As Passed by the Senate                       1            

123rd General Assembly                                             4            

   Regular Session                             Sub. S. B. No. 161  5            

      1999-2000                                                    6            


SENATORS GARDNER-KEARNS-SCHAFRATH-SHOEMAKER-PRENTISS-OELSLAGER-    9            

  MUMPER-CUPP-FINGERHUT-SPADA-NEIN-DRAKE-LATELL-WATTS-HAGAN-       10           

         BRADY-DiDONATO-WHITE-WACHTMANN-ARMBRUSTER-LATTA           10           


_________________________________________________________________   12           

                          A   B I L L                                           

             To amend sections 3334.01, 3334.02, 3334.08,          14           

                3334.10, 3334.11, 3334.12, 3334.15, and 5747.01    15           

                and to enact sections 3334.18, 3334.19, 3334.20,   16           

                3334.21, and 5747.70 of the Revised Code to                     

                authorize the Ohio tuition trust authority to      17           

                establish a variable college savings program.      18           




BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:        20           

      Section 1.  That sections 3334.01, 3334.02, 3334.08,         22           

3334.10, 3334.11, 3334.12, 3334.15, and 5747.01 be amended and     23           

sections 3334.18, 3334.19, 3334.20, 3334.21, and 5747.70 of the    24           

Revised Code be enacted to read as follows:                        25           

      Sec. 3334.01.  As used in this chapter:                      34           

      (A)  "Aggregate original principal amount" means the         36           

aggregate of the initial offering prices to the public of college  37           

savings bonds, exclusive of accrued interest, if any.  "Aggregate  38           

original principal amount" does not mean the aggregate accreted    39           

amount payable at maturity or redemption of such bonds.            40           

      (B)  "Beneficiary" means an:                                 42           

      (1)  AN individual designated by the purchaser under a       44           

tuition payment contract or through a scholarship program as the   46           

individual on whose behalf tuition credits purchased under the     47           

contract or awarded through the scholarship program will be                     

applied toward the payment of undergraduate, graduate, or          48           

professional tuition; OR                                           49           

                                                          2      


                                                                 
      (2)  AN INDIVIDUAL DESIGNATED BY THE CONTRIBUTOR UNDER A     51           

VARIABLE COLLEGE SAVINGS PROGRAM CONTRACT AS THE INDIVIDUAL WHOSE  52           

TUITION AND OTHER HIGHER EDUCATION EXPENSES WILL BE PAID FROM A    53           

VARIABLE COLLEGE SAVINGS PROGRAM ACCOUNT.                          54           

      (C)  "Capital appreciation bond" means a bond for which the  56           

following is true:                                                              

      (1)  The principal amount is less than the amount payable    58           

at maturity or early redemption; and                               59           

      (2)  No interest is payable on a current basis.              61           

      (D)  "Tuition credit" means a credit of the Ohio tuition     63           

trust authority purchased under section 3334.09 of the Revised     64           

Code.                                                                           

      (E)  "College savings bonds" means revenue and other         66           

obligations issued on behalf of the state or any agency or         67           

issuing authority thereof as a zero-coupon or capital              68           

appreciation bond, and designated as college savings bonds as      69           

provided in this chapter.  "College savings bond issue" means any  70           

issue of bonds of which any part has been designated as college    71           

savings bonds.                                                     72           

      (F)  "Institution of higher education" means a state         74           

institution of higher education, a private college, university,    76           

or other postsecondary institution located in this state that                   

possesses a certificate of authorization issued by the Ohio board  77           

of regents pursuant to Chapter 1713. of the Revised Code or a      78           

certificate of registration issued by the state board of           79           

proprietary school registration under Chapter 3332. of the         80           

Revised Code, or an accredited college, university, or other       81           

postsecondary institution located outside this state that is       82           

accredited by an accrediting organization or professional          83           

association recognized by the authority.  To be considered an      84           

institution of higher education, an institution shall meet the     85           

definition of an eligible educational institution under section    86           

529 of the Internal Revenue Code.                                               

      (G)  "Issuing authority" means any authority, commission,    88           

                                                          3      


                                                                 
body, agency, or individual empowered by the Ohio Constitution or  90           

the Revised Code to issue bonds or any other debt obligation of    91           

the state or any agency or department thereof.  "Issuer" means                  

the issuing authority or, if so designated under division (B) of   92           

section 3334.04 of the Revised Code, the treasurer of state.       93           

      (H)  "Tuition" means the charges imposed to attend an        95           

institution of higher education as an undergraduate, graduate, or  96           

professional student and all fees required as a condition of       97           

enrollment, as determined by the Ohio tuition trust authority.     98           

"Tuition" does not include fees charged to out-of-state residents  99           

by state institutions of higher education, laboratory fees, room   100          

and board, or other similar fees and charges.                      101          

      (I)  "Weighted average tuition" means the tuition cost       103          

resulting from the following calculation:                          104          

      (1)  Add the products of the annual undergraduate tuition    106          

CHARGED TO OHIO RESIDENTS at each four-year state university       108          

multiplied by that institution's total number of undergraduate     109          

fiscal year equated students; and                                  110          

      (2)  Divide the gross total of the products from division    112          

(J)(I)(1) of this section by the total number of undergraduate     113          

fiscal year equated students attending four-year state             114          

universities.                                                      115          

      (J)  "Zero-coupon bond" means a bond which has a stated      117          

interest rate of zero per cent and on which no interest is         118          

payable until the maturity or early redemption of the bond, and    119          

is offered at a substantial discount from its original stated      120          

principal amount.                                                  121          

      (K)  "State institution of higher education" includes the    123          

state universities listed in section 3345.011 of the Revised       124          

Code, community colleges created pursuant to Chapter 3354. of the  125          

Revised Code, university branches created pursuant to Chapter      126          

3355. of the Revised Code, technical colleges created pursuant to  127          

Chapter 3357. of the Revised Code, state community colleges        128          

created pursuant to Chapter 3358. of the Revised Code, the         129          

                                                          4      


                                                                 
medical college of Ohio at Toledo, and the northeastern Ohio       130          

universities college of medicine.                                               

      (L)  "Four-year state university" means those state          132          

universities listed in section 3345.011 of the Revised Code.       133          

      (M)  "Principal amount" refers to the initial offering       135          

price to the public of an obligation, exclusive of the accrued     136          

interest, if any.  "Principal amount" does not refer to the        137          

aggregate accreted amount payable at maturity or redemption of an  138          

obligation.                                                        139          

      (N)  "Scholarship program" means a program registered with   141          

the Ohio tuition trust authority pursuant to section 3334.18       142          

3334.17 of the Revised Code.                                       143          

      (O)  "Internal Revenue Code" means the "Internal Revenue     146          

Code of 1986," 100 Stat. 2085, 26 U.S.C.A. 1 et seq., as amended.  147          

      (P)  "Other higher education expenses" means room and board  150          

and books, supplies, equipment, and nontuition-related fees        151          

associated with the cost of attendance of a beneficiary at an      152          

institution of higher education, but only to the extent that such  153          

expenses meet the definition of "qualified higher education        154          

expenses" under section 529 of the Internal Revenue Code.  "Other  155          

higher education expenses" does not include tuition as defined in  156          

division (H) of this section.                                      157          

      (Q)  "Purchaser" means the person signing the tuition        160          

payment contract, who controls the account and acquires tuition    161          

credits for an account under the terms and conditions of the       162          

contract.                                                                       

      (R)  "CONTRIBUTOR" MEANS A PERSON WHO SIGNS A VARIABLE       164          

COLLEGE SAVINGS PROGRAM CONTRACT WITH THE OHIO TUITION TRUST       165          

AUTHORITY AND CONTRIBUTES TO AND OWNS THE ACCOUNT CREATED UNDER    166          

THE CONTRACT.                                                                   

      Sec. 3334.02.  (A)  In order to help make higher education   175          

affordable and accessible to all citizens of Ohio, to maintain     176          

state institutions of higher education by helping to provide a     177          

stable financial base to these institutions, to provide the        178          

                                                          5      


                                                                 
citizens of Ohio with financing assistance for higher education    179          

and protection against rising tuition costs, to encourage saving   180          

to enhance the ability of citizens of Ohio to obtain financial     181          

access to institutions of higher education, to encourage           182          

elementary and secondary students in this state to achieve         183          

academic excellence, and to promote a well-educated and            184          

financially secure population to the ultimate benefit of all       185          

citizens of the state of Ohio, there is hereby created the Ohio    186          

college savings program.  The program shall consist of the         187          

issuance of college savings bonds and the sale of tuition credits  188          

and, if offered, supplemental credits.                             189          

      (B)  The provisions of Chapter 1707. of the Revised Code     191          

shall not apply to tuition credits or any agreement or             193          

transaction related thereto.                                                    

      (C)  TO PROVIDE THE CITIZENS OF OHIO WITH A CHOICE OF        195          

TAX-ADVANTAGED COLLEGE SAVINGS PROGRAMS AND THE OPPORTUNITY TO     196          

PARTICIPATE IN MORE THAN ONE TYPE OF COLLEGE SAVINGS PROGRAM AT A  198          

TIME, THE OHIO TUITION TRUST AUTHORITY MAY ESTABLISH AND           199          

ADMINISTER A VARIABLE COLLEGE SAVINGS PROGRAM AS A QUALIFIED       200          

STATE TUITION PROGRAM UNDER SECTION 529 OF THE INTERNAL REVENUE    201          

CODE.  THE PROGRAM, IF ESTABLISHED, SHALL ALLOW CONTRIBUTORS TO    203          

MAKE CASH CONTRIBUTIONS TO VARIABLE COLLEGE SAVINGS PROGRAM        204          

ACCOUNTS CREATED FOR THE PURPOSE OF PAYING FUTURE TUITION AND                   

OTHER HIGHER EDUCATION EXPENSES AND PROVIDING VARIABLE RATES OF    205          

RETURN ON CONTRIBUTIONS.                                           206          

      (D)  IF A VARIABLE COLLEGE SAVINGS PROGRAM IS ESTABLISHED,   208          

A PERSON MAY PARTICIPATE SIMULTANEOUSLY IN BOTH THE OHIO COLLEGE   209          

SAVINGS PROGRAM AND THE VARIABLE COLLEGE SAVINGS PROGRAM.          210          

      Sec. 3334.08.  (A)  In addition to any other powers          219          

conferred by this chapter, the Ohio tuition trust authority may    220          

do any of the following:                                           221          

      (1)  Impose reasonable residency requirements for            223          

beneficiaries of tuition credits;                                  224          

      (2)  Impose reasonable limits on the number of tuition       226          

                                                          6      


                                                                 
credit participants;                                               227          

      (3)  Impose and collect administrative fees and charges in   229          

connection with any transaction under this chapter;                230          

      (4)  Purchase insurance from insurers licensed to do         232          

business in this state providing for coverage against any loss in  233          

connection with the authority's property, assets, or activities    234          

or to further ensure the value of tuition credits;                 235          

      (5)  Indemnify or purchase policies of insurance on behalf   237          

of members, officers, and employees of the authority from          238          

insurers licensed to do business in this state providing for       239          

coverage for any liability incurred in connection with any civil   240          

action, demand, or claim against a director, officer, or employee  241          

by reason of an act or omission by the director, officer, or       242          

employee that was not manifestly outside the scope of the          243          

employment or official duties of the director, officer, or         244          

employee or with malicious purpose, in bad faith, or in a wanton   246          

or reckless manner;                                                             

