Increased oversight vowed on tobacco grants
The overseers of agriculture's share of Kentucky's tobacco-settlement money pledged to do More to monitor spending.
But they also said they cannot micromanage or guarantee the success of every project funded in the effort to shift the state's farm economy away from tobacco. The comments followed yesterday's presentation of a University of Kentucky study evaluating $209 million in spending approved by the Kentucky Agricultural Development Board from tobacco-settlement funds. A 2000 state law gave agriculture half of the state's proceeds from the 1998 national tobacco settlement with cigarette makers. It also created the development board to oversee the awards. The study concluded that the results have been positive in many areas, but that there wasn't sufficient data to measure the effectiveness of some efforts and that other programs may need adjusting. "We funded a lot of dreams," board member Wayne Hunt said, adding that he didn't see a need for major overhaul. The study of funds awarded between 2001 and 2006 included three areas -- $100 million in county-level diversification projects, $86 million in specific agriculture economic-development projects and $23 million in an infrastructure loan program. The study found that the $86 million in development awards between 2001 and last year resulted in an additional $96.4 million in investment and $161.4 million in additional income from 2001 to 2007. Projects included helping build ethanol and biodiesel plants, marketing efforts, wineries, aquaculture, vegetable co-ops, and livestock-slaughter and -processing facilities. The study found that 20 of 64 projects that received grants of $100,000 or More accomplished their goals. Five were too new to evaluate. The study recommended continuing to fund risky ventures, which members of the agriculture development board defended yesterday. Board member Sam Lawson said he hoped the report wouldn't result in the panel being so conservative that it never funded an ultimately unsuccessful program. Board member Mary Sias, president of Kentucky State University, said those projects still should be funded, but the board and its executive wing, the Governor's Office of Agricultural Policy, should have stronger oversight to uncover any problems that develop. A state auditor's report in August found that a $5 million grant had lax oversight and unquantifiable results, including about $71,400 in expenses that appeared unreasonable. That involved a now-expired agreement between Allied Food Marketers West Inc. and the development board. Allied's contract called for it to help Kentucky producers reach retail customers, assisting the Kentucky Proud program that markets agricultural products. The UK study recommended that the board find a private-sector partner to provide marketing assistance with the Department of Agriculture, which oversees Kentucky Proud, to small entrepreneurs. The report called for More monitoring of development grant recipients' performance. Roger Thomas, director of the governor's agriculture policy office, said recipients of grants above a certain financial level will be made aware that they're subject to audit. Board members also discussed that type of monitoring for the county-level diversification projects, which involve cost-sharing for such efforts as expanding pastures and sharing farm equipment. The projects are approved by the state board based on a recommendation by councils in the 118 counties taking part. Thomas said there isn't enough staff for that level of oversight for each project. "It would just be overwhelming," he said. Analysis of the county-level programs yielded less quantifiable results. While the report found that the programs had been successful in assisting farms, some of the data asked of farmers was confusing and some of what was received was difficult to interpret. Several of the diversification programs that the state board encouraged counties to offer, such as sod production or commercial kitchen construction and renovation, were not utilized. Most -- 72 percent -- of the county-level money went to the beef industry. The study also found that the Kentucky Agricultural Finance Corp.'s loans focused on low-risk financing for experienced farms with high net worths. Researcher Craig Infanger, a UK agriculture economist, encouraged the state to try to make More loans to new farmers. "An argument can be made it's a pot of money looking for a good job," Lawson said.