To amend sections 131.44, 173.06, 173.40, 2913.40, 3721.51, 3721.56, 5101.11, 5111.02, 5111.10, 5111.86, 5111.871, 5112.01, 5112.06, 5112.07, 5112.11, 5123.041, 5733.04, 5743.02, 5743.03, 5743.04, 5743.05, 5743.08, 5743.081, 5743.12, 5743.13, 5743.14, 5743.32, 5743.33, 5743.34, 5743.35, 5747.01, 5747.02, 5747.05, 5901.02, 5901.03, and 5919.34; to amend for purposes of adopting new section numbers as indicated in parentheses sections 5111.10 (5111.90) and 5111.86 (5111.91); to enact sections 131.441, 173.061, 173.062, 173.07, 173.071, 173.072, 5111.0112, 5111.082, 5111.091, 5111.92, 5111.93, 5111.94, and 5901.021; and to repeal sections 5743.023 and 5743.322 of the Revised Code and to amend Section 5.02 of Sub. H.B. 73 of the 124th General Assembly, as subsequently amended; to amend Sections 16, 16.02, 44, 44.19, 63.07, 94, 94.02, 94.06, 94.07, 125, and 144 of Am. Sub. H.B. 94 of the 124th General Assembly; to amend Section 13 of Am. Sub. H.B. 94 of the 124th General Assembly, as subsequently amended; to amend Sections 63 and 63.37 of Am. Sub. H.B. 94 of the 124th General Assembly, as subsequently amended; to amend Section 29 of Am. Sub. H.B. 405 of the 124th General Assembly; and to repeal Section 31 of Am. Sub. H.B. 405 of the 124th General Assembly to increase the rate of tax on cigarettes; to make other tax modifications; to provide authorization and conditions for the operation of state programs; to make other budgetary and program modifications; and to make operating appropriations for the period ending June 30, 2003, and capital appropriations for the period ending June 30, 2004.

Section 1. That sections 131.44, 173.06, 173.40, 2913.40, 3721.51, 3721.56, 5101.11, 5111.02, 5111.10, 5111.86, 5111.871, 5112.01, 5112.06, 5112.07, 5112.11, 5123.041, 5733.04, 5743.02, 5743.03, 5743.04, 5743.05, 5743.08, 5743.081, 5743.12, 5743.13, 5743.14, 5743.32, 5743.33, 5743.34, 5743.35, 5747.01, 5747.02, 5747.05, 5901.02, 5901.03, and 5919.34 be amended; sections 5111.10 (5111.90) and 5111.86 (5111.91) be amended for the purpose of adopting new section numbers as indicated in parentheses; and sections 131.441, 173.061, 173.062, 173.07, 173.071, 173.072, 5111.0112, 5111.082, 5111.091, 5111.92, 5111.93, 5111.94, and 5901.021 of the Revised Code be enacted to read as follows:

Sec. 131.44.  (A) As used in this section:

(1) "Surplus revenue" means the excess, if any, of the total fund balance over the required year-end balance.

(2) "Total fund balance" means the sum of the unencumbered balance in the general revenue fund on the last day of the preceding fiscal year plus, the balance in the excess tax receipts fund created under section 131.441 of the Revised Code on the last day of the preceding fiscal year, and the balance in the budget stabilization fund.

(3) "Required year-end balance" means the sum of the following:

(a) Five per cent of the general revenue fund revenues for the preceding fiscal year;

(b) "Ending fund balance," which means one-half of one per cent of general revenue fund revenues for the preceding fiscal year;

(c) "Carryover balance," which means, with respect to a fiscal biennium, the excess, if any, of the estimated general revenue fund appropriation and transfer requirement for the second fiscal year of the biennium over the estimated general revenue fund revenue for that fiscal year;

(d) "Capital appropriation reserve," which means the amount, if any, of general revenue fund capital appropriations made for the current biennium that the director of budget and management has determined will be encumbered or disbursed;

(e) "Income tax reduction impact reserve," which means an amount equal to the reduction projected by the director of budget and management in income tax revenue in the current fiscal year attributable to the previous reduction in the income tax rate made by the tax commissioner pursuant to division (B) of section 5747.02 of the Revised Code.

(4) "Estimated general revenue fund appropriation and transfer requirement" means the most recent adjusted appropriations made by the general assembly from the general revenue fund and includes both of the following:

(a) Appropriations made and transfers of appropriations from the first fiscal year to the second fiscal year of the biennium in provisions of acts of the general assembly signed by the governor but not yet effective;

(b) Transfers of appropriation from the first fiscal year to the second fiscal year of the biennium approved by the controlling board.

(5) "Estimated general revenue fund revenue" means the most recent such estimate available to the director of budget and management.

(B)(1) Not later than the thirty-first day of July each year, the director of budget and management shall determine the surplus revenue that existed on the preceding thirtieth day of June and transfer from the general revenue fund, to the extent of the unobligated, unencumbered balance on the preceding thirtieth day of June in excess of one-half of one per cent of the general revenue fund revenues in the preceding fiscal year, and from the excess tax receipts fund, the following:

(a) First, to the budget stabilization fund, any amount necessary for the balance of the budget stabilization fund to equal five per cent of the general revenue fund revenues of the preceding fiscal year;

(b) Then, to the income tax reduction fund, which is hereby created in the state treasury, an amount equal to the surplus revenue.

(2) Not later than the thirty-first day of July each year, the director shall determine the percentage that the balance in the income tax reduction fund is of the amount of revenue that the director estimates will be received from the tax levied under section 5747.02 of the Revised Code in the current fiscal year without regard to any reduction under division (B) of that section. If that percentage exceeds thirty-five one hundredths of one per cent, the director shall certify the percentage to the tax commissioner not later than the thirty-first day of July.

(C) The director of budget and management shall transfer money in the income tax reduction fund to the general revenue fund, the local government fund, the library and local government support fund, and the local government revenue assistance fund as necessary to offset revenue reductions resulting from the reductions in taxes required under division (B) of section 5747.02 of the Revised Code in the respective amounts and percentages prescribed by divisions (A)(1), (2), and (4) of section 5747.03 of the Revised Code as if the amount transferred had been collected as taxes under Chapter 5747. of the Revised Code. If no reductions in taxes are made under that division that affect revenue received in the current fiscal year, the director shall not transfer money from the income tax reduction fund to the general revenue fund, the local government fund, the library and local government support fund, and the local government revenue assistance fund.

Sec. 131.441. (A) As used in this section:

(1) "Base year revenue" means sixteen billion one hundred ninety-five million eight hundred thousand dollars.

(2) "Target revenue" for each fiscal year after fiscal year 2002 means the target fiscal year revenue for the preceding fiscal year multiplied by the greater of the following:

(a) One hundred three per cent;

(b) One hundred per cent plus the percentage increase in the consumer price index prepared by the United States bureau of labor statistics (all urban consumers, all items) for the twelve-month period ending on the thirty-first day of December preceding the determination made under division (C) of this section.

For fiscal year 2002, "target revenue" equals the base year revenue multiplied by the greater of the quantities described in divisions (A)(2)(a) and (b) of this section.

(3) "Actual revenue" for a fiscal year means the total amount of taxes, nontax receipts, and transfers credited or made to the general revenue fund in the fiscal year.

(4) "Excess revenue" for a fiscal year means the excess, if any, of actual revenue for that fiscal year over the target revenue for that fiscal year.

(B) There is hereby created in the state treasury the excess tax receipts fund. Money in the fund shall not be transferred or appropriated from the fund except as provided in division (B)(1) of section 131.44 of the Revised Code.

(C) On the thirtieth day of June each year, the director of budget and management shall transfer from the general revenue fund to the excess tax receipts fund an amount equal to the excess revenue for the fiscal year ending on that day.

Sec. 173.06.  (A) The director of aging shall establish a golden buckeye card program and provide a golden buckeye card to any resident of this state who applies to the director for a card and who is sixty years of age or older or disabled. The director shall devise programs to provide benefits of any kind to card holders, and encourage support and participation in them by all persons, including governmental organizations. Card holders shall be entitled to any benefits granted to them by private persons or organizations, the laws of this state, or ordinances or resolutions of political subdivisions. This section does not require any person or organization to provide benefits to any card holder. The department of aging shall bear all costs of the program, except that the department is not required to bear any costs related to the prescription drug discount programs established pursuant to section 173.061 of the Revised Code.

(B) Before issuing a golden buckeye card to any person, the director shall establish the identity of any person who applies for a card and shall ascertain that such person is sixty years of age or older or disabled. The director shall adopt rules under Chapter 119. of the Revised Code to prevent the issuance of cards to persons not qualified to have them. Cards shall contain the signature of the card holder and any other information the director considers necessary to carry out the purposes of the golden buckeye card program under this section. Any card that the director issues shall be held in perpetuity by the original card holder and shall not be transferable to any other person. A person who loses his the person's card may obtain another card from the director upon providing the same information to the director as was required for the issuance of the original card.