      (6)  Make, execute, and deliver contracts, conveyances, and  248          

other instruments necessary to the exercise and discharge of the   249          

powers and duties of the authority;                                250          

      (7)  Promote, advertise, and publicize the college savings   252          

program AND THE VARIABLE COLLEGE SAVINGS PROGRAM;                  253          

      (8)  Adopt rules under section 111.15 of the Revised Code    255          

for the implementation of the college savings program AND THE      256          

VARIABLE COLLEGE SAVINGS PROGRAM;                                  257          

      (9)  Contract, for the provision of all or part of the       259          

services necessary for the management and operation of the         260          

college savings program AND THE VARIABLE COLLEGE SAVINGS PROGRAM,  261          

with a bank, trust company, savings and loan association,          263          

insurance company, or licensed dealer in securities if the bank,   264          

company, association, or dealer is authorized to do business in    265          

this state and information about the contract is filed with the    266          

controlling board pursuant to division (D)(6) of section 127.16    267          

of the Revised Code;                                                            

                                                          7      


                                                                 
      (10)  Contract for other services, or for goods, needed by   269          

the authority in the conduct of its business, including but not    270          

limited to credit card services;                                   271          

      (11)  Employ an executive director and other personnel as    273          

necessary to carry out its responsibilities under this chapter,    274          

and fix the compensation of these persons.  All employees of the   275          

authority shall be in the unclassified civil service and shall be  276          

eligible for membership in the public employees retirement         277          

system.                                                            278          

      (12)  Contract with financial consultants, actuaries,        280          

auditors, and other consultants as necessary to carry out its      281          

responsibilities under this chapter;                               282          

      (13)  Enter into agreements with any agency of the state or  284          

its political subdivisions or with private employers under which   285          

an employee may agree to have a designated amount deducted in      286          

each payroll period from the wages or salary due the employee for  287          

the purpose of purchasing tuition credits pursuant to a tuition    288          

payment contract OR MAKING CONTRIBUTIONS PURSUANT TO A VARIABLE    289          

COLLEGE SAVINGS PROGRAM CONTRACT;                                  290          

      (14)  Enter into an agreement with the treasurer of state    292          

under which the treasurer of state will receive, and credit to     293          

the Ohio tuition trust fund OR VARIABLE COLLEGE SAVINGS PROGRAM    294          

FUND, from any bank or savings and loan association authorized to  296          

do business in this state, amounts that a depositor of the bank    297          

or association authorizes the bank or association to withdraw      298          

periodically from the depositor's account for the purpose of       300          

purchasing tuition credits pursuant to a tuition payment contract  301          

OR MAKING CONTRIBUTIONS PURSUANT TO A VARIABLE COLLEGE SAVINGS     302          

PROGRAM CONTRACT;                                                               

      (15)  Solicit and accept gifts, grants, and loans from any   304          

person or governmental agency and participate in any governmental  305          

program;                                                           306          

      (16)  Impose limits on the number of credits which may be    309          

purchased on behalf of or assigned or awarded to any beneficiary   310          

                                                          8      


                                                                 
AND ON THE TOTAL AMOUNT OF CONTRIBUTIONS THAT MAY BE MADE ON       311          

BEHALF OF A BENEFICIARY;                                                        

      (17)  Impose restrictions on the substitution of another     313          

individual for the original beneficiary AND IMPOSE LIMITATIONS ON  314          

THE ROLLOVER OF ACCOUNTS TO PLANS OFFERED BY OTHER STATES;         315          

      (18)  Impose a limit on the age of a beneficiary, above      317          

which tuition credits may not be purchased OR CONTRIBUTIONS MADE   318          

on behalf of that beneficiary;                                     320          

      (19)  Enter into a cooperative agreement with the treasurer  322          

of state to provide for the direct disbursement of payments under  323          

tuition payment OR VARIABLE COLLEGE SAVINGS PROGRAM contracts;     324          

      (20)  Determine the other higher education expenses for      326          

which tuition credits OR CONTRIBUTIONS may be used;                327          

      (21)  Terminate any prepaid tuition PAYMENT OR VARIABLE      329          

COLLEGE SAVINGS PROGRAM contract if no purchases OR CONTRIBUTIONS  331          

are made for a period of three years or more and there are fewer   333          

than a total of five tuition units or tuition credits OR LESS                   

THAN A DOLLAR AMOUNT SET BY RULE on account, provided that notice  335          

of a possible termination shall be provided in advance,            336          

explaining any options to prevent termination, and a reasonable    337          

amount of time shall be provided within which to act to prevent a  338          

termination;                                                                    

      (22)  MAINTAIN A SEPARATE ACCOUNT FOR EACH TUITION PAYMENT   340          

OR VARIABLE COLLEGE SAVINGS PROGRAM CONTRACT;                      341          

      (23)  Perform all acts necessary and proper to carry out     343          

the duties and responsibilities of the authority pursuant to this  344          

chapter.                                                           345          

      (B)  Except as otherwise specified in this chapter, the      347          

provisions of Chapters 123., 125., and 4117. of the Revised Code   348          

shall not apply to the authority.  The department of               349          

administrative services shall, upon the request of the authority,  350          

act as the authority's agent for the purchase of equipment,        351          

supplies, insurance, or services, or the performance of            352          

administrative services pursuant to Chapter 125. of the Revised    353          

                                                          9      


                                                                 
Code.                                                              354          

      Sec. 3334.10.  Divisions (A) and, (B), (C), AND (D) of this  364          

section do not apply to scholarship programs established under     365          

section 3334.17 of the Revised Code.                                            

      (A)  Unless otherwise provided for in the contract, a        368          

tuition payment contract may be terminated by the purchaser under  369          

any of the following circumstances upon the written request of     370          

the purchaser to the authority:                                    371          

      (1)  Upon the death or permanent disability of the           373          

beneficiary;                                                                    

      (2)  Upon notification to the Ohio tuition trust authority   375          

in writing that the beneficiary is age eighteen or older, has      376          

decided not to attend an institution of higher education, and      377          

requests that the tuition payment contract be terminated;          378          

      (3)  Upon the beneficiary's completion of the degree         380          

requirements at an institution of higher education;                381          

      (4)  Upon the rollover of all contributions to AMOUNTS IN a  384          

tuition credit account to the prepaid tuition plan of AN           386          

EQUIVALENT ACCOUNT IN another state;                               387          

      (5)  Upon the occurrence of other circumstances determined   389          

by the authority to be grounds for termination.                    390          

      (B)  The authority shall determine the method and schedule   392          

for payment of refunds upon termination of a tuition payment       393          

contract.                                                          394          

      (1)  In cases described by division (A)(2) or (3) of this    396          

section, the amount of the refund shall be equal to ninety-nine    397          

one-hundredths of NOT LESS THAN one per cent of the weighted       398          

average tuition in the academic year the contract REFUND is        400          

terminated PAID, multiplied by the number of tuition credits       402          

purchased and not used, minus any reasonable charges and fees                   

provided for by the authority, or such other lesser sum as shall   403          

be determined by the authority but only to the extent that such a  404          

lesser sum is necessary to meet the refund penalty requirements    405          

for qualified state tuition programs under section 529 of the      406          

                                                          10     


                                                                 
Internal Revenue Code.                                             407          

      (2)  In cases described by division (A)(1) of this section,  409          

the amount of the refund shall be equal to the greater of the      410          

following:                                                                      

      (a)  One per cent of the weighted average tuition in the     412          

academic year the contract REFUND is terminated PAID, multiplied   413          

by the number of tuition credits purchased and not used;           415          

      (b)  The total purchase price of all tuition credits         417          

purchased for the beneficiary and not used.                        418          

      (3)  In cases described by division (A)(5) of this section,  420          

the amount of the refund shall be either of the following as       421          

determined by the authority:                                       422          

      (a)  The refund provided by division (B)(1) of this          424          

section;                                                                        

      (b)  The refund provided by division (B)(2) of this          426          

section, or such other lesser sum as shall be determined by the    428          

authority but only to the extent that such a lesser sum is         429          

necessary to meet the refund penalty requirements for qualified    430          

state tuition programs under section 529 of the Internal Revenue   431          

Code.                                                                           

      (C)  UNLESS OTHERWISE PROVIDED FOR IN THE CONTRACT, A        434          

VARIABLE COLLEGE SAVINGS PROGRAM ACCOUNT MAY BE TERMINATED BY THE  435          

CONTRIBUTOR FOR ANY REASON UPON THE WRITTEN REQUEST OF THE         436          

CONTRIBUTOR TO THE AUTHORITY.  TERMINATION OF A VARIABLE COLLEGE   437          

SAVINGS PROGRAM ACCOUNT SHALL OCCUR NO EARLIER THAN A MATURITY     438          

PERIOD SET BY THE AUTHORITY AFTER THE FIRST CONTRIBUTION IS MADE   439          

TO THE ACCOUNT.                                                                 

      (D)  THE AUTHORITY SHALL DETERMINE THE METHOD AND SCHEDULE   441          

FOR PAYMENT OF REFUNDS UPON TERMINATION OF A VARIABLE SAVINGS      442          

PROGRAM ACCOUNT.                                                   443          

      (1)  THE CONTRIBUTOR UNDER A VARIABLE SAVINGS PROGRAM        445          

CONTRACT MAY RECEIVE A REFUND OF THE BALANCE IN AN ACCOUNT, LESS   446          

ANY ADMINISTRATIVE FEES, IF THE ACCOUNT IS TERMINATED UPON THE     447          

DEATH OR PERMANENT DISABILITY OF THE BENEFICIARY OR, TO THE        448          

                                                          11     


                                                                 
EXTENT ALLOWED UNDER RULES OF THE AUTHORITY, UPON THE ROLLOVER OF  449          

ALL AMOUNTS IN A VARIABLE COLLEGE SAVINGS PROGRAM ACCOUNT TO AN    450          

EQUIVALENT ACCOUNT IN ANOTHER STATE.                               451          

      (2)  IF A VARIABLE COLLEGE SAVINGS PROGRAM ACCOUNT IS        453          

TERMINATED FOR ANY REASON OTHER THAN THOSE SET FORTH IN DIVISION   454          

(D)(1) OF THIS SECTION, THE CONTRIBUTOR MAY RECEIVE A REFUND OF    455          

THE BALANCE IN THE ACCOUNT, LESS ANY ADMINISTRATIVE FEES, AND      456          

LESS ANY ADDITIONAL AMOUNT NECESSARY TO MEET THE MINIMUM REFUND    457          

PENALTY REQUIREMENTS FOR A QUALIFIED STATE TUITION PROGRAM UNDER   458          

SECTION 529 OF THE INTERNAL REVENUE CODE.                          459          

      (3)  EARNINGS SHALL BE CALCULATED AS THE TOTAL VALUE OF THE  461          

ACCOUNT LESS THE AGGREGATE CONTRIBUTIONS, OR IN SUCH OTHER MANNER  462          

AS PRESCRIBED BY SECTION 529 OF THE INTERNAL REVENUE CODE.         464          

      (E)  In the case of a scholarship program, a refund of       466          

tuition credits in the program's account may be made only for      468          

just cause with the approval of the authority.  The refund shall   469          

be paid to the entity that established the scholarship program     470          

or, with that entity's approval, to the authority if this is       471          

authorized by federal tax law.  The amount of any refund shall be  472          

determined by the authority and shall meet the requirements for    473          

refunds made on account of scholarships under section 529 of the   474          

Internal Revenue Code.                                             475          

      (D)(F)  If a beneficiary is awarded a scholarship other      477          

than under a scholarship program, a waiver of tuition, or similar  478          

subvention that the authority determines cannot be converted into  481          

money by the beneficiary, the authority shall, during each         482          

academic term that the beneficiary furnishes the authority such    483          

information about the scholarship, waiver, or similar subvention   484          

as the authority requires, refund to the person designated in the  485          

contract, or, in the case of a beneficiary under a scholarship     486          

program, to the beneficiary an amount equal to the value that the  487          

tuition credits OR THE AMOUNTS IN THE VARIABLE COLLEGE SAVINGS     488          

PROGRAM ACCOUNT that are not needed on account of the              490          

scholarship, waiver, or similar subvention would otherwise have    491          

                                                          12     


                                                                 
to the beneficiary that term at the institution of higher                       

education where the beneficiary is enrolled.  The authority may,   492          

at its sole option, designate the institution of higher education  493          

at which the beneficiary is enrolled as the agent of the           494          

authority for purposes of refunds pursuant to this division.       495          

      (E)(G)  If, in any academic term for which tuition credits   497          

OR ANY AMOUNTS IN A VARIABLE COLLEGE SAVINGS PROGRAM ACCOUNT have  499          

been used to pay all or part of a beneficiary's tuition, the                    

beneficiary withdraws from the institution of higher education at  500          

which the beneficiary is enrolled prior to the end of the          501          

academic term, a pro rata share of any refund of tuition as a      502          

result of the withdrawal equal to that portion of the tuition      503          

paid with tuition credits OR THE AMOUNTS IN A VARIABLE COLLEGE     504          

SAVINGS PROGRAM ACCOUNT shall be made to the authority, unless     505          

the authority designates a different procedure.  The authority     506          

shall credit any refund received, less any reasonable charges and  507          

fees provided for by the authority, to the appropriate account     508          

established under division (F)(1) or (2) of section 3334.11 of     510          

the Revised Code OR DIVISION (H) OF THIS SECTION.                               

