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COMMONWEALTHOF PENNSYLVANIA HOUSEOF REPRESENTATIVES COMMITTEEON APPROPRIATIONS In re: 2004-2005Budget Hearings TobaccoSettlement Programs ***** ! Stenographicreport of hearingheld In MajorityCaucus Room, Main Capitol, Harrisburg,Pennsylvania, on Tuesday, , February24,2004 p.m. , 1:30 HON.DAVID G. ARGALL, CHAIRMAN Hon.Patrick E. Fleagle,Vice Chairman Hon.Gene DiGirolamo, Secretary Hon.Jim Lynch, Subcommittee on CapitolBudget Hon.Peter J. Zug,Subcommittee on Education Hon.Matthew E. Baker,Subcommittee/Health andHuman Services Ho'n.Dwight Evans, Democratic Chairman MEMBERSOF APPROPRIATIONSCOMMITTEE ' Hon.Gibson C. Armstrong Hon.Phyllis Mundy ,Hon.Stephen Barrar Hon.John Myers Hon.Steven R. Nickol Hon.Craig A. Dally Hon.Samuel E. Rohrer Hon.Teresa E. Forcier Hon.Stanley E. Saylor Hon.Dan Frankel Hon.Curt Schroder Hon.Jeffrey E. Habay Hon.Jerry A. Stern Hon.Frank LaGrotta Hon.Mike Sturla , Hon.John A. Maher Hon.Thomas A. Tangretti Hon.Kathy M. Manderino Hon:Don Walko Hon.Eugene F. McGill Hon.LeAnna Washington ' Hon.Anthony J. Melio Hon.Jake Wheatley : AlsoPresent: RobertGtreenwood, Executive Director MiriamFox, Democratic Executive Director Reportedby:' Hon.Dick Hess NancyJ. Grega,RPR ADELMANREPORTERS 231 TimothyRoad Gibsonia,Pennsylvania 15044 Phone/Fax (724\ 625-91 0 1 T Ja o4- INDEX Witnesses: Paqe CalvinB. Johnson,M.D., Secretary 3 Departmentof Health RichardOvermoyer, Deputy Secretary for Investment Departmentof Communityand Economic Development 1 CHAIRMANARGALL: I'd like to reconvenethis session of the 2 HouseAppropriations Committee. We arelooking at theTobacco Settlement 3 Programs:Secretary Johnson from the Department of Healthand Deputy 4 SecretaryRichard Overmoyer from DCED. Secretary Johnson, if you'dlike to : 5 begin? 6 SECRETARYJOHNSON: Thank you, Chairman Argall and good 7 afternoonto youand Chairman Evans and members. As youindicated, I am B HealthSecretary Calvin Johnson and I am pleasedto providetestimony and to I answerany questions that you may have about the Department of Health's 10 activitiesrelated to theTobacco Settlement as authorizedunde r Act77of 2001. 11 TheDepartment of Healthis responsiblefor implementingtwo 12 chaptersof thislegislation: Chapter 7, Tobacco Use Prevention and Cessation 13 Programs;and Chapter 9, CommonwealthUniversal Research Enhancement. 14 Wewere also responsible for the one-time commitments provided for under . 15 Chapter19, Health Link and Chapter 21 , Community-BasedHealth Care. 16 Bycommitting resources from the Tobacco Master Settlement to 17 thesecritical public health initiatives, the General Assembly has helped create a 1B verysound infrastructure that truly contributes to thehealth of all 19 Pennsylvanians.I am pleasedto notethat there has been widespread support, 20 interestanil enthusiasm for each of theseprograms. 21 " Regardingtobacco use prevention and cessation activities, we 22 haVeconvened and chaired the Tobacco Use Prevention and Cessation 23 AdvisoryCommittee, established 51 primarycontracts to provide 24 comprehensiveschool and community based programs in all67 countiesin 25 Pennsylvania,and implemented several state-wide initiatives. State-wide 4 1 initiativesare focused on youth,enforcement and compliance, public and 2 retailereducation, and technical assistance to ourcontractors. we are 3 confidentthat the combinationof state-wideinitiatives and dedicated community 4 programswill significantly reduce tobacco use throughout Pennsylvania, 5 particularlyamong our priority populations which are youth, pregnant women, 6 womenof child-bearingage, and minorities. 7 Furthermore,the Departmentcontinues to movefonruard with the 8 CommonwealthUniversal Research Enhancement program, which awards I broad-basedhealth research grants, in two categories, to Pennsylvania-based 10 researchers,universities, medical schools and other institutions. The General 11 Assembly andthe Governor have appointed a distinguishedand committed i 12 groupof advisorsto the HealthResearch Advisory Committee and it hasbeen a 13 pleasurefor meworking with them to establishthe researchpriorities for the 14 upcomingfiscal year. 15 As youare aware, the Department annually releases the 16 applicationsfor formula based grants and issues an RFPfor non-formula based 17 giants.We expectto beginto processthe grants for 2003-2004in the 1B beginningof Mayof thisyear. We areoptimistic that the research program will 19 generategroundbreaking research that will improve the healthstatus of 2.0 Pennsylvaniansand even those living beyond our borders. 