03/24/09 — Golden LEAF funds in sights of some, but no change yet

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Golden LEAF funds in sights of some, but no change yet

By Matthew Whittle
Published in News on March 24, 2009 1:46 PM

Faced with a $2 billion budget shortfall next year, some state legislators have been looking toward other funding sources to help make up the deficit, including the master tobacco settlement funds that are directed toward the Golden LEAF Foundation.

However, said foundation president Dan Gerlach, doing so would cripple the organization's mission -- and endanger the $2 million expected to be awarded to Wayne County later this year through the Community Assistance Initiative.

The initiative, which awards $2 million to each Tier 1 county in the state, is designed to help fund economic development efforts such as community college training programs. But, Gerlach explained, the best part about it is that the communities themselves are largely responsible for deciding how the money will be spent.

"People identify their priorities and rank their priorities," Gerlach said. "We just ask people to look at what will have the biggest effect to move the needle."

And, he added, even though Wayne County was technically classified as a Tier 2 county this year by the state Department of Commerce, the organization felt the money would still be put to good use.

"I said we're going to consider them as a Tier 1," he said. "Wayne County is exactly the kind of county that needs this kind of help."

He added he expects to begin holding the public prioritization meetings by the end of the year.

But for the money to get to Wayne County, the General Assembly will need to leave the master tobacco settlement money alone.

Created in 1999, the Golden LEAF Foundation was formed as a grant-making nonprofit to administer half of the state's share of the settlement with cigarette manufacturers for economic development purposes.

The foundation is expecting to receive between $140 million and $160 million over the next two years.

But, unlike in the past when the foundation relied on its endowment to make grants, Gerlach explained that for the next two years they plan to let that fund recover while using the settlement money itself.

Most of it, he continued, is already earmarked to pay down the $100 million loan the foundation took out to pay for the Spirit Aerosystems incentive package when it agreed to come to the Global TransPark in Kinston.

The rest, however, would go for foundation programs like the Community Assistance Initiative.

Others include:

* Economic catalyst cycle -- program to fund worker training and/or infrastructure projects to help provide incentives for companies to expand or create jobs and investment.

* Open grants cycle -- program to provide resources for worker training, economic development, health care and a range of other initiatives.

* Special initiatives -- a program to focus on work force development and other initiatives specifically in the areas of agriculture and aerospace, though Gerlach acknowledged that many of these details are still being worked out.

* Access to capital -- a program to provide loan-guarantee support to help make capital accessible to enterprises unable to access it through traditional institutions.

* Scholarships -- a program to provide scholarships for students at community colleges, state colleges and private colleges.

"With the current state of the economy, we can't wait on this. We're not going to pretend it's business as usual. We need to use the strategic advantage of our program now. We were set up outside the government for a reason -- to provide a nimbleness and a responsiveness," Ger-lach said. "People (legislators) are desperate to find money, and they say Golden LEAF has all this money."

But, he said, with its endowment down and $100 million loan to pay back, the foundation really isn't as flush with excess cash as some might believe.

Besides, he added, "The counties that have suffered the most are the ones we were created to help. We were created to fill those gaps."

Most local legislators said they don't plan on supporting any movement toward seizing Golden LEAF's funding, even on a temporary basis -- although Sen. Don Davis, D-Greene, said that all options must be on the table.

"I think it's a bad idea," Rep. Van Braxton, D-Lenoir, said. "Golden LEAF was set up to help areas like Wayne County that relied on tobacco to recover. And I think Golden LEAF has done a good job."

And its track record is why Rep. Efton Sager, R-Wayne, thinks ultimately the organization's funding stream will be left alone.

"I think it's safe," Sager said. "I don't think there's any danger of losing it. I think it's mostly people just looking at all different areas."