      (H)  THE AUTHORITY SHALL MAINTAIN A SEPARATE ACCOUNT FOR     512          

EACH VARIABLE COLLEGE SAVINGS CONTRACT ENTERED INTO PURSUANT TO    513          

DIVISION (A) OF SECTION 3334.18 OF THE REVISED CODE FOR            514          

CONTRIBUTIONS MADE ON BEHALF OF A BENEFICIARY, SHOWING THE NAME    517          

OF THE BENEFICIARY OF THAT CONTRACT AND THE AMOUNT OF              518          

CONTRIBUTIONS MADE PURSUANT TO THAT CONTRACT.  UPON REQUEST OF     519          

ANY BENEFICIARY OR CONTRIBUTOR, THE AUTHORITY SHALL PROVIDE A      520          

STATEMENT INDICATING, IN THE CASE OF A BENEFICIARY, THE AMOUNT OF  521          

CONTRIBUTIONS MADE PURSUANT TO THAT CONTRACT ON BEHALF OF THE      522          

BENEFICIARY, OR, IN THE CASE OF A CONTRIBUTOR, CONTRIBUTIONS       523          

MADE, DISBURSED, OR REFUNDED PURSUANT TO THAT CONTRACT.  A         524          

BENEFICIARY AND CONTRIBUTOR EACH MAY FILE ONLY ONE REQUEST UNDER   525          

THIS DIVISION IN ANY YEAR.                                                      

      Sec. 3334.11.  (A)  The assets of the Ohio tuition trust     534          

authority reserved for payment of the obligations of the           535          

                                                          13     


                                                                 
authority pursuant to tuition payment contracts shall be placed    536          

in a fund, which is hereby created and shall be known as the Ohio  538          

tuition trust fund.  The fund shall be in the custody of the       539          

treasurer of state, but shall not be part of the state treasury.   540          

That portion of payments received by the authority or the          541          

treasurer of state from persons purchasing tuition credits under   542          

tuition payment contracts that the authority determines is         543          

actuarially necessary for the payment of obligations of the        544          

authority pursuant to tuition payment contracts, all interest and  545          

investment income earned by the fund, and all other receipts of    546          

the authority from any other source that the authority determines  548          

appropriate, shall be deposited in the fund.  No purchaser or      549          

beneficiary of tuition credits shall have any claim against the    550          

funds of any state institution of higher education.  All           551          

investment fees and other costs incurred in connection with the    552          

exercise of the investment powers of the authority pursuant to     553          

divisions (D) and (E) of this section shall be paid from the                    

assets of the fund.                                                554          

      (B)  Unless otherwise provided by the authority, the assets  556          

of the Ohio tuition trust fund shall be expended in the following  557          

order:                                                             558          

      (1)  To make payments to beneficiaries, or institutions of   560          

higher education on behalf of beneficiaries, under division (B)    561          

of section 3334.09 of the Revised Code;                            562          

      (2)  To make refunds as provided in divisions (B), (C)(E),   564          

and (D)(F) of section 3334.10 of the Revised Code;                 565          

      (3)  To pay the investment fees and other costs of           567          

administering the fund.                                            568          

      (C)(1)  Except as may be provided in an agreement under      570          

division (A)(19) of section 3334.08 of the Revised Code, all       572          

disbursements from the Ohio tuition trust fund shall be made by                 

the treasurer of state on order of a designee of the authority.    573          

      (2)  The treasurer of state shall deposit any portion of     575          

the Ohio tuition trust fund not needed for immediate use in the    576          

                                                          14     


                                                                 
same manner as state funds are deposited.                          577          

      (D)  The authority is the trustee of the Ohio tuition trust  579          

fund.  The authority shall have full power to invest the assets    581          

of the fund and in exercising this power shall be subject to the                

limitations and requirements contained in divisions (K) to (M) of  583          

this section and sections 145.112 and 145.113 of the Revised       584          

Code.  The evidences of title of all investments shall be          585          

delivered to the treasurer of state or to a qualified trustee      587          

designated by the treasurer of state as provided in section        589          

135.18 of the Revised Code.  Assets of the fund shall be           590          

administered by the authority in a manner designed to be           591          

actuarially sound so that the assets of the fund will be                        

sufficient to satisfy the obligations of the authority pursuant    592          

to tuition payment contracts and defray the reasonable expenses    593          

of administering the fund.                                         594          

      (E)  The public employees retirement board shall, with the   596          

approval of the authority, exercise the investment powers of the   597          

authority as set forth in division (D) of this section until the   598          

authority determines that assumption and exercise by the           599          

authority of the investment powers is financially and              600          

administratively feasible.  The investment powers shall be         601          

exercised by the public employees retirement board in a manner     602          

agreed upon by the authority that maximizes the return on          603          

investment and minimizes the administrative expenses.              604          

      (F)(1)  The authority shall maintain a separate account for  606          

each tuition payment contract entered into pursuant to division    608          

(A) of section 3334.09 of the Revised Code for the purchase of     609          

tuition credits on behalf of a beneficiary or beneficiaries        610          

showing the beneficiary or beneficiaries of that contract and the  611          

number of tuition credits purchased pursuant to that contract.     612          

Upon request of any beneficiary or person who has entered into a   613          

tuition payment contract, the authority shall provide a statement  614          

indicating, in the case of a beneficiary, the number of tuition    615          

credits purchased on behalf of the beneficiary, or in the case of  616          

                                                          15     


                                                                 
a person who has entered into a tuition payment contract, the      617          

number of tuition credits purchased, used, or refunded pursuant    618          

to that contract.  A beneficiary and person that have entered      619          

into a tuition payment contract each may file only one request     620          

under this division in any year.                                   621          

      (2)  The authority shall maintain an account for each        623          

scholarship program showing the number of tuition credits that     624          

have been purchased for or donated to the program and the number   625          

of tuition credits that have been used.  Upon the request of the   626          

entity that established the scholarship program, the authority     627          

shall provide a statement indicating these numbers.                628          

      (G)  In addition to the Ohio tuition trust fund, there is    630          

hereby established a reserve fund that shall be in the custody of  633          

the treasurer of state but shall not be part of the state                       

treasury, and shall be known as the Ohio tuition trust reserve     634          

fund, and an operating fund that shall be part of the state        636          

treasury, and shall be known as the Ohio tuition trust operating   637          

fund.  That portion of payments received by the authority or the   638          

treasurer of state from persons purchasing tuition credits under   639          

tuition payment contracts that the authority determines is not     641          

actuarially necessary for the payment of obligations of the        642          

authority pursuant to tuition payment contracts, any interest and  643          

investment income earned by the reserve fund, any administrative   644          

charges and fees imposed by the authority on transactions under    645          

this chapter or on purchasers or beneficiaries of tuition          646          

credits, and all other receipts from any other source that the     648          

authority determines appropriate, shall be deposited in the        649          

reserve fund to pay the operating expenses of the authority and    650          

the costs of administering the program.  The assets of the         651          

reserve fund may be invested in the same manner and subject to     652          

the same limitations set forth in divisions (D), (E), and (K) to   654          

(M) of this section and sections 145.112 and 145.113 of the        655          

Revised Code.  All investment fees and other costs incurred in     657          

connection with the exercise of the investment powers shall be     659          

                                                          16     


                                                                 
paid from the assets of the reserve fund.  Except as otherwise     660          

provided for in this chapter, all operating expenses of the        661          

authority and costs of administering the program shall be paid     662          

from the operating fund.  The treasurer shall, upon request of     663          

the authority, transfer funds from the reserve fund to the         664          

operating fund as the authority determines appropriate to pay      665          

those current operating expenses of the authority and costs of     666          

administering the program as the authority designates.  Any        667          

interest or investment income earned on the assets of the          668          

operating fund shall be deposited in the operating fund.           669          

      (H)  In January of each year the authority shall report to   671          

each person who received any payments or refunds from the          672          

authority during the preceding year information relative to the    673          

value of the payments or refunds to assist in determining that     675          

person's tax liability.                                            676          

      (I)  The authority shall report to the tax commissioner any  679          

information, and at the times, as the tax commissioner requires    681          

to determine any tax liability that a person may have incurred     682          

during the preceding year as a result of having received any       683          

payments or refunds from the authority.                                         

      (J)  All records of the authority indicating the identity    685          

of purchasers and beneficiaries of tuition credits or college      686          

savings bonds, the number of tuition credits purchased, used, or   687          

refunded under a tuition payment contract, and the number of       688          

college savings bonds purchased, held, or redeemed are not public  689          

records within the meaning of section 149.43 of the Revised Code.  690          

      (K)  The authority and other fiduciaries shall discharge     693          

their duties with respect to the funds with care, skill,           694          

prudence, and diligence under the circumstances then prevailing    695          

that a prudent person acting in a like capacity and familiar with  696          

such matters would use in the conduct of an enterprise of a like   697          

character and with like aims; and by diversifying the investments  698          

of the assets of the funds so as to minimize the risk of large     699          

losses, unless under the circumstances it is clearly prudent not   701          

                                                          17     


                                                                 
to do so.                                                                       

      To facilitate investment of the funds, the authority may     703          

establish a partnership, trust, limited liability company,         704          

corporation, including a corporation exempt from taxation under    705          

the Internal Revenue Code, 100 Stat. 2085, 26 U.S.C. 1, as         706          

amended, or any other legal entity authorized to transact          707          

business in this state.                                                         

      (L)  In exercising its fiduciary responsibility with         709          

respect to the investment of the assets of the funds, it shall be  710          

the intent of the authority to give consideration to investments   711          

that enhance the general welfare of the state and its citizens     712          

where the investments offer quality, return, and safety            713          

comparable to other investments currently available to the         714          

authority.  In fulfilling this intent, equal consideration shall   715          

also be given to investments otherwise qualifying under this       716          

section that involve minority owned and controlled firms and       717          

firms owned and controlled by women, either alone or in joint      718          

venture with other firms.                                                       

      The authority shall adopt, in regular meeting, policies,     721          

objectives, or criteria for the operation of the investment        722          

program that include asset allocation targets and ranges, risk     724          

factors, asset class benchmarks, time horizons, total return       725          

objectives, and performance evaluation guidelines.  In adopting    727          

policies and criteria for the selection of agents with whom the    728          

authority may contract for the administration of the assets of                  

the funds, the authority shall give equal consideration to         729          

minority owned and controlled firms, firms owned and controlled    730          

by women, and ventures involving minority owned and controlled     731          

firms and firms owned and controlled by women that otherwise meet  732          

the policies and criteria established by the authority.            733          

Amendments and additions to the policies and criteria shall be     734          

adopted in regular meeting.  The authority shall publish its                    

policies, objectives, and criteria under this provision no less    735          

often than annually and shall make copies available to interested  737          

                                                          18     


                                                                 
parties.                                                                        

