As Reported by House Financial Institutions Committee        1            

123rd General Assembly                                             4            

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

      1999-2000                                                    6            


      SENATORS GARDNER-KEARNS-SCHAFRATH-SHOEMAKER-PRENTISS-        8            

    OELSLAGER-MUMPER-CUPP-FINGERHUT-SPADA-NEIN-DRAKE-LATELL-       9            

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

 REPRESENTATIVES ALLEN-AUSTRIA-BARNES-KILBANE-GERBERRY-JACOBSON-   11           

D. MILLER-MYERS-OLMAN-ROBINSON-SALERNO-SCHULER-STAPLETON-TRAKAS-   12           

                             VERICH                                13           


_________________________________________________________________   14           

                          A   B I L L                                           

             To amend sections 3334.01, 3334.02, 3334.08,          16           

                3334.10, 3334.11, 3334.12, 3334.15, 3366.01,       17           

                3366.03, 3366.04, and 5747.01 and to enact                      

                sections 3333.37, 3333.371, 3333.372, 3333.373,    18           

                3333.374, 3333.375, 3334.18, 3334.19, 3334.20,     19           

                3334.21, and 5747.70 of the Revised Code to                     

                require the Ohio tuition trust authority to        20           

                establish a variable college savings program, to   21           

                make other changes in the Ohio College Savings                  

                Program, to expand the scope of education loans    22           

                eligible to be financed by obligations issued by   23           

                the Treasurer of State, to authorize the "Ohio                  

                Outstanding Scholarship" and "Ohio Priority Needs  24           

                Fellowship" Programs to be administered by the     25           

                Ohio Board of Regents, and to maintain the                      

                provisions of this act on and after July 1, 2000,  26           

                by amending the version of section 5747.01 of the  27           

                Revised Code that takes effect on that date.       28           




BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:        30           

      Section 1.  That sections 3334.01, 3334.02, 3334.08,         32           

3334.10, 3334.11, 3334.12, 3334.15, 3366.01, 3366.03, 3366.04,     33           

                                                          2      


                                                                 
and 5747.01 be amended and sections 3333.37, 3333.371, 3333.372,   34           

3333.373, 3333.374, 3333.375, 3334.18, 3334.19, 3334.20, 3334.21,  36           

and 5747.70 of the Revised Code be enacted to read as follows:     37           

      Sec. 3333.37.  AS USED IN SECTIONS 3333.37 TO 3333.375 OF    39           

THE REVISED CODE, THE FOLLOWING WORDS AND TERMS HAVE THE           40           

FOLLOWING MEANINGS UNLESS THE CONTEXT INDICATES A DIFFERENT        41           

MEANING OR INTENT:                                                              

      (A)  "COST OF ATTENDANCE" MEANS ALL COSTS OF A STUDENT       43           

INCURRED IN CONNECTION WITH A PROGRAM OF STUDY AT AN ELIGIBLE      44           

INSTITUTION, AS DETERMINED BY THE INSTITUTION, INCLUDING TUITION;  45           

INSTRUCTIONAL FEES; ROOM AND BOARD; BOOKS, COMPUTERS, AND          46           

SUPPLIES; AND OTHER RELATED FEES, CHARGES, AND EXPENSES.                        

      (B)  "ELIGIBLE INSTITUTION" MEANS EITHER OF THE FOLLOWING:   48           

      (1)  A STATE-ASSISTED POST-SECONDARY EDUCATIONAL             50           

INSTITUTION WITHIN THE STATE;                                      51           

      (2)  A NONPROFIT INSTITUTION OF HIGHER EDUCATION WITHIN THE  53           

STATE THAT HOLDS A CERTIFICATE OF AUTHORIZATION FROM THE OHIO      54           

BOARD OF REGENTS PURSUANT TO CHAPTER 1713. OF THE REVISED CODE,    55           

THAT IS ACCREDITED BY THE APPROPRIATE REGIONAL AND, WHEN           56           

APPROPRIATE, PROFESSIONAL ACCREDITING ASSOCIATIONS WITHIN WHOSE    57           

JURSIDICTION IT FALLS, IS AUTHORIZED TO GRANT A BACHELOR'S DEGREE  58           

OR HIGHER, AND SATISFIES OTHER CONDITIONS AS SET FORTH IN THE      59           

POLICY GUIDELINES.                                                              

      (C)  "ELIGIBLE STUDENT" MEANS EITHER OF THE FOLLOWING:       61           

      (1)  AN UNDERGRADUATE STUDENT WHO MEETS ALL OF THE           63           

FOLLOWING:                                                                      

      (a)  IS A RESIDENT OF THIS STATE;                            65           

      (b)  HAS GRADUATED FROM ANY OHIO SECONDARY SCHOOL FOR WHICH  68           

THE STATE BOARD OF EDUCATION PRESCRIBES MINIMUM STANDARDS IN                    

ACCORDANCE WITH SECTION 3301.07 OF THE REVISED CODE;               69           

      (c)  IS ATTENDING AND IN GOOD STANDING, OR HAS BEEN          71           

ACCEPTED FOR ATTENDANCE, AT ANY ELIGIBLE INSTITUTION AS A          72           

FULL-TIME STUDENT TO PURSUE A BACHELOR'S DEGREE.                   73           

      (2)  A GRADUATE STUDENT WHO IS A RESIDENT OF THIS STATE,     76           

                                                          3      


                                                                 
AND IS ATTENDING AND IN GOOD STANDING, OR HAS BEEN ACCEPTED FOR    77           

ATTENDANCE, AT ANY ELIGIBLE INSTITUTION.                                        

      (D)  "FELLOWSHIP" OR "FELLOWSHIP PROGRAM" MEANS THE OHIO     79           

PRIORITY NEEDS FELLOWSHIP CREATED BY SECTIONS 3333.37 TO 3333.375  80           

OF THE REVISED CODE.                                               81           

      (E)  "FULL-TIME STUDENT" HAS THE MEANING AS DEFINED BY RULE  83           

OF THE OHIO BOARD OF REGENTS.                                      84           

      (F)  "OHIO OUTSTANDING SCHOLAR" MEANS A STUDENT WHO IS THE   86           

RECIPIENT OF A SCHOLARSHIP UNDER SECTIONS 3333.37 TO 3333.375 OF   87           

THE REVISED CODE.                                                  88           

      (G)  "POLICY GUIDELINES" MEANS THE RULES ADOPTED BY THE      91           

OHIO BOARD OF REGENTS PURSUANT TO SECTION 3333.374 OF THE REVISED  92           

CODE.                                                                           

      (H)  "PRIORITY NEEDS FELLOW" MEANS A STUDENT WHO IS THE      94           

RECIPIENT OF A FELLOWSHIP UNDER SECTIONS 3333.37 TO 3333.375 OF    95           

THE REVISED CODE.                                                  96           

      (I)  "PRIORITY NEEDS FIELD OF STUDY" MEANS THOSE ACADEMIC    98           

MAJORS AND DISCIPLINES AS DETERMINED BY THE OHIO BOARD OF REGENTS  99           

THAT SUPPORT THE PURPOSES AND INTENT OF SECTIONS 3333.37 TO        100          

3333.375 OF THE REVISED CODE AS DESCRIBED IN SECTION 3333.371 OF   101          

THE REVISED CODE.                                                  102          

      (J)  "SCHOLARSHIP" OR "SCHOLARSHIP PROGRAM" MEANS THE OHIO   105          

OUTSTANDING SCHOLARSHIP CREATED BY SECTIONS 3333.37 TO 3333.375                 

OF THE REVISED CODE.                                               106          

      Sec. 3333.371.  THE PURPOSES OF SECTIONS 3333.37 TO          108          

3333.375 OF THE REVISED CODE ARE TO CREATE BOTH OF THE FOLLOWING:  109          

      (A)  A SCHOLARSHIP PROGRAM FOR UNDERGRADUATE STUDENTS WHO    111          

ARE RESIDENTS OF THIS STATE AND ARE PURSUING A BACCALAUREATE       113          

DEGREE IN ANY FIELD OF STUDY TO ENCOURAGE THE RETENTION OF OHIO    114          

OUTSTANDING STUDENTS;                                                           

      (B)  A FELLOWSHIP PROGRAM FOR GRADUATE STUDENTS WHO ARE      116          

RESIDENTS OF THIS STATE FOR ATTENDANCE AT OHIO INSTITUTIONS OF     118          

HIGHER EDUCATION TO ENCOURAGE SUCH STUDENTS TO PURSUE FIELDS OF    119          

STUDY THAT ARE DETERMINED TO BE A PRIORITY FOR THE STATE IN                     

                                                          4      


                                                                 
ADVANCING ITS ECONOMIC, TECHNOLOGICAL, AND ACADEMIC INTERESTS.     120          

      Sec. 3333.372.  (A)  THERE IS HEREBY AUTHORIZED THE "OHIO    122          

OUTSTANDING SCHOLARSHIP" AND THE "OHIO PRIORITY NEEDS FELLOWSHIP"  123          

PROGRAMS, WHICH SHALL BE ESTABLISHED AND ADMINISTERED BY THE OHIO  124          

BOARD OF REGENTS FOR ELIGIBLE STUDENTS.  THE PROGRAMS SHALL        125          

PROVIDE SCHOLARSHIPS TO ELIGIBLE UNDERGRADUATE STUDENTS AND        127          

FELLOWSHIPS TO ELIGIBLE GRADUATE STUDENTS, EQUAL TO THE ANNUAL     128          

COST OF ATTENDANCE AT ELIGIBLE INSTITUTIONS, TO PURSUE                          

BACCALAUREATE DEGREES AND POST-BACCALAUREATE DEGREES IN PRIORITY   130          

NEEDS FIELD OF STUDY CONSISTENT WITH SECTION 3333.371 OF THE       131          

REVISED CODE.                                                                   

      (B)  THE SCHOLARSHIP AND FELLOWSHIP PROGRAMS CREATED UNDER   133          

SECTIONS 3333.37 TO 3333.375 OF THE REVISED CODE AND ANY           134          

NECESSARY ADMINISTRATIVE EXPENSES SHALL BE FUNDED SOLELY FROM THE  135          

OHIO OUTSTANDING SCHOLARSHIP AND THE OHIO PRIORITY NEEDS           136          

FELLOWSHIP PROGRAMS PAYMENT FUNDS ESTABLISHED PURSUANT TO SECTION  137          

3333.375 OF THE REVISED CODE.                                      138          

      (C)  THE SCHOLARSHIPS SHALL BE RENEWABLE FOR EACH OF THREE   140          

ADDITIONAL YEARS FOR UNDERGRADUATE STUDY, AND THE FELLOWSHIPS      142          

SHALL BE RENEWABLE FOR EACH OF TWO ADDITIONAL YEARS FOR GRADUATE   143          

STUDY, PROVIDED THE OHIO OUTSTANDING SCHOLAR OR PRIORITY NEEDS     144          

FELLOW REMAINS AN ELIGIBLE STUDENT AT AN ELIGIBLE INSTITUTION.     145          

      Sec. 3333.373.  (A)  THE BOARD OF REGENTS SHALL ESTABLISH    147          

THE RULES ADVISORY COMMITTEE, WHICH SHALL CONSIST OF THE           148          

CHANCELLOR OF THE OHIO BOARD OF REGENTS OR THE CHANCELLOR'S        149          

DESIGNEE, THE TREASURER OF STATE OR THE TREASURER OF STATE'S       150          

DESIGNEE, THE DIRECTOR OF DEVELOPMENT OR THE DIRECTOR'S DESIGNEE,  151          

ONE STATE SENATOR APPOINTED BY THE PRESIDENT OF THE SENATE, ONE    152          

STATE REPRESENTATIVE APPOINTED BY THE SPEAKER OF THE HOUSE OF                   

REPRESENTATIVES, AND TWO PUBLIC MEMBERS APPOINTED BY THE           153          

CHANCELLOR REPRESENTING THE INTERESTS OF THE STATE-ASSISTED        154          

ELIGIBLE INSTITUTIONS AND PRIVATE NONPROFIT ELIGIBLE               155          

INSTITUTIONS, RESPECTIVELY.                                                     

      (B)  THE COMMITTEE, WITHIN ONE HUNDRED TWENTY DAYS AFTER     157          

                                                          5      


                                                                 
THE EFFECTIVE DATE OF THIS SECTION, SHALL PROVIDE RECOMMENDATIONS  158          

TO THE OHIO BOARD OF REGENTS AS TO SUCH RULES, CRITERIA, AND       159          

GUIDELINES AS ARE NECESSARY AND APPROPRIATE TO IMPLEMENT THE       160          

SCHOLARSHIP AND FELLOWSHIP PROGRAMS CREATED BY SECTIONS 3333.37    161          

TO 3333.375 OF THE REVISED CODE.                                   162          

      (C)  THE COMMITTEE SHALL MEET AT LEAST ANNUALLY TO REVIEW    164          

THE SCHOLARSHIP AND FELLOWSHIP PROGRAMS GUIDELINES; MAKE           165          

RECOMMENDATIONS TO AMEND, RESCIND, OR MODIFY THE POLICY            166          

GUIDELINES; AND APPROVE SCHOLARSHIP AND FELLOWSHIP AWARDS TO       167          

ELIGIBLE STUDENTS.                                                              

      (D)  SECTION 101.84 OF THE REVISED CODE DOES NOT APPLY TO    170          

THIS SECTION.                                                                   

      Sec. 3333.374.  (A)  AFTER RECEIPT OF RECOMMENDATIONS FROM   172          

THE RULES ADVISORY COMMITTEE OR IF NO RECOMMENDATIONS ARE          173          

RECEIVED, THE OHIO BOARD OF REGENTS, NOT LATER THAN ONE HUNDRED    174          

EIGHTY DAYS AFTER THE EFFECTIVE DATE OF THIS SECTION AND WITH THE  175          

APPROVAL OF THE TREASURER OF STATE, SHALL ADOPT RULES, IN          176          

ACCORDANCE WITH CHAPTER 119. OF THE REVISED CODE, ESTABLISHING     177          

SUCH POLICY GUIDELINES AS THE BOARD CONSIDERS NECESSARY AND        178          

APPROPRIATE TO PROVIDE FOR THE IMPLEMENTATION OF THE SCHOLARSHIP   179          

AND FELLOWSHIP PROGRAMS.                                                        

      (B)  NOTHING IN THIS SECTION OR SECTION 3333.373 OF THE      182          

REVISED CODE SHALL PREVENT THE BOARD, WITH THE APPROVAL OF THE     183          

TREASURER OF STATE, FROM AMENDING OR RESCINDING RULES ADOPTED                   

PURSUANT TO DIVISION (A) OF THIS SECTION, OR FROM ADOPTING NEW     184          

RULES, IN ACCORDANCE WITH CHAPTER 119. OF THE REVISED CODE, FROM   186          

TIME TO TIME AS ARE NECESSARY TO FURTHER THE PURPOSES OF SECTIONS               

3333.37 TO 3333.375 OF THE REVISED CODE.                           187          

      Sec. 3333.375.  (A)(1)  THERE IS HEREBY CREATED THE OHIO     189          

OUTSTANDING SCHOLARSHIP AND THE OHIO PRIORITY NEEDS FELLOWSHIP     190          

PROGRAMS PAYMENT FUNDS, WHICH SHALL BE IN THE CUSTODY OF THE       191          

TREASURER OF STATE, BUT SHALL NOT BE A PART OF THE STATE           192          

TREASURY.                                                                       

      (2)  THE PAYMENT FUNDS SHALL CONSIST SOLELY OF ALL MONEYS    194          

                                                          6      


                                                                 
RETURNED TO THE TREASURER OF STATE, AS ISSUER OF CERTAIN           195          

TAX-EXEMPT STUDENT LOAN REVENUE BONDS, FROM ALL INDENTURES OF      196          

TRUST, BOTH PRESENTLY EXISTING AND FUTURE, CREATED AS A RESULT OF  197          

TAX-EXEMPT STUDENT LOAN REVENUE BONDS ISSUED UNDER CHAPTER 3366.   198          

OF THE REVISED CODE, AND ANY MONEYS EARNED FROM ALLOWABLE          199          

INVESTMENTS OF THE PAYMENT FUNDS UNDER DIVISION (B) OF THIS        200          

SECTION.                                                                        

      (3)  THE PAYMENT FUNDS SHALL BE USED SOLELY FOR SCHOLARSHIP  202          

AND FELLOWSHIPS AWARDED UNDER SECTIONS 3333.37 TO 3333.375 OF THE  203          

REVISED CODE BY THE OHIO BOARD OF REGENTS AND FOR ANY NECESSARY    204          

ADMINISTRATIVE EXPENSES INCURRED BY THE BOARD IN ADMINISTERING     205          

THE SCHOLARSHIP AND FELLOWSHIP PROGRAMS.                           206          

      (B)  THE TREASURER OF STATE MAY INVEST ANY MONEYS IN THE     208          

PAYMENT FUNDS NOT CURRENTLY NEEDED FOR SCHOLARSHIP AND FELLOWSHIP  209          

PAYMENTS IN ANY KIND OF INVESTMENTS IN WHICH MONEYS OF THE PUBLIC  210          

EMPLOYEES RETIREMENT SYSTEM MAY BE INVESTED UNDER CHAPTER 145. OF  211          

THE REVISED CODE.                                                               

      (C)(1)  THE INSTRUMENTS OF TITLE OF ALL INVESTMENTS SHALL    213          

BE DELIVERED TO THE TREASURER OF STATE OR TO A QUALIFIED TRUSTEE   214          

DESIGNATED BY THE TREASURER OF STATE AS PROVIDED IN SECTION        215          

135.18 OF THE REVISED CODE.                                        216          

      (2)  THE TREASURER OF STATE SHALL COLLECT BOTH PRINCIPAL     218          

AND INVESTMENT EARNINGS ON ALL INVESTMENTS AS THEY BECOME DUE AND  219          

PAY THEM INTO THE PAYMENT FUNDS.                                   220          

      (3)  ALL DEPOSITS TO THE PAYMENT FUNDS SHALL BE MADE IN      222          

PUBLIC DEPOSITORIES OF THIS STATE AND SECURED AS PROVIDED IN       223          

SECTION 135.18 OF THE REVISED CODE.                                224          

      (D)  ON OR BEFORE MARCH 1, 2001, AND ON OR BEFORE THE FIRST  227          

DAY OF MARCH IN EACH SUBSEQUENT YEAR, THE TREASURER OF STATE                    

SHALL PROVIDE TO THE CHANCELLOR OF THE OHIO BOARD OF REGENTS A     228          

STATEMENT INDICATING THE MONEYS IN THE OHIO OUTSTANDING            229          

SCHOLARSHIP AND THE OHIO PRIORITY NEEDS FELLOWSHIP PROGRAMS        230          

PAYMENT FUNDS THAT ARE AVAILABLE FOR THE UPCOMING ACADEMIC YEAR    231          

TO AWARD SCHOLARSHIPS AND FELLOWSHIPS UNDER SECTIONS 3333.37 TO    232          

                                                          7      


                                                                 
3333.375 OF THE REVISED CODE.                                      233          

      Sec. 3334.01.  As used in this chapter:                      242          

      (A)  "Aggregate original principal amount" means the         244          

aggregate of the initial offering prices to the public of college  245          

savings bonds, exclusive of accrued interest, if any.  "Aggregate  246          

original principal amount" does not mean the aggregate accreted    247          

amount payable at maturity or redemption of such bonds.            248          

      (B)  "Beneficiary" means an:                                 250          

      (1)  AN individual designated by the purchaser under a       252          

tuition payment contract or through a scholarship program as the   254          

individual on whose behalf tuition credits purchased under the     255          

contract or awarded through the scholarship program will be                     

applied toward the payment of undergraduate, graduate, or          256          

professional tuition; OR                                           257          

      (2)  AN INDIVIDUAL DESIGNATED BY THE CONTRIBUTOR UNDER A     259          

VARIABLE COLLEGE SAVINGS PROGRAM CONTRACT AS THE INDIVIDUAL WHOSE  260          

TUITION AND OTHER HIGHER EDUCATION EXPENSES WILL BE PAID FROM A    261          

VARIABLE COLLEGE SAVINGS PROGRAM ACCOUNT.                          262          

      (C)  "Capital appreciation bond" means a bond for which the  264          

following is true:                                                              