(C) No person shall use a golden buckeye card except to obtain a benefit for the holder of the card to which the holder is entitled under the conditions of the offer.

(D) As used in this section, "disabled person" means a person who has some impairment of body or mind that makes the person unfit to work at any substantially remunerative employment that he or she the person is substantially able to perform and that will, with reasonable probability, continue for a period of at least twelve months without any present indication of recovery therefrom, or who has been certified as permanently and totally disabled by an agency of this state or the United States having the function of so classifying persons.

Sec. 173.061. (A) As used in this section:

(1) "Prescription drug" means a drug that may not be dispensed without a prescription from a licensed health professional authorized to prescribe drugs.

(2) "Drug," "licensed health professional authorized to prescribe drugs," "pharmacy," and "prescription" have the same meanings as in section 4729.01 of the Revised Code.

(3) "Disabled person" has the same meaning as in section 173.06 of the Revised Code.

(B) The director of aging shall establish one or more prescription drug discount card programs that enable cardholders to receive discounts on prescription drugs dispensed at participating pharmacies. A card shall be provided to any resident of this state who applies in accordance with rules adopted by the director pursuant to division (F) of this section and is sixty years of age or older or is a disabled person.

If the director establishes more than one prescription drug discount card program under this section, an eligible resident may participate in one or more or all of the programs.

(C)(1) The director shall solicit and accept proposals from entities separate from the department of aging to provide for administration of a program or programs in accordance with rules adopted under division (F) of this section. Proposals must be submitted not later than a date established by the director. The director shall accept only those proposals that specify all of the following:

(a) The estimated amount of the discount based on the entity's previous experience and how the discount is to be achieved;

(b) To the extent that discounts on prescription drugs are to be achieved through rebates or discounts in prices that the entity negotiates with drug manufacturers, the proportion of the rebates or discounts to be used to do all of the following:

(i) Reduce any costs to cardholders;

(ii) Achieve discounts for cardholders;

(iii) Cover costs for administering the program.

(c) Any other benefits offered to cardholders;

(d) If fees are permitted, the fee, if any, to cardholders for participation in the program and whether the fee is to be a one-time or periodic fee;

(e) The estimated number and geographic distribution of participating pharmacies and the process for establishing the program's pharmacy network;

(f) Financial incentives to be paid to participating pharmacies by the entity;

(g) The percentage of prescription drugs to be covered by the program by major drug category;

(h) How the entity proposes to improve medication management for cardholders;

(i) How cardholders and participating pharmacies will be informed of the discounted price negotiated by the entity;

(j) How the entity will handle complaints about the program's operation;

(k) The entity's previous experience in managing similar programs;

(l) Any additional information requested by the director.

(2) The director shall contract with one or more entities to administer a program or programs on the basis of the proposals submitted, but may require an administrator to modify its conduct of a program in accordance with rules adopted under division (F) of this section. Prior to entering into a contract with an entity, the director shall obtain approval of the contract from the controlling board at a public hearing.

The director shall adopt rules specifying the period for which a contract will be in effect and may terminate a contract if an administrator fails to conduct a program in accordance with its proposal or with any modifications required by rule. When a contract period ends or a contract is terminated, the director shall enter into a new contract in the manner specified in this section for an original contract. Prior to making a new contract, the director may modify the rules for administration of the program or programs.

(D) The rules for administration of a program established under division (C)(2) of this section may permit an administrator to charge a fee for a prescription drug discount card. The fee may be a one-time or periodic fee. If the rules permit a fee to be charged, each entity that submits a proposal under which a fee will be charged shall specify the amount of the fee and the period to which the fee will apply.

If an administrator charges a fee for a prescription drug discount card, the rules may require the administrator to issue the cards. If an administrator does not charge a fee, the rules may require the administrator to issue the cards or may include the prescription drug discount information on golden buckeye cards issued under section 173.06 of the Revised Code.

(E) As used in this division, "administrator" includes the administrator's parent company and any subsidiary of the parent company.

(1) No administrator shall sell any information concerning a person who holds a prescription drug discount card, other than aggregate information that does not identify the cardholder, without the cardholder's written consent.

(2) Unless an administrator has the cardholder's written consent, no administrator shall use any personally identifiable information that it obtains concerning a cardholder through the program to promote or sell a program or product offered by the administrator that is not related to the administration of the program. This division does not prohibit an administrator from contacting cardholders concerning participation in or administration of the program, including, but not limited to, mailing a list of pharmacies participating in the program's network.

(3) To the extent that a discount is achieved through rebates or discounts in prices that an administrator negotiates with drug manufacturers, an administrator shall use the rebates or discounts to do the following:

(a) Reduce any costs to cardholders;

(b) Achieve discounts for cardholders;

(c) Cover any administrative costs of the program.

(F) The director shall adopt rules in accordance with Chapter 119. of the Revised Code that do all of the following:

(1) Specify how a resident may apply to participate in any one or more prescription drug discount card programs;

(2) Provide for the administration of each program;

(3) Specify the circumstances under which the director may require an administrator to modify its conduct of a program;

(4) Specify the duration of a contract;

(5) Specify whether an administrator may charge a fee for a card and whether an administrator is required to issue the cards;

(6) Require that an administrator permit any pharmacy willing to comply with the administrator's terms and conditions for participation in the program's network to participate in any network used by the administrator for its program;

(7) Prohibit an administrator from requiring a pharmacy or drug manufacturer to participate in the program's network as a condition of participation in another network operated by the administrator;

(8) Permit an administrator to negotiate with one or more drug manufacturers for discounts in drug prices or rebates;

(9) Permit an administrator to receive any rebate payments from drug manufacturers;

(10) Require that an administrator create a financial incentive program for participating pharmacies through which the administrator shall distribute a portion of any rebate payments from drug manufacturers received under division (F)(9) of this section.

(G) Not later than one month after the end of each twelve-month period that one or more prescription drug discount card programs are in operation, each administrator shall collect from each of its participating pharmacies and provide to the director of aging the information required by section 173.071 of the Revised Code.

Sec. 173.062. Records identifying the recipients of golden buckeye cards issued under section 173.06 of the Revised Code or prescription drug discount cards issued under section 173.061 of the Revised Code are not public records subject to inspection or copying under section 149.43 of the Revised Code and may be disclosed only at the discretion of the director of aging. The director may disclose only information in records identifying the recipients of golden buckeye cards or prescription drug discount cards that does not contain the recipient's medical history or prescription drug utilization history.

Sec. 173.07. Not later than four months after the end of each twelve-month period that one or more prescription drug discount card programs established under section 173.061 of the Revised Code are in operation, the director of aging shall issue a report on the operation of each program during that twelve-month period.

Sec. 173.071. Each report issued under section 173.07 of the Revised Code shall be based on information received by the director of aging from each administrator under division (G) of section 173.061 of the Revised Code and specify all of the following about each program:

(A) The number of prescription drug discount cardholders;

(B) The number of cardholders who used the card at least once in the immediately preceding twelve-month period;

(C) The total cost savings to all cardholders generated by the program;

(D) The average cost savings to a cardholder per prescription;

(E) The source and method of cost savings under the program;

(F) The drugs that are discounted under the program listed according to major drug category;

(G) For each participating pharmacy, the number of times in the twelve-month period that the pharmacy's customary and usual price was lower than the price offered under the prescription drug discount program;

(H) The name of the program's administrator;

(I) The length of the contract between the director and the program's administrator;

(J) The number of pharmacies participating in the program;

(K) Other than the cost of prescription drugs, any fees paid by cardholders to participate in the program;

(L) Any costs incurred by the state to operate the program;

(M) Any costs incurred by participating pharmacies to participate in the program.

Sec. 173.072. The director of aging shall submit each report to the governor, the speaker and minority leader of the house of representatives, the president and minority leader of the senate, and the chairpersons and ranking minority members of the committees of the house of representatives and senate that have primary concern with matters pertaining to health care.

Sec. 173.40.  There is hereby created a component of the medicaid program established under Chapter 5111. of the Revised Code to be known as the preadmission screening system providing options and resources today program, or PASSPORT. The PASSPORT program shall provide home and community-based services as an alternative to nursing facility placement for aged and disabled medicaid recipients. The program shall be operated pursuant to a home and community-based waiver granted by the United States secretary of health and human services under section 1915 of the "Social Security Act," 49 Stat. 620 (1935), 42 U.S.C. 1396n, as amended. The department of aging shall administer the program through an interagency agreement a contract entered into with the department of job and family services under section 5111.86 5111.91 of the Revised Code. The directors of aging and job and family services shall adopt rules in accordance with Chapter 119. of the Revised Code to implement the program.

Sec. 2913.40.  (A) As used in this section:

(1) "Statement or representation" means any oral, written, electronic, electronic impulse, or magnetic communication that is used to identify an item of goods or a service for which reimbursement may be made under the medical assistance program or that states income and expense and is or may be used to determine a rate of reimbursement under the medical assistance program.