      When reporting on the performance of investments, the        739          

authority shall comply with the performance presentation           741          

standards established by the association for investment            742          

management and research.                                                        

      (M)  All investments shall be purchased at current market    744          

prices and the evidences of title of the investments shall be      745          

placed in the hands of the treasurer of state, who is hereby       746          

designated as custodian thereof, or in the hands of the treasurer  748          

of state's authorized agent.  The treasurer of state or the agent  749          

shall collect the principal, dividends, distributions, and                      

interest thereon as they become due and payable and place them     750          

when so collected into the custodial funds.                        751          

      The treasurer of state shall pay for investments purchased   753          

by the authority on receipt of written or electronic instructions  754          

from the authority or the authority's designated agent             755          

authorizing the purchase and pending receipt of the evidence of    757          

title of the investment by the treasurer of state or the                        

treasurer of state's authorized agent.  The authority may sell     758          

investments held by the authority, and the treasurer of state or   759          

the treasurer of state's authorized agent shall accept payment     760          

from the purchaser and deliver evidence of title of the            761          

investment to the purchaser on receipt of written or electronic    762          

instructions from the authority or the authority's designated      763          

agent authorizing the sale, and pending receipt of the moneys for               

the investments.  The amount received shall be placed in the       764          

custodial funds.  The authority and the treasurer of state may     765          

enter into agreements to establish procedures for the purchase     766          

and sale of investments under this division and the custody of     767          

the investments.                                                                

      No purchase or sale of any investment shall be made under    769          

this section except as authorized by the authority.                770          

      Any statement of financial position distributed by the       772          

authority shall include fair value, as of the statement date, of   773          

                                                          19     


                                                                 
all investments held by the authority under this section.          774          

      Sec. 3334.12.  Notwithstanding anything to the contrary in   783          

sections 3334.07 and 3334.09 of the Revised Code:                  784          

      (A)  Annually, the Ohio tuition trust authority shall have   786          

the actuarial soundness of the Ohio tuition trust fund evaluated   787          

by a nationally recognized actuary and shall determine whether     788          

additional assets are necessary to defray the obligations of the   789          

authority.  If, after the authority sets the price for tuition     790          

credits, circumstances arise that the executive director           792          

determines necessitate an additional evaluation of the actuarial   793          

soundness of the fund, the executive director shall have a         795          

nationally recognized actuary conduct the necessary evaluation.    796          

If the assets of the fund are insufficient to ensure the           797          

actuarial soundness of the fund, the authority shall adjust the    798          

price of subsequent purchases of tuition credits.                               

      (B)  Upon termination of the program or liquidation of the   800          

Ohio tuition trust fund, the Ohio tuition trust reserve fund, and  801          

the Ohio tuition trust operating fund, any remaining assets of     802          

the funds after all obligations of the funds have been satisfied   803          

pursuant to division (B) of section 3334.11 of the Revised Code    804          

shall be transferred to the general revenue fund of the state.     805          

      (C)  The authority shall prepare and cause to have audited   807          

an annual financial report on all financial activity of the Ohio   808          

tuition trust authority within ninety days of the end of the       809          

fiscal year.  The authority shall transmit a copy of the audited   810          

financial report to the governor, the president of the senate,     811          

the speaker of the house of representatives, and the minority      812          

leaders of the senate and the house of representatives.  Copies    813          

of the audited financial report also shall be made available,      814          

upon request, to the persons entering into contracts with the      815          

authority and to prospective purchasers of tuition credits AND     816          

PROSPECTIVE CONTRIBUTORS TO VARIABLE COLLEGE SAVINGS PROGRAM       817          

ACCOUNTS.                                                                       

      Sec. 3334.15.  (A)  The right of a person to a tuition       826          

                                                          20     


                                                                 
credit or a payment under section 3334.09 of the Revised Code      828          

pursuant to a tuition credit contract or, A scholarship program,   829          

OR A VARIABLE COLLEGE SAVINGS PROGRAM ACCOUNT shall not be         831          

subject to execution, garnishment, attachment, the operation of    833          

bankruptcy or the insolvency laws, or other process of law.        834          

      (B)  THE RIGHT OF A PERSON TO A TUITION CREDIT OR A PAYMENT  836          

UNDER SECTION 3334.09 OF THE REVISED CODE PURSUANT TO A TUITION    837          

CREDIT CONTRACT, A SCHOLARSHIP PROGRAM, OR A VARIABLE COLLEGE      838          

SAVINGS PROGRAM ACCOUNT SHALL NOT BE USED AS SECURITY OR           839          

COLLATERAL FOR A LOAN.                                                          

      Sec. 3334.18.  (A)  A VARIABLE COLLEGE SAVINGS PROGRAM       841          

ESTABLISHED BY THE OHIO TUITION TRUST AUTHORITY SHALL INCLUDE      842          

PROVISIONS FOR A CONTRACT TO BE ENTERED INTO BETWEEN A             843          

CONTRIBUTOR AND THE AUTHORITY THAT WILL AUTHORIZE THE CONTRIBUTOR  844          

TO OPEN AN ACCOUNT FOR A BENEFICIARY AND MAY AUTHORIZE THE         846          

CONTRIBUTOR TO SUBSTITUTE A NEW BENEFICIARY FOR ONE ORIGINALLY                  

NAMED IN THE CONTRACT.                                             847          

      (B)  THE AUTHORITY SHALL PROVIDE ADEQUATE SAFEGUARDS TO      849          

PREVENT TOTAL CONTRIBUTIONS TO A VARIABLE COLLEGE SAVINGS PROGRAM  850          

ACCOUNT OR PURCHASES OF TUITION CREDITS, EITHER SEPARATELY OR      851          

COMBINED, THAT ARE MADE ON BEHALF OF A BENEFICIARY FROM EXCEEDING  852          

THE AMOUNT NECESSARY TO PROVIDE FOR THE TUITION AND OTHER HIGHER   853          

EDUCATION EXPENSES OF THE BENEFICIARY.  HOWEVER, IN NO EVENT       854          

SHALL CONTRIBUTIONS OR PURCHASES EXCEED THE ALLOWABLE LIMIT FOR A  856          

QUALIFIED STATE TUITION PROGRAM UNDER SECTION 529 OF THE INTERNAL  857          

REVENUE CODE.                                                                   

      (C)  PARTICIPATION IN THE VARIABLE COLLEGE SAVINGS PROGRAM   859          

DOES NOT GUARANTEE THAT CONTRIBUTIONS AND THE INVESTMENT RETURN    860          

ON CONTRIBUTIONS, IF ANY, WILL BE ADEQUATE TO COVER FUTURE         862          

TUITION AND OTHER HIGHER EDUCATION EXPENSES OR THAT A BENEFICIARY  863          

WILL BE ADMITTED TO OR PERMITTED TO CONTINUE TO ATTEND AN          864          

INSTITUTION OF HIGHER EDUCATION.  THE STATE SHALL HAVE NO DEBT OR  865          

OBLIGATION TO ANY CONTRIBUTOR, BENEFICIARY, OR ANY OTHER PERSON    866          

AS A RESULT OF THE ESTABLISHMENT OF THE PROGRAM.                   867          

                                                          21     


                                                                 
      Sec. 3334.19.  (A)  IF THE OHIO TUITION TRUST AUTHORITY      869          

ESTABLISHES A VARIABLE COLLEGE SAVINGS PROGRAM, IT SHALL ADOPT AN  870          

INVESTMENT PLAN THAT SETS FORTH INVESTMENT POLICIES AND            871          

GUIDELINES TO BE UTILIZED IN ADMINISTERING THE PROGRAM.  THE       872          

AUTHORITY MAY CONTRACT WITH ONE OR MORE INSURANCE COMPANIES,       873          

BANKS, OR OTHER FINANCIAL INSTITUTIONS TO ACT AS ITS INVESTMENT    874          

AGENTS AND TO PROVIDE SUCH SERVICES AS THE AUTHORITY CONSIDERS     875          

APPROPRIATE TO THE INVESTMENT PLAN, INCLUDING:                     876          

      (1)  PURCHASE, CONTROL, AND SAFEKEEPING OF ASSETS;           878          

      (2)  RECORD KEEPING AND ACCOUNTING FOR INDIVIDUAL ACCOUNTS   880          

AND FOR THE PROGRAM AS A WHOLE;                                    881          

      (3)  PROVISION OF CONSOLIDATED STATEMENTS OF ACCOUNT.        884          

      (B)  THE AUTHORITY OR ITS INVESTMENT AGENTS SHALL MAINTAIN   886          

A SEPARATE ACCOUNT FOR THE BENEFICIARY OF EACH CONTRACT ENTERED    887          

INTO UNDER THE VARIABLE COLLEGE SAVINGS PROGRAM.  IF A             888          

BENEFICIARY HAS MORE THAN ONE SUCH ACCOUNT, THE AUTHORITY OR ITS   889          

AGENTS SHALL TRACK TOTAL CONTRIBUTIONS AND EARNINGS AND PROVIDE A  890          

CONSOLIDATED SYSTEM OF ACCOUNT DISTRIBUTIONS TO INSTITUTIONS OF    891          

HIGHER EDUCATION.                                                               

      (C)  THE AUTHORITY OR ITS AGENTS MAY PLACE ASSETS OF THE     893          

PROGRAM IN SAVINGS ACCOUNTS AND MAY PURCHASE FIXED OR VARIABLE     894          

LIFE INSURANCE OR ANNUITY CONTRACTS, SECURITIES, EVIDENCE OF       896          

INDEBTEDNESS, OR OTHER INVESTMENT PRODUCTS PURSUANT TO THE         897          

INVESTMENT PLAN.                                                                

      (D)  CONTRIBUTORS SHALL NOT DIRECT THE INVESTMENT OF THEIR   899          

CONTRIBUTIONS UNDER THE INVESTMENT PLAN.  THE AUTHORITY SHALL      900          

IMPOSE OTHER LIMITS ON CONTRIBUTORS' INVESTMENT DISCRETION AS      901          

REQUIRED UNDER SECTION 529 OF THE INTERNAL REVENUE CODE.           902          

      (E)  IF THE AUTHORITY DOES NOT CONTRACT WITH AN INVESTMENT   904          

AGENT TO INVEST VARIABLE COLLEGE SAVINGS PROGRAM FUNDS, THE        905          

AUTHORITY SHALL BE THE TRUSTEE OF THE PROGRAM.  IN SUCH EVENT,     907          

THE AUTHORITY SHALL RECEIVE AND HOLD ALL PAYMENTS, DEPOSITS, AND   908          

CONTRIBUTIONS, AS WELL AS GIFTS, BEQUESTS, ENDOWMENTS, AND         909          

FEDERAL, STATE, OR LOCAL GRANTS AND ANY FUNDS FROM ANY OTHER       910          

                                                          22     


                                                                 
SOURCE, PUBLIC OR PRIVATE, AND ALL EARNINGS, UNTIL DISBURSED TO    911          

PAY TUITION OR OTHER HIGHER EDUCATION EXPENSES OR REFUNDS          912          

PURSUANT TO COLLEGE SAVINGS PLANS CONTRACTS.  THE AUTHORITY SHALL  913          

KEEP SUCH FUNDS SEGREGATED FROM ALL OTHER ASSETS OF THE            914          

AUTHORITY.                                                                      