      (1)  The principal amount is less than the amount payable    266          

at maturity or early redemption; and                               267          

      (2)  No interest is payable on a current basis.              269          

      (D)  "Tuition credit" means a credit of the Ohio tuition     271          

trust authority purchased under section 3334.09 of the Revised     272          

Code.                                                                           

      (E)  "College savings bonds" means revenue and other         274          

obligations issued on behalf of the state or any agency or         275          

issuing authority thereof as a zero-coupon or capital              276          

appreciation bond, and designated as college savings bonds as      277          

provided in this chapter.  "College savings bond issue" means any  278          

issue of bonds of which any part has been designated as college    279          

savings bonds.                                                     280          

      (F)  "Institution of higher education" means a state         282          

                                                          8      


                                                                 
institution of higher education, a private college, university,    284          

or other postsecondary institution located in this state that                   

possesses a certificate of authorization issued by the Ohio board  285          

of regents pursuant to Chapter 1713. of the Revised Code or a      286          

certificate of registration issued by the state board of           287          

proprietary school registration under Chapter 3332. of the         288          

Revised Code, or an accredited college, university, or other       289          

postsecondary institution located outside this state that is       290          

accredited by an accrediting organization or professional          291          

association recognized by the authority.  To be considered an      292          

institution of higher education, an institution shall meet the     293          

definition of an eligible educational institution under section    294          

529 of the Internal Revenue Code.                                               

      (G)  "Issuing authority" means any authority, commission,    296          

body, agency, or individual empowered by the Ohio Constitution or  298          

the Revised Code to issue bonds or any other debt obligation of    299          

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

the issuing authority or, if so designated under division (B) of   300          

section 3334.04 of the Revised Code, the treasurer of state.       301          

      (H)  "Tuition" means the charges imposed to attend an        303          

institution of higher education as an undergraduate, graduate, or  304          

professional student and all fees required as a condition of       305          

enrollment, as determined by the Ohio tuition trust authority.     306          

"Tuition" does not include fees charged to out-of-state residents  307          

by state institutions of higher education, laboratory fees, room   308          

and board, or other similar fees and charges.                      309          

      (I)  "Weighted average tuition" means the tuition cost       311          

resulting from the following calculation:                          312          

      (1)  Add the products of the annual undergraduate tuition    314          

CHARGED TO OHIO RESIDENTS at each four-year state university       316          

multiplied by that institution's total number of undergraduate     317          

fiscal year equated students; and                                  318          

      (2)  Divide the gross total of the products from division    320          

(J)(I)(1) of this section by the total number of undergraduate     321          

                                                          9      


                                                                 
fiscal year equated students attending four-year state             322          

universities.                                                      323          

      (J)  "Zero-coupon bond" means a bond which has a stated      325          

interest rate of zero per cent and on which no interest is         326          

payable until the maturity or early redemption of the bond, and    327          

is offered at a substantial discount from its original stated      328          

principal amount.                                                  329          

      (K)  "State institution of higher education" includes the    331          

state universities listed in section 3345.011 of the Revised       332          

Code, community colleges created pursuant to Chapter 3354. of the  333          

Revised Code, university branches created pursuant to Chapter      334          

3355. of the Revised Code, technical colleges created pursuant to  335          

Chapter 3357. of the Revised Code, state community colleges        336          

created pursuant to Chapter 3358. of the Revised Code, the         337          

medical college of Ohio at Toledo, and the northeastern Ohio       338          

universities college of medicine.                                               

      (L)  "Four-year state university" means those state          340          

universities listed in section 3345.011 of the Revised Code.       341          

      (M)  "Principal amount" refers to the initial offering       343          

price to the public of an obligation, exclusive of the accrued     344          

interest, if any.  "Principal amount" does not refer to the        345          

aggregate accreted amount payable at maturity or redemption of an  346          

obligation.                                                        347          

      (N)  "Scholarship program" means a program registered with   349          

the Ohio tuition trust authority pursuant to section 3334.18       350          

3334.17 of the Revised Code.                                       351          

      (O)  "Internal Revenue Code" means the "Internal Revenue     354          

Code of 1986," 100 Stat. 2085, 26 U.S.C.A. 1 et seq., as amended.  355          

      (P)  "Other higher education expenses" means room and board  358          

and books, supplies, equipment, and nontuition-related fees        359          

associated with the cost of attendance of a beneficiary at an      360          

institution of higher education, but only to the extent that such  361          

expenses meet the definition of "qualified higher education        362          

expenses" under section 529 of the Internal Revenue Code.  "Other  363          

                                                          10     


                                                                 
higher education expenses" does not include tuition as defined in  364          

division (H) of this section.                                      365          

      (Q)  "Purchaser" means the person signing the tuition        368          

payment contract, who controls the account and acquires tuition    369          

credits for an account under the terms and conditions of the       370          

contract.                                                                       

      (R)  "CONTRIBUTOR" MEANS A PERSON WHO SIGNS A VARIABLE       372          

COLLEGE SAVINGS PROGRAM CONTRACT WITH THE OHIO TUITION TRUST       373          

AUTHORITY AND CONTRIBUTES TO AND OWNS THE ACCOUNT CREATED UNDER    374          

THE CONTRACT.                                                                   

      Sec. 3334.02.  (A)  In order to help make higher education   383          

affordable and accessible to all citizens of Ohio, to maintain     384          

state institutions of higher education by helping to provide a     385          

stable financial base to these institutions, to provide the        386          

citizens of Ohio with financing assistance for higher education    387          

and protection against rising tuition costs, to encourage saving   388          

to enhance the ability of citizens of Ohio to obtain financial     389          

access to institutions of higher education, to encourage           390          

elementary and secondary students in this state to achieve         391          

academic excellence, and to promote a well-educated and            392          

financially secure population to the ultimate benefit of all       393          

citizens of the state of Ohio, there is hereby created the Ohio    394          

college savings program.  The program shall consist of the         395          

issuance of college savings bonds and the sale of tuition credits  396          

and, if offered, supplemental credits.                             397          

      (B)  The provisions of Chapter 1707. of the Revised Code     399          

shall not apply to tuition credits or any agreement or             401          

transaction related thereto.                                                    

      (C)  TO PROVIDE THE CITIZENS OF OHIO WITH A CHOICE OF        403          

TAX-ADVANTAGED COLLEGE SAVINGS PROGRAMS AND THE OPPORTUNITY TO     404          

PARTICIPATE IN MORE THAN ONE TYPE OF COLLEGE SAVINGS PROGRAM AT A  406          

TIME, THE OHIO TUITION TRUST AUTHORITY SHALL ESTABLISH AND         407          

ADMINISTER A VARIABLE COLLEGE SAVINGS PROGRAM AS A QUALIFIED       408          

STATE TUITION PROGRAM UNDER SECTION 529 OF THE INTERNAL REVENUE    409          

                                                          11     


                                                                 
CODE.  THE PROGRAM SHALL ALLOW CONTRIBUTORS TO MAKE CASH           410          

CONTRIBUTIONS TO VARIABLE COLLEGE SAVINGS PROGRAM ACCOUNTS         411          

CREATED FOR THE PURPOSE OF PAYING FUTURE TUITION AND OTHER HIGHER  412          

EDUCATION EXPENSES AND PROVIDING VARIABLE RATES OF RETURN ON       413          

CONTRIBUTIONS.                                                                  

      (D)  A PERSON MAY PARTICIPATE SIMULTANEOUSLY IN BOTH THE     416          

OHIO COLLEGE SAVINGS PROGRAM AND THE VARIABLE COLLEGE SAVINGS      417          

PROGRAM.                                                                        

      Sec. 3334.08.  (A)  In SUBJECT TO DIVISION (B) OF THIS       426          

SECTION, IN addition to any other powers conferred by this         428          

chapter, the Ohio tuition trust authority may do any of the        429          

following:                                                                      

      (1)  Impose reasonable residency requirements for            431          

beneficiaries of tuition credits;                                  432          

      (2)  Impose reasonable limits on the number of tuition       434          

credit participants;                                               435          

      (3)  Impose and collect administrative fees and charges in   437          

connection with any transaction under this chapter;                438          

      (4)  Purchase insurance from insurers licensed to do         440          

business in this state providing for coverage against any loss in  441          

connection with the authority's property, assets, or activities    442          

or to further ensure the value of tuition credits;                 443          

      (5)  Indemnify or purchase policies of insurance on behalf   445          

of members, officers, and employees of the authority from          446          

insurers licensed to do business in this state providing for       447          

coverage for any liability incurred in connection with any civil   448          

action, demand, or claim against a director, officer, or employee  449          

by reason of an act or omission by the director, officer, or       450          

employee that was not manifestly outside the scope of the          451          

employment or official duties of the director, officer, or         452          

employee or with malicious purpose, in bad faith, or in a wanton   454          

or reckless manner;                                                             

      (6)  Make, execute, and deliver contracts, conveyances, and  456          

other instruments necessary to the exercise and discharge of the   457          

                                                          12     


                                                                 
powers and duties of the authority;                                458          

      (7)  Promote, advertise, and publicize the OHIO college      460          

savings program AND THE VARIABLE COLLEGE SAVINGS PROGRAM;          462          

      (8)  Adopt rules under section 111.15 of the Revised Code    464          

for the implementation of the OHIO college savings program AND     466          

THE VARIABLE COLLEGE SAVINGS PROGRAM;                              467          

      (9)  Contract, for the provision of all or part of the       469          

services necessary for the management and operation of the OHIO    471          

college savings program AND THE VARIABLE COLLEGE SAVINGS PROGRAM,  472          

with a bank, trust company, savings and loan association,          474          

insurance company, or licensed dealer in securities if the bank,   475          

company, association, or dealer is authorized to do business in    476          

this state and information about the contract is filed with the    477          

controlling board pursuant to division (D)(6) of section 127.16    478          

of the Revised Code;                                                            

      (10)  Contract for other services, or for goods, needed by   480          

the authority in the conduct of its business, including but not    481          

limited to credit card services;                                   482          

      (11)  Employ an executive director and other personnel as    484          

necessary to carry out its responsibilities under this chapter,    485          

and fix the compensation of these persons.  All employees of the   486          

authority shall be in the unclassified civil service and shall be  487          

eligible for membership in the public employees retirement         488          

system.                                                            489          

      (12)  Contract with financial consultants, actuaries,        491          

auditors, and other consultants as necessary to carry out its      492          

responsibilities under this chapter;                               493          

      (13)  Enter into agreements with any agency of the state or  495          

its political subdivisions or with private employers under which   496          

an employee may agree to have a designated amount deducted in      497          

each payroll period from the wages or salary due the employee for  498          

the purpose of purchasing tuition credits pursuant to a tuition    499          

payment contract OR MAKING CONTRIBUTIONS PURSUANT TO A VARIABLE    500          

COLLEGE SAVINGS PROGRAM CONTRACT;                                  501          

                                                          13     


                                                                 
      (14)  Enter into an agreement with the treasurer of state    503          

under which the treasurer of state will receive, and credit to     504          

the Ohio tuition trust fund OR VARIABLE COLLEGE SAVINGS PROGRAM    505          

FUND, from any bank or savings and loan association authorized to  507          

do business in this state, amounts that a depositor of the bank    508          

or association authorizes the bank or association to withdraw      509          

periodically from the depositor's account for the purpose of       511          

purchasing tuition credits pursuant to a tuition payment contract  512          

OR MAKING CONTRIBUTIONS PURSUANT TO A VARIABLE COLLEGE SAVINGS     513          

PROGRAM CONTRACT;                                                               

      (15)  Solicit and accept gifts, grants, and loans from any   515          

person or governmental agency and participate in any governmental  516          

program;                                                           517          

      (16)  Impose limits on the number of credits which may be    520          

purchased on behalf of or assigned or awarded to any beneficiary   521          

AND ON THE TOTAL AMOUNT OF CONTRIBUTIONS THAT MAY BE MADE ON       522          

BEHALF OF A BENEFICIARY;                                                        

      (17)  Impose restrictions on the substitution of another     524          

individual for the original beneficiary UNDER THE OHIO COLLEGE     525          

SAVINGS PROGRAM;                                                   526          

      (18)  Impose a limit on the age of a beneficiary, above      528          

which tuition credits may not be purchased on behalf of that       530          

beneficiary;                                                       531          

      (19)  Enter into a cooperative agreement with the treasurer  533          

of state to provide for the direct disbursement of payments under  534          

tuition payment OR VARIABLE COLLEGE SAVINGS PROGRAM contracts;     535          

      (20)  Determine the other higher education expenses for      537          

which tuition credits OR CONTRIBUTIONS may be used;                538          

      (21)  Terminate any prepaid tuition PAYMENT OR VARIABLE      540          

COLLEGE SAVINGS PROGRAM contract if no purchases OR CONTRIBUTIONS  542          

are made for a period of three years or more and there are fewer   544          

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

THAN A DOLLAR AMOUNT SET BY RULE on account, provided that notice  546          

of a possible termination shall be provided in advance,            547          

                                                          14     


                                                                 
explaining any options to prevent termination, and a reasonable    548          

amount of time shall be provided within which to act to prevent a  549          

termination;                                                                    

      (22)  MAINTAIN A SEPARATE ACCOUNT FOR EACH TUITION PAYMENT   551          

OR VARIABLE COLLEGE SAVINGS PROGRAM CONTRACT;                      552          

      (23)  Perform all acts necessary and proper to carry out     554          

the duties and responsibilities of the authority pursuant to this  555          

chapter.                                                           556          

      (B)  THE AUTHORITY SHALL ADOPT RULES UNDER SECTION 111.15    559          

OF THE REVISED CODE FOR THE IMPLEMENTATION AND ADMINISTRATION OF   561          

THE VARIABLE COLLEGE SAVINGS PROGRAM. THE RULES SHALL PROVIDE      562          

TAXPAYERS WITH THE MAXIMUM TAX ADVANTAGES AND FLEXIBILITY                       

CONSISTENT WITH SECTION 529 OF THE INTERNAL REVENUE CODE AND       564          

REGULATIONS ADOPTED THEREUNDER WITH REGARD TO DISPOSITION OF       566          

CONTRIBUTIONS AND EARNINGS, DESIGNATION OF BENEFICIARIES, AND      567          

ROLLOVER OF ACCOUNT ASSETS TO OTHER PROGRAMS.                      568          

      (C)  Except as otherwise specified in this chapter, the      570          

provisions of Chapters 123., 125., and 4117. of the Revised Code   571          

shall not apply to the authority.  The department of               572          

administrative services shall, upon the request of the authority,  573          

act as the authority's agent for the purchase of equipment,        574          

supplies, insurance, or services, or the performance of            575          

administrative services pursuant to Chapter 125. of the Revised    576          

Code.                                                              577          

      Sec. 3334.10.  Divisions (A) and, (B), (C), AND (D) of this  587          

section do not apply to scholarship programs established under     588          

section 3334.17 of the Revised Code.                                            

      (A)  Unless otherwise provided for in the contract, a        591          

tuition payment contract may be terminated by the purchaser under  592          

any of the following circumstances upon the written request of     593          

the purchaser to the authority:                                    594          

      (1)  Upon the death or permanent disability of the           596          

beneficiary;                                                                    

      (2)  Upon notification to the Ohio tuition trust authority   598          

                                                          15     


                                                                 
in writing that the beneficiary is age eighteen or older, has      599          

decided not to attend an institution of higher education, and      600          

requests that the tuition payment contract be terminated;          601          

      (3)  Upon the beneficiary's completion of the degree         603          

requirements at an institution of higher education;                604          

      (4)  Upon the rollover of all contributions to AMOUNTS IN a  607          

tuition credit account to the prepaid tuition plan of AN           609          

EQUIVALENT ACCOUNT IN another state;                               610          

      (5)  Upon the occurrence of other circumstances determined   612          

by the authority to be grounds for termination.                    613          

      (B)  The authority shall determine the method and schedule   615          

for payment of refunds upon termination of a tuition payment       616          

contract.                                                          617          

      (1)  In cases described by division (A)(2) or (3) of this    619          

section, the amount of the refund shall be equal to ninety-nine    620          

one-hundredths of NOT LESS THAN one per cent of the weighted       621          

average tuition in the academic year the contract REFUND is        623          

terminated PAID, multiplied by the number of tuition credits       625          

purchased and not used, minus any reasonable charges and fees                   

provided for by the authority, or such other lesser sum as shall   626          

be determined by the authority but only to the extent that such a  627          

lesser sum is necessary to meet the refund penalty requirements    628          

for qualified state tuition programs under section 529 of the      629          

Internal Revenue Code.                                             630          

      (2)  In cases described by division (A)(1) of this section,  632          

the amount of the refund shall be equal to the greater of the      633          

following:                                                                      

      (a)  One per cent of the weighted average tuition in the     635          

academic year the contract REFUND is terminated PAID, multiplied   636          

by the number of tuition credits purchased and not used;           638          

      (b)  The total purchase price of all tuition credits         640          

purchased for the beneficiary and not used.                        641          

      (3)  In cases described by division (A)(5) of this section,  643          

the amount of the refund shall be either of the following as       644          

                                                          16     


                                                                 
determined by the authority:                                       645          

      (a)  The refund provided by division (B)(1) of this          647          

section;                                                                        

      (b)  The refund provided by division (B)(2) of this          649          

section, or such other lesser sum as shall be determined by the    651          

authority but only to the extent that such a lesser sum is         652          

necessary to meet the refund penalty requirements for qualified    653          

state tuition programs under section 529 of the Internal Revenue   654          

Code.                                                                           

      (C)  UNLESS OTHERWISE PROVIDED FOR IN THE CONTRACT, A        657          

VARIABLE COLLEGE SAVINGS PROGRAM ACCOUNT MAY BE TERMINATED BY THE  658          

CONTRIBUTOR FOR ANY REASON UPON THE WRITTEN REQUEST OF THE         659          

CONTRIBUTOR TO THE AUTHORITY.  TERMINATION OF A VARIABLE COLLEGE   660          

SAVINGS PROGRAM ACCOUNT SHALL OCCUR NO EARLIER THAN A MATURITY     661          

PERIOD SET BY THE AUTHORITY AFTER THE FIRST CONTRIBUTION IS MADE   662          

TO THE ACCOUNT.                                                                 

