MSA Payments and Impacts on
Programs
Governor’s Office of Agricultural Policy
July 16, 2014
Tobacco Master Settlement
Agreement (MSA)
1998 agreement between 46 states Attorneys
General that compensated states for the costs
associated with the treatment of smokingrelated illnesses
Written for the first 25 years, but agreement is in
perpetuity
States were left to decided how they wanted to
allocate this new source of revenue
Kentucky MSA Revenue
(in Millions)
$160.00
$140.00
$120.00
$100.00
$80.00
$60.00
$40.00
$20.00
$2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Actual Payments
Estimated Payments
Kentucky’s MSA Distribution
MSA Revenue
Ky Ag Development Fund
State Fund
County Fund
Direct
Appropriations
118 County
accounts
Early Childhood
Fund
Healthcare
Fund
Kentucky’s MSA Distribution
State Fund
Debt
Cost
share
Service
Special
Projects
Remaining for Regional & State
Project Investment
What is Debt Service?
Bonds issued backed by
full faith and credit of the
Commonwealth
Cash now for projects in
exchange for repayment
of debt over time
Debt Service - Cash
needed to pay interest
and principal on a loan /
debt
Kentucky’s MSA Debt Service
UK Diagnostic
Center
Breathitt Vet
Center
2008
2008
Water and
Sewer
4-H Camp
Renovations
2000, 2004,
2008
Farmland
Preservation
2000
2008
Debt
Service
FFA Leadership
Center
Renovations
2008
Kentucky’s MSA Debt Service
Water and
Sewer
2000, 2004,
2008
Farmland
Preservation
2000
UK Diagnostic
Center
Breathitt Vet
Center
2008
2008
$28.4 Million each
year to support
$379,000,000 in
Bonds
Debt
Service
4-H Camp
Renovations
2008
FFA Leadership
Center
Renovations
2008
Agricultural Development Fund Appropriations
(FY 2001-2014)
45,000,000
40,000,000
35,000,000
30,000,000
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
-
County Allocations
Conservation
State Projects & Admin
Debt Service
Agricultural Development Fund Appropriations
(FY 2004 vs. FY2014)
155.5%
97.8%
26.2%
72.2%
Debt
Service
State Fund
County
Fund
Conservation
Fiscal Year 2014
Total: $90.8 Million
$295,700
$2,500,000
Debt Service
KADB State projects & administration
Conservation State Cost Share
County Ag Development Funds
Healthcare Initiatives
Early Childhood Development Initiatives
Recent Tobacco Settlement Actions
D Prevents $42.5 million in Budget Cuts to Tobacco
Programs in FY 14
D Ensures that the Enacted Appropriations for FY 15 & 16
will be fully funded (Agriculture the biggest beneficiary)
D Provides an Estimated $57.9 million in Additional Tobacco
Funds over the 3 Fiscal Years
D Provides an Estimated $42.0 million in Additional Tobacco
Funds over 2 Fiscal Years (FY 14 and 15)
D Removes the biggest element of uncertainty to Tobacco
Fund receipts over the next 10 years
D Saves the costly annual expense of litigation/arbitration
Prevents Budget Cuts to Tobacco Programs
in FY 14
D Enacted Appropriations
$90,800,000
D CFG Revised Estimate (Dec 2013)
$45,400,000
D
Budget Reduction Plan to Cut $45.4 million enacted in HB 235 to
be prepared if the CFG Revised Estimate came true
•
•
•
Agricultural Development Fund
Early Childhood Development Fund
Health Care Improvement Fund
($23,124,200)
($ 6,261,300)
($15,985,800)
FY 2014 Budget Reduction Plan-Agricultural
Development – Cuts that Won’t Take Place
Planned Budget Cuts in Reduction Plan:
Agricultural Development
County Accounts
Gov’s Office for Agricultural Policy Grants*
Conservation/Cost Share Program
Agricultural Development Total
($8,083,600)
(12,046,700)
(2,938,600)
($23,124,200)
*Includes Shifting $5.7 million in GOAP Grant Funds Just to
Pay Debt Service and $6 million to County Accounts
Without the Settlement: County Accounts would only have
$6,000,000 and the statewide Agricultural Development
grant program would be bare-bones
Tobacco Fund Revenue Estimates in the 2014-16
Enacted Budget
Fiscal Year
FY14
FY15
FY16
•
Enacted
$ 90.8 $99.7
$72.4
•
Estimate with Settlement
$159.4
$88.3
•
Difference
$ 68.6 ($26.6)
•
•
Two-Year Difference: FY 14 & 15
Three-Year Difference: FY14,15 & 16
$73.1
$15.9
$42.0
$57.9
Ensures that the Enacted Appropriations for
FY 15 and 16 will be fully funded
D
Extra Funds received in FY 14 will be used to offset the
estimated shortfall in FY 15 Tobacco Receipts
D FY 14 Receipts in Excess of Appropriations = $68.6 million
D Expected FY 15 Shortfall = $26.6 million
D The remaining $42.0 million from the FY 14 receipts will be
reserved until the General Assembly takes future actions
Tobacco Settlement Appropriations for FY 15
and FY 16
FY 2015
FY 2016
(millions $)
Official Revenue Estimate
less State Enforcement (Revenue Dept)
less Debt Service
$99.70
0.25
28.39
$71.06
$72.40
0.25
28.48
$43.67
Agricultural Development
County Accounts
Gov’s Office for Agricultural Policy Grants
Conservation/Cost Share Program
Farms to Food Banks
$37.70
19.35
11.75
6.00
0.60
$12.82
9.85
2.37
0.00
0.60
Other GOAP Reminders
County Council Membership
•August 1, 2014 – deadline
•44 Counties to date
County Council Administrative Funds
•Due to delayed 2014 payment, this process has been
delayed
Governor’s Office of Agricultural Policy
Roger Thomas
Executive Director
Joel Neaveill
Chief of Staff
404 Ann Street
Frankfort, KY 40601
(502) 564-4627
agpolicy.ky.gov
govkyapolicy@ky.gov
Visit our Flickr site for recent event photos: www.flickr.com/photos/agpolicy.