(2) "Medical assistance program" means the program established by the department of job and family services to provide medical assistance under section 5111.01 of the Revised Code and the medicaid program of Title XIX of the "Social Security Act," 49 Stat. 620 (1935), 42 U.S.C. 301, as amended.

(3) "Provider" means any person who has signed a provider agreement with the department of job and family services to provide goods or services pursuant to the medical assistance program or any person who has signed an agreement with a party to such a provider agreement under which the person agrees to provide goods or services that are reimbursable under the medical assistance program.

(4) "Provider agreement" means an oral or written agreement between the department of job and family services and a person in which the person agrees to provide goods or services under the medical assistance program.

(5) "Recipient" means any individual who receives goods or services from a provider under the medical assistance program.

(6) "Records" means any medical, professional, financial, or business records relating to the treatment or care of any recipient, to goods or services provided to any recipient, or to rates paid for goods or services provided to any recipient and any records that are required by the rules of the director of job and family services to be kept for the medical assistance program.

(B) No person shall knowingly make or cause to be made a false or misleading statement or representation for use in obtaining reimbursement from the medical assistance program.

(C) No person, with purpose to commit fraud or knowing that the person is facilitating a fraud, shall do either of the following:

(1) Contrary to the terms of the person's provider agreement, charge, solicit, accept, or receive for goods or services that the person provides under the medical assistance program any property, money, or other consideration in addition to the amount of reimbursement under the medical assistance program and the person's provider agreement for the goods or services and any deductibles or co-payments authorized by rules adopted under section 5111.02 5111.0112 of the Revised Code or by any rules adopted pursuant to that section.

(2) Solicit, offer, or receive any remuneration, other than any deductibles or co-payments authorized by rules adopted under section 5111.02 5111.0112 of the Revised Code or by any rules adopted pursuant to that section, in cash or in kind, including, but not limited to, a kickback or rebate, in connection with the furnishing of goods or services for which whole or partial reimbursement is or may be made under the medical assistance program.

(D) No person, having submitted a claim for or provided goods or services under the medical assistance program, shall do either of the following for a period of at least six years after a reimbursement pursuant to that claim, or a reimbursement for those goods or services, is received under the medical assistance program:

(1) Knowingly alter, falsify, destroy, conceal, or remove any records that are necessary to fully disclose the nature of all goods or services for which the claim was submitted, or for which reimbursement was received, by the person;

(2) Knowingly alter, falsify, destroy, conceal, or remove any records that are necessary to disclose fully all income and expenditures upon which rates of reimbursements were based for the person.

(E) Whoever violates this section is guilty of medicaid fraud. Except as otherwise provided in this division, medicaid fraud is a misdemeanor of the first degree. If the value of property, services, or funds obtained in violation of this section is five hundred dollars or more and is less than five thousand dollars, medicaid fraud is a felony of the fifth degree. If the value of property, services, or funds obtained in violation of this section is five thousand dollars or more and is less than one hundred thousand dollars, medicaid fraud is a felony of the fourth degree. If the value of the property, services, or funds obtained in violation of this section is one hundred thousand dollars or more, medicaid fraud is a felony of the third degree.

(F) Upon application of the governmental agency, office, or other entity that conducted the investigation and prosecution in a case under this section, the court shall order any person who is convicted of a violation of this section for receiving any reimbursement for furnishing goods or services under the medical assistance program to which the person is not entitled to pay to the applicant its cost of investigating and prosecuting the case. The costs of investigation and prosecution that a defendant is ordered to pay pursuant to this division shall be in addition to any other penalties for the receipt of that reimbursement that are provided in this section, section 5111.03 of the Revised Code, or any other provision of law.

(G) The provisions of this section are not intended to be exclusive remedies and do not preclude the use of any other criminal or civil remedy for any act that is in violation of this section.

Sec. 3721.51.  The department of job and family services shall:

(A) For the purposes specified in section 3721.56 of the Revised Code, determine an annual franchise permit fee on each nursing home in an amount equal to three dollars and thirty cents for fiscal years year 2002 and 2003, four dollars and thirty cents for fiscal years 2003 through 2005, and one dollar for each fiscal year thereafter, multiplied by the product of the following:

(1) The number of beds licensed as nursing home beds, plus any other beds certified as skilled nursing facility beds under Title XVIII or nursing facility beds under Title XIX of the "Social Security Act," 49 Stat. 620 (1935), 42 U.S.C.A. 301, as amended, on July 1, 1993, and, for each subsequent year, the first day of May of the calendar year in which the fee is determined pursuant to division (A) of section 3721.53 of the Revised Code;

(2) The number of days in fiscal year 1994 and, for each subsequent year, the number of days in the fiscal year beginning on the first day of July of the calendar year in which the fee is determined pursuant to division (A) of section 3721.53 of the Revised Code.

(B) For the purposes specified in section 3721.56 of the Revised Code, determine an annual franchise permit fee on each hospital in an amount equal to three dollars and thirty cents for fiscal years year 2002 and 2003, four dollars and thirty cents for fiscal years 2003 through 2005, and one dollar for each fiscal year thereafter, multiplied by the product of the following:

(1) The number of beds registered pursuant to section 3701.07 of the Revised Code as skilled nursing facility beds or long-term care beds, plus any other beds licensed as nursing home beds under section 3721.02 or 3721.09 of the Revised Code, on July 1, 1993, and, for each subsequent year, the first day of May of the calendar year in which the fee is determined pursuant to division (A) of section 3721.53 of the Revised Code;

(2) The number of days in fiscal year 1994 and, for each subsequent year, the number of days in the fiscal year beginning on the first day of July of the calendar year in which the fee is determined pursuant to division (A) of section 3721.53 of the Revised Code.

If the United States health care financing administration centers for medicare and medicaid services determines that the franchise permit fee established by sections 3721.50 through to 3721.58 of the Revised Code would be an impermissible health care related tax under section 1903(w) of the "Social Security Act," 49 Stat. 620 (1935), 42 U.S.C. 1396b(w), as amended, the department of job and family services shall take all necessary actions to cease implementation of those sections in accordance with rules adopted under section 3721.58 of the Revised Code.

Sec. 3721.56.  (A) Thirty and three-tenths per cent of all payments and penalties paid by nursing homes and hospitals under sections 3721.53 and 3721.54 of the Revised Code for fiscal years year 2002 and 2003, twenty-three and twenty-six-hundredths per cent of such payments and penalties paid for fiscal years 2003 through 2005, and all such payments and penalties paid for subsequent fiscal years, shall be deposited into the "home and community-based services for the aged fund," which is hereby created in the state treasury. The departments of job and family services and aging shall use the moneys in the fund to fund the following in accordance with rules adopted under section 3721.58 of the Revised Code:

(1) The medical assistance program established under Chapter 511. 5111. of the Revised Code;

(2) The PASSPORT program established under section 173.40 of the Revised Code;

(3) The residential state supplement program established under section 173.35 of the Revised Code.

(B) Sixty-nine and seven-tenths per cent of all payments and penalties paid by nursing homes and hospitals under sections 3721.53 and 3721.54 of the Revised Code for fiscal years year 2002 and, and seventy-six and seventy-four-hundredths per cent of such payments and penalties paid for fiscal years 2003 through 2005, shall be deposited into the nursing facility stabilization fund, which is hereby created in the state treasury. The department of job and family services shall use the money in the fund in the manner provided by Am. Sub. H.B. 94 and Sub. S.B. 261 of the 124th general assembly.

Sec. 5101.11.  This section does not apply to contracts entered into under section 5111.022, 5111.90, or 5111.91 of the Revised Code.

(A) As used in this section:

(1) "Entity" includes an agency, board, commission, or department of the state or a political subdivision of the state; a private, nonprofit entity; a school district; a private school; or a public or private institution of higher education.

(2) "Federal financial participation" means the federal government's share of expenditures made by an entity in implementing a program administered by the department of job and family services.

(B) At the request of any public entity having authority to implement a program administered by the department of job and family services or any private entity under contract with a public entity to implement a program administered by the department, the department may seek to obtain federal financial participation for costs incurred by the entity. Federal financial participation may be sought from programs operated pursuant to Title IV-A, Title IV-E, and Title XIX of the "Social Security Act," 49 Stat. 620 (1935), 42 U.S.C. 301, as amended; the "Food Stamp Act of 1964," 78 Stat. 703, 7 U.S.C. 2011, as amended; and any other statute or regulation under which federal financial participation may be available, except that federal financial participation may be sought only for expenditures made with funds for which federal financial participation is available under federal law.

(C) All funds collected by the department of job and family services pursuant to division (B) of this section shall be distributed to the entities that incurred the costs, except for any amounts retained by the department pursuant to division (D)(3) of this section.