      (D)  THE AUTHORITY SHALL DETERMINE THE METHOD AND SCHEDULE   664          

FOR PAYMENT OF REFUNDS UPON TERMINATION OF A VARIABLE SAVINGS      665          

PROGRAM ACCOUNT.                                                   666          

      (1)  THE CONTRIBUTOR UNDER A VARIABLE SAVINGS PROGRAM        668          

CONTRACT MAY RECEIVE A REFUND OF THE BALANCE IN AN ACCOUNT, LESS   669          

ANY ADMINISTRATIVE FEES, IF THE ACCOUNT IS TERMINATED UPON THE     670          

DEATH OR PERMANENT DISABILITY OF THE BENEFICIARY OR, TO THE        671          

EXTENT ALLOWED UNDER RULES OF THE AUTHORITY, UPON THE ROLLOVER OF  672          

ALL AMOUNTS IN A VARIABLE COLLEGE SAVINGS PROGRAM ACCOUNT TO AN    673          

EQUIVALENT ACCOUNT IN ANOTHER STATE.                               674          

      (2)  IF A VARIABLE COLLEGE SAVINGS PROGRAM ACCOUNT IS        676          

TERMINATED FOR ANY REASON OTHER THAN THOSE SET FORTH IN DIVISION   677          

(D)(1) OF THIS SECTION, THE CONTRIBUTOR MAY RECEIVE A REFUND OF    678          

THE BALANCE IN THE ACCOUNT, LESS ANY ADMINISTRATIVE FEES, AND      679          

LESS ANY ADDITIONAL AMOUNT NECESSARY TO MEET THE MINIMUM REFUND    680          

PENALTY REQUIREMENTS FOR A QUALIFIED STATE TUITION PROGRAM UNDER   681          

SECTION 529 OF THE INTERNAL REVENUE CODE.                          682          

      (3)  EARNINGS SHALL BE CALCULATED AS THE TOTAL VALUE OF THE  684          

                                                          17     


                                                                 
VARIABLE SAVINGS PROGRAM ACCOUNT LESS THE AGGREGATE                686          

CONTRIBUTIONS, OR IN SUCH OTHER MANNER AS PRESCRIBED BY SECTION    687          

529 OF THE INTERNAL REVENUE CODE.                                  688          

      (E)  In the case of a scholarship program, a refund of       690          

tuition credits in the program's account may be made only for      692          

just cause with the approval of the authority.  The refund shall   693          

be paid to the entity that established the scholarship program     694          

or, with that entity's approval, to the authority if this is       695          

authorized by federal tax law.  The amount of any refund shall be  696          

determined by the authority and shall meet the requirements for    697          

refunds made on account of scholarships under section 529 of the   698          

Internal Revenue Code.                                             699          

      (D)(F)  If a beneficiary is awarded a scholarship other      701          

than under a scholarship program, a waiver of tuition, or similar  702          

subvention that the authority determines cannot be converted into  705          

money by the beneficiary, the authority shall, during each         706          

academic term that the beneficiary furnishes the authority such    707          

information about the scholarship, waiver, or similar subvention   708          

as the authority requires, refund to the person designated in the  709          

contract, or, in the case of a beneficiary under a scholarship     710          

program, to the beneficiary an amount equal to the value that the  711          

tuition credits OR THE AMOUNTS IN THE VARIABLE COLLEGE SAVINGS     712          

PROGRAM ACCOUNT that are not needed on account of the              714          

scholarship, waiver, or similar subvention would otherwise have    715          

to the beneficiary that term at the institution of higher                       

education where the beneficiary is enrolled.  The authority may,   716          

at its sole option, designate the institution of higher education  717          

at which the beneficiary is enrolled as the agent of the           718          

authority for purposes of refunds pursuant to this division.       719          

      (E)(G)  If, in any academic term for which tuition credits   721          

OR ANY AMOUNTS IN A VARIABLE COLLEGE SAVINGS PROGRAM ACCOUNT have  723          

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

beneficiary withdraws from the institution of higher education at  724          

which the beneficiary is enrolled prior to the end of the          725          

                                                          18     


                                                                 
academic term, a pro rata share of any refund of tuition as a      726          

result of the withdrawal equal to that portion of the tuition      727          

paid with tuition credits OR THE AMOUNTS IN A VARIABLE COLLEGE     728          

SAVINGS PROGRAM ACCOUNT shall be made to the authority, unless     729          

the authority designates a different procedure.  The authority     730          

shall credit any refund received, less any reasonable charges and  731          

fees provided for by the authority, to the appropriate account     732          

established under division (F)(1) or (2) of section 3334.11 of     734          

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

      (H)  THE AUTHORITY SHALL MAINTAIN A SEPARATE ACCOUNT FOR     736          

EACH VARIABLE COLLEGE SAVINGS CONTRACT ENTERED INTO PURSUANT TO    737          

DIVISION (A) OF SECTION 3334.18 OF THE REVISED CODE FOR            738          

CONTRIBUTIONS MADE ON BEHALF OF A BENEFICIARY, SHOWING THE NAME    741          

OF THE BENEFICIARY OF THAT CONTRACT AND THE AMOUNT OF              742          

CONTRIBUTIONS MADE PURSUANT TO THAT CONTRACT.  UPON REQUEST OF     743          

ANY BENEFICIARY OR CONTRIBUTOR, THE AUTHORITY SHALL PROVIDE A      744          

STATEMENT INDICATING, IN THE CASE OF A BENEFICIARY, THE AMOUNT OF  745          

CONTRIBUTIONS MADE PURSUANT TO THAT CONTRACT ON BEHALF OF THE      746          

BENEFICIARY, OR, IN THE CASE OF A CONTRIBUTOR, CONTRIBUTIONS       747          

MADE, DISBURSED, OR REFUNDED PURSUANT TO THAT CONTRACT.            748          

      Sec. 3334.11.  (A)  The assets of the Ohio tuition trust     757          

authority reserved for payment of the obligations of the           758          

authority pursuant to tuition payment contracts shall be placed    759          

in a fund, which is hereby created and shall be known as the Ohio  761          

tuition trust fund.  The fund shall be in the custody of the       762          

treasurer of state, but shall not be part of the state treasury.   763          

That portion of payments received by the authority or the          764          

treasurer of state from persons purchasing tuition credits under   765          

tuition payment contracts that the authority determines is         766          

actuarially necessary for the payment of obligations of the        767          

authority pursuant to tuition payment contracts, all interest and  768          

investment income earned by the fund, and all other receipts of    769          

the authority from any other source that the authority determines  771          

appropriate, shall be deposited in the fund.  No purchaser or      772          

                                                          19     


                                                                 
beneficiary of tuition credits shall have any claim against the    773          

funds of any state institution of higher education.  All           774          

investment fees and other costs incurred in connection with the    775          

exercise of the investment powers of the authority pursuant to     776          

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

assets of the fund.                                                777          

      (B)  Unless otherwise provided by the authority, the assets  779          

of the Ohio tuition trust fund shall be expended in the following  780          

order:                                                             781          

      (1)  To make payments to beneficiaries, or institutions of   783          

higher education on behalf of beneficiaries, under division (B)    784          

of section 3334.09 of the Revised Code;                            785          

      (2)  To make refunds as provided in divisions (B), (C)(E),   787          

and (D)(F) of section 3334.10 of the Revised Code;                 788          

      (3)  To pay the investment fees and other costs of           790          

administering the fund.                                            791          

      (C)(1)  Except as may be provided in an agreement under      793          

division (A)(19) of section 3334.08 of the Revised Code, all       795          

disbursements from the Ohio tuition trust fund shall be made by                 

the treasurer of state on order of a designee of the authority.    796          

      (2)  The treasurer of state shall deposit any portion of     798          

the Ohio tuition trust fund not needed for immediate use in the    799          

same manner as state funds are deposited.                          800          

      (D)  The authority is the trustee of the Ohio tuition trust  802          

fund.  The authority shall have full power to invest the assets    804          

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

limitations and requirements contained in divisions (K) to (M) of  806          

this section and sections 145.112 and 145.113 of the Revised       807          

Code.  The evidences of title of all investments shall be          808          

delivered to the treasurer of state or to a qualified trustee      810          

designated by the treasurer of state as provided in section        812          

135.18 of the Revised Code.  Assets of the fund shall be           813          

administered by the authority in a manner designed to be           814          

actuarially sound so that the assets of the fund will be                        

                                                          20     


                                                                 
sufficient to satisfy the obligations of the authority pursuant    815          

to tuition payment contracts and defray the reasonable expenses    816          

of administering the fund.                                         817          

      (E)  The public employees retirement board shall, with the   819          

approval of the authority, exercise the investment powers of the   820          

authority as set forth in division (D) of this section until the   821          

authority determines that assumption and exercise by the           822          

authority of the investment powers is financially and              823          

administratively feasible.  The investment powers shall be         824          

exercised by the public employees retirement board in a manner     825          

agreed upon by the authority that maximizes the return on          826          

investment and minimizes the administrative expenses.              827          

      (F)(1)  The authority shall maintain a separate account for  829          

each tuition payment contract entered into pursuant to division    831          

(A) of section 3334.09 of the Revised Code for the purchase of     832          

tuition credits on behalf of a beneficiary or beneficiaries        833          

showing the beneficiary or beneficiaries of that contract and the  834          

number of tuition credits purchased pursuant to that contract.     835          

Upon request of any beneficiary or person who has entered into a   836          

tuition payment contract, the authority shall provide a statement  837          

indicating, in the case of a beneficiary, the number of tuition    838          

credits purchased on behalf of the beneficiary, or in the case of  839          

a person who has entered into a tuition payment contract, the      840          

number of tuition credits purchased, used, or refunded pursuant    841          

to that contract.  A beneficiary and person that have entered      842          

into a tuition payment contract each may file only one request     843          

under this division in any year.                                   844          

      (2)  The authority shall maintain an account for each        846          

scholarship program showing the number of tuition credits that     847          

have been purchased for or donated to the program and the number   848          

of tuition credits that have been used.  Upon the request of the   849          

entity that established the scholarship program, the authority     850          

shall provide a statement indicating these numbers.                851          

      (G)  In addition to the Ohio tuition trust fund, there is    853          

                                                          21     


                                                                 
hereby established a reserve fund that shall be in the custody of  856          

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

treasury, and shall be known as the Ohio tuition trust reserve     857          

fund, and an operating fund that shall be part of the state        859          

treasury, and shall be known as the Ohio tuition trust operating   860          

fund.  That portion of payments received by the authority or the   861          

treasurer of state from persons purchasing tuition credits under   862          

tuition payment contracts that the authority determines is not     864          

actuarially necessary for the payment of obligations of the        865          

authority pursuant to tuition payment contracts, any interest and  866          

investment income earned by the reserve fund, any administrative   867          

charges and fees imposed by the authority on transactions under    868          

this chapter or on purchasers or beneficiaries of tuition          869          

credits, and all other receipts from any other source that the     871          

authority determines appropriate, shall be deposited in the        872          

reserve fund to pay the operating expenses of the authority and    873          

the costs of administering the program.  The assets of the         874          

reserve fund may be invested in the same manner and subject to     875          

the same limitations set forth in divisions (D), (E), and (K) to   877          

(M) of this section and sections 145.112 and 145.113 of the        878          

Revised Code.  All investment fees and other costs incurred in     880          

connection with the exercise of the investment powers shall be     882          

paid from the assets of the reserve fund.  Except as otherwise     883          

provided for in this chapter, all operating expenses of the        884          

authority and costs of administering the program shall be paid     885          

from the operating fund.  The treasurer shall, upon request of     886          

the authority, transfer funds from the reserve fund to the         887          

operating fund as the authority determines appropriate to pay      888          

those current operating expenses of the authority and costs of     889          

administering the program as the authority designates.  Any        890          

interest or investment income earned on the assets of the          891          

operating fund shall be deposited in the operating fund.           892          

      (H)  In January of each year the authority shall report to   894          

each person who received any payments or refunds from the          895          

                                                          22     


                                                                 
authority during the preceding year information relative to the    896          

value of the payments or refunds to assist in determining that     898          

person's tax liability.                                            899          

      (I)  The authority shall report to the tax commissioner any  902          

information, and at the times, as the tax commissioner requires    904          

to determine any tax liability that a person may have incurred     905          

during the preceding year as a result of having received any       906          

payments or refunds from the authority.                                         

      (J)  All records of the authority indicating the identity    908          

of purchasers and beneficiaries of tuition credits or college      909          

savings bonds, the number of tuition credits purchased, used, or   910          

refunded under a tuition payment contract, and the number of       911          

college savings bonds purchased, held, or redeemed are not public  912          

records within the meaning of section 149.43 of the Revised Code.  913          

      (K)  The authority and other fiduciaries shall discharge     916          

their duties with respect to the funds with care, skill,           917          

prudence, and diligence under the circumstances then prevailing    918          

that a prudent person acting in a like capacity and familiar with  919          

such matters would use in the conduct of an enterprise of a like   920          

character and with like aims; and by diversifying the investments  921          

of the assets of the funds so as to minimize the risk of large     922          

losses, unless under the circumstances it is clearly prudent not   924          

to do so.                                                                       

      To facilitate investment of the funds, the authority may     926          

establish a partnership, trust, limited liability company,         927          

corporation, including a corporation exempt from taxation under    928          

the Internal Revenue Code, 100 Stat. 2085, 26 U.S.C. 1, as         929          

amended, or any other legal entity authorized to transact          930          

business in this state.                                                         

      (L)  In exercising its fiduciary responsibility with         932          

respect to the investment of the assets of the funds, it shall be  933          

the intent of the authority to give consideration to investments   934          

that enhance the general welfare of the state and its citizens     935          

where the investments offer quality, return, and safety            936          

                                                          23     


                                                                 
comparable to other investments currently available to the         937          

authority.  In fulfilling this intent, equal consideration shall   938          

also be given to investments otherwise qualifying under this       939          

section that involve minority owned and controlled firms and       940          

firms owned and controlled by women, either alone or in joint      941          

venture with other firms.                                                       

      The authority shall adopt, in regular meeting, policies,     944          

objectives, or criteria for the operation of the investment        945          

program that include asset allocation targets and ranges, risk     947          

factors, asset class benchmarks, time horizons, total return       948          

objectives, and performance evaluation guidelines.  In adopting    950          

policies and criteria for the selection of agents with whom the    951          

authority may contract for the administration of the assets of                  

the funds, the authority shall give equal consideration to         952          

minority owned and controlled firms, firms owned and controlled    953          

by women, and ventures involving minority owned and controlled     954          

firms and firms owned and controlled by women that otherwise meet  955          

the policies and criteria established by the authority.            956          

Amendments and additions to the policies and criteria shall be     957          

adopted in regular meeting.  The authority shall publish its                    

policies, objectives, and criteria under this provision no less    958          

often than annually and shall make copies available to interested  960          

parties.                                                                        

      When reporting on the performance of investments, the        962          

authority shall comply with the performance presentation           964          

standards established by the association for investment            965          

management and research.                                                        

      (M)  All investments shall be purchased at current market    967          

prices and the evidences of title of the investments shall be      968          

placed in the hands of the treasurer of state, who is hereby       969          

designated as custodian thereof, or in the hands of the treasurer  971          

of state's authorized agent.  The treasurer of state or the agent  972          

shall collect the principal, dividends, distributions, and                      

interest thereon as they become due and payable and place them     973          

                                                          24     


                                                                 
when so collected into the custodial funds.                        974          

      The treasurer of state shall pay for investments purchased   976          

by the authority on receipt of written or electronic instructions  977          

from the authority or the authority's designated agent             978          

authorizing the purchase and pending receipt of the evidence of    980          

title of the investment by the treasurer of state or the                        

treasurer of state's authorized agent.  The authority may sell     981          

investments held by the authority, and the treasurer of state or   982          

the treasurer of state's authorized agent shall accept payment     983          

from the purchaser and deliver evidence of title of the            984          

investment to the purchaser on receipt of written or electronic    985          

instructions from the authority or the authority's designated      986          

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

the investments.  The amount received shall be placed in the       987          

custodial funds.  The authority and the treasurer of state may     988          

enter into agreements to establish procedures for the purchase     989          

and sale of investments under this division and the custody of     990          

the investments.                                                                

      No purchase or sale of any investment shall be made under    992          

this section except as authorized by the authority.                993          

      Any statement of financial position distributed by the       995          

authority shall include fair value, as of the statement date, of   996          

all investments held by the authority under this section.          997          

      Sec. 3334.12.  Notwithstanding anything to the contrary in   1,006        

sections 3334.07 and 3334.09 of the Revised Code:                  1,007        

      (A)  Annually, the Ohio tuition trust authority shall have   1,009        

the actuarial soundness of the Ohio tuition trust fund evaluated   1,010        

by a nationally recognized actuary and shall determine whether     1,011        

additional assets are necessary to defray the obligations of the   1,012        

authority.  If, after the authority sets the price for tuition     1,013        

credits, circumstances arise that the executive director           1,015        

determines necessitate an additional evaluation of the actuarial   1,016        

soundness of the fund, the executive director shall have a         1,018        

nationally recognized actuary conduct the necessary evaluation.    1,019        

                                                          25     


                                                                 
If the assets of the fund are insufficient to ensure the           1,020        

actuarial soundness of the fund, the authority shall adjust the    1,021        

price of subsequent purchases of tuition credits.                               

      (B)  Upon termination of the program or liquidation of the   1,023        

Ohio tuition trust fund, the Ohio tuition trust reserve fund, and  1,024        

the Ohio tuition trust operating fund, any remaining assets of     1,025        

the funds after all obligations of the funds have been satisfied   1,026        

pursuant to division (B) of section 3334.11 of the Revised Code    1,027        

shall be transferred to the general revenue fund of the state.     1,028        

      (C)  The authority shall prepare and cause to have audited   1,030        

an annual financial report on all financial activity of the Ohio   1,031        

tuition trust authority within ninety days of the end of the       1,032        

fiscal year.  The authority shall transmit a copy of the audited   1,033        

financial report to the governor, the president of the senate,     1,034        

the speaker of the house of representatives, and the minority      1,035        

leaders of the senate and the house of representatives.  Copies    1,036        

of the audited financial report also shall be made available,      1,037        

upon request, to the persons entering into contracts with the      1,038        

authority and to prospective purchasers of tuition credits AND     1,039        

PROSPECTIVE CONTRIBUTORS TO VARIABLE COLLEGE SAVINGS PROGRAM       1,040        

ACCOUNTS.                                                                       

      Sec. 3334.15.  (A)  The right of a person to a tuition       1,049        

credit or a payment under section 3334.09 of the Revised Code      1,051        

pursuant to a tuition credit contract or, A scholarship program,   1,052        

OR A VARIABLE COLLEGE SAVINGS PROGRAM ACCOUNT shall not be         1,054        

subject to execution, garnishment, attachment, the operation of    1,056        

bankruptcy or the insolvency laws, or other process of law.        1,057        

      (B)  THE RIGHT OF A PERSON TO A TUITION CREDIT OR A PAYMENT  1,059        

UNDER SECTION 3334.09 OF THE REVISED CODE PURSUANT TO A TUITION    1,060        

CREDIT CONTRACT, A SCHOLARSHIP PROGRAM, OR A VARIABLE COLLEGE      1,061        

SAVINGS PROGRAM ACCOUNT SHALL NOT BE USED AS SECURITY OR           1,062        

COLLATERAL FOR A LOAN.                                                          

      Sec. 3334.18.  (A)  A VARIABLE COLLEGE SAVINGS PROGRAM       1,064        

ESTABLISHED BY THE OHIO TUITION TRUST AUTHORITY SHALL INCLUDE      1,065        

                                                          26     


                                                                 
PROVISIONS FOR A CONTRACT TO BE ENTERED INTO BETWEEN A             1,066        

CONTRIBUTOR AND THE AUTHORITY THAT WILL AUTHORIZE THE CONTRIBUTOR  1,067        

TO OPEN AN ACCOUNT FOR A BENEFICIARY AND AUTHORIZE THE             1,069        

CONTRIBUTOR TO SUBSTITUTE A NEW BENEFICIARY FOR ONE ORIGINALLY                  

NAMED IN THE CONTRACT, TO THE EXTENT PERMITTED BY SECTION 529 OF   1,071        

THE INTERNAL REVENUE CODE.                                                      

      (B)  THE AUTHORITY SHALL PROVIDE ADEQUATE SAFEGUARDS TO      1,073        

PREVENT TOTAL CONTRIBUTIONS TO A VARIABLE COLLEGE SAVINGS PROGRAM  1,074        

ACCOUNT OR PURCHASES OF TUITION CREDITS, EITHER SEPARATELY OR      1,075        

COMBINED, THAT ARE MADE ON BEHALF OF A BENEFICIARY FROM EXCEEDING  1,076        

THE AMOUNT NECESSARY TO PROVIDE FOR THE TUITION AND OTHER HIGHER   1,077        

EDUCATION EXPENSES OF THE BENEFICIARY, CONSISTENT WITH THE         1,078        

MAXIMUM CONTRIBUTIONS PERMITTED BY SECTION 529 OF THE INTERNAL     1,080        

REVENUE CODE.  HOWEVER, IN NO EVENT SHALL CONTRIBUTIONS OR         1,081        

PURCHASES EXCEED THE ALLOWABLE LIMIT FOR A QUALIFIED STATE         1,082        

TUITION PROGRAM UNDER SECTION 529 OF THE INTERNAL REVENUE CODE.    1,083        

      (C)(1)  PARTICIPATION IN THE VARIABLE COLLEGE SAVINGS        1,085        

PROGRAM DOES NOT GUARANTEE THAT CONTRIBUTIONS AND THE INVESTMENT   1,086        

RETURN ON CONTRIBUTIONS, IF ANY, WILL BE ADEQUATE TO COVER FUTURE  1,088        

TUITION AND OTHER HIGHER EDUCATION EXPENSES OR THAT A BENEFICIARY  1,089        

WILL BE ADMITTED TO OR PERMITTED TO CONTINUE TO ATTEND AN          1,090        

INSTITUTION OF HIGHER EDUCATION.                                                

      (2)  RETURNS ON CONTRIBUTORS' INVESTMENTS IN THE VARIABLE    1,092        

COLLEGE SAVINGS PROGRAM ARE NOT GUARANTEED BY THE STATE AND THE    1,093        

CONTRIBUTORS TO THE VARIABLE COLLEGE SAVINGS PROGRAM ASSUME ALL    1,094        

INVESTMENT RISK, INCLUDING THE POTENTIAL LOSS OF PRINCIPAL AND     1,095        

LIABILITY FOR PENALTIES SUCH AS THOSE LEVIED FOR NONEDUCATIONAL    1,096        

WITHDRAWALS.                                                                    

