Program Review and Investigations Committee




<MeetMDY1> July 12, 2012


Call to Order and Roll Call

The<MeetNo2> Program Review and Investigations Committee met on<Day> Thursday,<MeetMDY2> July 12, 2012, at<MeetTime> 10:00 AM, in<Room> Room 131 of the Capitol Annex. Representative Fitz Steele, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Jimmy Higdon, Co-Chair; Representative Fitz Steele, Co-Chair; Senators Tom Buford, Perry B. Clark, Vernie McGaha, Joey Pendleton, and Dan "Malano" Seum; Representatives Dwight D. Butler, Leslie Combs, Terry Mills, Rick Rand, and Arnold Simpson.


Guests: Eric Friedlander, Deputy Secretary, Cabinet for Health and Family Services. Stephen R. Hall, Commissioner; Betsy Dunnigan, Deputy Commissioner; Natalie Kelly, Childrenís Branch Manager, Division of Behavioral Health, Program Development Branch; Department for Behavioral Health, Developmental, and Intellectual Disabilities, Cabinet for Health and Family Services. Tony Wilder, Commissioner, Department for Local Government. Michael Hammons, Chair, Endow Kentucky Commission. Gerry Roll, Executive Director, Foundation for Appalachian Kentucky.


LRC Staff: Greg Hager, Committee Staff Administrator; Colleen Kennedy; Katie Kirkland; Van Knowles; Lora Littleton; Jean Ann Myatt; William Spears; Joel Thomas; Leonard Evans, Graduate Fellow; Jenna Skop, Graduate Fellow; Stella Mountain, Committee Assistant.


Approve Minutes for June 14, 2012

Upon motion made by Representative Mills and seconded by Representative Simpson, the minutes of the June 14, 2012 meeting were approved by voice vote, without objection.


Representative Steele asked for a moment of silence in memory of former Representative Bunch.


Follow-up on Impact Plus

Mr. Friedlander said that he had met with Ms. Campbell-Turner on June 20. They exchanged information and agreed that this should be a documented process. He has received the closing report on the case from the Office of the Attorney General. The cabinet is reviewing information and determining what needs to be further examined. Ms. Campbell-Turner has requested reenrollment to provide services through the Impact Plus program and the Michelle P. Supports for Community Living waiver. He will try to resolve the case by August 1 but cannot guarantee this. There is ongoing litigation and unresolved issues related to administrative recoupment.


Senator Higdon stated that the Office of the Attorney General has confirmed that there is nothing criminal to pursue. The evidence is that Ms. Campbell-Turner probably should not have been terminated as an Impact Plus provider, but he is pleased that the process is moving forward.


Representative Steele instructed cabinet officials to return for the September Program Review meeting to provide an update.


Overview of Endow Kentucky

Commissioner Wilder commended the General Assembly for enacting Senate Bill 227 in 2010. This is visionary legislation, and there has been significant progress since its enactment. The act provided tax credits of $500,000 for each year of the biennium. Five new community foundations were certified in the first year, three have been certified since, and another is going through the process. About $5 million has been donated, with $730,000 of the tax credits being used. The Appalachian Regional Commission provided $1 million in funding, which is being directed to 11 of the most distressed counties in Appalachia.


Mr. Hammons credited Judy Clabes for suggesting the need to encourage philanthropy and to provide research. Governor Beshear appointed a commission on philanthropy, which issued a report in 2009 on initiatives related to early development and health of children. Effort was needed to grow philanthropy, especially in rural areas. The Kentucky Philanthropy Initiative commissioned a wealth study, which was distributed to committee members today. The study indicated that Kentuckians have assets of more than $300 billion. Over the next 10 years, if 5 percent of the wealth available to transfer between generations in Kentucky households were to be set aside for community organizations, this would generate $3.6 billion. The interest on the $5 million that has already been given is $235,000. He thanked the General Assembly for the legislation.


Representative Steele thanked Commissioner Wilder and the others testifying and House and Senate leadership for their support for the task force on poverty.


Senator Buford asked for elaboration on specific benefits of the program. Mr. Hammons described the Wired 65 workforce development initiative in the I-65 corridor.


In response to a question from Senator Buford, Mr. Hammons said that funds could be used to establish day care in rural communities. Commissioner Wilder said that foundations have a wide range of options.


Ms. Roll said that charity is good, but philanthropy provides for the long-term investments to build and transform communities by changing old habits of focusing on needs, gaps, and barriers to a future based on our assets and gifts and the opportunities they present. She thanked Senator Brandon Smith, Representative Fitz Steele, the legislature, and others for helping to create Endow Kentucky.


