. Thomas responded to the senator that as producers experience the benefits of the program in coming years and program costs would be lower than the initial costs. He predicted the board would be receptive to similar funding in the future.


            The KBN will conduct informational meetings across the state to publicize the program. Mr. Neaveill said the program was the outgrowth of a project in the Washington County area.


            The GOAP officials responded to Representative McKee that, in terms of herd management, a contract with a producer will remain viable so long as the producer markets the offspring through the Mag 60 program.


            The KABA/Select Sires Inc. project also drew comments and questions from committee members. The KABA plans to partner with the Kentucky Dairy Development Council and state universities to arrange and conduct educational presentations on the benefits of using technology. Select Sires markets artificial insemination (AI) products to producers.


            Responding to Senator Pendleton, Mr. Neaveill indicated that KABA/Select Sires will assist in the project and offer other in-kind services. Mr. Thomas said that, when the Cattlemen’s Association proposed the endeavor, board members expressed reservations about the benefits to KABA/Select Sires. If other companies offer similar services, their proposals will be reviewed favorably.


            Asked by Senator Pendleton about Select Sires’ commitment in the project, the witnesses reiterated the assistance and other in-kind services. Senator Pendleton indicated he would feel more comfortable about the arrangement if producers received a discount on their AI purchases. Senator Parrett also expressed reservations about the arrangement and the perceived benefits to KABA/Select Sires.


            As discussion continued, the committee approved a motion by Senator Pendleton that Mr. Thomas ask KABA/Select Sires if it would be amenable to discounting purchases by producers participating in the project. Mr. Thomas indicated that he would do so.


MSA Briefing

            In other discussion, Mr. Rogers updated the committee on litigation surrounding some participating tobacco manufacturers’ withholding of prior year Master Settlement Agreement payments to states that settled as a part of the MSA. Mr. Thomas indicated that the state was reviewing a proposal by companies to settle the matter. The litigation has resulting in the escrowing of several million dollars that settling states should have received from companies.


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