(D) In distributing federal financial participation pursuant to this section, the department may either enter into an agreement with the entity that is to receive the funds or distribute the funds in accordance with rules adopted under division (F) of this section. If the department decides to enter into an agreement to distribute the funds, the agreement may include terms that do any of the following:

(1) Provide for the whole or partial reimbursement of any cost incurred by the entity in implementing the program;

(2) In the event that federal financial participation is disallowed or otherwise unavailable for any expenditure, require the department of job and family services or the entity, whichever party caused the disallowance or unavailability of federal financial participation, to assume responsibility for the expenditures;

(3) Permit the department to retain not more than five per cent of the amount of the federal financial participation to be distributed to the entity;

(4) Require the public entity to certify the availability of sufficient unencumbered funds to match the federal financial participation it receives under this section;

(5) Establish the length of the agreement, which may be for a fixed or a continuing period of time;

(6) Establish any other requirements determined by the department to be necessary for the efficient administration of the agreement.

(E) An entity that receives federal financial participation pursuant to this section for a program aiding children and their families shall establish a process for collaborative planning with the department of job and family services for the use of the funds to improve and expand the program.

(F) The director of job and family services shall adopt rules as necessary to implement this section, including rules for the distribution of federal financial participation pursuant to this section. The rules shall be adopted in accordance with Chapter 119. of the Revised Code. The director may adopt or amend any statewide plan required by the federal government for a program administered by the department, as necessary to implement this section.

(G) Federal financial participation received pursuant to this section shall not be included in any calculation made under section 5101.16 or 5101.161 of the Revised Code.

Sec. 5111.0112. The director of job and family services shall examine instituting a copayment program under medicaid. As part of the examination, the director shall determine which groups of medicaid recipients may be subjected to a copayment requirement under federal statutes and regulations and which of those groups are appropriate for a copayment program designed to reduce inappropriate and excessive use of medical goods and services. If, on completion of the examination, the director determines that it is feasible to institute such a copayment program, the director may seek approval from the United States secretary of health and human services to institute the copayment program. If necessary, the director may seek approval by applying for a waiver of federal statutes and regulations. If such approval is obtained, the director shall adopt rules in accordance with Chapter 119. of the Revised Code governing the copayment program.

Sec. 5111.02.  (A) Under the medical assistance program:

(1) Reimbursement Except as otherwise permitted by federal statute or regulation and at the department's discretion, reimbursement by the department of job and family services to a medical provider for any medical service rendered under the program shall not exceed the authorized reimbursement level for the same service under the medicare program established under Title XVIII of the "Social Security Act," 49 Stat. 620 (1935), 42 U.S.C.A. 301, as amended.

(2) Reimbursement for freestanding medical laboratory charges shall not exceed the customary and usual fee for laboratory profiles.

(3) The department may deduct from payments for services rendered by a medicaid provider under the medical assistance program any amounts the provider owes the state as the result of incorrect medical assistance payments the department has made to the provider.

(4) The department may conduct final fiscal audits in accordance with the applicable requirements set forth in federal laws and regulations and determine any amounts the provider may owe the state. When conducting final fiscal audits, the department shall consider generally accepted auditing standards, which include the use of statistical sampling.

(5) To the maximum extent that federal laws and regulations permit the implementation of such a policy, the department may institute a copayment program for all services provided under the medical assistance program. The program shall be administered in accordance with the applicable requirements set forth in federal laws and regulations.

(6) The number of days of inpatient hospital care for which reimbursement is made on behalf of a recipient of medical assistance to a hospital that is not paid under a diagnostic-related-group prospective payment system shall not exceed thirty days during a period beginning on the day of the recipient's admission to the hospital and ending sixty days after the termination of that hospital stay, except that the department may make exceptions to this limitation. The limitation does not apply to children participating in the program for medically handicapped children established under section 3701.023 of the Revised Code.

(B) The director of job and family services may adopt, amend, or rescind rules under Chapter 119. of the Revised Code establishing the amount, duration, and scope of medical services to be included in the medical assistance program. Such rules shall establish the conditions under which services are covered and reimbursed, the method of reimbursement applicable to each covered service, and the amount of reimbursement or, in lieu of such amounts, methods by which such amounts are to be determined for each covered service. Any rules that pertain to nursing facilities or intermediate care facilities for the mentally retarded shall be consistent with sections 5111.20 to 5111.33 of the Revised Code.

(C) No health insuring corporation that has a contract to provide health care services to recipients of medical assistance shall restrict the availability to its enrollees of any prescription drugs included in the Ohio medicaid drug formulary as established under rules adopted by the director.

(D) The division of any reimbursement between a collaborating physician or podiatrist and a clinical nurse specialist, certified nurse-midwife, or certified nurse practitioner for services performed by the nurse shall be determined and agreed on by the nurse and collaborating physician or podiatrist. In no case shall reimbursement exceed the payment that the physician or podiatrist would have received had the physician or podiatrist provided the entire service.

Sec. 5111.091. Every three months, the director of job and family services shall submit a report to the president and minority leader of the senate and speaker and minority leader of the house of representatives on the establishment and implementation of programs designed to control the increase of the cost of the medicaid program.

Sec. 5111.871.  The department of job and family services shall enter into an interagency agreement a contract with the department of mental retardation and developmental disabilities under section 5111.86 5111.91 of the Revised Code with regard to the component of the medicaid program established by the department of job and family services under one or more waivers from the United States secretary of health and human services pursuant to section 1915 of the "Social Security Act," 49 Stat. 620 (1935), 42 U.S.C.A. 1396n, as amended, to provide eligible medicaid recipients with home and community-based services as an alternative to placement in an intermediate care facility for the mentally retarded. The agreement contract shall provide for the department of mental retardation and developmental disabilities to administer the component in accordance with the terms of the waiver. The directors of job and family services and mental retardation and developmental disabilities shall adopt rules in accordance with Chapter 119. of the Revised Code governing the component.

If the department of mental retardation and developmental disabilities or the department of job and family services denies an individual's application for home and community-based services provided under this medicaid component, the department that denied the services shall give timely notice to the individual that the individual may request a hearing under section 5101.35 of the Revised Code.

The departments of mental retardation and developmental disabilities and job and family services may approve, reduce, deny, or terminate a service included in the individualized service plan developed for a medicaid recipient eligible for home and community-based services provided under this medicaid component. The departments shall consider the recommendations a county board of mental retardation and developmental disabilities makes under division (A)(1)(c) of section 5126.055 of the Revised Code. If either department approves, reduces, denies, or terminates a service, that department shall give timely notice to the medicaid recipient that the recipient may request a hearing under section 5101.35 of the Revised Code.

If supported living or residential services, as defined in section 5126.01 of the Revised Code, are to be provided under this component, any person or government entity with a current, valid medicaid provider agreement and a current, valid license under section 5123.19 or certificate under section 5123.045 or 5126.431 of the Revised Code may provide the services.

Sec. 5111.10 5111.90. To (A) As used in sections 5111.90 to 5111.93 of the Revised Code:

(1) "Political subdivision" means a municipal corporation, township, county, school district, or other body corporate and politic responsible for governmental activities only in a geographical area smaller than that of the state.

(2) "State agency" means every organized body, office, or agency, other than the department of job and family services, established by the laws of the state for the exercise of any function of state government.

(B) To the extent permitted by Title XIX of the "Social Security Act," 49 79 Stat. 620 286 (1935 1965), 42 U.S.C.A. 301 1396, as amended, and regulations adopted under that act title, the department of job and family services may enter into agreements contracts with political subdivisions to use funds of the political subdivision to pay the nonfederal share of expenditures under the medical assistance medicaid program. The determination and provision of federal financial reimbursement to a subdivision entering into an agreement a contract under this section shall be determined by the department, subject to section 5111.92 of the Revised Code, approval by the United States secretary of health and human services, and the availability of federal financial participation.

Sec. 5111.86 5111.91. The department of job and family services may enter into interagency agreements contracts with one or more other state agencies or political subdivisions to have the state agency or political subdivision administer one or more components of the medicaid program, or one or more aspects of a component, under the department's supervision. A state agency or political subdivision that enters into such an interagency agreement a contract shall comply with the terms of the contract and any rules the director of job and family services has adopted governing the component, or aspect of the component, that the state agency or political subdivision is to administer, including any rules establishing review, audit, and corrective action plan requirements. A contract with a state agency shall be in the form of an interagency agreement.

A state agency or political subdivision that enters into an interagency agreement a contract with the department under this section shall reimburse the department for the nonfederal share of the cost to the department of performing, or contracting for the performance of, a fiscal audit of the component of the medicaid program, or aspect of the component, that the state agency or political subdivision administers if rules governing the component, or aspect of the component, require that a fiscal audit be conducted.

There is hereby created in the state treasury the medicaid administrative reimbursement fund. The department shall use money in the fund to pay for the nonfederal share of the cost of a fiscal audit for which a state agency or political subdivision is required by this section to reimburse the department. The department shall deposit the reimbursements into the fund.

