Tobacco Settlement Agreement Fund Oversight Committee




<MeetMDY1> October 2, 2013


Call to Order and Roll Call

The<MeetNo2> meeting of the Tobacco Settlement Agreement Fund Oversight Committee was held on<Day> Wednesday,<MeetMDY2> October 2, 2013, 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, Jimmy Higdon, Dennis Parrett, Robin L. Webb, and Whitney Westerfield; Representatives Mike Denham, Tom McKee, Ryan Quarles, and Jonathan Shell.


Guests: Roger Thomas, Joel Neaveill, Bill McCloskey, Biff Baker, and Brian Murphy, Governor’s Office of Agricultural Policy; Van Ingram, Office of Drug Control Policy; Heather Wainscott and Amy Andrews, Kentucky Agency for Substance Abuse Policy.


LRC Staff: Lowell Atchley, Kelly Ludwig, and Kelly Blevins.


The September 4, 2013, minutes were approved without objection by voice vote, upon a motion by Senator Parrett and a second by Representative Stone.


Governor’s Office of Agricultural Policy

            Mr. Thomas, Executive Director, Mr. Joel Neaveill, Chief of Staff, and Mr. Bill McCloskey, Director of Financial Services, Governor’s Office of Agricultural Policy, testified about project funding decisions made by the Agricultural Development Board (ADB) during its September meeting.


            Mr. Neaveill reviewed funding allocations and provided explanations for approvals the previous month under the County Agricultural Improvement, Deceased Farm Animal Removal, and Shared-use Equipment programs.


            GOAP officials elaborated on one project receiving state and local tobacco settlement fund commitments, Morehead State University, which was approved for $90,000 to build a food technology laboratory and food service area on the Morehead campus. Another project denied funding also prompted some discussion, Barren County Board of Education, which sought $662,000 in state and county funds to help build one phase of an agricultural exposition center in Barren County.


            Responding to Representative Stone, Mr. McCloskey verified that local producers will be able to use the Morehead food lab.


            Mr. Thomas told Representative Stone, who asked about any precedent for the Morehead funding commitment, that the University of Kentucky received funds for a similar endeavor. In addition, funds have been approved in the past for certified kitchens, where producers can process their farm-grown foodstuffs. Responding to other committee members’ questions, Mr. Thomas said Morehead has a vibrant and growing agricultural program and that the food laboratory will offer instruction on food safety and regulatory requirements.


            Responding to Representative Denham and Senator Gibson, who asked some questions about the Barren County denial, Mr. Thomas indicated that the board does not grant funding to boards of education that receive state funds, but has funded school-related projects, such as greenhouses. Senator Gibson indicated that perhaps the board should fund projects from boards of education because there is another source of outside funding available and are recognized for sustaining projects. Later, Senator Webb commented that there is a need to foster agriculture-related activities for youth and provide venues for those activities.


Representative McKee pointed out that some nearby counties, when asked, declined to participate in the Barren County project.


            Senator Parrett and Representative Stone also commented on regions setting priorities and regional competitiveness. Mr. Thomas indicated that the Morehead project was a good example of an undertaking that was regional in scope.


            Mr. Thomas also reported on a three-judge panel’s ruling in an arbitration hearing regarding some disputed 2003 Master Settlement Agreement payments. The panel ruled in favor of more than 30 cigarette makers in their individual claims against Kentucky and five other states. The companies alleged that Kentucky and other states failed to diligently enforce state tobacco laws during 2003 and were entitled to a refund under the MSA. The judges determined that nine states enforced the provisions. Several other states earlier settled the claims against them.


            The GOAP executive director said there are questions regarding the three-judge panel’s decision to accept the earlier settlements. He said those settlements went beyond the dictates of the original MSA. Some states have filed motions to have the settlements vacated.


Mr. Thomas cautioned that the ruling could affect the 2014 payment after calculations are made regarding each losing state’s liability, but a figure of $45-$55 million has been mentioned.


            He responded to Representative Stone that an appeal is being considered, but, since the decision was made by an arbitration panel, the decision would be difficult to have overturned.


            In continuing discussion, Mr. Thomas pointed out that a reduction of the 2014 MSA payment also would affect the health-related programs that receive the tobacco settlement funds, such as the Kentucky Agency for Substance Abuse Policy (KY-ASAP) an agency whose staff was prepared to testify later in the meeting.


            Asked by Co-chair Hornback about any similarity among the six states, Mr. Thomas said he believed Kentucky did as good as or better than some in filing lawsuits against cigarette sellers that violated MSA requirements.


Kentucky Agency for Substance Abuse Policy (KY-ASAP)

            The committee received the annual report from KY-ASAP, with Mr. Van Ingram, Executive Director, and Ms. Heather Wainscott, Branch Manager, Kentucky Office of Drug Control Policy, and Ms. Amy Andrews, KY-ASAP Program Coordinator, appearing before the committee.


            According to the report presented by Mr. Ingram, KY-ASAP has continued to evolve since its placement in the Office of Drug Control Policy in 2004. KY-ASAP helps fund some 116 local KY-ASAP boards that exist in 120 counties. The boards, in turn, use the funds to engage in a variety of policy and program initiatives at the local level, centering mostly on combating drug and alcohol abuse, and assisting smoking cessation efforts.


            Mr. Ingram responded to several committee member questions, mostly on the drug problem in the state.


            Responding to Representative Stone, who commented on the use of the funds in his home county, Mr. Ingram mentioned the need for drug treatment.


            He responded to Senator Hornback that forced treatment as a part of the court process can be successful, provided a person stays in a program long enough. He indicated that where one goes and who one associates with can have an impact on a person’s recovery from drug use.


Senator Higdon commented that he wished the Marion Adjustment Center, a former private prison, could be reopened as a drug treatment facility.


Commenting on Representative Denham’s observations about the growing heroin problem in the state, Mr. Ingram indicated Kentucky has an overall opiate problem. He said he was not surprised that, when the state clamped down on the “pill mills” prevalent in the state, drug users, experienced with intravenous drug use, would turn to heroin. He said there also is an “education problem” with young people, who do not fear the consequences of illicit drug use.


Senator Westerfield, a former assistant commonwealth’s attorney, indicated there are some drug offenders who want treatment versus jail time, but when there are not enough facilities offenders “fade away.”


Senator Webb commented on an encounter with an admitted heroin user at a jail in her region and suggested that if a person uses the drug, that person is dealing with underlying issues.


Senator Gibson commented that the drug problem can be corrected by funding rehabilitation programs offer treatment. Otherwise, he commented, prisons will continue to be filled and abusers will return again and again.


Responded to Senator Hornback, who asked about the U.S. Justice Department’s decision not to attempt to challenge state laws that allow for medical and recreational marijuana under some circumstances, Mr. Ingram revealed that in the 21 states where marijuana has been legalized, use has gone up. He argued that young people will be apt to use marijuana in those places where it has been legalized for medical purposes.


 Responding to Representative McKee, who asked how Kentucky stands in dealing with drug abuse, Mr. Ingram said he was optimistic. He said illicit pill use has been reduced, abuse of oxycodone has declined, and there are fewer methamphetamine labs. He added that older law enforcement officers like him want to see more drug treatment.


Documents distributed during the committee meeting are available with meeting materials in the LRC Library. The meeting adjourned at approximately 11:20 a.m.