      (F)  THE AUTHORITY AND ANY INVESTMENT AGENTS WITH WHICH IT   916          

CONTRACTS SHALL DISCHARGE THEIR DUTIES WITH RESPECT TO PROGRAM     917          

FUNDS WITH THE CARE AND DILIGENCE THAT A PRUDENT PERSON FAMILIAR   919          

WITH SUCH MATTERS AND WITH THE CHARACTER AND AIMS OF THE PROGRAM   920          

WOULD USE.                                                                      

      (G)  THE ASSETS OF THE PROGRAM SHALL BE PRESERVED,           922          

INVESTED, AND EXPENDED SOLELY FOR THE PURPOSES OF THIS CHAPTER     923          

AND SHALL NOT BE LOANED OR OTHERWISE TRANSFERRED OR USED BY THE    925          

STATE FOR ANY OTHER PURPOSE.  THIS SECTION SHALL NOT BE CONSTRUED               

TO PROHIBIT THE AUTHORITY OR ITS INVESTMENT AGENTS FROM            927          

INVESTING, BY PURCHASE OR OTHERWISE, IN BONDS, NOTES, OR OTHER     928          

OBLIGATIONS OF THE STATE OR ANY AGENCY OR INSTRUMENTALITY OF THE   929          

STATE.  UNLESS OTHERWISE SPECIFIED BY THE AUTHORITY, ASSETS OF     930          

THE PROGRAM SHALL BE EXPENDED IN THE FOLLOWING ORDER OF PRIORITY:  931          

      (1)  TO MAKE PAYMENTS ON BEHALF OF BENEFICIARIES;            933          

      (2)  TO MAKE REFUNDS UPON TERMINATION OF VARIABLE COLLEGE    935          

SAVINGS PROGRAM CONTRACTS;                                         936          

      (3)  TO PAY THE COSTS OF PROGRAM ADMINISTRATION AND          938          

OPERATIONS.                                                                     

      (H)  NO RECORDS OF THE AUTHORITY INDICATING THE IDENTITY OF  940          

CONTRIBUTORS AND BENEFICIARIES UNDER THE PROGRAM OR AMOUNTS        941          

CONTRIBUTED TO, EARNED BY, OR DISTRIBUTED FROM PROGRAM ACCOUNTS    942          

ARE PUBLIC RECORDS WITHIN THE MEANING OF SECTION 149.43 OF THE     943          

REVISED CODE.                                                                   

      Sec. 3334.20.  (A)  THIS SECTION APPLIES ONLY IF THE OHIO    945          

TUITION TRUST AUTHORITY DOES NOT CONTRACT WITH AN INVESTMENT       947          

AGENT FOR THE PURPOSES SET FORTH IN SECTION 3334.19 OF THE         948          

REVISED CODE.                                                      949          

      (B)  THE ASSETS OF THE AUTHORITY RECEIVED UNDER THE          951          

                                                          23     


                                                                 
VARIABLE COLLEGE SAVINGS PROGRAM SHALL BE PLACED IN A FUND, WHICH  952          

IS HEREBY CREATED AND SHALL BE KNOWN AS THE VARIABLE COLLEGE       954          

SAVINGS PROGRAM FUND.  THE FUND SHALL BE IN THE CUSTODY OF THE     955          

TREASURER OF STATE, BUT SHALL NOT BE PART OF THE STATE TREASURY.   956          

ALL SUCH ASSETS AND THE INTEREST AND INVESTMENT INCOME EARNED BY   957          

THE FUND, AND ALL OTHER RECEIPTS OF THE AUTHORITY FROM ANY OTHER   958          

SOURCE THAT THE AUTHORITY DETERMINES APPROPRIATE, SHALL BE         959          

DEPOSITED IN THE FUND.  NO CONTRIBUTOR OR BENEFICIARY UNDER THE    960          

VARIABLE COLLEGE SAVINGS PROGRAM SHALL HAVE ANY CLAIM AGAINST THE  961          

FUNDS OF ANY STATE INSTITUTION OF HIGHER EDUCATION.  ALL           962          

INVESTMENT FEES AND OTHER COSTS INCURRED IN CONNECTION WITH THE    963          

EXERCISE OF THE INVESTMENT POWERS OF THE AUTHORITY PURSUANT TO                  

DIVISIONS (D) AND (E) OF THIS SECTION SHALL BE PAID FROM THE       964          

ASSETS OF THE FUND.                                                965          

      (C)(1)  EXCEPT AS MAY BE PROVIDED IN AN AGREEMENT UNDER      967          

DIVISION (A)(19) OF SECTION 3334.08 OF THE REVISED CODE, ALL       968          

DISBURSEMENTS FROM THE FUND SHALL BE MADE BY THE TREASURER OF      970          

STATE ON ORDER OF A DESIGNEE OF THE AUTHORITY.                     971          

      (2)  THE TREASURER OF STATE SHALL DEPOSIT ANY PORTION OF     973          

THE FUND NOT NEEDED FOR IMMEDIATE USE IN THE SAME MANNER AS STATE  974          

FUNDS ARE DEPOSITED.                                               975          

      (D)  THE AUTHORITY IS THE TRUSTEE OF THE FUND.  THE          977          

AUTHORITY SHALL HAVE FULL POWER TO INVEST THE ASSETS OF THE FUND   978          

AND IN EXERCISING THIS POWER SHALL BE SUBJECT TO THE LIMITATIONS   979          

AND REQUIREMENTS CONTAINED IN DIVISIONS (H) TO (J) OF THIS         981          

SECTION AND SECTIONS 145.112 AND 145.113 OF THE REVISED CODE.      982          

THE EVIDENCES OF TITLE TO ALL INVESTMENTS SHALL BE DELIVERED TO    983          

THE TREASURER OF STATE OR TO A QUALIFIED TRUSTEE DESIGNATED BY                  

THE TREASURER OF STATE AS PROVIDED IN SECTION 135.18 OF THE        984          

REVISED CODE.                                                      985          

      (E)  THE PUBLIC EMPLOYEES RETIREMENT BOARD SHALL, WITH THE   987          

APPROVAL OF THE AUTHORITY, EXERCISE THE INVESTMENT POWERS OF THE   988          

AUTHORITY AS SET FORTH IN DIVISION (D) OF THIS SECTION UNTIL THE   990          

AUTHORITY DETERMINES THAT ASSUMPTION AND EXERCISE BY THE                        

                                                          24     


                                                                 
AUTHORITY OF THE INVESTMENT POWERS IS FINANCIALLY AND              991          

ADMINISTRATIVELY FEASIBLE.  THE INVESTMENT POWERS SHALL BE         992          

EXERCISED BY THE PUBLIC EMPLOYEES RETIREMENT BOARD IN A MANNER     993          

AGREED UPON BY THE AUTHORITY THAT MAXIMIZES THE RETURN ON          994          

INVESTMENT AND MINIMIZES THE ADMINISTRATIVE EXPENSES.              995          

      (F)  IN JANUARY OF EACH YEAR THE AUTHORITY SHALL REPORT TO   998          

EACH PERSON WHO RECEIVED ANY PAYMENTS OR REFUNDS FROM THE                       

AUTHORITY DURING THE PRECEDING YEAR INFORMATION RELATIVE TO THE    999          

VALUE OF THE PAYMENTS OR REFUNDS TO ASSIST IN DETERMINING THAT     1,000        

PERSON'S TAX LIABILITY.                                                         

      (G)  THE AUTHORITY SHALL REPORT TO THE TAX COMMISSIONER ANY  1,002        

INFORMATION, AT THE TIMES AS THE TAX COMMISSIONER REQUIRES, TO     1,003        

DETERMINE ANY TAX LIABILITY THAT A PERSON MAY HAVE INCURRED        1,004        

DURING THE PRECEDING YEAR AS A RESULT OF HAVING RECEIVED ANY       1,005        

PAYMENTS OR REFUNDS FROM THE AUTHORITY.                                         

      (H)  IN EXERCISING ITS FIDUCIARY RESPONSIBILITY WITH         1,007        

RESPECT TO THE INVESTMENT OF THE ASSETS OF THE FUND, IT SHALL BE   1,008        

THE INTENT OF THE AUTHORITY TO GIVE CONSIDERATION TO INVESTMENTS   1,009        

THAT ENHANCE THE GENERAL WELFARE OF THE STATE AND ITS CITIZENS     1,010        

WHERE THE INVESTMENTS OFFER QUALITY, RETURN, AND SAFETY            1,011        

COMPARABLE TO OTHER INVESTMENTS CURRENTLY AVAILABLE TO THE         1,012        

AUTHORITY.  IN FULFILLING THIS INTENT, EQUAL CONSIDERATION SHALL   1,013        

ALSO BE GIVEN TO INVESTMENTS OTHERWISE QUALIFYING UNDER THIS       1,014        

SECTION THAT INVOLVE MINORITY OWNED AND CONTROLLED FIRMS AND       1,015        

FIRMS OWNED AND CONTROLLED BY WOMEN, EITHER ALONE OR IN JOINT      1,016        

VENTURE WITH OTHER FIRMS.                                                       

      THE AUTHORITY SHALL ADOPT, IN REGULAR MEETING, POLICIES,     1,018        

OBJECTIVES, OR CRITERIA FOR THE OPERATION OF THE INVESTMENT PLAN   1,019        

THAT INCLUDE ASSET ALLOCATION TARGETS AND RANGES, RISK FACTORS,    1,020        

ASSET CLASS BENCHMARKS, TIME HORIZONS, TOTAL RETURN OBJECTIVES,    1,021        

AND PERFORMANCE EVALUATION GUIDELINES.  IN ADOPTING POLICIES AND   1,022        

CRITERIA FOR THE SELECTION OF ENTITIES WITH WHOM THE AUTHORITY     1,023        

MAY CONTRACT FOR ASSISTANCE IN THE ADMINISTRATION OF THE ASSETS    1,024        

OF THE FUND, THE AUTHORITY SHALL GIVE EQUAL CONSIDERATION TO       1,025        

                                                          25     


                                                                 
MINORITY OWNED AND CONTROLLED FIRMS, FIRMS OWNED AND CONTROLLED    1,026        

BY WOMEN, AND VENTURES INVOLVING MINORITY OWNED AND CONTROLLED     1,027        

FIRMS AND FIRMS OWNED AND CONTROLLED BY WOMEN THAT OTHERWISE MEET  1,028        

THE POLICIES AND CRITERIA ESTABLISHED BY THE AUTHORITY.            1,029        

AMENDMENTS AND ADDITIONS TO THE POLICIES AND CRITERIA SHALL BE     1,030        

ADOPTED IN REGULAR MEETING.  THE AUTHORITY SHALL PUBLISH ITS       1,031        

POLICIES, OBJECTIVES, AND CRITERIA UNDER THIS PROVISION NO LESS    1,032        

OFTEN THAN ANNUALLY AND SHALL MAKE COPIES AVAILABLE TO INTERESTED  1,033        

PARTIES.                                                                        

      WHEN REPORTING ON THE PERFORMANCE OF INVESTMENTS, THE        1,035        

AUTHORITY SHALL COMPLY WITH THE PERFORMANCE PRESENTATION           1,036        

STANDARDS ESTABLISHED BY THE ASSOCIATION FOR INVESTMENT            1,037        

MANAGEMENT AND RESEARCH.                                                        

