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COMMISSIONERS' COURT AGENDA REQUEST
PLEASE FURNISH ONE ORIGINAL AND NINE COPIES OF THIS REQUEST AND DOCUMENTS TO BE
REVIEWED BY THE COURT.
MADE BY: Fred Henneke OFFICE: County Judge
MEETING DATE: June 14, 1999
SUBJECT: (PLEASE BE SPECIFIC)
TIME PREFERRED:
Consider and discuss possible contract with Allison, Bass & Associates, L.L.P regarding
assistance with participation in Tobacco Settlement Distribution.
EXECUTIVE SESSION REQUESTED: (PLEASE STATE REASON)
NAME OF PERSON ADDRESSING THE COURT:
Count~ge
ESTIMATED LENGTH OF PRESENTATION:
IF PERSONNEL MATTER -NAME OF EMPLOYEE:
Time for submitting this request for Court to assure that the matter is posted in accordance with Title 5, Chapter
551 and 552, Government Code, is as follows:
Meeting scheduled for Mondays:
THIS REQUEST RECEIVED BY:
THIS REQUEST RECEIVED ON:
5:00 P.M. previous Tuesday.

All Agenda Requests will be screened by the County Judge's Office to determine if adequate information has been
prepared for the Court's formal consideration and action at time of Court Meetings. Your cooperation will be
appreciated and contribute towards you request being addressed at the earliest opportunity. See Agenda Request Rules
Adopted by Commissioners' Court.
ALLISON, BASS & ASSOCIATES, L.L.P.
.JAMES P. ALLISON
ROBERT T. BASS
Hon. Fred Henneke
Kerr County Judge
700 Main St.
Kerrville, TX 78028
Ca~z~a al'
WAHRENBERGER HOUSE
208 WEST 14TH STREET
AUSTIN, TEXAS 78701
(512) 482-0701
Fnx (512) 480-0902
June 3, 1999
RE: Tobacco Settlement Distribution
Dear Judge Henneke:
C. REX HALL, JR.
PAUL D. PALMER
When we concluded the successful negotiations for the tobacco settlement, the
County Judges and Commissioners Association and several counties requested that we
offer a program to assist counties in the implementation of the future payments from the
Permanent Trust Account. We have continued to meet with the state leadership, the
Texas Department of Health and the Comptroller of Public Accounts to ensure a fair,
efficient implementation of the settlement. With the passage of H.B. 1161 implementing
the settlement agreement and H.B. 1398 revising the indigent health care program, it is
time to prepare for the future tobacco payments.
The conditions of the settlement agreement will require that counties develop
accurate records and file an annual report of health care expenditures to receive future
payments. These records will be subject to audit and penalties. These reports will be
utilized to allocate distributions from the Permanent Trust Account.
Your health care expenditures for the calendar year 1999 will determine your
participation in the $100 million distribution in April, 2000. Your report will be due on
March 1, 2000.
Since certain expenditures can be shifted to maximize your participation, it is
important to review your budget, contracts, and programs now to assure the full
consideration of your health care costs. If necessary, budget and contract amendments
can be prepared and implemented before the end of the calendar year.
The $100 million distribution in May 2000 will be the largest distribution in the
near future. It is important that your report and records enable your county to fully
participate in this distribution.
Page 2
June 3, 1999
We are prepared to provide all necessary assistance to ensure maximum
participation by your county. Under this program, we will fully review your county
programs and contracts, insure that these programs and contracts maximize your
participation in the settlement, and complete your annual report in a timely fashion. We
will provide this service for two equal payments of $3,205 each (1/2 of 1 % of your
recent tobacco settlement distribution) or an hourly rate of $150 per hour. The flat fee
will enable the county to fully budget this cost over two years without exposure to
additional fees or expenses. Choosing the hourly rate would allow the county to pay
only for services as required but will not cap the cost. Under either option, our fee is
contingent upon the funding of the tobacco settlement. If the Permanent Trust Account is
not funded, we will relinquish and return all fees.
Enclosed is a draft agreement to authorize us to provide this service. If you wish
to implement this assistance, please select the fee arrangement and return the contract.
After this year, your county staff should be able to repeat this process without additional
assistance.
Enclosed is additional information on the tobacco settlement and future
distributions. If you need further information, please call me.