Sec. 5111.92.  (A)(1) Except as provided in division (B) of this section, if a state agency or political subdivision administers one or more components of the medicaid program that the United States department of health and human services approved, and for which federal financial participation was initially obtained, prior to January 1, 2002, or administers one or more aspects of such a component, the department of job and family services may retain or collect not more than ten per cent of the federal financial participation the state agency or political subdivision obtains through an approved, administrative claim regarding the component or aspect of the component. If the department retains or collects a percentage of such federal financial participation, the percentage the department retains or collects shall be specified in a contract the department enters into with the state agency or political subdivision under section 5111.91 of the Revised Code.

(2) Except as provided in division (B) of this section, if a state agency or political subdivision administers one or more components of the medicaid program that the United States department of health and human services approved on or after January 1, 2002, or administers one or more aspects of such a component, the department of job and family services shall retain or collect not less than three and not more than ten per cent of the federal financial participation the state agency or political subdivision obtains through an approved, administrative claim regarding the component or aspect of the component. The percentage the department retains or collects shall be specified in a contract the department enters into with the state agency or political subdivision under section 5111.91 of the Revised Code.

(B) The department of job and family services may retain or collect a percentage of federal financial participation under divisions (A)(1) and (2) of this section only to the extent permitted by federal statutes and regulations.

(C) All amounts the department retains or collects under this section shall be deposited into the health care services administration fund created under section 5111.94 of the Revised Code.

Sec. 5111.93.  The department of job and family services may retain or collect a percentage of the federal financial participation included in a supplemental medicaid payment to one or more medicaid providers owned or operated by a state agency or political subdivision that brings the payment to such provider or providers to the upper payment limit established by 42 C.F.R. 447.272. If the department retains or collects a percentage of that federal financial participation, the department shall adopt a rule under Chapter 119. of the Revised Code specifying the percentage the department is to retain or collect. All amounts the department retains or collects under this section shall be deposited into the health care services administration fund created under section 5111.94 of the Revised Code.

Sec. 5111.94.  (A) As used in this section, "vendor offset" means a reduction of a medicaid payment to a medicaid provider to correct a previous, incorrect medicaid payment to that provider.

(B) There is hereby created in the state treasury the health care services administration fund. Except as provided in division (C) of this section, all the following shall be deposited into the fund:

(1) Amounts deposited into the fund pursuant to sections 5111.92 and 5111.93 of the Revised Code;

(2) The amount of the state share of all money the department of job and family services, in fiscal year 2003 and each fiscal year thereafter, recovers pursuant to a tort action under the department's right of recovery under section 5101.58 of the Revised Code that exceeds the state share of all money the department, in fiscal year 2002, recovers pursuant to a tort action under that right of recovery;

(3) Subject to division (D) of this section, the amount of the state share of all money the department of job and family services, in fiscal year 2003 and each fiscal year thereafter, recovers through audits of medicaid providers that exceeds the state share of all money the department, in fiscal year 2002, recovers through such audits;

(4) Until October 16, 2003, amounts from assessments on hospitals under section 5112.06 of the Revised Code and intergovernmental transfers by governmental hospitals under section 5112.07 of the Revised Code that are deposited into the fund in accordance with the law.

(C) No funds shall be deposited into the health care services administration fund in violation of federal statutes or regulations.

(D) In determining under division (B)(3) of this section the amount of money the department, in a fiscal year, recovers through audits of medicaid providers, the amount recovered in the form of vendor offset shall be excluded.

(E) The director of job and family services shall use funds available in the health care services administration fund to pay for costs associated with the administration of the medicaid program.

Sec. 5112.01.  As used in sections 5112.03 to 5112.21 of the Revised Code:

(A)(1) "Hospital" means a nonfederal hospital to which either of the following applies:

(a) The hospital is registered under section 3701.07 of the Revised Code as a general medical and surgical hospital or a pediatric general hospital, and provides inpatient hospital services, as defined in 42 C.F.R. 440.10;

(b) The hospital is recognized under the medicare program established by Title XVIII of the "Social Security Act," 49 Stat. 620 (1935), 42 U.S.C.A. 301, as amended, as a cancer hospital and is exempt from the medicare prospective payment system.

"Hospital" does not include a hospital operated by a health insuring corporation that has been issued a certificate of authority under section 1751.05 of the Revised Code or a hospital that does not charge patients for services.

(2) "Disproportionate share hospital" means a hospital that meets the definition of a disproportionate share hospital in rules adopted under section 5112.03 of the Revised Code.

(B) "Bad debt," "charity care," "courtesy care," and "contractual allowances" have the same meanings given these terms in regulations adopted under Title XVIII of the "Social Security Act."

(C) "Cost reporting period" means the twelve-month period used by a hospital in reporting costs for purposes of Title XVIII of the "Social Security Act."

(D) "Governmental hospital" means a county hospital with more than five hundred registered beds or a state-owned and -operated hospital with more than five hundred registered beds.

(E) "Indigent care pool" means the sum of the following:

(1) The total of assessments to be paid in a program year by all hospitals under section 5112.06 of the Revised Code, less the assessments deposited into the legislative budget services fund under section 5112.19 of the Revised Code and into the health care services administration fund created under section 5111.94 of the Revised Code;

(2) The total amount of intergovernmental transfers required to be made in the same program year by governmental hospitals under section 5112.07 of the Revised Code, less the amount of transfers deposited into the legislative budget services fund under section 5112.19 of the Revised Code and into the health care services administration fund created under section 5111.94 of the Revised Code;

(3) The total amount of federal matching funds that will be made available in the same program year as a result of funds distributed by the department of job and family services to hospitals under section 5112.08 of the Revised Code.

(F) "Intergovernmental transfer" means any transfer of money by a governmental hospital under section 5112.07 of the Revised Code.

(G) "Medical assistance program" means the program of medical assistance established under section 5111.01 of the Revised Code and Title XIX of the "Social Security Act."

(H) "Program year" means a period beginning the first day of October, or a later date designated in rules adopted under section 5112.03 of the Revised Code, and ending the thirtieth day of September, or an earlier date designated in rules adopted under that section.

(I) "Registered beds" means the total number of hospital beds registered with the department of health, as reported in the most recent "directory of registered hospitals" published by the department of health.

(J) "Total facility costs" means the total costs for all services rendered to all patients, including the direct, indirect, and overhead cost to the hospital of all services, supplies, equipment, and capital related to the care of patients, regardless of whether patients are enrolled in a health insuring corporation, excluding costs associated with providing skilled nursing services in distinct-part nursing facility units, as shown on the hospital's cost report filed under section 5112.04 of the Revised Code. Effective October 1, 1993, if rules adopted under section 5112.03 of the Revised Code so provide, "total facility costs" may exclude costs associated with providing care to recipients of any of the governmental programs listed in division (B) of that section.

(K) "Uncompensated care" means bad debt and charity care.

Sec. 5112.06.  (A) For the purpose of distributing funds to hospitals under the medical assistance program pursuant to sections 5112.01 to 5112.21 of the Revised Code and depositing funds into the legislative budget services fund under section 5112.19 of the Revised Code and into the health care services administration fund created under section 5111.94 of the Revised Code, there is hereby imposed an assessment on all hospitals. Each hospital's assessment shall be based on total facility costs. All hospitals shall be assessed according to the rate or rates established each program year by the department of job and family services in rules adopted under section 5112.03 of the Revised Code. The department shall assess all hospitals uniformly and in a manner consistent with federal statutes and regulations. During any program year, the department shall not assess any hospital more than two per cent of the hospital's total facility costs.

The department shall establish an assessment rate or rates each program year that will do both of the following:

(1) Yield funds that, when combined with intergovernmental transfers and federal matching funds, will produce a program of sufficient size to pay a substantial portion of the indigent care provided by hospitals;

(2) Yield funds that, when combined with intergovernmental transfers and federal matching funds, will produce amounts for distribution to disproportionate share hospitals that do not exceed, in the aggregate, the limits prescribed by the United States health care financing administration under subsection (f) of section 1923 of the "Social Security Act," 49 Stat. 620 (1935), 42 U.S.C.A. 1396r-4(f), as amended.

(B)(1) Except as provided in division (B)(3) of this section, each hospital shall pay its assessment in periodic installments in accordance with a schedule established by the director of job and family services in rules adopted under section 5112.03 of the Revised Code.

(2) The installments shall be equal in amount, unless either of the following applies:

(a) The department makes adjustments during a program year under division (D) of section 5112.09 of the Revised Code in the total amount of hospitals' assessments;

(b) The director of job and family services determines that adjustments in the amounts of installments are necessary for the administration of sections 5112.01 to 5112.21 of the Revised Code and that unequal installments will not create cash flow difficulties for hospitals.

(3) The director may adopt rules under section 5112.03 of the Revised Code establishing alternate schedules for hospitals to pay assessments under this section in order to reduce hospitals' cash flow difficulties.