      (I)  ALL INVESTMENTS SHALL BE PURCHASED AT CURRENT MARKET    1,039        

PRICES AND THE EVIDENCES OF TITLE TO THE INVESTMENTS SHALL BE      1,040        

PLACED IN THE HANDS OF THE TREASURER OF STATE, WHO IS HEREBY       1,042        

DESIGNATED AS CUSTODIAN THEREOF, OR IN THE HANDS OF THE TREASURER  1,043        

OF STATE'S AUTHORIZED AGENT.  THE TREASURER OF STATE OR THE AGENT  1,044        

SHALL COLLECT THE PRINCIPAL, DIVIDENDS, DISTRIBUTIONS, AND         1,045        

INTEREST THEREON AS THEY BECOME DUE AND PAYABLE AND PLACE THEM                  

WHEN SO COLLECTED INTO THE CUSTODIAL FUND.                         1,046        

      THE TREASURER OF STATE SHALL PAY FOR INVESTMENTS PURCHASED   1,048        

BY THE AUTHORITY ON RECEIPT OF WRITTEN OR ELECTRONIC INSTRUCTIONS  1,049        

FROM THE AUTHORITY OR THE AUTHORITY'S DESIGNATED AGENT             1,050        

AUTHORIZING THE PURCHASE AND PENDING RECEIPT OF THE EVIDENCE OF    1,051        

TITLE OF THE INVESTMENT BY THE TREASURER OF STATE OR THE           1,052        

TREASURER OF STATE'S AUTHORIZED AGENT.  THE AUTHORITY MAY SELL     1,053        

INVESTMENTS HELD BY THE AUTHORITY, AND THE TREASURER OF STATE OR   1,054        

THE TREASURER OF STATE'S AUTHORIZED AGENT SHALL ACCEPT PAYMENT     1,055        

FROM THE PURCHASER AND DELIVER EVIDENCE OF TITLE OF THE            1,056        

INVESTMENT TO THE PURCHASER ON RECEIPT OF WRITTEN OR ELECTRONIC    1,057        

INSTRUCTIONS FROM THE AUTHORITY OR THE AUTHORITY'S DESIGNATED      1,058        

AGENT AUTHORIZING THE SALE, AND PENDING RECEIPT OF THE MONEYS FOR  1,059        

THE INVESTMENTS.  THE AMOUNT RECEIVED SHALL BE PLACED IN THE       1,060        

                                                          26     


                                                                 
CUSTODIAL FUND.  THE AUTHORITY AND THE TREASURER OF STATE MAY      1,061        

ENTER INTO AGREEMENTS TO ESTABLISH PROCEDURES FOR THE PURCHASE                  

AND SALE OF INVESTMENTS UNDER THIS DIVISION AND THE CUSTODY OF     1,062        

THE INVESTMENTS.                                                   1,063        

      NO PURCHASE OR SALE OF ANY INVESTMENT SHALL BE MADE UNDER    1,065        

THIS SECTION EXCEPT AS AUTHORIZED BY THE AUTHORITY.                1,066        

      ANY STATEMENT OF FINANCIAL POSITION DISTRIBUTED BY THE       1,068        

AUTHORITY SHALL INCLUDE FAIR VALUE, AS OF THE STATEMENT DATE, OF   1,069        

ALL INVESTMENTS HELD BY THE AUTHORITY UNDER THIS SECTION.          1,070        

      Sec. 3334.21.  THE VARIABLE COLLEGE SAVINGS PROGRAM MAY BE   1,072        

TERMINATED BY STATUTE OR UPON THE DETERMINATION OF THE OHIO        1,073        

TUITION TRUST AUTHORITY THAT THE PROGRAM IS NOT FINANCIALLY        1,074        

FEASIBLE.  UPON TERMINATION, ALL AMOUNTS HELD IN PROGRAM ACCOUNTS  1,075        

SHALL BE RETURNED TO ACCOUNT OWNERS, TO THE EXTENT POSSIBLE, AND   1,076        

ANY UNCLAIMED ASSETS IN THE PROGRAM SHALL BE TRANSFERRED TO THE    1,077        

UNCLAIMED FUNDS TRUST FUND AND DISPOSED OF IN ACCORDANCE WITH      1,078        

SECTION 169.05 OF THE REVISED CODE.                                             

      Sec. 5747.01.  Except as otherwise expressly provided or     1,087        

clearly appearing from the context, any term used in this chapter  1,088        

has the same meaning as when used in a comparable context in the   1,089        

Internal Revenue Code, and all other statutes of the United        1,090        

States relating to federal income taxes.                           1,091        

      As used in this chapter:                                     1,093        

      (A)  "Adjusted gross income" or "Ohio adjusted gross         1,095        

income" means adjusted gross income as defined and used in the     1,096        

Internal Revenue Code, adjusted as provided in this section:       1,097        

      (1)  Add interest or dividends on obligations or securities  1,099        

of any state or of any political subdivision or authority of any   1,100        

state, other than this state and its subdivisions and              1,101        

authorities.                                                                    

      (2)  Add interest or dividends on obligations of any         1,103        

authority, commission, instrumentality, territory, or possession   1,104        

of the United States that are exempt from federal income taxes     1,105        

but not from state income taxes.                                   1,106        

                                                          27     


                                                                 
      (3)  Deduct interest or dividends on obligations of the      1,108        

United States and its territories and possessions or of any        1,109        

authority, commission, or instrumentality of the United States to  1,110        

the extent included in federal adjusted gross income but exempt    1,111        

from state income taxes under the laws of the United States.       1,112        

      (4)  Deduct disability and survivor's benefits to the        1,114        

extent included in federal adjusted gross income.                  1,115        

      (5)  Deduct benefits under Title II of the Social Security   1,117        

Act and tier 1 railroad retirement benefits to the extent          1,118        

included in federal adjusted gross income under section 86 of the  1,119        

Internal Revenue Code.                                             1,120        

      (6)  Add, in the case of a taxpayer who is a beneficiary of  1,122        

a trust that makes an accumulation distribution as defined in      1,123        

section 665 of the Internal Revenue Code, the portion, if any, of  1,124        

such distribution that does not exceed the undistributed net       1,125        

income of the trust for the three taxable years preceding the      1,126        

taxable year in which the distribution is made.  "Undistributed    1,127        

net income of a trust" means the taxable income of the trust       1,128        

increased by (a)(i) the additions to adjusted gross income         1,129        

required under division (A) of this section and (ii) the personal  1,130        

exemptions allowed to the trust pursuant to section 642(b) of the  1,131        

Internal Revenue Code, and decreased by (b)(i) the deductions to   1,132        

adjusted gross income required under division (A) of this          1,133        

section, (ii) the amount of federal income taxes attributable to   1,134        

such income, and (iii) the amount of taxable income that has been  1,135        

included in the adjusted gross income of a beneficiary by reason   1,136        

of a prior accumulation distribution.  Any undistributed net       1,137        

income included in the adjusted gross income of a beneficiary      1,138        

shall reduce the undistributed net income of the trust commencing  1,139        

with the earliest years of the accumulation period.                1,140        

      (7)  Deduct the amount of wages and salaries, if any, not    1,142        

otherwise allowable as a deduction but that would have been        1,143        

allowable as a deduction in computing federal adjusted gross       1,144        

income for the taxable year, had the targeted jobs credit allowed  1,145        

                                                          28     


                                                                 
and determined under sections 38, 51, and 52 of the Internal       1,146        

Revenue Code not been in effect.                                   1,147        

      (8)  Deduct any interest or interest equivalent on public    1,149        

obligations and purchase obligations to the extent included in     1,150        

federal adjusted gross income.                                     1,151        

      (9)  Add any loss or deduct any gain resulting from the      1,153        

sale, exchange, or other disposition of public obligations to the  1,154        

extent included in federal adjusted gross income.                  1,155        

      (10)  Regarding tuition credits purchased under Chapter      1,157        

3334. of the Revised Code:                                         1,159        

      (a)  Deduct the following:                                   1,161        

      (i)  For credits that as of the end of the taxable year      1,164        

have not been refunded pursuant to the termination of a tuition                 

payment contract under section 3334.10 of the Revised Code, the    1,166        

amount of income related to the credits, to the extent included    1,167        

in federal adjusted gross income;                                               

      (ii)  For credits that during the taxable year have been     1,170        

refunded pursuant to the termination of a tuition payment                       

contract under section 3334.10 of the Revised Code, the excess of  1,171        

the total purchase price of the tuition credits refunded over the  1,172        

amount of refund, to the extent the amount of the excess was not   1,173        

deducted in determining federal adjusted gross income.             1,174        

      (b)  Add the following:                                      1,176        

      (i)  For credits that as of the end of the taxable year      1,179        

have not been refunded pursuant to the termination of a tuition                 

payment contract under section 3334.10 of the Revised Code, the    1,180        

amount of loss related to the credits, to the extent the amount    1,181        

of the loss was deducted in determining federal adjusted gross     1,182        

income;                                                                         

      (ii)  For credits that during the taxable year have been     1,185        

refunded pursuant to the termination of a tuition payment                       

contract under section 3334.10 of the Revised Code, the excess of  1,187        

the amount of refund over the purchase price of each tuition       1,188        

credit refunded, to the extent not included in federal adjusted    1,189        

                                                          29     


                                                                 
gross income DEDUCT OR ADD AMOUNTS RELATED TO TUITION CREDITS      1,190        

PURCHASED OR CONTRIBUTIONS TO VARIABLE COLLEGE SAVINGS PROGRAM     1,191        

ACCOUNTS MADE AS PROVIDED IN SECTION 5747.70 OF THE REVISED CODE.  1,192        

      (11)(a)  Deduct, to the extent not otherwise allowable as a  1,194        

deduction or exclusion in computing federal or Ohio adjusted       1,195        

gross income for the taxable year, the amount the taxpayer paid    1,196        

during the taxable year for medical care insurance and qualified   1,197        

long-term care insurance for the taxpayer, the taxpayer's spouse,  1,198        

and dependents.  No deduction for medical care insurance under     1,199        

division (A)(11) of this section shall be allowed either to any                 

taxpayer who is eligible to participate in any subsidized health   1,200        

plan maintained by any employer of the taxpayer or of the          1,201        

taxpayer's spouse, or to any taxpayer who is entitled to, or on    1,202        

application would be entitled to, benefits under part A of Title   1,203        

XVIII of the "Social Security Act," 49 Stat. 620 (1935), 42        1,204        

U.S.C. 301, as amended.  For the purposes of division (A)(11)(a)   1,205        

of this section, "subsidized health plan" means a health plan for  1,206        

which the employer pays any portion of the plan's cost.  The       1,207        

deduction allowed under division (A)(11)(a) of this section shall  1,208        

be the net of any related premium refunds, related premium         1,209        

reimbursements, or related insurance premium dividends received    1,210        

during the taxable year.                                           1,211        

      (b)  Deduct, to the extent not otherwise deducted or         1,213        

excluded in computing federal or Ohio adjusted gross income        1,214        

during the taxable year, the amount the taxpayer paid during the   1,215        

taxable year, not compensated for by any insurance or otherwise,   1,216        

for medical care of the taxpayer, the taxpayer's spouse, and       1,217        

dependents, to the extent the expenses exceed seven and one-half   1,218        

per cent of the taxpayer's federal adjusted gross income.          1,219        

      (c)  For purposes of division (A)(11) of this section,       1,221        

"medical care" has the meaning given in section 213 of the         1,222        

Internal Revenue Code, subject to the special rules, limitations,  1,223        

and exclusions set forth therein, and "qualified long-term care"   1,224        

has the same meaning given in section 7702(B)(b) of the Internal   1,225        

                                                          30     


                                                                 
Revenue Code.                                                                   