      (3)  THE STATE SHALL HAVE NO DEBT OR OBLIGATION TO ANY       1,099        

CONTRIBUTOR, BENEFICIARY, OR ANY OTHER PERSON AS A RESULT OF THE   1,100        

ESTABLISHMENT OF THE PROGRAM, AND THE STATE ASSUMES NO RISK OR     1,101        

LIABILITY FOR FUNDS INVESTED IN THE VARIABLE COLLEGE SAVINGS       1,102        

PROGRAM.                                                                        

      (4) INFORMATIONAL MATERIALS ABOUT THE VARIABLE COLLEGE       1,104        

                                                          27     


                                                                 
SAVINGS PROGRAM PREPARED BY THE AUTHORITY OR ITS AGENTS AND        1,105        

PROVIDED TO PROSPECTIVE CONTRIBUTORS SHALL STATE CLEARLY THE       1,106        

INFORMATION SET FORTH IN DIVISION (C) OF THIS SECTION.             1,107        

      Sec. 3334.19.  (A)  THE OHIO TUITION TRUST AUTHORITY SHALL   1,110        

ADOPT AN INVESTMENT PLAN THAT SETS FORTH INVESTMENT POLICIES AND   1,111        

GUIDELINES TO BE UTILIZED IN ADMINISTERING THE PROGRAM.  EXCEPT    1,112        

AS PROVIDED IN SECTION 3334.20 OF THE REVISED CODE, THE AUTHORITY  1,113        

SHALL CONTRACT WITH ONE OR MORE INSURANCE COMPANIES, BANKS, OR     1,114        

OTHER FINANCIAL INSTITUTIONS TO ACT AS ITS INVESTMENT AGENTS AND   1,115        

TO PROVIDE SUCH SERVICES AS THE AUTHORITY CONSIDERS APPROPRIATE    1,116        

TO THE INVESTMENT PLAN, INCLUDING:                                 1,117        

      (1)  PURCHASE, CONTROL, AND SAFEKEEPING OF ASSETS;           1,119        

      (2)  RECORD KEEPING AND ACCOUNTING FOR INDIVIDUAL ACCOUNTS   1,121        

AND FOR THE PROGRAM AS A WHOLE;                                    1,122        

      (3)  PROVISION OF CONSOLIDATED STATEMENTS OF ACCOUNT.        1,125        

      (B)  THE AUTHORITY OR ITS INVESTMENT AGENTS SHALL MAINTAIN   1,127        

A SEPARATE ACCOUNT FOR THE BENEFICIARY OF EACH CONTRACT ENTERED    1,128        

INTO UNDER THE VARIABLE COLLEGE SAVINGS PROGRAM.  IF A             1,129        

BENEFICIARY HAS MORE THAN ONE SUCH ACCOUNT, THE AUTHORITY OR ITS   1,130        

AGENTS SHALL TRACK TOTAL CONTRIBUTIONS AND EARNINGS AND PROVIDE A  1,131        

CONSOLIDATED SYSTEM OF ACCOUNT DISTRIBUTIONS TO INSTITUTIONS OF    1,132        

HIGHER EDUCATION.                                                               

      (C)  THE AUTHORITY OR ITS AGENTS MAY PLACE ASSETS OF THE     1,134        

PROGRAM IN SAVINGS ACCOUNTS AND MAY PURCHASE FIXED OR VARIABLE     1,135        

LIFE INSURANCE OR ANNUITY CONTRACTS, SECURITIES, EVIDENCE OF       1,137        

INDEBTEDNESS, OR OTHER INVESTMENT PRODUCTS PURSUANT TO THE         1,138        

INVESTMENT PLAN.                                                                

      (D)  CONTRIBUTORS SHALL NOT DIRECT THE INVESTMENT OF THEIR   1,140        

CONTRIBUTIONS UNDER THE INVESTMENT PLAN.  THE AUTHORITY SHALL      1,141        

IMPOSE OTHER LIMITS ON CONTRIBUTORS' INVESTMENT DISCRETION AS      1,142        

REQUIRED UNDER SECTION 529 OF THE INTERNAL REVENUE CODE.           1,143        

      (E)  THE INVESTMENT AGENTS WITH WHICH THE AUTHORITY          1,145        

CONTRACTS SHALL DISCHARGE THEIR DUTIES WITH RESPECT TO PROGRAM     1,146        

FUNDS WITH THE CARE AND DILIGENCE THAT A PRUDENT PERSON FAMILIAR   1,148        

                                                          28     


                                                                 
WITH SUCH MATTERS AND WITH THE CHARACTER AND AIMS OF THE PROGRAM   1,149        

WOULD USE.                                                                      

      (F)  THE ASSETS OF THE PROGRAM SHALL BE PRESERVED,           1,151        

INVESTED, AND EXPENDED SOLELY FOR THE PURPOSES OF THIS CHAPTER     1,152        

AND SHALL NOT BE LOANED OR OTHERWISE TRANSFERRED OR USED BY THE    1,154        

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

TO PROHIBIT THE INVESTMENT AGENTS OF THE AUTHORITY FROM            1,155        

INVESTING, BY PURCHASE OR OTHERWISE, IN BONDS, NOTES, OR OTHER     1,157        

OBLIGATIONS OF THE STATE OR ANY AGENCY OR INSTRUMENTALITY OF THE   1,158        

STATE.  UNLESS OTHERWISE SPECIFIED BY THE AUTHORITY, ASSETS OF     1,159        

THE PROGRAM SHALL BE EXPENDED IN THE FOLLOWING ORDER OF PRIORITY:  1,160        

      (1)  TO MAKE PAYMENTS ON BEHALF OF BENEFICIARIES;            1,162        

      (2)  TO MAKE REFUNDS UPON TERMINATION OF VARIABLE COLLEGE    1,164        

SAVINGS PROGRAM CONTRACTS;                                         1,165        

      (3)  TO PAY THE COSTS OF PROGRAM ADMINISTRATION AND          1,167        

OPERATIONS.                                                                     

      (G)  NO RECORDS OF THE AUTHORITY INDICATING THE IDENTITY OF  1,169        

CONTRIBUTORS AND BENEFICIARIES UNDER THE PROGRAM OR AMOUNTS        1,170        

CONTRIBUTED TO, EARNED BY, OR DISTRIBUTED FROM PROGRAM ACCOUNTS    1,171        

ARE PUBLIC RECORDS WITHIN THE MEANING OF SECTION 149.43 OF THE     1,172        

REVISED CODE.                                                                   

      Sec. 3334.20.  (A)  AS USED IN THIS SECTION, "STATE AGENCY"  1,174        

MEANS EVERY DEPARTMENT, BUREAU, BOARD, COMMISSION, OFFICE, OR      1,176        

OTHER ORGANIZED BODY ESTABLISHED BY THE CONSTITUTION OR LAWS OF    1,177        

THIS STATE FOR THE EXERCISE OF STATE GOVERNMENT.                   1,178        

      (B)  IF A CONDITION ARISES CONCERNING THE INVESTMENT OF      1,180        

FUNDS RECEIVED UNDER THE VARIABLE COLLEGE SAVINGS PROGRAM AND      1,181        

REQUIRING AN INTERIM PERIOD FOR INVESTMENT OF PROGRAM FUNDS,       1,182        

WHICH CONDITION IS DETERMINED PURSUANT TO DIVISION (D) OF THIS     1,183        

SECTION, THE OHIO TUITION TRUST AUTHORITY SHALL CHOOSE THE         1,185        

TREASURER OF STATE, A STATE AGENCY HAVING INVESTMENT AUTHORITY,    1,186        

OR AN INVESTMENT AGENT UNDER CONTRACT WITH THE AUTHORITY TO        1,187        

INVEST PROGRAM FUNDS PURSUANT TO THE INVESTMENT PLAN ESTABLISHED   1,188        

UNDER DIVISION (A) OF SECTION 3334.19 OF THE REVISED CODE.  THE    1,189        

                                                          29     


                                                                 
TREASURER OF STATE, STATE AGENCY, OR INVESTMENT AGENT CHOSEN BY    1,190        

THE AUTHORITY PURSUANT TO THIS DIVISION SHALL BE SUBJECT TO THE    1,191        

REQUIREMENTS AND CONDITIONS THAT APPLY TO INVESTMENT AGENTS        1,192        

SPECIFIED IN SECTION 3334.19 OF THE REVISED CODE.                  1,193        

      (C)  THE AUTHORITY SHALL BE THE TRUSTEE OF THE PROGRAM.      1,195        

DURING THE INTERIM PERIOD, THE AUTHORITY SHALL RECEIVE AND HOLD    1,196        

ALL PAYMENTS, DEPOSITS, AND CONTRIBUTIONS, AS WELL AS GIFTS,       1,197        

BEQUESTS, ENDOWMENTS, AND FEDERAL, STATE, OR LOCAL GRANTS AND ANY  1,198        

FUNDS FROM ANY OTHER SOURCE, PUBLIC OR PRIVATE, AND ALL EARNINGS,  1,199        

UNTIL DISBURSED TO PAY TUITION OR OTHER HIGHER EDUCATION EXPENSES  1,200        

OR REFUNDS PURSUANT TO COLLEGE SAVINGS PLANS CONTRACTS.  THE       1,201        

AUTHORITY SHALL KEEP SUCH FUNDS SEGREGATED FROM ALL OTHER ASSETS   1,202        

OF THE AUTHORITY.                                                  1,203        

      (D)  THE AUTHORITY SHALL ADOPT RULES UNDER SECTION 111.15    1,205        

OF THE REVISED CODE DEFINING THE CONDITIONS UNDER WHICH AN         1,207        

INTERIM INVESTMENT PERIOD IS REQUIRED AND THIS SECTION APPLIES.    1,208        

THE RULES SHALL INCLUDE ANY CONDITION REQUIRING THE TERMINATION    1,209        

OF THE INTERIM PERIOD AND THE AUTHORITY TO CONTRACT WITH           1,210        

ALTERNATIVE INVESTMENT AGENTS PURSUANT TO SECTION 3334.19 OF THE   1,211        

REVISED CODE AND ANY OTHER REQUIREMENTS THAT APPLY DURING THE      1,213        

INTERIM INVESTMENT PERIOD.                                                      

      (E)  WHEN THE INTERIM PERIOD FOR INVESTMENT OF PROGRAM       1,215        

FUNDS TERMINATES, THE INVESTMENT AGENTS SELECTED PURSUANT TO       1,216        

SECTION 3334.19 OF THE REVISED CODE FOR THE INVESTMENT OF PROGRAM  1,217        

FUNDS SHALL HAVE THE SOLE AUTHORITY TO INVEST PROGRAM FUNDS        1,218        

PURSUANT TO THE INVESTMENT PLAN ESTABLISHED UNDER DIVISION (A) OF  1,219        

THAT SECTION AND SHALL BE SUBJECT TO THAT SECTION.                 1,220        

      Sec. 3334.21.  THE VARIABLE COLLEGE SAVINGS PROGRAM MAY BE   1,222        

TERMINATED BY STATUTE OR UPON THE DETERMINATION OF THE OHIO        1,223        

TUITION TRUST AUTHORITY THAT THE PROGRAM IS NOT FINANCIALLY        1,224        

FEASIBLE.  UPON TERMINATION, ALL AMOUNTS HELD IN PROGRAM ACCOUNTS  1,225        

SHALL BE RETURNED TO ACCOUNT OWNERS, TO THE EXTENT POSSIBLE, AND   1,226        

ANY UNCLAIMED ASSETS IN THE PROGRAM SHALL BE TRANSFERRED TO THE    1,227        

UNCLAIMED FUNDS TRUST FUND AND DISPOSED OF IN ACCORDANCE WITH      1,228        

                                                          30     


                                                                 
SECTION 169.05 OF THE REVISED CODE.                                             

      Sec. 3366.01.  As used in this chapter, the following words  1,238        

and terms have the following meanings unless the context           1,239        

indicates a different meaning or intent:                                        

      (A)  "Bond proceedings" means the order, trust, agreement,   1,242        

indenture and other agreements, or amendments and supplements to   1,243        

the foregoing, or any one or more or combination thereof,          1,244        

authorizing or providing for the terms and conditions applicable   1,245        

to, or providing for the issuance, security, or liquidity of,      1,246        

obligations and the provisions contained in such obligations.      1,247        

      (B)  "Bond service charges" means principal, including       1,250        

mandatory sinking fund requirements for retirement of              1,251        

obligations, and interest, and redemption premium, if any,         1,252        

required to be paid on obligations.                                             

      (C)  "Bond service fund" means the applicable fund and       1,255        

accounts therein created in the bond proceedings for and pledged   1,256        

to the payment of bond service charges, including all moneys and   1,257        

investments, and earnings from investments, credited and to be     1,258        

credited thereto.                                                               

      (D)  "Costs of attendance" means all costs of a student      1,261        

incurred in connection with a program of study at an eligible      1,262        

institution, as determined by the institution, including tuition;  1,263        

instructional fees; room and board; books, computers, and          1,264        

supplies; and other related fees, charges, and expenses.           1,265        

      (E)  "Designated nonprofit corporation ADMINISTRATOR"        1,268        

means, WITH RESPECT TO ALL OBLIGATIONS ISSUED PRIOR TO SEPTEMBER   1,269        

1, 1999, AND TO ALL NONFEDERAL EDUCATION LOANS, the nonprofit      1,271        

corporation designated ON NOVEMBER 10, 1992, under division (D)    1,273        

of section 3351.07 of the Revised Code to operate exclusively for  1,274        

charitable and educational purposes by expanding access to higher  1,275        

education financing programs for students and families in need of  1,276        

student financial aid.  FOR ALL OTHER PURPOSES, "DESIGNATED        1,278        

ADMINISTRATOR" MEANS THE OHIO CORPORATION THAT IS A SUBSIDIARY OF  1,279        

THE NONPROFIT CORPORATION DESIGNATED UNDER DIVISION (D) OF         1,280        

                                                          31     


                                                                 
SECTION 3351.07 OF THE REVISED CODE AND THAT HAS AGREED TO ENTER   1,282        

INTO AN ADMINISTRATION AGREEMENT WITH THE ISSUING AUTHORITY AND    1,283        

THE DIRECTOR OF DEVELOPMENT, OR ANY OTHER PERSON THAT ENTERS INTO  1,284        

AN ADMINISTRATION AGREEMENT WITH THE ISSUING AUTHORITY AND THE     1,285        

DIRECTOR OF DEVELOPMENT.                                           1,286        

      (F)  "Education loan" means a loan made by an eligible       1,289        

lender pursuant to the policy guidelines to or for the benefit of  1,291        

a student for the purpose of financing part or all of the                       

student's costs of attendance.                                     1,292        

      (G)  "Eligible borrower" means any of the following:         1,295        

      (1)  Individuals who are residents of the state, and who     1,297        

are attending and are in good standing in, or who have been        1,298        

accepted for attendance at, any eligible institution located in    1,299        

this state or elsewhere, on a part-time or full-time basis, to     1,300        

pursue an associate, baccalaureate, or advanced degree or a        1,301        

nursing diploma;                                                   1,302        

      (2)  Individuals who reside outside the state and who have   1,305        

been accepted for attendance at, or who are attending and are in   1,306        

good standing in, any eligible institution located in this state,  1,307        

on a part-time or full-time basis, to pursue an associate,                      

baccalaureate, or advanced degree or a nursing diploma;            1,308        

      (3)  Individuals who are parents or legal guardians of, or   1,311        

other persons, as set forth in the policy guidelines, borrowing    1,312        

under an education loan for the benefit of individuals meeting     1,313        

requirements set forth in division (G)(1) or (2) of this section,  1,314        

in order to assist them in paying costs of attendance.             1,315        

      (H)(1)  "Eligible institution" means an institution          1,318        

described in any of divisions (H)(1)(a), (b), or (c) of this       1,319        

section that satisfies all of the requirements set forth in        1,321        

divisions (H)(2), (3), and (4) of this section.                    1,322        

      (a)  The institution is a state-assisted post-secondary      1,325        

educational institution within this state.                                      

      (b)  The institution is a nonprofit institution within this  1,328        

state having a certificate of authorization from the Ohio board    1,329        

                                                          32     


                                                                 
of regents pursuant to Chapter 1713. of the Revised Code.          1,330        

      (c)  The institution is a post-secondary educational         1,333        

institution similar to one described in division (H)(1)(a) or (b)  1,334        

of this section that is located outside this state and that is     1,335        

similarly approved by the appropriate agency of that state.        1,336        

      (2)  The institution is accredited by the appropriate        1,338        

regional and, when appropriate, professional accrediting           1,339        

associations within whose jurisdiction it falls.                   1,340        

      (3)  The institution satisfies the eligibility requirements  1,343        

for participation in the federal family education loan program     1,344        

authorized under Title IV, Part B, of the "Higher Education Act    1,346        

of 1965," 20 U.S.C.A. 1071 et seq., as amended, as long as that    1,348        

program remains in existence.                                                   

      (4)  The institution satisfies the other conditions set      1,350        

forth in the policy guidelines.                                    1,351        

      (I)  "Eligible lender" means, WITH RESPECT TO LENDERS        1,353        

MAKING NONFEDERAL EDUCATION LOANS, a bank, national banking        1,354        

association, savings bank, savings and loan association, or        1,355        

credit union having an office in this state that satisfies the     1,356        

criteria for eligible lenders established pursuant to the policy   1,357        

guidelines.  WITH RESPECT TO LENDERS MAKING FEDERAL EDUCATION      1,358        

LOANS, "ELIGIBLE LENDER" MEANS ANY PERSON THAT IS PERMITTED TO     1,360        

MAKE LOANS UNDER THE FEDERAL FAMILY EDUCATION LOAN PROGRAM         1,361        

AUTHORIZED UNDER TITLE IV, PART B, OF THE "HIGHER EDUCATION ACT    1,364        

OF 1965," 20 U.S.C.A. 1071 ET SEQ., AS AMENDED; THAT HAS AN        1,365        

OFFICE IN THIS STATE; AND THAT SATISFIES THE CRITERIA FOR                       

ELIGIBLE LENDERS ESTABLISHED PURSUANT TO THE POLICY GUIDELINES.    1,366        

      (J)  "FEDERAL EDUCATION LOAN" MEANS AN EDUCATION LOAN THAT   1,368        

IS ORIGINATED IN COMPLIANCE WITH THE FEDERAL FAMILY EDUCATION      1,369        

LOAN PROGRAM AUTHORIZED UNDER TITLE IV, PART B, OF THE "HIGHER     1,374        

EDUCATION ACT OF 1965," 20 U.S.C.A. 1071 ET SEQ., AS AMENDED.      1,375        

      (J)(K)  "Governmental agency" means the state and any state  1,378        

department, division, commission, institution, or authority; the   1,379        

United States or any agency thereof; or any agency, commission,    1,380        

                                                          33     


                                                                 
or authority established pursuant to an interstate compact or      1,381        

agreement; or any combination of the foregoing.                    1,382        

      (K)(L)  "Issuing authority" means the treasurer of state,    1,385        

or the officer who by law performs the functions of the treasurer  1,386        

of state.                                                                       

      (L)(M)  "NONFEDERAL EDUCATION LOAN" MEANS ANY EDUCATION      1,388        

LOAN THAT IS NOT A FEDERAL EDUCATION LOAN.                         1,390        

      (N)  "Obligations" means the bonds, notes, or securities of  1,393        

this state issued by the issuing authority pursuant to this        1,394        

chapter.                                                                        

      (M)(O)  "Person" means any individual, corporation,          1,397        

business trust, estate, trust, partnership, or association, any    1,398        

federal, state, interstate, regional, or local governmental        1,399        

agency, any subdivision of the state, or any combination of        1,400        

these.                                                                          