Sec. 5112.07.  (A) The department of job and family services may require governmental hospitals to make intergovernmental transfers each program year for the purpose of distributing funds to hospitals under the medical assistance program pursuant to sections 5112.01 to 5112.21 of the Revised Code and depositing funds into the legislative budget services fund under section 5112.19 of the Revised Code and into the health care services administration fund created under section 5111.94 of the Revised Code. The department shall not require transfers in an amount that, when combined with hospital assessments paid under section 5112.06 of the Revised Code and federal matching funds, produce amounts for distribution to disproportionate share hospitals that, in the aggregate, exceed limits prescribed by the United States health care financing administration under subsection (f) of section 1923 of the "Social Security Act," 49 Stat. 620 (1935), 42 U.S.C.A. 1396r-4(f), as amended.

(B) Before or during each program year, the department shall notify each governmental hospital of the amount of the intergovernmental transfer it is required to make during the program year. Each governmental hospital shall make intergovernmental transfers as required by the department under this section in periodic installments, executed by electronic fund transfer, in accordance with a schedule established in rules adopted under section 5112.03 of the Revised Code.

Sec. 5112.11. The Except for moneys deposited into the legislative budget services fund under section 5112.19 of the Revised Code and the health care services administration fund created under section 5111.94 of the Revised Code, the department of job and family services shall not use money paid to the department under sections 5112.06 and 5112.07 of the Revised Code or money that the department pays to hospitals under section 5112.08 of the Revised Code to replace any funds appropriated by the general assembly for the medical assistance program.

Sec. 5123.041.  (A) As used in this section, "habilitation center" means a habilitation center that provides habilitation center services under section 5111.041 of the Revised Code.

(B) The department of mental retardation and developmental disabilities shall do all of the following pursuant to an interagency agreement a contract with the department of job and family services entered into under section 5111.86 5111.91 of the Revised Code:

(1) Certify habilitation centers that meet the certification requirements established by rules adopted by the director of job and family services under section 5111.041 of the Revised Code;

(2) Accept and process medicaid reimbursement claims from habilitation centers providing habilitation center services to medicaid recipients under section 5111.041 of the Revised Code;

(3) With medicaid funds provided to the department from the department of job and family services, pay the medicaid reimbursement claims accepted and processed under division (B)(2) of this section;

(4) Perform the other duties included in the interagency agreement.

(C) The director of mental retardation and developmental disabilities shall adopt rules in accordance with Chapter 119. of the Revised Code that do all of the following:

(1) Establish procedures for certification of habilitation centers;

(2) Establish the fee that may be assessed under division (D) of this section;

(3) Specify how the department of mental retardation and developmental disabilities will perform its duties under this section.

(D) The department of mental retardation and developmental disabilities may assess the fee established by rule under division (C)(2) of this section for performing its duties under this section. The fee may be retained from any payment the department makes under division (B)(3) of this section.

Sec. 5733.04.  As used in this chapter:

(A) "Issued and outstanding shares of stock" applies to nonprofit corporations, as provided in section 5733.01 of the Revised Code, and includes, but is not limited to, membership certificates and other instruments evidencing ownership of an interest in such nonprofit corporations, and with respect to a financial institution that does not have capital stock, "issued and outstanding shares of stock" includes, but is not limited to, ownership interests of depositors in the capital employed in such an institution.

(B) "Taxpayer" means a corporation subject to the tax imposed by section 5733.06 of the Revised Code.

(C) "Resident" means a corporation organized under the laws of this state.

(D) "Commercial domicile" means the principal place from which the trade or business of the taxpayer is directed or managed.

(E) "Taxable year" means the period prescribed by division (A) of section 5733.031 of the Revised Code upon the net income of which the value of the taxpayer's issued and outstanding shares of stock is determined under division (B) of section 5733.05 of the Revised Code or the period prescribed by division (A) of section 5733.031 of the Revised Code that immediately precedes the date as of which the total value of the corporation is determined under division (A) or (C) of section 5733.05 of the Revised Code.

(F) "Tax year" means the calendar year in and for which the tax imposed by section 5733.06 of the Revised Code is required to be paid.

(G) "Internal Revenue Code" means the "Internal Revenue Code of 1986," 100 Stat. 2085, 26 U.S.C.A. 1, as amended.

(H) "Federal income tax" means the income tax imposed by the Internal Revenue Code.

(I) Except as provided in section 5733.058 of the Revised Code, "net income" means the taxpayer's taxable income before operating loss deduction and special deductions, as required to be reported for the taxpayer's taxable year under the Internal Revenue Code, subject to the following adjustments:

(1)(a) Deduct any net operating loss incurred in any taxable years ending in 1971 or thereafter but exclusive of any net operating loss incurred in taxable years ending prior to January 1, 1971. This deduction shall not be allowed in any tax year commencing before December 31, 1973, but shall be carried over and allowed in tax years commencing after December 31, 1973, until fully utilized in the next succeeding taxable year or years in which the taxpayer has net income, but in no case for more than the designated carryover period as described in division (I)(1)(b) of this section. The amount of such net operating loss, as determined under the allocation and apportionment provisions of section 5733.051 and division (B) of section 5733.05 of the Revised Code for the year in which the net operating loss occurs, shall be deducted from net income, as determined under the allocation and apportionment provisions of section 5733.051 and division (B) of section 5733.05 of the Revised Code, to the extent necessary to reduce net income to zero with the remaining unused portion of the deduction, if any, carried forward to the remaining years of the designated carryover period as described in division (I)(1)(b) of this section, or until fully utilized, whichever occurs first.

(b) For losses incurred in taxable years ending on or before December 31, 1981, the designated carryover period shall be the five consecutive taxable years after the taxable year in which the net operating loss occurred. For losses incurred in taxable years ending on or after January 1, 1982, the designated carryover period shall be the fifteen consecutive taxable years after the taxable year in which the net operating loss occurs.

(c) The tax commissioner may require a taxpayer to furnish any information necessary to support a claim for deduction under division (I)(1)(a) of this section and no deduction shall be allowed unless the information is furnished.

(2) Deduct any amount included in net income by application of section 78 or 951 of the Internal Revenue Code, amounts received for royalties, technical or other services derived from sources outside the United States, and dividends received from a subsidiary, associate, or affiliated corporation that neither transacts any substantial portion of its business nor regularly maintains any substantial portion of its assets within the United States. For purposes of determining net foreign source income deductible under division (I)(2) of this section, the amount of gross income from all such sources other than dividend income and income derived by application of section 78 or 951 of the Internal Revenue Code shall be reduced by:

(a) The amount of any reimbursed expenses for personal services performed by employees of the taxpayer for the subsidiary, associate, or affiliated corporation;

(b) Ten per cent of the amount of royalty income and technical assistance fees;

(c) Fifteen per cent of the amount of dividends and all other income.

The amounts described in divisions (I)(2)(a) to (c) of this section are deemed to be the expenses attributable to the production of deductible foreign source income unless the taxpayer shows, by clear and convincing evidence, less actual expenses, or the tax commissioner shows, by clear and convincing evidence, more actual expenses.

(3) Add any loss or deduct any gain resulting from the sale, exchange, or other disposition of a capital asset, or an asset described in section 1231 of the Internal Revenue Code, to the extent that such loss or gain occurred prior to the first taxable year on which the tax provided for in section 5733.06 of the Revised Code is computed on the corporation's net income. For purposes of division (I)(3) of this section, the amount of the prior loss or gain shall be measured by the difference between the original cost or other basis of the asset and the fair market value as of the beginning of the first taxable year on which the tax provided for in section 5733.06 of the Revised Code is computed on the corporation's net income. At the option of the taxpayer, the amount of the prior loss or gain may be a percentage of the gain or loss, which percentage shall be determined by multiplying the gain or loss by a fraction, the numerator of which is the number of months from the acquisition of the asset to the beginning of the first taxable year on which the fee provided in section 5733.06 of the Revised Code is computed on the corporation's net income, and the denominator of which is the number of months from the acquisition of the asset to the sale, exchange, or other disposition of the asset. The adjustments described in this division do not apply to any gain or loss where the gain or loss is recognized by a qualifying taxpayer, as defined in section 5733.0510 of the Revised Code, with respect to a qualifying taxable event, as defined in that section.

(4) Deduct the dividend received deduction provided by section 243 of the Internal Revenue Code.

(5) Deduct any interest or interest equivalent on public obligations and purchase obligations to the extent included in federal taxable income. As used in divisions (I)(5) and (6) of this section, "public obligations," "purchase obligations," and "interest or interest equivalent" have the same meanings as in section 5709.76 of the Revised Code.

(6) Add any loss or deduct any gain resulting from the sale, exchange, or other disposition of public obligations to the extent included in federal taxable income.