      (12)(a)  Deduct any amount included in federal adjusted      1,227        

gross income solely because the amount represents a reimbursement  1,228        

or refund of expenses that in any year the taxpayer had deducted   1,230        

as an itemized deduction pursuant to section 63 of the Internal    1,231        

Revenue Code and applicable United States department of the        1,232        

treasury regulations.  The deduction otherwise allowed under       1,233        

division (A)(12)(a) of this section shall be reduced to the        1,234        

extent the reimbursement is attributable to an amount the          1,235        

taxpayer deducted under this section in any taxable year.          1,236        

      (b)  Add any amount not otherwise included in Ohio adjusted  1,238        

gross income for any taxable year to the extent that the amount    1,239        

is attributable to the recovery during the taxable year of any     1,240        

amount deducted or excluded in computing federal or Ohio adjusted  1,241        

gross income in any taxable year.                                  1,242        

      (13)  Deduct any portion of the deduction described in       1,244        

section 1341(a)(2) of the Internal Revenue Code, for repaying      1,245        

previously reported income received under a claim of right, that   1,246        

meets both of the following requirements:                          1,247        

      (a)  It is allowable for repayment of an item that was       1,249        

included in the taxpayer's adjusted gross income for a prior       1,250        

taxable year and did not qualify for a credit under division (A)   1,251        

or (B) of section 5747.05 of the Revised Code for that year;       1,252        

      (b)  It does not otherwise reduce the taxpayer's adjusted    1,254        

gross income for the current or any other taxable year.            1,255        

      (14)  Deduct an amount equal to the deposits made to, and    1,257        

net investment earnings of, a medical savings account during the   1,258        

taxable year, in accordance with section 3924.66 of the Revised    1,259        

Code.  The deduction allowed by division (A)(14) of this section   1,260        

does not apply to medical savings account deposits and earnings    1,261        

otherwise deducted or excluded for the current or any other        1,262        

taxable year from the taxpayer's federal adjusted gross income.    1,263        

      (15)(a)  Add an amount equal to the funds withdrawn from a   1,265        

medical savings account during the taxable year, and the net       1,266        

                                                          31     


                                                                 
investment earnings on those funds, when the funds withdrawn were  1,267        

used for any purpose other than to reimburse an account holder     1,268        

for, or to pay, eligible medical expenses, in accordance with      1,269        

section 3924.66 of the Revised Code;                                            

      (b)  Add the amounts distributed from a medical savings      1,271        

account under division (A)(2) of section 3924.68 of the Revised    1,272        

Code during the taxable year.                                      1,273        

      (16)  Add any amount claimed as a credit under section       1,275        

5747.059 of the Revised Code to the extent that such amount        1,276        

satisfies either of the following:                                              

      (a)  The amount was deducted or excluded from the            1,278        

computation of the taxpayer's federal adjusted gross income as     1,279        

required to be reported for the taxpayer's taxable year under the  1,280        

Internal Revenue Code;                                                          

      (b)  The amount resulted in a reduction of the taxpayer's    1,282        

federal adjusted gross income as required to be reported for any   1,283        

of the taxpayer's taxable years under the Internal Revenue Code.   1,284        

      (17)  Deduct the amount contributed by the taxpayer to an    1,286        

individual development account program established by a county     1,287        

department of human services pursuant to sections 329.11 to        1,288        

329.14 of the Revised Code for the purpose of matching funds       1,289        

deposited by program participants.  On request of the tax          1,290        

commissioner, the taxpayer shall provide any information that, in               

the tax commissioner's opinion, is necessary to establish the      1,291        

amount deducted under division (A)(17) of this section.            1,292        

      (18)  Beginning in taxable year 2001, if the taxpayer is     1,294        

married and files a joint return and the combined federal          1,296        

adjusted gross income of the taxpayer and the taxpayer's spouse    1,297        

for the taxable year does not exceed one hundred thousand                       

dollars, or if the taxpayer is single and has a federal adjusted   1,298        

gross income for the taxable year not exceeding fifty thousand     1,300        

dollars, deduct amounts paid during the taxable year for           1,301        

qualified tuition and fees paid to an eligible institution for     1,302        

the taxpayer, the taxpayer's spouse, or any dependent of the                    

                                                          32     


                                                                 
taxpayer, who is a resident of this state and is enrolled in or    1,303        

attending a program that culminates in a degree or diploma at an   1,304        

eligible institution.  The deduction may be claimed only to the    1,305        

extent that qualified tuition and fees are not otherwise deducted  1,306        

or excluded for any taxable year from federal or Ohio adjusted     1,307        

gross income.  The deduction may not be claimed for educational    1,308        

expenses for which the taxpayer claims a credit under section      1,309        

5747.27 of the Revised Code.                                                    

      (19)  Add any reimbursement received during the taxable      1,311        

year of any amount the taxpayer deducted under division (A)(18)    1,312        

of this section in any previous taxable year to the extent the     1,313        

amount is not otherwise included in Ohio adjusted gross income.    1,314        

      (B)  "Business income" means income arising from             1,316        

transactions, activities, and sources in the regular course of a   1,317        

trade or business and includes income from tangible and            1,318        

intangible property if the acquisition, rental, management, and    1,319        

disposition of the property constitute integral parts of the       1,320        

regular course of a trade or business operation.                   1,321        

      (C)  "Nonbusiness income" means all income other than        1,323        

business income and may include, but is not limited to,            1,324        

compensation, rents and royalties from real or tangible personal   1,325        

property, capital gains, interest, dividends and distributions,    1,326        

patent or copyright royalties, or lottery winnings, prizes, and    1,327        

awards.                                                            1,328        

      (D)  "Compensation" means any form of remuneration paid to   1,330        

an employee for personal services.                                 1,331        

      (E)  "Fiduciary" means a guardian, trustee, executor,        1,333        

administrator, receiver, conservator, or any other person acting   1,334        

in any fiduciary capacity for any individual, trust, or estate.    1,335        

      (F)  "Fiscal year" means an accounting period of twelve      1,337        

months ending on the last day of any month other than December.    1,338        

      (G)  "Individual" means any natural person.                  1,340        

      (H)  "Internal Revenue Code" means the "Internal Revenue     1,342        

Code of 1986," 100 Stat. 2085, 26 U.S.C.A. 1, as amended.          1,343        

                                                          33     


                                                                 
      (I)  "Resident" means:                                       1,345        

      (1)  An individual who is domiciled in this state, subject   1,347        

to section 5747.24 of the Revised Code;                            1,348        

      (2)  The estate of a decedent who at the time of death was   1,351        

domiciled in this state.  The domicile tests of section 5747.24    1,352        

of the Revised Code and any election under section 5747.25 of the  1,353        

Revised Code are not controlling for purposes of division (I)(2)   1,354        

of this section.                                                                

      (J)  "Nonresident" means an individual or estate that is     1,356        

not a resident.  An individual who is a resident for only part of  1,357        

a taxable year is a nonresident for the remainder of that taxable  1,358        

year.                                                              1,359        

      (K)  "Pass-through entity" has the same meaning as in        1,361        

section 5733.04 of the Revised Code.                               1,362        

      (L)  "Return" means the notifications and reports required   1,364        

to be filed pursuant to this chapter for the purpose of reporting  1,365        

the tax due and includes declarations of estimated tax when so     1,366        

required.                                                          1,367        

      (M)  "Taxable year" means the calendar year or the           1,369        

taxpayer's fiscal year ending during the calendar year, or         1,370        

fractional part thereof, upon which the adjusted gross income is   1,371        

calculated pursuant to this chapter.                               1,372        

      (N)  "Taxpayer" means any person subject to the tax imposed  1,374        

by section 5747.02 of the Revised Code or any pass-through entity  1,375        

that makes the election under division (D) of section 5747.08 of   1,376        

the Revised Code.                                                               

      (O)  "Dependents" means dependents as defined in the         1,378        

Internal Revenue Code and as claimed in the taxpayer's federal     1,379        

income tax return for the taxable year or which the taxpayer       1,380        

would have been permitted to claim had the taxpayer filed a        1,381        

federal income tax return.                                         1,383        

      (P)  "Principal county of employment" means, in the case of  1,385        

a nonresident, the county within the state in which a taxpayer     1,386        

performs services for an employer or, if those services are        1,387        

                                                          34     


                                                                 
performed in more than one county, the county in which the major   1,388        

portion of the services are performed.                             1,389        

      (Q)  As used in sections 5747.50 to 5747.55 of the Revised   1,391        

Code:                                                                           

      (1)  "Subdivision" means any county, municipal corporation,  1,393        

park district, or township.                                        1,394        

      (2)  "Essential local government purposes" includes all      1,396        

functions that any subdivision is required by general law to       1,397        

exercise, including like functions that are exercised under a      1,398        

charter adopted pursuant to the Ohio Constitution.                 1,399        

      (R)  "Overpayment" means any amount already paid that        1,401        

exceeds the figure determined to be the correct amount of the      1,402        

tax.                                                               1,403        

      (S)  "Taxable income" applies to estates only and means      1,405        

taxable income as defined and used in the Internal Revenue Code    1,406        

adjusted as follows:                                               1,407        

      (1)  Add interest or dividends on obligations or securities  1,409        

of any state or of any political subdivision or authority of any   1,410        

state, other than this state and its subdivisions and              1,411        

authorities;                                                       1,412        

      (2)  Add interest or dividends on obligations of any         1,414        

authority, commission, instrumentality, territory, or possession   1,415        

of the United States that are exempt from federal income taxes     1,416        

but not from state income taxes;                                   1,417        

      (3)  Add the amount of personal exemption allowed to the     1,419        

estate pursuant to section 642(b) of the Internal Revenue Code;    1,420        

      (4)  Deduct interest or dividends on obligations of the      1,422        

United States and its territories and possessions or of any        1,423        

authority, commission, or instrumentality of the United States     1,424        

that are exempt from state taxes under the laws of the United      1,425        

States;                                                            1,426        

      (5)  Deduct the amount of wages and salaries, if any, not    1,428        

otherwise allowable as a deduction but that would have been        1,429        

allowable as a deduction in computing federal taxable income for   1,430        

                                                          35     


                                                                 
the taxable year, had the targeted jobs credit allowed under       1,431        

sections 38, 51, and 52 of the Internal Revenue Code not been in   1,432        

effect;                                                            1,433        

      (6)  Deduct any interest or interest equivalent on public    1,435        

obligations and purchase obligations to the extent included in     1,436        

federal taxable income;                                            1,437        

      (7)  Add any loss or deduct any gain resulting from sale,    1,439        

exchange, or other disposition of public obligations to the        1,440        

extent included in federal taxable income;                         1,441        

      (8)  Except in the case of the final return of an estate,    1,443        

add any amount deducted by the taxpayer on both its Ohio estate    1,444        

tax return pursuant to section 5731.14 of the Revised Code, and    1,445        

on its federal income tax return in determining either federal     1,446        

adjusted gross income or federal taxable income;                   1,447        

      (9)(a)  Deduct any amount included in federal taxable        1,449        

income solely because the amount represents a reimbursement or     1,450        

refund of expenses that in a previous year the decedent had        1,451        

deducted as an itemized deduction pursuant to section 63 of the    1,452        

Internal Revenue Code and applicable treasury regulations.  The    1,454        

deduction otherwise allowed under division (S)(9)(a) of this       1,455        

section shall be reduced to the extent the reimbursement is        1,456        

attributable to an amount the taxpayer or decedent deducted under  1,457        

this section in any taxable year.                                  1,458        

      (b)  Add any amount not otherwise included in Ohio taxable   1,460        

income for any taxable year to the extent that the amount is       1,461        

attributable to the recovery during the taxable year of any        1,462        

amount deducted or excluded in computing federal or Ohio taxable   1,463        

income in any taxable year.                                        1,464        

      (10)  Deduct any portion of the deduction described in       1,466        

section 1341(a)(2) of the Internal Revenue Code, for repaying      1,467        

previously reported income received under a claim of right, that   1,468        

meets both of the following requirements:                          1,469        

      (a)  It is allowable for repayment of an item that was       1,471        

included in the taxpayer's taxable income or the decedent's        1,472        

                                                          36     


                                                                 
adjusted gross income for a prior taxable year and did not         1,473        

qualify for a credit under division (A) or (B) of section 5747.05  1,474        

of the Revised Code for that year.                                 1,475        

      (b)  It does not otherwise reduce the taxpayer's taxable     1,477        

income or the decedent's adjusted gross income for the current or  1,478        

any other taxable year.                                            1,479        

      (11)  Add any amount claimed as a credit under section       1,481        

5747.059 of the Revised Code to the extent that the amount         1,482        

satisfies either of the following:                                 1,483        

      (a)  The amount was deducted or excluded from the            1,485        

computation of the taxpayer's federal taxable income as required   1,486        

to be reported for the taxpayer's taxable year under the Internal  1,487        

Revenue Code;                                                                   