      (N)(P)  "Pledged receipts" means, to the extent the          1,403        

following are pledged by the bond proceedings for the payment of   1,404        

bond service charges:  all receipts representing moneys accruing   1,405        

from or in connection with the repayment of education loans,       1,406        

including interest and payments from any guarantee or insurance    1,407        

in respect to such education loans; accrued interest received      1,408        

from the sale of obligations; the balances in the special funds;   1,409        

income from the investment of the special funds; all right,        1,410        

title, or interest of the state in any education loans and any     1,411        

guarantees or insurance in respect thereof; all right, title, and  1,412        

interest of the STATE AND THE designated nonprofit corporation     1,414        

ADMINISTRATOR in the education loans and any guarantees or         1,416        

insurance in respect thereof, and any money representing the                    

proceeds of obligations or any income from or interest on those    1,417        

proceeds; or any other gifts, grants, donations, and pledges and   1,418        

any income and receipts therefrom, available and pledged for the   1,419        

payment of bond service charges.                                   1,420        

      (O)(Q)  "Policy guidelines" means the rules adopted          1,423        

pursuant to division (A) of section 3366.03 of the Revised Code.   1,424        

                                                          34     


                                                                 
      (P)(R)  "Proceeds loan" means the transfer, pursuant to a    1,427        

loan agreement or agency agreement, of the proceeds of the         1,428        

obligations, or the deposit of the proceeds of the obligations     1,429        

with a trustee in trust under a trust agreement, indenture, or     1,430        

other trust document under the bond proceedings pending their      1,431        

disbursement for the purposes authorized by this chapter.          1,432        

      (Q)(S)  "Resident" means any student who would qualify as a  1,435        

resident of this state for state subsidy and tuition surcharge     1,436        

purposes under rules adopted by the Ohio board of regents under    1,437        

section 3333.31 of the Revised Code.                               1,438        

      (R)(T)  "Special funds" or "funds" means the bond service    1,441        

fund and any other funds, including reserve funds, created under   1,442        

the bond proceedings, including all moneys and investments, and    1,443        

earnings from investment, credited and to be credited thereto.     1,444        

      (S)(U)  "Student" means an individual described in division  1,447        

(G)(1) or (2) of this section who meets requirements established   1,448        

under the policy guidelines.  "Student" includes dependent and     1,449        

independent undergraduate, graduate, and professional students.    1,450        

      (T)(V)  "Subdivision" has the same meaning as in division    1,453        

(MM) of section 133.01 of the Revised Code.                        1,454        

      Sec. 3366.03.  (A)  In furtherance of the public policy and  1,464        

purpose set forth in section 3366.02 of the Revised Code and to    1,465        

implement that purpose, the director of development, with the      1,466        

approval of the issuing authority, shall adopt, amend, or rescind  1,467        

rules, pursuant to Chapter 119. of the Revised Code, establishing  1,468        

such policy guidelines as the director considers necessary or      1,469        

appropriate to provide for creating a secondary market for         1,470        

education loans as authorized by this chapter.  The policy         1,471        

guidelines shall include such provisions as the director           1,472        

considers appropriate to further the public policy and purpose     1,473        

set forth in section 3366.02 of the Revised Code.                  1,475        

      (B)  The director of development or the issuing authority    1,478        

or both may:                                                                    

      (1)  Enter into agreements with the ANY designated           1,480        

                                                          35     


                                                                 
nonprofit corporation ADMINISTRATOR to provide for the proceeds    1,481        

loan for the purchase of education loans on the secondary market;  1,483        

      (2)  Enter into agreements with the ANY designated           1,485        

nonprofit corporation ADMINISTRATOR to provide for  stimulating    1,486        

the making of education loans through the the acquisition of such  1,488        

loans, in accordance with the policy guidelines; and               1,489        

      (3)  Do all other acts and enter into contracts and execute  1,492        

all instruments necessary or appropriate to carry out the                       

provisions of this chapter.                                        1,493        

      (C)   All expenses and obligations incurred by the issuing   1,496        

authority or the director of development in carrying out duties    1,497        

and in exercising powers under this chapter shall be payable       1,498        

solely from, as appropriate, pledged receipts, moneys from the     1,499        

sale of obligations, or any amounts contributed by the designated  1,500        

nonprofit corporation ADMINISTRATOR.  This chapter does not        1,501        

authorize the issuing authority to incur debt or bonded            1,502        

indebtedness of the state, or to obligate or pledge any moneys     1,503        

other than pledged receipts for the payment of any obligations.    1,504        

      (D)  The designated nonprofit corporation ADMINISTRATOR,     1,506        

subject to the applicable provisions of this chapter, shall        1,507        

purchase education loans from eligible lenders directly or         1,508        

indirectly, with moneys loaned or otherwise provided to it under   1,510        

this chapter from the proceeds of obligations, which education     1,511        

loans are used by and for students for paying costs of attendance  1,513        

at eligible institutions.                                                       

      (E)  In accordance with the policy guidelines, the           1,516        

designated nonprofit corporation ADMINISTRATOR shall do all of     1,517        

the following:                                                     1,518        

      (1)  Specify the terms of and procedures for making,         1,520        

selling, purchasing, servicing, and collecting those education     1,521        

loans eligible for purchase under the guidelines;                  1,522        

      (2)  Take such actions as may be necessary or appropriate    1,525        

to establish the terms of, purchase, service or otherwise          1,526        

administer, and collect any education loan;                                     

                                                          36     


                                                                 
      (3)  With respect to those loans acquired pursuant to this   1,528        

chapter, establish the fees including, without limitation,         1,529        

origination and loan fees; charges; rates of interest; times of    1,530        

payment of interest and principal; late charges; aggregate         1,531        

amounts of education loans to be issued per year and in total;     1,532        

eligibility and credit criteria of eligible borrowers;             1,533        

refinancing or consolidation provisions; criteria for              1,535        

participation by eligible lenders; criteria for allocating the     1,536        

distribution of education loans among students attending or        1,537        

planning to attend different eligible institutions; terms of       1,538        

sales and purchases of education loans; and other terms,           1,539        

conditions, and provisions of and security for education loans.    1,540        

      The designated nonprofit corporation ADMINISTRATOR shall     1,542        

not purchase any education loan unless the loan conforms to the    1,544        

policy guidelines.                                                 1,545        

      (F)  If the director of development determines that          1,547        

education loans are not being made in the amount or manner         1,548        

anticipated, the designated nonprofit corporation ADMINISTRATOR,   1,549        

with the consent of the director, may enter into special           1,551        

arrangements with certain eligible lenders pursuant to guidelines  1,552        

adopted under this chapter to stimulate the provision of           1,553        

education loans.                                                                

      (G)  The designated nonprofit corporation ADMINISTRATOR may  1,556        

establish additional procedures and set other terms and            1,558        

conditions not inconsistent with the policy guidelines as may be   1,559        

necessary or appropriate in connection with the program            1,560        

authorized under this chapter.                                                  

      (H)  At least annually by a date specified by the director   1,563        

of development, the designated nonprofit corporation                            

ADMINISTRATOR shall provide to the issuing authority and the       1,565        

director of development reports on the use of the proceeds of      1,566        

obligations.                                                                    

      (I)  FOR PURPOSES OF THIS CHAPTER, ANY DESIGNATED            1,568        

ADMINISTRATOR OTHER THAN THE NONPROFIT CORPORATION DESIGNATED      1,569        

                                                          37     


                                                                 
UNDER DIVISION (D) OF SECTION 3351.07 OF THE REVISED CODE SHALL    1,570        

BE A PERSON THAT MAINTAINS ITS PRINCIPAL PLACE OF BUSINESS IN THE  1,572        

STATE AND THAT HAS AS ITS PRINCIPAL BUSINESS THE MAKING,           1,573        

PURCHASING, HOLDING, OR SELLING OF LOANS MADE TO FINANCE           1,574        

INDIVIDUALS' COST OF POST-SECONDARY EDUCATION.                     1,575        

      Sec. 3366.04.  (A)  The issuing authority may issue          1,585        

obligations under this section to provide money to make proceeds   1,586        

loans to the designated nonprofit corporation ADMINISTRATOR for    1,587        

the purpose of acquiring education loans, or needed for            1,588        

capitalized interest, for funding reserves, and for paying costs   1,589        

and expenses incurred in connection with the issuance, carrying,   1,590        

securing, paying, redeeming, or retirement of the obligations or   1,591        

any obligations refunded thereby, including payment of costs and   1,592        

expenses relating to letters of credit, lines of credit,           1,593        

insurance, put agreements, standby purchase agreements, indexing,  1,594        

marketing, remarketing and administrative arrangements, interest   1,595        

swap or hedging agreements, and any other credit enhancement       1,596        

facility as defined in division (H) of section 133.01 of the       1,597        

Revised Code, liquidity, remarketing, renewal, or refunding        1,598        

arrangements, all of which are authorized by this section.  The    1,599        

proceeds thereof shall, as provided in the bond proceedings, be    1,600        

loaned, or otherwise made available as a proceeds loan, to the     1,601        

designated nonprofit corporation ADMINISTRATOR.  The issuing       1,602        

authority may appoint trustees, paying agents, and transfer        1,604        

agents and may retain the services of financial advisors,          1,605        

accounting experts, and attorneys, and retain or contract for the  1,606        

services of marketing, remarketing, indexing, and administrative   1,607        

agents, other consultants, and independent contractors, including  1,608        

printing services, as are necessary to carry out the provisions    1,609        

of this section.  The costs of such services are allowable costs   1,610        

payable from the proceeds of such obligations.                     1,611        

      (B)  The holders or owners of obligations shall have no      1,614        

right to have taxes levied by the general assembly, or any moneys  1,615        

other than pledged receipts obligated or pledged, and any moneys   1,616        

                                                          38     


                                                                 
other than pledged receipts shall not be obligated or pledged,     1,617        

for the payment of bond service charges.  The obligations are not  1,618        

debts of the state, bond service charges are payable solely from   1,619        

the revenues and funds pledged as pledged receipts for their       1,620        

payment, and the right of such holders and owners to payment of    1,621        

bond service charges is limited to pledged receipts as provided    1,622        

in the bond proceedings, and each such obligation shall bear on    1,623        

its face a statement to that effect.   No money, including money   1,624        

from the general revenue fund, shall be appropriated, obligated,   1,625        

or used to pay bond service charges or the costs incurred in the   1,626        

administration of this chapter, other than pledged receipts.       1,627        

      (C)  Obligations shall be authorized by order of the         1,630        

issuing authority at the request of the designated nonprofit                    

corporation ADMINISTRATOR and with the approval of the director    1,631        

of development, and the bond proceedings shall provide for the     1,633        

purpose thereof and the principal amount or amounts, and shall     1,634        

provide for or authorize the manner for determining the principal  1,635        

maturity or maturities, the interest rate or rates or the maximum  1,636        

interest rate, the date of the obligations and the dates of        1,637        

payment of interest thereon, their denomination, and the           1,638        

establishment within or outside this state of a place or places    1,639        

of payment of bond service charges.  Sections 9.98 to 9.983 of     1,640        

the Revised Code apply to obligations issued under this section.   1,642        

The purpose of such obligations may be stated in the bond          1,643        

proceedings in terms describing the general purpose to be served.  1,644        

The bond proceedings shall also provide, subject to the            1,645        

provisions of any other applicable bond proceedings, for the                    

pledge of, and the granting of a security interest in, all, or     1,646        

such part as the issuing authority may determine, of the pledged   1,647        

receipts to the payment of bond service charges, which pledge may  1,648        

be made and security interest granted, subject to the provisions   1,649        

of any applicable prior bond proceedings, either prior to or on a  1,650        

parity with or subordinate to other expenses, claims, or           1,651        

payments, and may be made or granted to secure obligations senior  1,652        

                                                          39     


                                                                 
or subordinate to, or on a parity with, obligations theretofore    1,653        

or thereafter issued, if and to the extent provided in the bond    1,654        

proceedings.  The pledged receipts so pledged or subject to a      1,655        

security interest and thereafter received by the issuing           1,656        

authority or the designated nonprofit corporation ADMINISTRATOR    1,657        

on behalf of the issuing authority or otherwise received are       1,659        

immediately subject to such pledge and security interest without   1,661        

any physical delivery thereof or further act, and such pledge and  1,662        

security interest are valid, binding, and enforceable against all  1,663        

parties having claims of any kind against the state or any         1,664        

governmental agency, or against the designated nonprofit           1,665        

corporation ADMINISTRATOR, whether or not such parties have        1,667        

notice thereof, and shall create a perfected security interest     1,668        

for all purposes of Chapter 1309. of the Revised Code, without     1,669        

the necessity for separation or delivery or possession of the      1,670        

pledged receipts, or for the filing or recording of the bond       1,671        

proceedings by which such pledge and security interest are         1,672        

created or any certificate, statement, or other document with      1,673        

respect thereto; and the pledge of such pledged receipts and the   1,674        

security interest are effective and the money therefrom and        1,675        

thereof may be applied to the purposes for which pledged without   1,676        

necessity for any act of appropriation.  Every pledge made and     1,677        

security interest granted, and every covenant and agreement made   1,678        

with respect thereto in the bond proceedings may therein be        1,679        

extended to the benefit of the owners and holders of obligations   1,680        

authorized by this section, and to any trustee therefor, for the   1,681        

further security of the payment of the bond service charges.       1,682        

      (D)  The bond proceedings may contain additional provisions  1,685        

as to:                                                                          

      (1)  The redemption of obligations prior to maturity at      1,687        

such price or prices and under such terms and conditions as are    1,688        

provided in the bond proceedings;                                  1,689        

      (2)  Other terms of the obligations;                         1,691        

      (3)  Limitations on the issuance of additional obligations;  1,694        

                                                          40     


                                                                 
      (4)  The terms of any trust agreement or indenture securing  1,697        

the obligations or under which the same may be issued;                          

      (5)  The investment of the proceeds of obligations and       1,699        

amounts on deposit in the special funds;                           1,700        

      (6)  Any or every provision of the bond proceedings being    1,703        

binding upon such officer, board, commission, authority, agency,   1,704        

department, or other person or body as may from time to time have  1,705        

the authority under law to take such actions as may be necessary   1,706        

to perform all or any part of the duty required by such                         

provision;                                                         1,707        

      (7)  Any provision that may be made in a trust agreement or  1,710        

indenture;                                                                      

      (8)  Provisions for the use of the proceeds of repayment of  1,713        

education loans to acquire additional education loans;                          

      (9)  Any other or additional agreements with the holders of  1,716        

the obligations, the trustee therefor, or the designated                        

nonprofit corporation ADMINISTRATOR, relating to the obligations   1,717        

or the security therefor, including the assignment of security     1,719        

obtained or to be obtained for education loans.                    1,720        

      (E)  The obligations and any coupons pertaining to           1,723        

obligations shall be in the form specified in the bond                          

proceedings and shall be signed by or bear the facsimile           1,724        

signature of the issuing authority.  Any obligations or coupons    1,725        

may be executed by the person who, on the date of execution, is    1,726        

the proper issuing authority although on the date of such bonds    1,727        

or coupons such person was not the issuing authority.  In case     1,728        

the issuing authority whose signature or a facsimile of whose      1,729        

signature appears on any such obligation or coupon ceases to be    1,730        

the issuing authority before delivery thereof, such signature or   1,731        

facsimile is nevertheless valid and sufficient for all purposes    1,732        

as if that official had remained the issuing authority until such  1,733        

delivery.                                                          1,734        

      (F)  All obligations are negotiable instruments and          1,737        

securities under Chapter 1308. of the Revised Code, subject to     1,738        

                                                          41     


                                                                 
the provisions of the bond proceedings as to registration.  The    1,739        

obligations may be issued in coupon or in registered form, or      1,740        

both, as the issuing authority determines.   Provision may be      1,741        

made for the registration of any obligations with coupons          1,742        

attached thereto as to principal alone or as to both principal     1,743        

and interest, their exchange for obligations so registered, and    1,744        

for the conversion or reconversion into obligations with coupons   1,745        

attached thereto of any obligations registered as to both          1,746        

principal and interest, and for reasonable charges for such        1,747        

registration, exchange, conversion, and reconversion.              1,748        

      (G)  Obligations may be sold at public sale or at private    1,751        

sale, as determined by the issuing authority in the bond           1,752        

proceedings.                                                                    

      (H)  Pending preparation of definitive obligations, the      1,755        

issuing authority may issue interim receipts or certificates       1,756        

which shall be exchanged for such definitive obligations.          1,757        

      (I)  In the discretion of the issuing authority,             1,759        

obligations may be secured additionally by a trust agreement or    1,760        

indenture between the issuing authority and a corporate trustee    1,761        

and, if so provided for in the bond proceedings, any other         1,762        

necessary or appropriate party.  Any such trustee shall be a       1,763        

trust company, bank, or national banking association authorized    1,764        

to exercise trust powers within the state.  Any such agreement or  1,765        

indenture may contain the order authorizing the issuance of the    1,766        

obligations, any provisions that may be contained in any bond      1,767        

proceedings, and other provisions which are customary or           1,768        

appropriate in an agreement or indenture of such type, including,  1,769        

but not limited to:                                                1,770        

      (1)  Maintenance of each pledge, security interest, and      1,772        

trust agreement, indenture, or other instrument comprising part    1,773        

of the bond proceedings until the bond service charges on the      1,774        

obligations secured thereby have been fully paid, or provision     1,775        

therefor has been made in accordance with the bond proceedings;    1,776        

      (2)  In the event of default in any payments required to be  1,779        

                                                          42     


                                                                 
made by the bond proceedings, or any other agreement of the                     

issuing authority made as a part of the contract under which the   1,780        

obligations were issued, enforcement of such payments or           1,781        

agreement by mandamus, the appointment of a receiver, suit in      1,782        

equity, action at law, or any combination of the foregoing;        1,783        

      (3)  The rights and remedies of the holders of obligations   1,786        

and of the trustee, and provisions for protecting and enforcing    1,787        

them, including limitations on rights of individual holders of     1,788        

obligations;                                                                    

      (4)  The replacement of any obligations that become          1,790        

mutilated or are destroyed, lost, or stolen;                       1,791        

      (5)  Such other provisions as the trustee and the issuing    1,794        

authority agree upon, including limitations, conditions, or        1,795        

qualifications relating to the education loans that may be made    1,796        

or acquired pursuant to the trust agreement or indenture.                       