Endow Kentucky provides grants for capacity building in communities, provides money to leverage private investment in local and nonprofit endowments, and incentivizes those endowment contributions with tax credits. When this legislation was passed in 2010, the tax credits were funded; the capacity building grants and leveraging pool were not.


Kentucky is filled with community-minded people with a will to do good, but often without access to needed financial resources. It also has people with financial wealth, many of whom want to invest locally. With Endow Kentucky, the right infrastructure for giving throughout the Commonwealth is now being developed.


The Foundation for Appalachian Kentucky is the most recent of many efforts over the last half century to create a community foundation in Appalachian counties. It is the only successful effort. The foundation was conceived in 2002 as the Community Foundation of Hazard and Perry County. By 2010, there were two full-time staff in place and three additional counties interested in building a regional community foundation. Ms. Roll cited the foundationís accomplishments over the past 3 years, including meeting the National Standards for US Community Foundations; building an initial unrestricted endowment of over $1.5 million with more than 300 donors and a mailing list of 2,000 people; facilitating and implementing a strategic plan in Perry County and helping to do so in three additional counties; making more than $300,000 in grants to the community, most passed through from individuals and other foundations; supporting the community in raising $215,000 for the East Kentucky Tornado Relief Fund; and working with three additional counties in creating local community funds.


Ms. Roll stated that whether one believes that the crisis the Kentucky coal economy is facing is a result of government regulations, natural gas, or an act of God, Kentucky is facing an inevitable decline in a major resource for this state and Appalachia. She thanked the legislature for the tax credits for contributions to permanent endowments, but asked legislators to fund the capacity building grants in the Endow Kentucky legislation and to commit resources to be matched 2:1 by communities to build their endowments.


She agrees with Senator Smith that Endow Kentucky is landmark legislation. The tax credits have brought in almost $5 million in private money for local communities. Thirty-five percent of that money is in rural counties.


Mr. Hammons echoed the need for capacity and challenge grants. The plan is to expand from 11 counties to 14. He cited the Barren River project that was funded by the Turner family. He has heard of people who wanted to leave an endowment for a community but did not have a mechanism to do so. Commissioner Wilder added that there is a need for education of estate attorneys that there are options to protect heirs and leave a significant portion of estates to the community.


Senator Pendleton agreed with the testimony. There is a need to get out the word to help seniors and families. He thanked Commissioner Wilder for his work at the Department for Local Government to help seniors.


Representative Rand mentioned that his community had lost a grocery. He asked if this is the type of problem that a foundation could address. Ms. Roll gave an example of foundation funding being used to help provide a building. Mr. Hammons cited the example of a medical provider who left. The foundation convinced the provider to donate the building so that it could be used to attract another provider.


In response to a question from Representative Rand, Ms. Roll said the community foundation has provided the opportunity to draw other organizations with competing interests together to raise funds. She gave the example of the Run for the Hills event from the community foundation in Perry County. Businesses were encouraged to be the charity challengers. Last year, local nonprofits raised $180,000 over 3 months. More was raised with one event than would have been raised with separate fundraising efforts. Commissioner Wilder said the umbrella aspect of a community foundation is effective.


Representative Rand commented that those with estates sometimes have trouble identifying mechanisms for donating to their communities. Mr. Hammons noted that the idea for Run for the Hills came from western Kentucky, which illustrates the communication among community foundations. Ms. Roll said that a community foundation can serve as a clearinghouse. Donations can be divided among recipients, and donors can specify where their money goes.


Senator Buford said that sounds like things are going well but the General Assembly needs more specific information on what is being accomplished, for example, how many women have gone back to work after getting child care. He would like to get a list of what has been done for people. Ms. Roll said that she would send the newsletter and annual report.


Senator Seum asked for their opinion of local vocational education. He gave an example of his grandson, who received vocational training and got a job as a diesel mechanic while in high school in Indiana. He wondered why vocational education was such that Louisville trucking companies had to recruit diesel mechanics from Indiana. Ms. Roll said the foundation did a strategic plan for Perry County, focusing on primary and secondary education with integration of vocational education. Foundations can bring in private funding.


Representative Steele thanked Commissioner Wilder for his work. He cited examples of community support provided by a coal company family in Perry County. He was glad that Ms. Roll mentioned EPA. He referred to the recent loss of 600 jobs at Arch Coal due to EPA regulation. Coal still has a price advantage over natural gas. Coal companies are the first to help in southeastern Kentucky. Ms. Roll said that their foundation is a testament to the investment made by coal companies.


The meeting adjourned at 11:10.