      (b)  The amount resulted in a reduction in the taxpayer's    1,489        

federal taxable income as required to be reported for any of the   1,490        

taxpayer's taxable years under the Internal Revenue Code.          1,491        

      (T)  "School district income" and "school district income    1,493        

tax" have the same meanings as in section 5748.01 of the Revised   1,494        

Code.                                                              1,495        

      (U)  As used in divisions (A)(8), (A)(9), (S)(6), and        1,497        

(S)(7) of this section, "public obligations," "purchase            1,498        

obligations," and "interest or interest equivalent" have the same  1,499        

meanings as in section 5709.76 of the Revised Code.                1,500        

      (V)  "Limited liability company" means any limited           1,502        

liability company formed under Chapter 1705. of the Revised Code   1,503        

or under the laws of any other state.                              1,504        

      (W)  "Pass-through entity investor" means any person who,    1,506        

during any portion of a taxable year of a pass-through entity, is  1,507        

a partner, member, shareholder, or investor in that pass-through   1,508        

entity.                                                                         

      (X)  "Banking day" has the same meaning as in section        1,510        

1304.01 of the Revised Code.                                       1,511        

      (Y)  "Month" means a calendar month.                         1,513        

      (Z)  "Quarter" means the first three months, the second      1,515        

                                                          37     


                                                                 
three months, the third three months, or the last three months of  1,516        

the taxpayer's taxable year.                                                    

      (AA)(1)  "Eligible institution" means a state university or  1,518        

state institution of higher education as defined in section        1,519        

3345.011 of the Revised Code, or a private, nonprofit college,     1,520        

university, or other post-secondary institution located in this    1,521        

state that possesses a certificate of authorization issued by the  1,522        

Ohio board of regents pursuant to Chapter 1713. of the Revised                  

Code or a certificate of registration issued by the state board    1,523        

of proprietary school registration under Chapter 3332. of the      1,524        

Revised Code.                                                                   

      (2)  "Qualified tuition and fees" means tuition and fees     1,526        

imposed by an eligible institution as a condition of enrollment    1,527        

or attendance, not exceeding two thousand five hundred dollars in  1,528        

each of the individual's first two years of post-secondary         1,529        

education.  If the individual is a part-time student, "qualified   1,530        

tuition and fees" includes tuition and fees paid for the academic               

equivalent of the first two years of post-secondary education      1,531        

during a maximum of five taxable years, not exceeding a total of   1,532        

five thousand dollars.  "Qualified tuition and fees" does not      1,533        

include:                                                                        

      (a)  Expenses for any course or activity involving sports,   1,535        

games, or hobbies unless the course or activity is part of the     1,536        

individual's degree or diploma program;                            1,537        

      (b)  The cost of books, room and board, student activity     1,539        

fees, athletic fees, insurance expenses, or other expenses         1,540        

unrelated to the individual's academic course of instruction;      1,541        

      (c)  Tuition, fees, or other expenses paid or reimbursed     1,543        

through an employer, scholarship, grant in aid, or other           1,544        

educational benefit program.                                                    

      (BB)  Any term used in this chapter that is not otherwise    1,546        

defined in this section and that is not used in a comparable       1,547        

context in the Internal Revenue Code and other statutes of the     1,548        

United States relating to federal income taxes has the same        1,549        

                                                          38     


                                                                 
meaning as in section 5733.40 of the Revised Code.                 1,550        

      Sec. 5747.70.  (A)  IN COMPUTING OHIO ADJUSTED GROSS         1,552        

INCOME, A DEDUCTION FROM FEDERAL ADJUSTED GROSS INCOME IS ALLOWED  1,553        

TO A CONTRIBUTOR FOR THE AMOUNT CONTRIBUTED DURING THE TAXABLE     1,554        

YEAR TO A VARIABLE COLLEGE SAVINGS PROGRAM ACCOUNT AND TO A        1,556        

PURCHASER OF TUITION CREDITS UNDER THE OHIO COLLEGE SAVINGS        1,557        

PROGRAM CREATED BY CHAPTER 3334. OF THE REVISED CODE TO THE        1,559        

EXTENT THAT THE AMOUNTS OF SUCH CONTRIBUTIONS AND PURCHASES WERE   1,560        

NOT DEDUCTED IN DETERMINING THE CONTRIBUTOR'S OR PURCHASER'S       1,561        

FEDERAL ADJUSTED GROSS INCOME FOR THE TAXABLE YEAR.  THE COMBINED               

AMOUNT OF CONTRIBUTIONS AND PURCHASES DEDUCTED ON THE INCOME TAX   1,562        

RETURNS OF ANY PERSON AND THE PERSON'S SPOUSE IN ANY TAXABLE YEAR  1,563        

IS LIMITED TO TWO THOUSAND DOLLARS FOR EACH BENEFICIARY FOR WHOM   1,564        

CONTRIBUTIONS OR PURCHASES ARE MADE.  IF THE COMBINED ANNUAL       1,565        

CONTRIBUTIONS AND PURCHASES FOR A BENEFICIARY EXCEED TWO THOUSAND  1,566        

DOLLARS, THE EXCESS MAY BE CARRIED FORWARD AND DEDUCTED IN FUTURE  1,567        

TAXABLE YEARS UNTIL THE CONTRIBUTIONS AND PURCHASES HAVE BEEN      1,568        

FULLY DEDUCTED.                                                    1,569        

      (B)  IN COMPUTING OHIO ADJUSTED GROSS INCOME, A DEDUCTION    1,571        

FROM FEDERAL ADJUSTED GROSS INCOME IS ALLOWED FOR:                 1,572        

      (1)  INCOME RELATED TO CREDITS AND CONTRIBUTIONS THAT AS OF  1,574        

THE END OF THE TAXABLE YEAR HAVE NOT BEEN REFUNDED PURSUANT TO     1,575        

THE TERMINATION OF A TUITION PAYMENT CONTRACT OR VARIABLE COLLEGE  1,576        

SAVINGS PROGRAM ACCOUNT UNDER SECTION 3334.10 OF THE REVISED       1,577        

CODE, TO THE EXTENT THAT SUCH INCOME IS INCLUDED IN FEDERAL        1,578        

ADJUSTED GROSS INCOME.                                             1,579        

      (2)  THE EXCESS OF THE TOTAL PURCHASE PRICE OF TUITION       1,581        

CREDITS REFUNDED DURING THE TAXABLE YEAR PURSUANT TO THE           1,582        

TERMINATION OF A TUITION PAYMENT CONTRACT UNDER SECTION 3334.10    1,583        

OF THE REVISED CODE OVER THE AMOUNT OF THE REFUND, TO THE EXTENT   1,584        

THE AMOUNT OF THE EXCESS WAS NOT DEDUCTED IN DETERMINING FEDERAL   1,585        

ADJUSTED GROSS INCOME.  DIVISION (B)(2) OF THIS SECTION APPLIES    1,586        

ONLY TO CREDITS FOR WHICH NO DEDUCTION WAS ALLOWABLE UNDER         1,587        

DIVISION (A) OF THIS SECTION.                                                   

                                                          39     


                                                                 
      (C)  IN COMPUTING OHIO ADJUSTED GROSS INCOME, THERE SHALL    1,589        

BE ADDED TO FEDERAL ADJUSTED GROSS INCOME THE AMOUNT OF LOSS       1,590        

RELATED TO CREDITS AND CONTRIBUTIONS THAT AS OF THE END OF THE     1,591        

TAXABLE YEAR HAVE NOT BEEN REFUNDED PURSUANT TO THE TERMINATION    1,592        

OF A TUITION PAYMENT CONTRACT OR VARIABLE COLLEGE SAVINGS PROGRAM  1,593        

ACCOUNT UNDER SECTION 3334.10 OF THE REVISED CODE, TO THE EXTENT   1,594        

THAT SUCH LOSS WAS DEDUCTED IN DETERMINING FEDERAL ADJUSTED GROSS  1,595        

INCOME.                                                                         

      (D)  FOR TAXABLE YEARS IN WHICH DISTRIBUTIONS OR REFUNDS     1,597        

ARE MADE UNDER A TUITION PAYMENT OR VARIABLE COLLEGE SAVINGS       1,598        

PROGRAM CONTRACT FOR ANY REASON OTHER THAN PAYMENT OF TUITION OR   1,599        

OTHER HIGHER EDUCATION EXPENSES, OR THE BENEFICIARY'S DEATH,       1,600        

DISABILITY, OR RECEIPT OF A SCHOLARSHIP AS DESCRIBED IN SECTION    1,601        

3334.10 OF THE REVISED CODE:                                                    

      (1)  IF THE DISTRIBUTION OR REFUND IS PAID TO THE PURCHASER  1,603        

OR CONTRIBUTOR OR BENEFICIARY, ANY PORTION OF THE DISTRIBUTION OR  1,604        

REFUND NOT INCLUDED IN THE RECIPIENT'S FEDERAL ADJUSTED GROSS      1,605        

INCOME SHALL BE ADDED TO THE RECIPIENT'S OHIO ADJUSTED GROSS       1,606        

INCOME, EXCEPT THAT THE AMOUNT ADDED SHALL NOT EXCEED AMOUNTS      1,607        

PREVIOUSLY DEDUCTED UNDER DIVISION (A) OF THIS SECTION LESS ANY    1,608        

AMOUNTS ADDED UNDER DIVISION (D)(1) OF THIS SECTION IN A PRIOR     1,609        

TAXABLE YEAR.                                                                   

      (2)  IF AMOUNTS PAID BY A PURCHASER OR CONTRIBUTOR ON OR     1,611        

AFTER JANUARY 1, 1999, ARE PAID TO SOMEONE OTHER THAN THE          1,612        

PURCHASER OR CONTRIBUTOR OR BENEFICIARY, THE AMOUNT OF THE         1,613        

PAYMENT NOT INCLUDED IN THE RECIPIENT'S FEDERAL ADJUSTED GROSS     1,614        

INCOME, LESS ANY AMOUNTS ADDED UNDER DIVISION (D) OF THIS SECTION  1,615        

IN A PRIOR TAXABLE YEAR, SHALL BE ADDED TO THE RECIPIENT'S OHIO    1,616        

ADJUSTED GROSS INCOME.                                                          

      Section 2.  That existing sections 3334.01, 3334.02,         1,618        

3334.08, 3334.10, 3334.11, 3334.12, 3334.15, and 5747.01 of the    1,619        

Revised Code are hereby repealed.                                  1,620        

      Section 3.  Section 5747.01 of the Revised Code, as amended  1,622        

by this act, and section 5747.70 of the Revised Code, as enacted   1,623        

                                                          40     


                                                                 
by this act, apply to tax years beginning on and after January 1,  1,624        

1999.                                                                           

      Section 4.  Section 5747.01 of the Revised Code is           1,626        

presented in this act as a composite of the section as amended by  1,627        

both Am. Sub. H.B. 4 and Am. Sub. H.B. 282 of the 123rd General    1,628        

Assembly, with the new language of neither of the acts shown in    1,629        

capital letters.  This is in recognition of the principle stated   1,630        

in division (B) of section 1.52 of the Revised Code that such      1,631        

amendments are to be harmonized where not substantively            1,632        

irreconcilable and constitutes a legislative finding that such is  1,633        

the resulting version in effect prior to the effective date of     1,634        

this act.