      (J)  Any holder of obligations or a trustee under the bond   1,799        

proceedings, except to the extent that rights are restricted by    1,800        

the bond proceedings, may by any suitable form of legal            1,801        

proceedings, protect and enforce any rights under the laws of      1,802        

this state or granted by such bond proceedings.  Such rights                    

include the right to compel the performance of all duties of the   1,803        

issuing authority or the director of development required by this  1,804        

chapter or the bond proceedings; to enjoin unlawful activities;    1,805        

and, in the event of default with respect to the payment of any    1,806        

bond service charges on any obligations or in the performance of   1,807        

any covenant or agreement on the part of the issuing authority or  1,808        

the director of development in the bond proceedings, to apply to   1,809        

a court having jurisdiction to appoint a receiver to receive and   1,810        

administer the pledged receipts pledged to the payment of the      1,811        

bond service charges on such obligations or which are the subject  1,812        

of the covenant or agreement, with full power to pay and to        1,813        

provide for payment of bond service charges on such obligations    1,814        

and with such powers, subject to the direction of the court, as    1,815        

are accorded receivers in general equity cases, excluding any      1,816        

                                                          43     


                                                                 
power to pledge revenues or receipts or other income or moneys,    1,817        

other than pledged receipts, and excluding any power to take       1,818        

possession of, or cause the sale or otherwise dispose of, any      1,819        

property other than the pledged receipts.                          1,820        

      Each duty of the issuing authority, of each governmental     1,822        

agency including the director of development, of the designated    1,823        

nonprofit corporation ADMINISTRATOR, and of any of the officers,   1,824        

members, or employees of any of the foregoing, undertaken          1,826        

pursuant to the bond proceedings or any agreement made under       1,827        

authority of this chapter, and each duty in every agreement by or  1,828        

with the issuing authority under this chapter, each governmental   1,829        

agency including the director of development, and the designated   1,830        

nonprofit corporation ADMINISTRATOR, is hereby established as a    1,831        

duty of the issuing authority, the governmental agency, or the     1,833        

designated nonprofit corporation ADMINISTRATOR, respectively, and  1,834        

of each such officer, member, or employee having authority to      1,836        

perform such duty, specifically enjoined by the law resulting      1,837        

from an office, trust, or station within the meaning of section    1,838        

2731.01 of the Revised Code.                                       1,839        

      The person who is at the time the issuing authority or the   1,842        

director of development, or the officers or employees of either    1,843        

of them, are not liable in their personal capacities on any        1,844        

obligations or any agreements of or with the issuing authority or  1,845        

the director of development.                                                    

      (K)  The issuing authority may issue obligations for the     1,848        

refunding, including funding and retirement, and advance                        

refunding with or without payment or redemption prior to           1,849        

maturity, of any obligations previously issued.  Such obligations  1,850        

may be issued in amounts sufficient for payment of the principal   1,851        

amount of the prior obligations, any redemption premiums thereon,  1,852        

principal maturities of any such obligations maturing prior to     1,853        

the redemption of the remaining obligations on a parity            1,854        

therewith, interest accrued or to accrue to the maturity dates or  1,855        

dates of redemption of such obligations, and expenses incurred or  1,856        

                                                          44     


                                                                 
to be incurred in connection with such issuance and such           1,857        

refunding, funding, and retirement.  Subject to the bond           1,858        

proceedings therefor, the portion of proceeds of the sale of       1,859        

obligations issued under this division to be applied to bond       1,860        

service charges on the prior obligations shall be credited to an   1,861        

appropriate account held by the trustee for such prior or new      1,862        

obligations or to the appropriate account in the bond service      1,863        

fund for such obligations.  Obligations authorized under this      1,864        

division shall be deemed to be issued for those purposes for       1,865        

which such prior obligations were issued and are subject to the    1,866        

provisions of this section pertaining to other obligations,        1,867        

except as otherwise provided in this section.                      1,868        

      (L)  The authority to issue obligations under this section   1,871        

includes authority to issue obligations in the form of bond        1,872        

anticipation notes and to renew the same from time to time by the  1,873        

issuance of new notes.  The holders of such notes or interest      1,874        

coupons pertaining thereto shall have a right to be paid solely    1,875        

from the pledged receipts and special funds that may be pledged    1,876        

to the payment of the bonds anticipated, or from the proceeds of   1,877        

such anticipated bonds or renewal notes, or both, as the issuing   1,878        

authority provides in the order authorizing such notes.  Such      1,879        

notes may be additionally secured by covenants of the issuing      1,880        

authority and the director of development to the effect that the   1,881        

issuing authority and the director of development will do such or  1,882        

all things necessary for the issuance of such bonds or renewal     1,883        

notes in appropriate amounts, and apply the proceeds thereof to    1,884        

the extent necessary, to make full payment of the principal of     1,885        

and interest on such notes at the time or times contemplated, as   1,886        

provided in such order.  For such THIS purpose, the issuing        1,888        

authority shall issue bonds or renewal notes in such principal     1,889        

amount and upon such terms as may be necessary to provide funds    1,890        

to pay, when required, the principal of and interest and any       1,892        

premium on such notes.  Subject to this division, all provisions   1,893        

for and references to obligations in this section are applicable   1,894        

                                                          45     


                                                                 
to notes authorized under this division.                                        

      The issuing authority in the bond proceedings authorizing    1,897        

the issuance of bond anticipation notes shall set forth for such   1,898        

bonds an estimated interest rate and a schedule of principal       1,899        

payments for such bonds and the annual maturity dates thereof,     1,900        

but this provision does not modify any authority in this section   1,901        

to pledge receipts to, to grant a security interest in those       1,902        

receipts for the purpose of securing, and to covenant to issue     1,903        

bonds to fund, the payment of principal of and interest and any    1,904        

premium on such notes, or to provide in the bond proceedings                    

authorizing the issuance of the anticipated bonds interest rates   1,905        

and a schedule of principal payments for such bonds and the        1,906        

annual maturity dates thereof which differ from the estimates in   1,907        

the bond proceedings authorizing the issuance of such bond         1,908        

anticipation notes.                                                1,909        

      (M)  Obligations issued under this section are lawful        1,912        

investments for banks; savings banks; savings and loan                          

associations; credit union share guarantee corporations; trust     1,914        

companies; trustees; fiduciaries; insurance companies, including   1,915        

domestic for life and domestic not for life; trustees or other     1,916        

officers having charge of sinking and bond retirement or other     1,917        

special funds of the state and of subdivisions and taxing          1,918        

districts of the state; the commissioners of the sinking fund of   1,919        

the state; the administrator of workers' compensation, subject to  1,920        

the approval of the workers' compensation board; the state         1,921        

teachers retirement system; the public employees retirement        1,922        

system; the school employees retirement system; and the Ohio       1,923        

police and fire pension fund, notwithstanding any other            1,924        

provisions of the Revised Code or rules adopted pursuant to those  1,928        

provisions by any agency of the state with respect to investments  1,929        

by them, and are also eligible as security for the repayment of    1,930        

the deposit of public moneys.                                                   

      (N)  Provision may be made in the applicable bond            1,933        

proceedings for the establishment of separate accounts in the      1,934        

                                                          46     


                                                                 
bond service fund and for the application of such accounts only    1,935        

to the specified bond service charges on obligations pertinent to  1,936        

such accounts and bond service fund and for other accounts         1,937        

therein within the general purposes of such fund.  Unless          1,938        

otherwise provided in any applicable bond proceedings, moneys to   1,939        

the credit of or in the several special funds established          1,940        

pursuant to this section shall be invested and disbursed as        1,941        

provided in the bond proceedings.                                               

      (O)  The issuing authority shall pledge and grant a          1,944        

security interest in all, or such portion as the issuing                        

authority determines, of the pledged receipts to the payment of    1,945        

bond service charges on obligations, and for the establishment     1,946        

and maintenance of any reserves, as provided in the bond           1,947        

proceedings, and make other provisions therein with respect to     1,948        

pledged receipts as authorized by this chapter, which provisions   1,949        

are controlling notwithstanding any other provisions of law        1,950        

pertaining thereto.                                                1,951        

      (P)  The obligations, the transfer thereof, and the          1,954        

interest, accreted amount, and other income therefrom, including   1,955        

any profit made on the sale thereof, shall at all times be free    1,956        

from taxation, direct or indirect, within this state.                           

      Sec. 5747.01.  Except as otherwise expressly provided or     1,966        

clearly appearing from the context, any term used in this chapter  1,967        

has the same meaning as when used in a comparable context in the   1,968        

Internal Revenue Code, and all other statutes of the United        1,969        

States relating to federal income taxes.                           1,970        

      As used in this chapter:                                     1,972        

      (A)  "Adjusted gross income" or "Ohio adjusted gross         1,974        

income" means adjusted gross income as defined and used in the     1,975        

Internal Revenue Code, adjusted as provided in this section:       1,976        

      (1)  Add interest or dividends on obligations or securities  1,978        

of any state or of any political subdivision or authority of any   1,979        

state, other than this state and its subdivisions and              1,980        

authorities.                                                                    

                                                          47     


                                                                 
      (2)  Add interest or dividends on obligations of any         1,982        

authority, commission, instrumentality, territory, or possession   1,983        

of the United States that are exempt from federal income taxes     1,984        

but not from state income taxes.                                   1,985        

      (3)  Deduct interest or dividends on obligations of the      1,987        

United States and its territories and possessions or of any        1,988        

authority, commission, or instrumentality of the United States to  1,989        

the extent included in federal adjusted gross income but exempt    1,990        

from state income taxes under the laws of the United States.       1,991        

      (4)  Deduct disability and survivor's benefits to the        1,993        

extent included in federal adjusted gross income.                  1,994        

      (5)  Deduct benefits under Title II of the Social Security   1,996        

Act and tier 1 railroad retirement benefits to the extent          1,997        

included in federal adjusted gross income under section 86 of the  1,998        

Internal Revenue Code.                                             1,999        

      (6)  Add, in the case of a taxpayer who is a beneficiary of  2,001        

a trust that makes an accumulation distribution as defined in      2,002        

section 665 of the Internal Revenue Code, the portion, if any, of  2,003        

such distribution that does not exceed the undistributed net       2,004        

income of the trust for the three taxable years preceding the      2,005        

taxable year in which the distribution is made.  "Undistributed    2,006        

net income of a trust" means the taxable income of the trust       2,007        

increased by (a)(i) the additions to adjusted gross income         2,008        

required under division (A) of this section and (ii) the personal  2,009        

exemptions allowed to the trust pursuant to section 642(b) of the  2,010        

Internal Revenue Code, and decreased by (b)(i) the deductions to   2,011        

adjusted gross income required under division (A) of this          2,012        

section, (ii) the amount of federal income taxes attributable to   2,013        

such income, and (iii) the amount of taxable income that has been  2,014        

included in the adjusted gross income of a beneficiary by reason   2,015        

of a prior accumulation distribution.  Any undistributed net       2,016        

income included in the adjusted gross income of a beneficiary      2,017        

shall reduce the undistributed net income of the trust commencing  2,018        

with the earliest years of the accumulation period.                2,019        

                                                          48     


                                                                 
      (7)  Deduct the amount of wages and salaries, if any, not    2,021        

otherwise allowable as a deduction but that would have been        2,022        

allowable as a deduction in computing federal adjusted gross       2,023        

income for the taxable year, had the targeted jobs credit allowed  2,024        

and determined under sections 38, 51, and 52 of the Internal       2,025        

Revenue Code not been in effect.                                   2,026        

      (8)  Deduct any interest or interest equivalent on public    2,028        

obligations and purchase obligations to the extent included in     2,029        

federal adjusted gross income.                                     2,030        

      (9)  Add any loss or deduct any gain resulting from the      2,032        

sale, exchange, or other disposition of public obligations to the  2,033        

extent included in federal adjusted gross income.                  2,034        

      (10)  Regarding tuition credits purchased under Chapter      2,036        

3334. of the Revised Code:                                         2,038        

      (a)  Deduct the following:                                   2,040        

      (i)  For credits that as of the end of the taxable year      2,043        

have not been refunded pursuant to the termination of a tuition                 

payment contract under section 3334.10 of the Revised Code, the    2,045        

amount of income related to the credits, to the extent included    2,046        

in federal adjusted gross income;                                               

      (ii)  For credits that during the taxable year have been     2,049        

refunded pursuant to the termination of a tuition payment                       

contract under section 3334.10 of the Revised Code, the excess of  2,050        

the total purchase price of the tuition credits refunded over the  2,051        

amount of refund, to the extent the amount of the excess was not   2,052        

deducted in determining federal adjusted gross income.             2,053        

      (b)  Add the following:                                      2,055        

      (i)  For credits that as of the end of the taxable year      2,058        

have not been refunded pursuant to the termination of a tuition                 

payment contract under section 3334.10 of the Revised Code, the    2,059        

amount of loss related to the credits, to the extent the amount    2,060        

of the loss was deducted in determining federal adjusted gross     2,061        

income;                                                                         

      (ii)  For credits that during the taxable year have been     2,064        

                                                          49     


                                                                 
refunded pursuant to the termination of a tuition payment                       

contract under section 3334.10 of the Revised Code, the excess of  2,066        

the amount of refund over the purchase price of each tuition       2,067        

credit refunded, to the extent not included in federal adjusted    2,068        

gross income DEDUCT OR ADD AMOUNTS, AS PROVIDED UNDER SECTION      2,069        

5747.70 OF THE REVISED CODE, RELATED TO CONTRIBUTIONS TO VARIABLE  2,071        

COLLEGE SAVINGS PROGRAM ACCOUNTS MADE OR TUITION CREDITS           2,072        

PURCHASED PURSUANT TO CHAPTER 3334. OF THE REVISED CODE.           2,073        

      (11)(a)  Deduct, to the extent not otherwise allowable as a  2,074        

deduction or exclusion in computing federal or Ohio adjusted       2,075        

gross income for the taxable year, the amount the taxpayer paid    2,076        

during the taxable year for medical care insurance and qualified   2,077        

long-term care insurance for the taxpayer, the taxpayer's spouse,  2,078        

and dependents.  No deduction for medical care insurance under     2,079        

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

taxpayer who is eligible to participate in any subsidized health   2,080        

plan maintained by any employer of the taxpayer or of the          2,081        

taxpayer's spouse, or to any taxpayer who is entitled to, or on    2,082        

application would be entitled to, benefits under part A of Title   2,083        

XVIII of the "Social Security Act," 49 Stat. 620 (1935), 42        2,084        

U.S.C. 301, as amended.  For the purposes of division (A)(11)(a)   2,085        

of this section, "subsidized health plan" means a health plan for  2,086        

which the employer pays any portion of the plan's cost.  The       2,087        

deduction allowed under division (A)(11)(a) of this section shall  2,088        

be the net of any related premium refunds, related premium         2,089        

reimbursements, or related insurance premium dividends received    2,090        

during the taxable year.                                           2,091        

      (b)  Deduct, to the extent not otherwise deducted or         2,093        

excluded in computing federal or Ohio adjusted gross income        2,094        

during the taxable year, the amount the taxpayer paid during the   2,095        

taxable year, not compensated for by any insurance or otherwise,   2,096        

for medical care of the taxpayer, the taxpayer's spouse, and       2,097        

dependents, to the extent the expenses exceed seven and one-half   2,098        

per cent of the taxpayer's federal adjusted gross income.          2,099        

                                                          50     


                                                                 
      (c)  For purposes of division (A)(11) of this section,       2,101        

"medical care" has the meaning given in section 213 of the         2,102        

Internal Revenue Code, subject to the special rules, limitations,  2,103        

and exclusions set forth therein, and "qualified long-term care"   2,104        

has the same meaning given in section 7702(B)(b) of the Internal   2,105        

Revenue Code.                                                                   

      (12)(a)  Deduct any amount included in federal adjusted      2,107        

gross income solely because the amount represents a reimbursement  2,108        

or refund of expenses that in any year the taxpayer had deducted   2,110        

as an itemized deduction pursuant to section 63 of the Internal    2,111        

Revenue Code and applicable United States department of the        2,112        

treasury regulations.  The deduction otherwise allowed under       2,113        

division (A)(12)(a) of this section shall be reduced to the        2,114        

extent the reimbursement is attributable to an amount the          2,115        

taxpayer deducted under this section in any taxable year.          2,116        

      (b)  Add any amount not otherwise included in Ohio adjusted  2,118        

gross income for any taxable year to the extent that the amount    2,119        

is attributable to the recovery during the taxable year of any     2,120        

amount deducted or excluded in computing federal or Ohio adjusted  2,121        

gross income in any taxable year.                                  2,122        

      (13)  Deduct any portion of the deduction described in       2,124        

section 1341(a)(2) of the Internal Revenue Code, for repaying      2,125        

previously reported income received under a claim of right, that   2,126        

meets both of the following requirements:                          2,127        

      (a)  It is allowable for repayment of an item that was       2,129        

included in the taxpayer's adjusted gross income for a prior       2,130        

taxable year and did not qualify for a credit under division (A)   2,131        

or (B) of section 5747.05 of the Revised Code for that year;       2,132        

      (b)  It does not otherwise reduce the taxpayer's adjusted    2,134        

gross income for the current or any other taxable year.            2,135        

      (14)  Deduct an amount equal to the deposits made to, and    2,137        

net investment earnings of, a medical savings account during the   2,138        

taxable year, in accordance with section 3924.66 of the Revised    2,139        

Code.  The deduction allowed by division (A)(14) of this section   2,140        

                                                          51     


                                                                 
does not apply to medical savings account deposits and earnings    2,141        

otherwise deducted or excluded for the current or any other        2,142        

taxable year from the taxpayer's federal adjusted gross income.    2,143        

      (15)(a)  Add an amount equal to the funds withdrawn from a   2,145        

medical savings account during the taxable year, and the net       2,146        

investment earnings on those funds, when the funds withdrawn were  2,147        

used for any purpose other than to reimburse an account holder     2,148        

for, or to pay, eligible medical expenses, in accordance with      2,149        

section 3924.66 of the Revised Code;                                            

      (b)  Add the amounts distributed from a medical savings      2,151        

account under division (A)(2) of section 3924.68 of the Revised    2,152        

Code during the taxable year.                                      2,153        

      (16)  Add any amount claimed as a credit under section       2,155        

5747.059 of the Revised Code to the extent that such amount        2,156        

satisfies either of the following:                                              

      (a)  The amount was deducted or excluded from the            2,158        

computation of the taxpayer's federal adjusted gross income as     2,159        

required to be reported for the taxpayer's taxable year under the  2,160        

Internal Revenue Code;                                                          

      (b)  The amount resulted in a reduction of the taxpayer's    2,162        

federal adjusted gross income as required to be reported for any   2,163        

of the taxpayer's taxable years under the Internal Revenue Code.   2,164        

      (17)  Deduct the amount contributed by the taxpayer to an    2,166        

individual development account program established by a county     2,167        

department of human services pursuant to sections 329.11 to        2,168        

329.14 of the Revised Code for the purpose of matching funds       2,169        

deposited by program participants.  On request of the tax          2,170        

commissioner, the taxpayer shall provide any information that, in               

the tax commissioner's opinion, is necessary to establish the      2,171        

amount deducted under division (A)(17) of this section.            2,172        

      (18)  Beginning in taxable year 2001, if the taxpayer is     2,174        

married and files a joint return and the combined federal          2,176        

adjusted gross income of the taxpayer and the taxpayer's spouse    2,177        

for the taxable year does not exceed one hundred thousand                       

                                                          52     


                                                                 
dollars, or if the taxpayer is single and has a federal adjusted   2,178        

gross income for the taxable year not exceeding fifty thousand     2,180        

dollars, deduct amounts paid during the taxable year for           2,181        

qualified tuition and fees paid to an eligible institution for     2,182        

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

taxpayer, who is a resident of this state and is enrolled in or    2,183        

attending a program that culminates in a degree or diploma at an   2,184        

eligible institution.  The deduction may be claimed only to the    2,185        

extent that qualified tuition and fees are not otherwise deducted  2,186        

or excluded for any taxable year from federal or Ohio adjusted     2,187        

gross income.  The deduction may not be claimed for educational    2,188        

expenses for which the taxpayer claims a credit under section      2,189        

5747.27 of the Revised Code.                                                    

      (19)  Add any reimbursement received during the taxable      2,191        

year of any amount the taxpayer deducted under division (A)(18)    2,192        

of this section in any previous taxable year to the extent the     2,193        

amount is not otherwise included in Ohio adjusted gross income.    2,194        

      (B)  "Business income" means income arising from             2,196        

transactions, activities, and sources in the regular course of a   2,197        

trade or business and includes income from tangible and            2,198        

intangible property if the acquisition, rental, management, and    2,199        

disposition of the property constitute integral parts of the       2,200        

regular course of a trade or business operation.                   2,201        

      (C)  "Nonbusiness income" means all income other than        2,203        

business income and may include, but is not limited to,            2,204        

compensation, rents and royalties from real or tangible personal   2,205        

property, capital gains, interest, dividends and distributions,    2,206        

patent or copyright royalties, or lottery winnings, prizes, and    2,207        

awards.                                                            2,208        

      (D)  "Compensation" means any form of remuneration paid to   2,210        

an employee for personal services.                                 2,211        

      (E)  "Fiduciary" means a guardian, trustee, executor,        2,213        

administrator, receiver, conservator, or any other person acting   2,214        

in any fiduciary capacity for any individual, trust, or estate.    2,215        

                                                          53     


                                                                 
      (F)  "Fiscal year" means an accounting period of twelve      2,217        

months ending on the last day of any month other than December.    2,218        

      (G)  "Individual" means any natural person.                  2,220        

      (H)  "Internal Revenue Code" means the "Internal Revenue     2,222        

Code of 1986," 100 Stat. 2085, 26 U.S.C.A. 1, as amended.          2,223        

      (I)  "Resident" means:                                       2,225        

      (1)  An individual who is domiciled in this state, subject   2,227        

to section 5747.24 of the Revised Code;                            2,228        

      (2)  The estate of a decedent who at the time of death was   2,231        

domiciled in this state.  The domicile tests of section 5747.24    2,232        

of the Revised Code and any election under section 5747.25 of the  2,233        

Revised Code are not controlling for purposes of division (I)(2)   2,234        

of this section.                                                                

      (J)  "Nonresident" means an individual or estate that is     2,236        

not a resident.  An individual who is a resident for only part of  2,237        

a taxable year is a nonresident for the remainder of that taxable  2,238        

year.                                                              2,239        

      (K)  "Pass-through entity" has the same meaning as in        2,241        

section 5733.04 of the Revised Code.                               2,242        

      (L)  "Return" means the notifications and reports required   2,244        

to be filed pursuant to this chapter for the purpose of reporting  2,245        

the tax due and includes declarations of estimated tax when so     2,246        

required.                                                          2,247        

      (M)  "Taxable year" means the calendar year or the           2,249        

taxpayer's fiscal year ending during the calendar year, or         2,250        

fractional part thereof, upon which the adjusted gross income is   2,251        

calculated pursuant to this chapter.                               2,252        

      (N)  "Taxpayer" means any person subject to the tax imposed  2,254        

by section 5747.02 of the Revised Code or any pass-through entity  2,255        

that makes the election under division (D) of section 5747.08 of   2,256        

the Revised Code.                                                               