Sincerely,
~ ~ ~
James P. Allison
JPA/mm
cc: Members, Commissioners Court
CONTRACT FOR PROFESSIONAL SERVICES
WHEREAS, under the provisions of the Settlement Agreement in The State of
Texas vs. The American Tobacco Company, et al., a Permanent Trust Account will be
established with $1.8 Billion Dollars from the proceeds of the settlement; and
WHEREAS, the income from the Permanent Trust Account will be distributed on
an annual basis to certain Political Subdivisions to partially reimburse their public health
expenditures; and
WHEREAS, participation in the distribution from the Permanent Trust Account
will require certain accounting and reporting procedures, beginning in calendar year 1999;
and
WHEREAS, professional assistance will be necessary to assure that Kerr County
receives its full entitlement from the proceeds of the Permanent Trust Account; and
WHEREAS, the firm of Allison, Bass, & Associates, L.L.P. is prepared to
provide all necessary professional services to maximize payments from this fund;
IT IS HEREBY AGREED by Kerr County, Texas, acting by and through its
Commissioners Court and Allison, Bass and Associates, a Limited Liability Partnership as
follows:
SERVICES
1. Allison, Bass, & Associates, L.L.P. will provide to Kerr County, Texas,
all necessary services to fully participate in the distribution from the Permanent Trust
Account under the terms of the Settlement Agreement in The State of Texas vs. The
American Tobacco Compan,~ These services shall include the following:
A. Preparation of all required forms and reports of public health
expenditures to the Texas Department of Health and other agencies,
including, but not limited to, the Pro Rata Settlement Distribution
County Expenditure Statement;
CONTRACT FOR PROFESSIONAL SERVICES
Page 1 of 3
B. Consultation and training for all necessary county personnel to
implement any needed changes in reporting and accounting
procedures, including the following:
1. Determination of allowable county indigent health care
expenditures;
2. Determination of allowable unreimbursed jail health care;
3. Determination of additional unreimbursed health care
expenditures including mental health care, health care
education, outreach, screening, laboratory services,
counseling, case management, and pharmacy services.
C. Consultation and training for all necessary county personnel to meet
all audit requirements imposed by the Texas Department of Health.
D. Representation of Kerr County before any state agency or
legislative body as necessary to ensure full participation in the
distribution of any proceeds and other health-related issues;
E. Consultation with the Commissioners Court and Kerr County
legislators on any policy statements or other actions required for
participation in the Agreement Trust Account.
F. These services do not include any litigation matters.
2. Kerr County agrees to provide access to all necessary records and county
personnel for this project.
COMPENSATION
(CHOOSE ONE OPTION)
l.A. Kerr County shall pay the sum of two (2) equal payments of $3,205 each to
Allison, Bass, & Associates, L.L.P. The first payment shall be due and payable
on July 1, 1999, and the second payment will be due and payable on July 1, 2000.
ALTERNATE:
1.B. Kerr County shall pay Allison, Bass & Associates, L.L.P. an hourly rate of
$150 per hour plus actual necessary expenses for telephone, postage, printing, and
travel. Allison, Bass, & Associates, L.L.P. shall submit a detailed monthly
statement of services rendered and expenses incurred.
CONTRACT FOR PROFESSIONAL SERVICES
Page 2 of 3
PERM
This agreement shall begin on July 1, 1999 and terminate on July 1, 2000, unless
extended by mutual agreement of the parties. This agreement is contingent upon the
funding of the Permanent Trust Account under the Settlement Agreement in The State of
Texas vs. The American Tobacco Company, et al. If the Permanent Trust Account is not
funded for any reason, this agreement is null and void, and any payments made by Kerr
County shall be immediately returned by Allison, Bass, & Associates, L.L.P.
EXECUTED on this
day of , 1999.
Kerr County
BY:
BY:
County Judge
Allison, Bass, & Associates, L.L.P.
James P. Allison
CONTRACT FOR PROFESSIONAL SERVICES
Page 3 of 3
ALLISON, BASS & ASSOCIATES, L.L.P.

WAHRENBERGER HOUSE
208 WEST 14TH STREET
.LAMES P. ALLISON AUSTIN, TEXAS 78701 C. REx HALL. JR.
(512)482-0701
ROBERT T. BASS Fix (512) 480-0902 PAUL D. PALMER
TOBACCO SETTLEMENT
QUESTIONS AND ANSWERS
1. Are there any restrictions on the use of tobacco settlement payments? No. the
payments may be used for any legal purpose in the county budget.
2. Will the county receive future payments? Yes. The initial payment distributed $300
million to hospital districts and counties based upon population. Future payments will
be made from the Permanent Trust Account. In 2000, $100 million will be distributed
based upon hospital district taxes and county health care expenditures. In 2001, $50
million plus income to the trust will be distributed. In future years, only income will
be distributed.
3. Will our county receive as much money in the future? No. Since future amounts to be
distributed will be lower and since hospital districts expend more money than counties
on health care, future payments will be lower.
4. Will our county be fully reimbursed for our health care expenditures? No. The
tobacco settlement will partially reimburse your health care expenditures.
Reimbursement will probably equal 5-10% of your expenditures.
5. Will the county automatically receive future payments? No. The county will be
required to file an annual report of its health care expenditures to receive a distribution
payment from the Permanent Trust Account.
6. Will a county health care expenditure count toward the distribution? Yes. Any
expenditure for health care services, including jail health care, will be counted.
Environmental services, such as septic tank and restaurant inspections, will not be
included.
7. Will the reporting requirements be complicated? If your county expends funds for
additional programs beyond indigent health care and jail health care, the accounting and
reporting procedures can be complex. We are working with the Texas Department of
Health to simplify these procedures.
8. When are the reports due? Beginning in 2000, the reports will be due on March 1 for
expenditures in the previous calendar year. Payments should be distributed about April
30, 2000.
9. Will the county be penalized for over-stating its expenditures? Yes. Upon audit, they
could be assessed a 10% penalty for false reports.