21 Theother two non-recurring initiatives are the one-timeHealth 22 Linkand Community-Based Care programs, both of whichprovided additional 23 resourcesto Pennsylvania'shealth care delivery system. As youmay recall, 24 theHealth Link program provided $20 million for grants of upto $500,000to 25 hospitalsin sixth,seventh and eighth class counties in orderto purchase 1 medicalor surgicalequipment. The Community-Based Health Care programs 2 providedgrants to eligibleproviders or collaborativesfor the operationof 3 integrateddelivery systems. The total amount of thisprogram was $25 million. 4 Thisbrief summary provides a smallsample of theinitiatives that 5 the Departmenthas undertaken as a resultof Act77, anddoesnot fully , 6 describethe successes that these programs have enjoyed in onlya fewyears. 7 I believethat we haveaccomplished a great deal during,the past two years, at B thesame time that we faceda multitudeof othermajor public health challenges. I I thankyou for yourefforts, the efforts of yourcolleagues in the General 10 .'Assemblyand the Governor for continuing to allocatethese vital resources in a ' 11 mannerconsistent with good science and best practices. You should be 12 pleasedto knowand proud that the public and the health community have been o 13 veryreceptive and respohsive to yourcharge to improvePennsylvania's health. 14 We'reencouraged by the energyand the efforts put forth by countless 15 community-basedorganizations and health care providers, who have 16 respondedto thischarge in largenumbers and who have taken steps to ma.ke 17 significantimprovements for the health of allPennsytvanians 18 | appreciateyour time this afternoon and would be happyto 19 answerany questions you would have for me at theappropriate time. 20 CHAIRMANARGALL: We'll do theDeputy Secretary and then 21 we'lldo thequestions all at once. 22 DEPUTYSECRETARY you. , . OVERMOYER:Thank Good 23 afternoon,Mr. Chairman and members of thiscommittee. My name is Richard 24 Overmoyerand I amthe Deputy Secretary for Technology Investment at the 25 Departmentof Communityand Economic Development. My office oversees 1 twocomponents of theTobacco Settlement Fund. First,my officeis staffto the 2 TobaccoSettlement lnvestment Board. This board oversees the Health 3 Endowmentfor LongTerm Hope, othenruise known as the Endowmentand the 4 HealthVenture lnvestment Account, focused on venturecapital. The second 5 componentoverseen by myoffice is the RegionalBiotechnology Center 6 Program- nowknown as the LifeScierice Greenhouse. I would like to briefly 7 highlightthe activities within these two components: B First,the Health Endowment for Long Term Hope was established I bythe TobaccoSettlement Act as a meansto providea revenuestream beyond 10 thetime that the Commonwealth would receive payments from the master 11 settlementagreement. Eight percent of thefunds received as partof the 12 TobaccoSettlement are directed to the endowmentand the Tobacco 13 Settlementtnvestment Board is chargedwith pursuing an investmentstrategy 14 thatprovides the future revenue source that I mentionedpreviousty. The 15 TobaccoSettlement Investment Board agreed on a strategyin thethird quarter ' 16 of 2003and funds were invested in thefourth quarter to firstquarter of 2004. ln 17 thetime since inception of thefund the board las witnesseda 9.2percent 18 growthrate in thesefunds. .: 19 TheHealth Venture Account was established by the Tobacco zfr SettlementAct as a meansto increasethe LifeScience focused venture capital 21 in theCommonwealth. An allocationof $60million in TobaccoSettlement 22 Fundswas providedfor in theact. Afterdeliberating, the Tobacco Settlement 23 InvestmentBoard issued an RFQin July, 2OO2 seeking qualified Investment 24 Managersto receivethese funds and leverage the tobacco dollars for the 25 benefitof Pennsylvania-basedLifeScience companies. Two firms, Quaker Bio 1 Ventures;located in thePhiladelphia region, and Pennsylvania Early Stage, alsolocated or headquarteredin the Philadelphia area, received commitments 3 fromthe Board and performed the first closings on theircommitments in 4 February,2003. A thirdfund was selected but did not meet the requirements .. 5 establishedby the Board. A replacementcandidate, Birchmere/Bay City 6 Ventures;was selectedin November,2003 and just yesterday, the Boardmet 7 to hearan updateon theirfund-raising status and gave them the go forwardto ' B continuethat fund raising. 9TheLifeScienceGieenhouSeSWerea|soestab|ishedbythe 10 TobaccoSettlement Act and received an allocationof $100million in Tobacco 11 SettlementFunds to establishthree regional centers focused on growingLifq 12 Sciencecompanies in Pennsylvania.The purpose of theLife Science '' 13 Greenhouseis to catalyzethe Life Science Business opportunities stemming 14 fromresearch in institutionsthroughout the Commonwealth. The focus is on 15 . someareas indicating technology transfers from research laboratories, 16 enhancingcollaborations between academic, entrepreneurial, corporate 17 financialand government partners,
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