      (O)  "Dependents" means dependents as defined in the         2,258        

Internal Revenue Code and as claimed in the taxpayer's federal     2,259        

income tax return for the taxable year or which the taxpayer       2,260        

                                                          54     


                                                                 
would have been permitted to claim had the taxpayer filed a        2,261        

federal income tax return.                                         2,263        

      (P)  "Principal county of employment" means, in the case of  2,265        

a nonresident, the county within the state in which a taxpayer     2,266        

performs services for an employer or, if those services are        2,267        

performed in more than one county, the county in which the major   2,268        

portion of the services are performed.                             2,269        

      (Q)  As used in sections 5747.50 to 5747.55 of the Revised   2,271        

Code:                                                                           

      (1)  "Subdivision" means any county, municipal corporation,  2,273        

park district, or township.                                        2,274        

      (2)  "Essential local government purposes" includes all      2,276        

functions that any subdivision is required by general law to       2,277        

exercise, including like functions that are exercised under a      2,278        

charter adopted pursuant to the Ohio Constitution.                 2,279        

      (R)  "Overpayment" means any amount already paid that        2,281        

exceeds the figure determined to be the correct amount of the      2,282        

tax.                                                               2,283        

      (S)  "Taxable income" applies to estates only and means      2,285        

taxable income as defined and used in the Internal Revenue Code    2,286        

adjusted as follows:                                               2,287        

      (1)  Add interest or dividends on obligations or securities  2,289        

of any state or of any political subdivision or authority of any   2,290        

state, other than this state and its subdivisions and              2,291        

authorities;                                                       2,292        

      (2)  Add interest or dividends on obligations of any         2,294        

authority, commission, instrumentality, territory, or possession   2,295        

of the United States that are exempt from federal income taxes     2,296        

but not from state income taxes;                                   2,297        

      (3)  Add the amount of personal exemption allowed to the     2,299        

estate pursuant to section 642(b) of the Internal Revenue Code;    2,300        

      (4)  Deduct interest or dividends on obligations of the      2,302        

United States and its territories and possessions or of any        2,303        

authority, commission, or instrumentality of the United States     2,304        

                                                          55     


                                                                 
that are exempt from state taxes under the laws of the United      2,305        

States;                                                            2,306        

      (5)  Deduct the amount of wages and salaries, if any, not    2,308        

otherwise allowable as a deduction but that would have been        2,309        

allowable as a deduction in computing federal taxable income for   2,310        

the taxable year, had the targeted jobs credit allowed under       2,311        

sections 38, 51, and 52 of the Internal Revenue Code not been in   2,312        

effect;                                                            2,313        

      (6)  Deduct any interest or interest equivalent on public    2,315        

obligations and purchase obligations to the extent included in     2,316        

federal taxable income;                                            2,317        

      (7)  Add any loss or deduct any gain resulting from sale,    2,319        

exchange, or other disposition of public obligations to the        2,320        

extent included in federal taxable income;                         2,321        

      (8)  Except in the case of the final return of an estate,    2,323        

add any amount deducted by the taxpayer on both its Ohio estate    2,324        

tax return pursuant to section 5731.14 of the Revised Code, and    2,325        

on its federal income tax return in determining either federal     2,326        

adjusted gross income or federal taxable income;                   2,327        

      (9)(a)  Deduct any amount included in federal taxable        2,329        

income solely because the amount represents a reimbursement or     2,330        

refund of expenses that in a previous year the decedent had        2,331        

deducted as an itemized deduction pursuant to section 63 of the    2,332        

Internal Revenue Code and applicable treasury regulations.  The    2,334        

deduction otherwise allowed under division (S)(9)(a) of this       2,335        

section shall be reduced to the extent the reimbursement is        2,336        

attributable to an amount the taxpayer or decedent deducted under  2,337        

this section in any taxable year.                                  2,338        

      (b)  Add any amount not otherwise included in Ohio taxable   2,340        

income for any taxable year to the extent that the amount is       2,341        

attributable to the recovery during the taxable year of any        2,342        

amount deducted or excluded in computing federal or Ohio taxable   2,343        

income in any taxable year.                                        2,344        

      (10)  Deduct any portion of the deduction described in       2,346        

                                                          56     


                                                                 
section 1341(a)(2) of the Internal Revenue Code, for repaying      2,347        

previously reported income received under a claim of right, that   2,348        

meets both of the following requirements:                          2,349        

      (a)  It is allowable for repayment of an item that was       2,351        

included in the taxpayer's taxable income or the decedent's        2,352        

adjusted gross income for a prior taxable year and did not         2,353        

qualify for a credit under division (A) or (B) of section 5747.05  2,354        

of the Revised Code for that year.                                 2,355        

      (b)  It does not otherwise reduce the taxpayer's taxable     2,357        

income or the decedent's adjusted gross income for the current or  2,358        

any other taxable year.                                            2,359        

      (11)  Add any amount claimed as a credit under section       2,361        

5747.059 of the Revised Code to the extent that the amount         2,362        

satisfies either of the following:                                 2,363        

      (a)  The amount was deducted or excluded from the            2,365        

computation of the taxpayer's federal taxable income as required   2,366        

to be reported for the taxpayer's taxable year under the Internal  2,367        

Revenue Code;                                                                   

      (b)  The amount resulted in a reduction in the taxpayer's    2,369        

federal taxable income as required to be reported for any of the   2,370        

taxpayer's taxable years under the Internal Revenue Code.          2,371        

      (T)  "School district income" and "school district income    2,373        

tax" have the same meanings as in section 5748.01 of the Revised   2,374        

Code.                                                              2,375        

      (U)  As used in divisions (A)(8), (A)(9), (S)(6), and        2,377        

(S)(7) of this section, "public obligations," "purchase            2,378        

obligations," and "interest or interest equivalent" have the same  2,379        

meanings as in section 5709.76 of the Revised Code.                2,380        

      (V)  "Limited liability company" means any limited           2,382        

liability company formed under Chapter 1705. of the Revised Code   2,383        

or under the laws of any other state.                              2,384        

      (W)  "Pass-through entity investor" means any person who,    2,386        

during any portion of a taxable year of a pass-through entity, is  2,387        

a partner, member, shareholder, or investor in that pass-through   2,388        

                                                          57     


                                                                 
entity.                                                                         

      (X)  "Banking day" has the same meaning as in section        2,390        

1304.01 of the Revised Code.                                       2,391        

      (Y)  "Month" means a calendar month.                         2,393        

      (Z)  "Quarter" means the first three months, the second      2,395        

three months, the third three months, or the last three months of  2,396        

the taxpayer's taxable year.                                                    

      (AA)(1)  "Eligible institution" means a state university or  2,398        

state institution of higher education as defined in section        2,399        

3345.011 of the Revised Code, or a private, nonprofit college,     2,400        

university, or other post-secondary institution located in this    2,401        

state that possesses a certificate of authorization issued by the  2,402        

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

Code or a certificate of registration issued by the state board    2,403        

of proprietary school registration under Chapter 3332. of the      2,404        

Revised Code.                                                                   

      (2)  "Qualified tuition and fees" means tuition and fees     2,406        

imposed by an eligible institution as a condition of enrollment    2,407        

or attendance, not exceeding two thousand five hundred dollars in  2,408        

each of the individual's first two years of post-secondary         2,409        

education.  If the individual is a part-time student, "qualified   2,410        

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

equivalent of the first two years of post-secondary education      2,411        

during a maximum of five taxable years, not exceeding a total of   2,412        

five thousand dollars.  "Qualified tuition and fees" does not      2,413        

include:                                                                        

      (a)  Expenses for any course or activity involving sports,   2,415        

games, or hobbies unless the course or activity is part of the     2,416        

individual's degree or diploma program;                            2,417        

      (b)  The cost of books, room and board, student activity     2,419        

fees, athletic fees, insurance expenses, or other expenses         2,420        

unrelated to the individual's academic course of instruction;      2,421        

      (c)  Tuition, fees, or other expenses paid or reimbursed     2,423        

through an employer, scholarship, grant in aid, or other           2,424        

                                                          58     


                                                                 
educational benefit program.                                                    

      (BB)  Any term used in this chapter that is not otherwise    2,426        

defined in this section and that is not used in a comparable       2,427        

context in the Internal Revenue Code and other statutes of the     2,428        

United States relating to federal income taxes has the same        2,429        

meaning as in section 5733.40 of the Revised Code.                 2,430        

      THIS IS AN INTERIM SECTION EFFECTIVE UNTIL JUNE 1, 2000.     2,432        

      Sec. 5747.70.  (A)  IN COMPUTING OHIO ADJUSTED GROSS         2,434        

INCOME, A DEDUCTION FROM FEDERAL ADJUSTED GROSS INCOME IS ALLOWED  2,435        

TO A CONTRIBUTOR FOR THE AMOUNT CONTRIBUTED DURING THE TAXABLE     2,436        

YEAR TO A VARIABLE COLLEGE SAVINGS PROGRAM ACCOUNT AND TO A        2,438        

PURCHASER OF TUITION CREDITS UNDER THE OHIO COLLEGE SAVINGS        2,439        

PROGRAM CREATED BY CHAPTER 3334. OF THE REVISED CODE TO THE        2,441        

EXTENT THAT THE AMOUNTS OF SUCH CONTRIBUTIONS AND PURCHASES WERE   2,442        

NOT DEDUCTED IN DETERMINING THE CONTRIBUTOR'S OR PURCHASER'S       2,443        

FEDERAL ADJUSTED GROSS INCOME FOR THE TAXABLE YEAR.  THE COMBINED               

AMOUNT OF CONTRIBUTIONS AND PURCHASES DEDUCTED IN ANY TAXABLE      2,444        

YEAR BY A TAXPAYER OR THE TAXPAYER AND THE TAXPAYER'S SPOUSE,      2,445        

REGARDLESS OF WHETHER THE TAXPAYER AND THE TAXPAYER'S SPOUSE FILE  2,446        

SEPARATE RETURNS OR A JOINT RETURN, IS LIMITED TO TWO THOUSAND     2,448        

DOLLARS FOR EACH BENEFICIARY FOR WHOM CONTRIBUTIONS OR PURCHASES   2,449        

ARE MADE.  IF THE COMBINED ANNUAL CONTRIBUTIONS AND PURCHASES FOR  2,450        

A BENEFICIARY EXCEED TWO THOUSAND DOLLARS, THE EXCESS MAY BE       2,451        

CARRIED FORWARD AND DEDUCTED IN FUTURE TAXABLE YEARS UNTIL THE     2,452        

CONTRIBUTIONS AND PURCHASES HAVE BEEN FULLY DEDUCTED.              2,453        

      (B)  IN COMPUTING OHIO ADJUSTED GROSS INCOME, A DEDUCTION    2,455        

FROM FEDERAL ADJUSTED GROSS INCOME IS ALLOWED FOR:                 2,456        

      (1)  INCOME RELATED TO TUITION CREDITS AND CONTRIBUTIONS     2,458        

THAT AS OF THE END OF THE TAXABLE YEAR HAVE NOT BEEN REFUNDED      2,459        

PURSUANT TO THE TERMINATION OF A TUITION PAYMENT CONTRACT OR       2,460        

VARIABLE COLLEGE SAVINGS PROGRAM ACCOUNT UNDER SECTION 3334.10 OF  2,461        

THE REVISED CODE, TO THE EXTENT THAT SUCH INCOME IS INCLUDED IN    2,462        

FEDERAL ADJUSTED GROSS INCOME.                                     2,463        

      (2)  THE EXCESS OF THE TOTAL PURCHASE PRICE OF TUITION       2,465        

                                                          59     


                                                                 
CREDITS REFUNDED DURING THE TAXABLE YEAR PURSUANT TO THE           2,466        

TERMINATION OF A TUITION PAYMENT CONTRACT UNDER SECTION 3334.10    2,467        

OF THE REVISED CODE OVER THE AMOUNT OF THE REFUND, TO THE EXTENT   2,468        

THE AMOUNT OF THE EXCESS WAS NOT DEDUCTED IN DETERMINING FEDERAL   2,469        

ADJUSTED GROSS INCOME.  DIVISION (B)(2) OF THIS SECTION APPLIES    2,470        

ONLY TO CREDITS FOR WHICH NO DEDUCTION WAS ALLOWABLE UNDER         2,471        

DIVISION (A) OF THIS SECTION.                                                   

      (C)  IN COMPUTING OHIO ADJUSTED GROSS INCOME, THERE SHALL    2,473        

BE ADDED TO FEDERAL ADJUSTED GROSS INCOME THE AMOUNT OF LOSS       2,474        

RELATED TO TUITION CREDITS AND CONTRIBUTIONS THAT AS OF THE END    2,475        

OF THE TAXABLE YEAR HAVE NOT BEEN REFUNDED PURSUANT TO THE         2,476        

TERMINATION OF A TUITION PAYMENT CONTRACT OR VARIABLE COLLEGE      2,477        

SAVINGS PROGRAM ACCOUNT UNDER SECTION 3334.10 OF THE REVISED       2,478        

CODE, TO THE EXTENT THAT SUCH LOSS WAS DEDUCTED IN DETERMINING     2,479        

FEDERAL ADJUSTED GROSS INCOME.                                                  

      (D)  FOR TAXABLE YEARS IN WHICH DISTRIBUTIONS OR REFUNDS     2,481        

ARE MADE UNDER A TUITION PAYMENT OR VARIABLE COLLEGE SAVINGS       2,482        

PROGRAM CONTRACT FOR ANY REASON OTHER THAN PAYMENT OF TUITION OR   2,483        

OTHER HIGHER EDUCATION EXPENSES, OR THE BENEFICIARY'S DEATH,       2,484        

DISABILITY, OR RECEIPT OF A SCHOLARSHIP AS DESCRIBED IN SECTION    2,485        

3334.10 OF THE REVISED CODE:                                                    

      (1)  IF THE DISTRIBUTION OR REFUND IS PAID TO THE PURCHASER  2,487        

OR CONTRIBUTOR OR BENEFICIARY, ANY PORTION OF THE DISTRIBUTION OR  2,488        

REFUND NOT INCLUDED IN THE RECIPIENT'S FEDERAL ADJUSTED GROSS      2,489        

INCOME SHALL BE ADDED TO THE RECIPIENT'S FEDERAL ADJUSTED GROSS    2,490        

INCOME IN DETERMINING THE RECIPIENT'S OHIO ADJUSTED GROSS INCOME,  2,491        

EXCEPT THAT THE AMOUNT ADDED SHALL NOT EXCEED AMOUNTS PREVIOUSLY   2,492        

DEDUCTED UNDER DIVISION (A) OF THIS SECTION LESS ANY AMOUNTS       2,493        

ADDED UNDER DIVISION (D)(1) OF THIS SECTION IN A PRIOR TAXABLE     2,494        

YEAR.                                                                           

      (2)  IF AMOUNTS PAID BY A PURCHASER OR CONTRIBUTOR ON OR     2,496        

AFTER JANUARY 1, 2000, ARE DISTRIBUTED OR REFUNDED TO SOMEONE      2,497        

OTHER THAN THE PURCHASER OR CONTRIBUTOR OR BENEFICIARY, THE        2,499        

AMOUNT OF THE PAYMENT NOT INCLUDED IN THE RECIPIENT'S FEDERAL      2,500        

                                                          60     


                                                                 
ADJUSTED GROSS INCOME, LESS ANY AMOUNTS ADDED UNDER DIVISION (D)   2,501        

OF THIS SECTION IN A PRIOR TAXABLE YEAR, SHALL BE ADDED TO THE     2,502        

RECIPIENT'S FEDERAL ADJUSTED GROSS INCOME IN DETERMINING THE                    

RECIPIENT'S OHIO ADJUSTED GROSS INCOME.                            2,503        

      Section 2.  That existing sections 3334.01, 3334.02,         2,505        

3334.08, 3334.10, 3334.11, 3334.12, 3334.15, 3366.01, 3366.03,     2,506        

3366.04, and 5747.01 of the Revised Code are hereby repealed.      2,508        

      Section 3.  That section 5747.01 of the Revised Code, as     2,510        

amended by H.B. 471 of the 123rd General Assembly, be amended to   2,512        

read as follows:                                                                

      Sec. 5747.01.  Except as otherwise expressly provided or     2,521        

clearly appearing from the context, any term used in this chapter  2,522        

has the same meaning as when used in a comparable context in the   2,523        

Internal Revenue Code, and all other statutes of the United        2,524        

States relating to federal income taxes.                           2,525        

      As used in this chapter:                                     2,527        

      (A)  "Adjusted gross income" or "Ohio adjusted gross         2,529        

income" means adjusted gross income as defined and used in the     2,530        

Internal Revenue Code, adjusted as provided in this section:       2,531        

      (1)  Add interest or dividends on obligations or securities  2,533        

of any state or of any political subdivision or authority of any   2,534        

state, other than this state and its subdivisions and              2,535        

authorities.                                                                    

      (2)  Add interest or dividends on obligations of any         2,537        

authority, commission, instrumentality, territory, or possession   2,538        

of the United States that are exempt from federal income taxes     2,539        

but not from state income taxes.                                   2,540        

      (3)  Deduct interest or dividends on obligations of the      2,542        

United States and its territories and possessions or of any        2,543        

authority, commission, or instrumentality of the United States to  2,544        

the extent included in federal adjusted gross income but exempt    2,545        

from state income taxes under the laws of the United States.       2,546        

      (4)  Deduct disability and survivor's benefits to the        2,548        

extent included in federal adjusted gross income.                  2,549        

                                                          61     


                                                                 
      (5)  Deduct benefits under Title II of the Social Security   2,551        

Act and tier 1 railroad retirement benefits to the extent          2,552        

included in federal adjusted gross income under section 86 of the  2,553        

Internal Revenue Code.                                             2,554        

      (6)  Add, in the case of a taxpayer who is a beneficiary of  2,556        

a trust that makes an accumulation distribution as defined in      2,557        

section 665 of the Internal Revenue Code, the portion, if any, of  2,558        

such distribution that does not exceed the undistributed net       2,559        

income of the trust for the three taxable years preceding the      2,560        

taxable year in which the distribution is made.  "Undistributed    2,561        

net income of a trust" means the taxable income of the trust       2,562        

increased by (a)(i) the additions to adjusted gross income         2,563        

required under division (A) of this section and (ii) the personal  2,564        

exemptions allowed to the trust pursuant to section 642(b) of the  2,565        

Internal Revenue Code, and decreased by (b)(i) the deductions to   2,566        

adjusted gross income required under division (A) of this          2,567        

section, (ii) the amount of federal income taxes attributable to   2,568        

such income, and (iii) the amount of taxable income that has been  2,569        

included in the adjusted gross income of a beneficiary by reason   2,570        

of a prior accumulation distribution.  Any undistributed net       2,571        

income included in the adjusted gross income of a beneficiary      2,572        

shall reduce the undistributed net income of the trust commencing  2,573        

with the earliest years of the accumulation period.                2,574        

      (7)  Deduct the amount of wages and salaries, if any, not    2,576        

otherwise allowable as a deduction but that would have been        2,577        

allowable as a deduction in computing federal adjusted gross       2,578        

income for the taxable year, had the targeted jobs credit allowed  2,579        

and determined under sections 38, 51, and 52 of the Internal       2,580        

Revenue Code not been in effect.                                   2,581        

      (8)  Deduct any interest or interest equivalent on public    2,583        

obligations and purchase obligations to the extent included in     2,584        

federal adjusted gross income.                                     2,585        

      (9)  Add any loss or deduct any gain resulting from the      2,587        

sale, exchange, or other disposition of public obligations to the  2,588        

                                                          62     


                                                                 
extent included in federal adjusted gross income.                  2,589        

      (10)  Regarding tuition credits purchased under Chapter      2,591        

3334. of the Revised Code:                                         2,593        

      (a)  Deduct the following:                                   2,595        

      (i)  For credits that as of the end of the taxable year      2,598        

have not been refunded pursuant to the termination of a tuition                 

payment contract under section 3334.10 of the Revised Code, the    2,600        

amount of income related to the credits, to the extent included    2,601        

in federal adjusted gross income;                                               