(7) To the extent not otherwise allowed, deduct any dividends or distributions received by a taxpayer from a public utility, excluding an electric company, if the taxpayer owns at least eighty per cent of the issued and outstanding common stock of the public utility. As used in division (I)(7) of this section, "public utility" means a public utility as defined in Chapter 5727. of the Revised Code, whether or not the public utility is doing business in the state.

(8) To the extent not otherwise allowed, deduct any dividends received by a taxpayer from an insurance company, if the taxpayer owns at least eighty per cent of the issued and outstanding common stock of the insurance company. As used in division (I)(8) of this section, "insurance company" means an insurance company that is taxable under Chapter 5725. or 5729. of the Revised Code.

(9) Deduct expenditures for modifying existing buildings or structures to meet American national standards institute standard A-117.1-1961 (R-1971), as amended; provided, that no deduction shall be allowed to the extent that such deduction is not permitted under federal law or under rules of the tax commissioner. Those deductions as are allowed may be taken over a period of five years. The tax commissioner shall adopt rules under Chapter 119. of the Revised Code establishing reasonable limitations on the extent that expenditures for modifying existing buildings or structures are attributable to the purpose of making the buildings or structures accessible to and usable by physically handicapped persons.

(10) Deduct the amount of wages and salaries, if any, not otherwise allowable as a deduction but that would have been allowable as a deduction in computing federal taxable income before operating loss deduction and special deductions for the taxable year, had the targeted jobs credit allowed and determined under sections 38, 51, and 52 of the Internal Revenue Code not been in effect.

(11) Deduct net interest income on obligations of the United States and its territories and possessions or of any authority, commission, or instrumentality of the United States to the extent the laws of the United States prohibit inclusion of the net interest for purposes of determining the value of the taxpayer's issued and outstanding shares of stock under division (B) of section 5733.05 of the Revised Code. As used in division (I)(11) of this section, "net interest" means interest net of any expenses taken on the federal income tax return that would not have been allowed under section 265 of the Internal Revenue Code if the interest were exempt from federal income tax.

(12)(a) Except as set forth in division (I)(12)(d) of this section, to the extent not included in computing the taxpayer's federal taxable income before operating loss deduction and special deductions, add gains and deduct losses from direct or indirect sales, exchanges, or other dispositions, made by a related entity who is not a taxpayer, of the taxpayer's indirect, beneficial, or constructive investment in the stock or debt of another entity, unless the gain or loss has been included in computing the federal taxable income before operating loss deduction and special deductions of another taxpayer with a more closely related investment in the stock or debt of the other entity. The amount of gain added or loss deducted shall not exceed the product obtained by multiplying such gain or loss by the taxpayer's proportionate share, directly, indirectly, beneficially, or constructively, of the outstanding stock of the related entity immediately prior to the direct or indirect sale, exchange, or other disposition.

(b) Except as set forth in division (I)(12)(e) of this section, to the extent not included in computing the taxpayer's federal taxable income before operating loss deduction and special deductions, add gains and deduct losses from direct or indirect sales, exchanges, or other dispositions made by a related entity who is not a taxpayer, of intangible property other than stock, securities, and debt, if such property was owned, or used in whole or in part, at any time prior to or at the time of the sale, exchange, or disposition by either the taxpayer or by a related entity that was a taxpayer at any time during the related entity's ownership or use of such property, unless the gain or loss has been included in computing the federal taxable income before operating loss deduction and special deductions of another taxpayer with a more closely related ownership or use of such intangible property. The amount of gain added or loss deducted shall not exceed the product obtained by multiplying such gain or loss by the taxpayer's proportionate share, directly, indirectly, beneficially, or constructively, of the outstanding stock of the related entity immediately prior to the direct or indirect sale, exchange, or other disposition.

(c) As used in division (I)(12) of this section, "related entity" means those entities described in divisions (I)(12)(c)(i) to (iii) of this section:

(i) An individual stockholder, or a member of the stockholder's family enumerated in section 318 of the Internal Revenue Code, if the stockholder and the members of the stockholder's family own, directly, indirectly, beneficially, or constructively, in the aggregate, at least fifty per cent of the value of the taxpayer's outstanding stock;

(ii) A stockholder, or a stockholder's partnership, estate, trust, or corporation, if the stockholder and the stockholder's partnerships, estates, trusts, and corporations own directly, indirectly, beneficially, or constructively, in the aggregate, at least fifty per cent of the value of the taxpayer's outstanding stock;

(iii) A corporation, or a party related to the corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under division (I)(12)(c)(iv) of this section, if the taxpayer owns, directly, indirectly, beneficially, or constructively, at least fifty per cent of the value of the corporation's outstanding stock.

(iv) The attribution rules of section 318 of the Internal Revenue Code apply for purposes of determining whether the ownership requirements in divisions (I)(12)(c)(i) to (iii) of this section have been met.

(d) For purposes of the adjustments required by division (I)(12)(a) of this section, the term "investment in the stock or debt of another entity" means only those investments where the taxpayer and the taxpayer's related entities directly, indirectly, beneficially, or constructively own, in the aggregate, at any time during the twenty-four month period commencing one year prior to the direct or indirect sale, exchange, or other disposition of such investment at least fifty per cent or more of the value of either the outstanding stock or such debt of such other entity.

(e) For purposes of the adjustments required by division (I)(12)(b) of this section, the term "related entity" excludes all of the following:

(i) Foreign corporations as defined in section 7701 of the Internal Revenue Code;

(ii) Foreign partnerships as defined in section 7701 of the Internal Revenue Code;

(iii) Corporations, partnerships, estates, and trusts created or organized in or under the laws of the Commonwealth of Puerto Rico or any possession of the United States;

(iv) Foreign estates and foreign trusts as defined in section 7701 of the Internal Revenue Code.

The exclusions described in divisions (I)(12)(e)(i) to (iv) of this section do not apply if the corporation, partnership, estate, or trust is described in any one of divisions (C)(1) to (5) of section 5733.042 of the Revised Code.

(f) Nothing in division (I)(12) of this section shall require or permit a taxpayer to add any gains or deduct any losses described in divisions (I)(12)(f)(i) and (ii) of this section:

(i) Gains or losses recognized for federal income tax purposes by an individual, estate, or trust without regard to the attribution rules described in division (I)(12)(c) of this section;

(ii) A related entity's gains or losses described in division (I)(12)(b) of this section if the taxpayer's ownership of or use of such intangible property was limited to a period not exceeding nine months and was attributable to a transaction or a series of transactions executed in accordance with the election or elections made by the taxpayer or a related entity pursuant to section 338 of the Internal Revenue Code.

(13) Any adjustment required by section 5733.042 of the Revised Code.

(14) Add any amount claimed as a credit under section 5733.0611 of the Revised Code to the extent that such amount satisfies either of the following:

(a) It was deducted or excluded from the computation of the corporation's taxable income before operating loss deduction and special deductions as required to be reported for the corporation's taxable year under the Internal Revenue Code;

(b) It resulted in a reduction of the corporation's taxable income before operating loss deduction and special deductions as required to be reported for any of the corporation's taxable years under the Internal Revenue Code.

(15) Deduct the amount contributed by the taxpayer to an individual development account program established by a county department of job and family services pursuant to sections 329.11 to 329.14 of the Revised Code for the purpose of matching funds deposited by program participants. On request of the tax commissioner, the taxpayer shall provide any information that, in the tax commissioner's opinion, is necessary to establish the amount deducted under division (I)(15) of this section.

(16) Any adjustment required by section 5733.0510 of the Revised Code.

(17)(a) Add five-sixths of the amount of depreciation expense allowed under subsection (k) of section 168 of the Internal Revenue Code, including a person's proportionate or distributive share of the amount of depreciation expense allowed by that subsection to any pass-through entity in which the person has direct or indirect ownership. The tax commissioner, under procedures established by the commissioner, may waive the add-back related to a pass-through entity if the person owns, directly or indirectly, less than five per cent of the pass-through entity.

(b) Nothing in division (I)(17) of this section shall be construed to adjust or modify the adjusted basis of any asset.

(c) To the extent the add-back is attributable to property generating income or loss allocable under section 5733.051 of the Revised Code, the add-back shall be allocated to the same location as the income or loss generated by that property. Otherwise, the add-back shall be apportioned, subject to division (B)(2)(d) of section 5733.05 of the Revised Code.

(18)(a) If a person is required to make the add-back under division (I)(17)(a) of this section for a tax year, the person shall deduct one-fifth of the amount added back for each of the succeeding five tax years.

(b) If the amount deducted under division (I)(18)(a) of this section is attributable to an add-back allocated under division (I)(17)(c) of this section, the amount deducted shall be allocated to the same location. Otherwise, the amount shall be apportioned using the apportionment factors for the taxable year in which the deduction is taken, subject to division (B)(2)(d) of section 5733.05 of the Revised Code.