      (ii)  For credits that during the taxable year have been     2,604        

refunded pursuant to the termination of a tuition payment                       

contract under section 3334.10 of the Revised Code, the excess of  2,605        

the total purchase price of the tuition credits refunded over the  2,606        

amount of refund, to the extent the amount of the excess was not   2,607        

deducted in determining federal adjusted gross income.             2,608        

      (b)  Add the following:                                      2,610        

      (i)  For credits that as of the end of the taxable year      2,613        

have not been refunded pursuant to the termination of a tuition                 

payment contract under section 3334.10 of the Revised Code, the    2,614        

amount of loss related to the credits, to the extent the amount    2,615        

of the loss was deducted in determining federal adjusted gross     2,616        

income;                                                                         

      (ii)  For credits that during the taxable year have been     2,619        

refunded pursuant to the termination of a tuition payment                       

contract under section 3334.10 of the Revised Code, the excess of  2,621        

the amount of refund over the purchase price of each tuition       2,622        

credit refunded, to the extent not included in federal adjusted    2,623        

gross income DEDUCT OR ADD AMOUNTS, AS PROVIDED UNDER SECTION      2,624        

5747.70 OF THE REVISED CODE, RELATED TO CONTRIBUTIONS TO VARIABLE  2,626        

COLLEGE SAVINGS PROGRAM ACCOUNTS MADE OR TUITION CREDITS           2,627        

PURCHASED PURSUANT TO CHAPTER 3334. OF THE REVISED CODE.           2,628        

      (11)(a)  Deduct, to the extent not otherwise allowable as a  2,630        

deduction or exclusion in computing federal or Ohio adjusted       2,631        

gross income for the taxable year, the amount the taxpayer paid    2,632        

                                                          63     


                                                                 
during the taxable year for medical care insurance and qualified   2,633        

long-term care insurance for the taxpayer, the taxpayer's spouse,  2,634        

and dependents.  No deduction for medical care insurance under     2,635        

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

taxpayer who is eligible to participate in any subsidized health   2,636        

plan maintained by any employer of the taxpayer or of the          2,637        

taxpayer's spouse, or to any taxpayer who is entitled to, or on    2,638        

application would be entitled to, benefits under part A of Title   2,639        

XVIII of the "Social Security Act," 49 Stat. 620 (1935), 42        2,640        

U.S.C. 301, as amended.  For the purposes of division (A)(11)(a)   2,641        

of this section, "subsidized health plan" means a health plan for  2,642        

which the employer pays any portion of the plan's cost.  The       2,643        

deduction allowed under division (A)(11)(a) of this section shall  2,644        

be the net of any related premium refunds, related premium         2,645        

reimbursements, or related insurance premium dividends received    2,646        

during the taxable year.                                           2,647        

      (b)  Deduct, to the extent not otherwise deducted or         2,649        

excluded in computing federal or Ohio adjusted gross income        2,650        

during the taxable year, the amount the taxpayer paid during the   2,651        

taxable year, not compensated for by any insurance or otherwise,   2,652        

for medical care of the taxpayer, the taxpayer's spouse, and       2,653        

dependents, to the extent the expenses exceed seven and one-half   2,654        

per cent of the taxpayer's federal adjusted gross income.          2,655        

      (c)  For purposes of division (A)(11) of this section,       2,657        

"medical care" has the meaning given in section 213 of the         2,658        

Internal Revenue Code, subject to the special rules, limitations,  2,659        

and exclusions set forth therein, and "qualified long-term care"   2,660        

has the same meaning given in section 7702(B)(b) of the Internal   2,661        

Revenue Code.                                                                   

      (12)(a)  Deduct any amount included in federal adjusted      2,663        

gross income solely because the amount represents a reimbursement  2,664        

or refund of expenses that in any year the taxpayer had deducted   2,666        

as an itemized deduction pursuant to section 63 of the Internal    2,667        

Revenue Code and applicable United States department of the        2,668        

                                                          64     


                                                                 
treasury regulations.  The deduction otherwise allowed under       2,669        

division (A)(12)(a) of this section shall be reduced to the        2,670        

extent the reimbursement is attributable to an amount the          2,671        

taxpayer deducted under this section in any taxable year.          2,672        

      (b)  Add any amount not otherwise included in Ohio adjusted  2,674        

gross income for any taxable year to the extent that the amount    2,675        

is attributable to the recovery during the taxable year of any     2,676        

amount deducted or excluded in computing federal or Ohio adjusted  2,677        

gross income in any taxable year.                                  2,678        

      (13)  Deduct any portion of the deduction described in       2,680        

section 1341(a)(2) of the Internal Revenue Code, for repaying      2,681        

previously reported income received under a claim of right, that   2,682        

meets both of the following requirements:                          2,683        

      (a)  It is allowable for repayment of an item that was       2,685        

included in the taxpayer's adjusted gross income for a prior       2,686        

taxable year and did not qualify for a credit under division (A)   2,687        

or (B) of section 5747.05 of the Revised Code for that year;       2,688        

      (b)  It does not otherwise reduce the taxpayer's adjusted    2,690        

gross income for the current or any other taxable year.            2,691        

      (14)  Deduct an amount equal to the deposits made to, and    2,693        

net investment earnings of, a medical savings account during the   2,694        

taxable year, in accordance with section 3924.66 of the Revised    2,695        

Code.  The deduction allowed by division (A)(14) of this section   2,696        

does not apply to medical savings account deposits and earnings    2,697        

otherwise deducted or excluded for the current or any other        2,698        

taxable year from the taxpayer's federal adjusted gross income.    2,699        

      (15)(a)  Add an amount equal to the funds withdrawn from a   2,701        

medical savings account during the taxable year, and the net       2,702        

investment earnings on those funds, when the funds withdrawn were  2,703        

used for any purpose other than to reimburse an account holder     2,704        

for, or to pay, eligible medical expenses, in accordance with      2,705        

section 3924.66 of the Revised Code;                                            

      (b)  Add the amounts distributed from a medical savings      2,707        

account under division (A)(2) of section 3924.68 of the Revised    2,708        

                                                          65     


                                                                 
Code during the taxable year.                                      2,709        

      (16)  Add any amount claimed as a credit under section       2,711        

5747.059 of the Revised Code to the extent that such amount        2,712        

satisfies either of the following:                                              

      (a)  The amount was deducted or excluded from the            2,714        

computation of the taxpayer's federal adjusted gross income as     2,715        

required to be reported for the taxpayer's taxable year under the  2,716        

Internal Revenue Code;                                                          

      (b)  The amount resulted in a reduction of the taxpayer's    2,718        

federal adjusted gross income as required to be reported for any   2,719        

of the taxpayer's taxable years under the Internal Revenue Code.   2,720        

      (17)  Deduct the amount contributed by the taxpayer to an    2,722        

individual development account program established by a county     2,723        

department of job and family services pursuant to sections 329.11  2,724        

to 329.14 of the Revised Code for the purpose of matching funds    2,726        

deposited by program participants.  On request of the tax          2,728        

commissioner, the taxpayer shall provide any information that, in               

the tax commissioner's opinion, is necessary to establish the      2,729        

amount deducted under division (A)(17) of this section.            2,731        

      (18)  Beginning in taxable year 2001, if the taxpayer is     2,733        

married and files a joint return and the combined federal          2,735        

adjusted gross income of the taxpayer and the taxpayer's spouse    2,736        

for the taxable year does not exceed one hundred thousand                       

dollars, or if the taxpayer is single and has a federal adjusted   2,737        

gross income for the taxable year not exceeding fifty thousand     2,739        

dollars, deduct amounts paid during the taxable year for           2,740        

qualified tuition and fees paid to an eligible institution for     2,741        

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

taxpayer, who is a resident of this state and is enrolled in or    2,742        

attending a program that culminates in a degree or diploma at an   2,743        

eligible institution.  The deduction may be claimed only to the    2,744        

extent that qualified tuition and fees are not otherwise deducted  2,745        

or excluded for any taxable year from federal or Ohio adjusted     2,746        

gross income.  The deduction may not be claimed for educational    2,747        

                                                          66     


                                                                 
expenses for which the taxpayer claims a credit under section      2,748        

5747.27 of the Revised Code.                                                    

      (19)  Add any reimbursement received during the taxable      2,750        

year of any amount the taxpayer deducted under division (A)(18)    2,751        

of this section in any previous taxable year to the extent the     2,752        

amount is not otherwise included in Ohio adjusted gross income.    2,753        

      (B)  "Business income" means income arising from             2,755        

transactions, activities, and sources in the regular course of a   2,756        

trade or business and includes income from tangible and            2,757        

intangible property if the acquisition, rental, management, and    2,758        

disposition of the property constitute integral parts of the       2,759        

regular course of a trade or business operation.                   2,760        

      (C)  "Nonbusiness income" means all income other than        2,762        

business income and may include, but is not limited to,            2,763        

compensation, rents and royalties from real or tangible personal   2,764        

property, capital gains, interest, dividends and distributions,    2,765        

patent or copyright royalties, or lottery winnings, prizes, and    2,766        

awards.                                                            2,767        

      (D)  "Compensation" means any form of remuneration paid to   2,769        

an employee for personal services.                                 2,770        

      (E)  "Fiduciary" means a guardian, trustee, executor,        2,772        

administrator, receiver, conservator, or any other person acting   2,773        

in any fiduciary capacity for any individual, trust, or estate.    2,774        

      (F)  "Fiscal year" means an accounting period of twelve      2,776        

months ending on the last day of any month other than December.    2,777        

      (G)  "Individual" means any natural person.                  2,779        

      (H)  "Internal Revenue Code" means the "Internal Revenue     2,781        

Code of 1986," 100 Stat. 2085, 26 U.S.C.A. 1, as amended.          2,782        

      (I)  "Resident" means:                                       2,784        

      (1)  An individual who is domiciled in this state, subject   2,786        

to section 5747.24 of the Revised Code;                            2,787        

      (2)  The estate of a decedent who at the time of death was   2,790        

domiciled in this state.  The domicile tests of section 5747.24    2,791        

of the Revised Code and any election under section 5747.25 of the  2,792        

                                                          67     


                                                                 
Revised Code are not controlling for purposes of division (I)(2)   2,793        

of this section.                                                                

      (J)  "Nonresident" means an individual or estate that is     2,795        

not a resident.  An individual who is a resident for only part of  2,796        

a taxable year is a nonresident for the remainder of that taxable  2,797        

year.                                                              2,798        

      (K)  "Pass-through entity" has the same meaning as in        2,800        

section 5733.04 of the Revised Code.                               2,801        

      (L)  "Return" means the notifications and reports required   2,803        

to be filed pursuant to this chapter for the purpose of reporting  2,804        

the tax due and includes declarations of estimated tax when so     2,805        

required.                                                          2,806        

      (M)  "Taxable year" means the calendar year or the           2,808        

taxpayer's fiscal year ending during the calendar year, or         2,809        

fractional part thereof, upon which the adjusted gross income is   2,810        

calculated pursuant to this chapter.                               2,811        

      (N)  "Taxpayer" means any person subject to the tax imposed  2,813        

by section 5747.02 of the Revised Code or any pass-through entity  2,814        

that makes the election under division (D) of section 5747.08 of   2,815        

the Revised Code.                                                               

      (O)  "Dependents" means dependents as defined in the         2,817        

Internal Revenue Code and as claimed in the taxpayer's federal     2,818        

income tax return for the taxable year or which the taxpayer       2,819        

would have been permitted to claim had the taxpayer filed a        2,820        

federal income tax return.                                         2,822        

      (P)  "Principal county of employment" means, in the case of  2,824        

a nonresident, the county within the state in which a taxpayer     2,825        

performs services for an employer or, if those services are        2,826        

performed in more than one county, the county in which the major   2,827        

portion of the services are performed.                             2,828        

      (Q)  As used in sections 5747.50 to 5747.55 of the Revised   2,830        

Code:                                                                           

      (1)  "Subdivision" means any county, municipal corporation,  2,832        

park district, or township.                                        2,833        

                                                          68     


                                                                 
      (2)  "Essential local government purposes" includes all      2,835        

functions that any subdivision is required by general law to       2,836        

exercise, including like functions that are exercised under a      2,837        

charter adopted pursuant to the Ohio Constitution.                 2,838        

      (R)  "Overpayment" means any amount already paid that        2,840        

exceeds the figure determined to be the correct amount of the      2,841        

tax.                                                               2,842        

      (S)  "Taxable income" applies to estates only and means      2,844        

taxable income as defined and used in the Internal Revenue Code    2,845        

adjusted as follows:                                               2,846        

      (1)  Add interest or dividends on obligations or securities  2,848        

of any state or of any political subdivision or authority of any   2,849        

state, other than this state and its subdivisions and              2,850        

authorities;                                                       2,851        

      (2)  Add interest or dividends on obligations of any         2,853        

authority, commission, instrumentality, territory, or possession   2,854        

of the United States that are exempt from federal income taxes     2,855        

but not from state income taxes;                                   2,856        

      (3)  Add the amount of personal exemption allowed to the     2,858        

estate pursuant to section 642(b) of the Internal Revenue Code;    2,859        

      (4)  Deduct interest or dividends on obligations of the      2,861        

United States and its territories and possessions or of any        2,862        

authority, commission, or instrumentality of the United States     2,863        

that are exempt from state taxes under the laws of the United      2,864        

States;                                                            2,865        

      (5)  Deduct the amount of wages and salaries, if any, not    2,867        

otherwise allowable as a deduction but that would have been        2,868        

allowable as a deduction in computing federal taxable income for   2,869        

the taxable year, had the targeted jobs credit allowed under       2,870        

sections 38, 51, and 52 of the Internal Revenue Code not been in   2,871        

effect;                                                            2,872        

      (6)  Deduct any interest or interest equivalent on public    2,874        

obligations and purchase obligations to the extent included in     2,875        

federal taxable income;                                            2,876        

                                                          69     


                                                                 
      (7)  Add any loss or deduct any gain resulting from sale,    2,878        

exchange, or other disposition of public obligations to the        2,879        

extent included in federal taxable income;                         2,880        

      (8)  Except in the case of the final return of an estate,    2,882        

add any amount deducted by the taxpayer on both its Ohio estate    2,883        

tax return pursuant to section 5731.14 of the Revised Code, and    2,884        

on its federal income tax return in determining either federal     2,885        

adjusted gross income or federal taxable income;                   2,886        

      (9)(a)  Deduct any amount included in federal taxable        2,888        

income solely because the amount represents a reimbursement or     2,889        

refund of expenses that in a previous year the decedent had        2,890        

deducted as an itemized deduction pursuant to section 63 of the    2,891        

Internal Revenue Code and applicable treasury regulations.  The    2,893        

deduction otherwise allowed under division (S)(9)(a) of this       2,894        

section shall be reduced to the extent the reimbursement is        2,895        

attributable to an amount the taxpayer or decedent deducted under  2,896        

this section in any taxable year.                                  2,897        

      (b)  Add any amount not otherwise included in Ohio taxable   2,899        

income for any taxable year to the extent that the amount is       2,900        

attributable to the recovery during the taxable year of any        2,901        

amount deducted or excluded in computing federal or Ohio taxable   2,902        

income in any taxable year.                                        2,903        

      (10)  Deduct any portion of the deduction described in       2,905        

section 1341(a)(2) of the Internal Revenue Code, for repaying      2,906        

previously reported income received under a claim of right, that   2,907        

meets both of the following requirements:                          2,908        

      (a)  It is allowable for repayment of an item that was       2,910        

included in the taxpayer's taxable income or the decedent's        2,911        

adjusted gross income for a prior taxable year and did not         2,912        

qualify for a credit under division (A) or (B) of section 5747.05  2,913        

of the Revised Code for that year.                                 2,914        

      (b)  It does not otherwise reduce the taxpayer's taxable     2,916        

income or the decedent's adjusted gross income for the current or  2,917        

any other taxable year.                                            2,918        

                                                          70     


                                                                 
      (11)  Add any amount claimed as a credit under section       2,920        

5747.059 of the Revised Code to the extent that the amount         2,921        

satisfies either of the following:                                 2,922        

      (a)  The amount was deducted or excluded from the            2,924        

computation of the taxpayer's federal taxable income as required   2,925        

to be reported for the taxpayer's taxable year under the Internal  2,926        

Revenue Code;                                                                   

      (b)  The amount resulted in a reduction in the taxpayer's    2,928        

federal taxable income as required to be reported for any of the   2,929        

taxpayer's taxable years under the Internal Revenue Code.          2,930        

      (T)  "School district income" and "school district income    2,932        

tax" have the same meanings as in section 5748.01 of the Revised   2,933        

Code.                                                              2,934        

      (U)  As used in divisions (A)(8), (A)(9), (S)(6), and        2,936        

(S)(7) of this section, "public obligations," "purchase            2,937        

obligations," and "interest or interest equivalent" have the same  2,938        

meanings as in section 5709.76 of the Revised Code.                2,939        

      (V)  "Limited liability company" means any limited           2,941        

liability company formed under Chapter 1705. of the Revised Code   2,942        

or under the laws of any other state.                              2,943        

      (W)  "Pass-through entity investor" means any person who,    2,945        

during any portion of a taxable year of a pass-through entity, is  2,946        

a partner, member, shareholder, or investor in that pass-through   2,947        

entity.                                                                         

      (X)  "Banking day" has the same meaning as in section        2,949        

1304.01 of the Revised Code.                                       2,950        

      (Y)  "Month" means a calendar month.                         2,952        

      (Z)  "Quarter" means the first three months, the second      2,954        

three months, the third three months, or the last three months of  2,955        

the taxpayer's taxable year.                                                    

      (AA)(1)  "Eligible institution" means a state university or  2,957        

state institution of higher education as defined in section        2,958        

3345.011 of the Revised Code, or a private, nonprofit college,     2,959        

university, or other post-secondary institution located in this    2,960        

                                                          71     


                                                                 
state that possesses a certificate of authorization issued by the  2,961        

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

Code or a certificate of registration issued by the state board    2,962        

of proprietary school registration under Chapter 3332. of the      2,963        

Revised Code.                                                                   

      (2)  "Qualified tuition and fees" means tuition and fees     2,965        

imposed by an eligible institution as a condition of enrollment    2,966        

or attendance, not exceeding two thousand five hundred dollars in  2,967        

each of the individual's first two years of post-secondary         2,968        

education.  If the individual is a part-time student, "qualified   2,969        

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

equivalent of the first two years of post-secondary education      2,970        

during a maximum of five taxable years, not exceeding a total of   2,971        

five thousand dollars.  "Qualified tuition and fees" does not      2,972        

include:                                                                        

      (a)  Expenses for any course or activity involving sports,   2,974        

games, or hobbies unless the course or activity is part of the     2,975        

individual's degree or diploma program;                            2,976        

      (b)  The cost of books, room and board, student activity     2,978        

fees, athletic fees, insurance expenses, or other expenses         2,979        

unrelated to the individual's academic course of instruction;      2,980        

      (c)  Tuition, fees, or other expenses paid or reimbursed     2,982        

through an employer, scholarship, grant in aid, or other           2,983        

educational benefit program.                                                    

      (BB)  Any term used in this chapter that is not otherwise    2,985        

defined in this section and that is not used in a comparable       2,986        

context in the Internal Revenue Code and other statutes of the     2,987        

United States relating to federal income taxes has the same        2,988        

meaning as in section 5733.40 of the Revised Code.                 2,989        

      Section 4.  That all existing versions of section 5747.01    2,991        

of the Revised Code are hereby repealed.                           2,992        

      Section 5.  Sections 3 and 4 of this act shall take effect   2,994        

July 1, 2000.                                                      2,995        

      Section 6.  Section 5747.01 of the Revised Code, as amended  2,996        

                                                          72     


                                                                 
by this act, and section 5747.70 of the Revised Code, as enacted   2,997        

by this act, apply to tax years beginning on and after January 1,  2,998        

2000.                                                                           

      Section 7.  Section 5747.01 of the Revised Code is           3,000        

presented in Section 1 of this act as a composite of the section   3,002        

as amended by both Am. Sub. H.B. 4 and Am. Sub. H.B. 282 of the    3,003        

123rd General Assembly, with the new language of neither of the    3,004        

acts shown in capital letters.  This is in recognition of the      3,005        

principle stated in division (B) of section 1.52 of the Revised    3,006        

Code that such amendments are to be harmonized where not           3,007        

substantively irreconcilable and constitutes a legislative         3,008        

finding that such is the resulting version in effect prior to the  3,009        

effective date of this act.