(J) Any term used in this chapter has the same meaning as when used in comparable context in the laws of the United States relating to federal income taxes unless a different meaning is clearly required. Any reference in this chapter to the Internal Revenue Code includes other laws of the United States relating to federal income taxes.

(K) "Financial institution" has the meaning given by section 5725.01 of the Revised Code but does not include a production credit association as described in 85 Stat. 597, 12 U.S.C.A. 2091.

(L)(1) A "qualifying holding company" is any corporation satisfying all of the following requirements:

(a) Subject to divisions (L)(2) and (3) of this section, the net book value of the corporation's intangible assets is greater than or equal to ninety per cent of the net book value of all of its assets and at least fifty per cent of the net book value of all of its assets represents direct or indirect investments in the equity of, loans and advances to, and accounts receivable due from related members;

(b) At least ninety per cent of the corporation's gross income for the taxable year is attributable to the following:

(i) The maintenance, management, ownership, acquisition, use, and disposition of its intangible property, its aircraft the use of which is not subject to regulation under 14 C.F.R. part 121 or part 135, and any real property described in division (L)(2)(c) of this section;

(ii) The collection and distribution of income from such property.

(c) The corporation is not a financial institution on the last day of the taxable year ending prior to the first day of the tax year;

(d) The corporation's related members make a good faith and reasonable effort to make timely and fully the adjustments required by division (C)(2) of section 5733.05 of the Revised Code and to pay timely and fully all uncontested taxes, interest, penalties, and other fees and charges imposed under this chapter;

(e) Subject to division (L)(4) of this section, the corporation elects to be treated as a qualifying holding company for the tax year.

A corporation otherwise satisfying divisions (L)(1)(a) to (e) of this section that does not elect to be a qualifying holding company is not a qualifying holding company for the purposes of this chapter.

(2)(a)(i) For purposes of making the ninety per cent computation under division (L)(1)(a) of this section, the net book value of the corporation's assets shall not include the net book value of aircraft or real property described in division (L)(1)(b)(i) of this section.

(ii) For purposes of making the fifty per cent computation under division (L)(1)(a) of this section, the net book value of assets shall include the net book value of aircraft or real property described in division (L)(1)(b)(i) of this section.

(b)(i) As used in division (L) of this section, "intangible asset" includes, but is not limited to, the corporation's direct interest in each pass-through entity only if at all times during the corporation's taxable year ending prior to the first day of the tax year the corporation's and the corporation's related members' combined direct and indirect interests in the capital or profits of such pass-through entity do not exceed fifty per cent. If the corporation's interest in the pass-through entity is an intangible asset for that taxable year, then the distributive share of any income from the pass-through entity shall be income from an intangible asset for that taxable year.

(ii) If a corporation's and the corporation's related members' combined direct and indirect interests in the capital or profits of a pass-through entity exceed fifty per cent at any time during the corporation's taxable year ending prior to the first day of the tax year, "intangible asset" does not include the corporation's direct interest in the pass-through entity, and the corporation shall include in its assets its proportionate share of the assets of any such pass-through entity and shall include in its gross income its distributive share of the gross income of such pass-through entity in the same form as was earned by the pass-through entity.

(iii) A pass-through entity's direct or indirect proportionate share of any other pass-through entity's assets shall be included for the purpose of computing the corporation's proportionate share of the pass-through entity's assets under division (L)(2)(b)(ii) of this section, and such pass-through entity's distributive share of any other pass-through entity's gross income shall be included for purposes of computing the corporation's distributive share of the pass-through entity's gross income under division (L)(2)(b)(ii) of this section.

(c) For the purposes of divisions (L)(1)(b)(i), (1)(b)(ii), (2)(a)(i), and (2)(a)(ii) of this section, real property is described in division (L)(2)(c) of this section only if all of the following conditions are present at all times during the taxable year ending prior to the first day of the tax year:

(i) The real property serves as the headquarters of the corporation's trade or business, or is the place from which the corporation's trade or business is principally managed or directed;

(ii) Not more than ten per cent of the value of the real property and not more than ten per cent of the square footage of the building or buildings that are part of the real property is used, made available, or occupied for the purpose of providing, acquiring, transferring, selling, or disposing of tangible property or services in the normal course of business to persons other than related members, the corporation's employees and their families, and such related members' employees and their families.

(d) As used in division (L) of this section, "related member" has the same meaning as in division (A)(6) of section 5733.042 of the Revised Code without regard to division (B) of that section.

(3) The percentages described in division (L)(1)(a) of this section shall be equal to the quarterly average of those percentages as calculated during the corporation's taxable year ending prior to the first day of the tax year.

(4) With respect to the election described in division (L)(1)(e) of this section:

(a) The election need not accompany a timely filed report;

(b) The election need not accompany the report; rather, the election may accompany a subsequently filed but timely application for refund and timely amended report, or a subsequently filed but timely petition for reassessment;

(c) The election is not irrevocable;

(d) The election applies only to the tax year specified by the corporation;

(e) The corporation's related members comply with division (L)(1)(d) of this section.

Nothing in division (L)(4) of this section shall be construed to extend any statute of limitations set forth in this chapter.

(M) "Qualifying controlled group" means two or more corporations that satisfy the ownership and control requirements of division (A) of section 5733.052 of the Revised Code.

(N) "Limited liability company" means any limited liability company formed under Chapter 1705. of the Revised Code or under the laws of any other state.

(O) "Pass-through entity" means a corporation that has made an election under subchapter S of Chapter 1 of Subtitle A of the Internal Revenue Code for its taxable year under that code, or a partnership, limited liability company, or any other person, other than an individual, trust, or estate, if the partnership, limited liability company, or other person is not classified for federal income tax purposes as an association taxed as a corporation.

(P) "Electric company" and "combined company" have the same meanings as in section 5727.01 of the Revised Code.

Sec. 5743.02.  To provide revenues for the general revenue fund, an excise tax on sales of cigarettes is hereby levied at the rate of eleven and one-half thirty-seven mills on each cigarette.

Only one sale of the same article shall be used in computing the amount of tax due.

The treasurer of state shall place to the credit of the tax refund fund created by section 5703.052 of the Revised Code, out of receipts from the tax levied by this section, amounts equal to the refunds certified by the tax commissioner pursuant to section 5743.05 of the Revised Code. The balance of taxes collected under such section, after the credits to the tax refund fund, shall be paid into the general revenue fund.

Sec. 5743.03.  Except as provided in section 5743.04 of the Revised Code, the taxes imposed under sections 5743.02, 5743.023, 5743.024, and 5743.026 of the Revised Code shall be paid by the purchase of stamps. A stamp shall be affixed to each package of an aggregate denomination not less than the amount of the tax upon the contents thereof. The stamp, so affixed, shall be prima-facie evidence of payment of the tax. Except as is provided in the rules prescribed by the tax commissioner under authority of sections 5743.01 to 5743.20 of the Revised Code, and unless such stamps have been previously affixed, they shall be so affixed by each wholesale dealer, and canceled by writing or stamping across the face thereof the number assigned to such wholesale dealer by the tax commissioner for that purpose, prior to the delivery of any cigarettes to any person in this state, or in the case of a tax levied pursuant to section 5743.024 or 5743.026 of the Revised Code, prior to the delivery of cigarettes to any person in the county in which the tax is levied.

Except as provided in the rules prescribed by the commissioner under authority of sections 5743.01 to 5743.20 of the Revised Code, and unless such stamps have been previously affixed, each retail dealer shall within twenty-four hours after the receipt of any cigarettes at the retail dealer's place of business and prior to the delivery thereof to any person in this state, or in the case of a tax levied pursuant to section 5743.024 or 5743.026 of the Revised Code prior to the delivery thereof to any person in the county in which the tax is levied, so affix such stamps and cancel same by writing or stamping across the face thereof the number assigned to such retail dealer by the commissioner for that purpose.

Whenever any cigarettes are found in the place of business of any retail dealer without proper tax stamps affixed thereto and canceled, it is presumed that such cigarettes are kept therein in violation of sections 5743.01 to 5743.20 of the Revised Code.

Each wholesale dealer and each retail dealer who purchases cigarettes without proper tax stamps affixed thereto shall, on or before the thirty-first day of the month following the close of each semiannual period, which period shall end on the thirtieth day of June and the thirty-first day of December of each year, make and file a return of the preceding semiannual period, on such form as is prescribed by the tax commissioner, showing the dealer's entire purchases and sales of cigarettes and stamps or impressions for such semiannual period and accurate inventories as of the beginning and end of each semiannual period of cigarettes, stamped or unstamped; cigarette tax stamps affixed or unaffixed and unused meter impressions; and such other information as the commissioner finds necessary to the proper administration of sections 5743.01 to 5743.20 of the Revised Code. The commissioner may extend the time for making and filing returns and may remit all or any part of amounts of penalties which may become due under sections 5743.01 to 5743.20 of the Revised Code. The wholesale or retail dealer shall deliver the return together with a remittance of the tax deficiency reported thereon to the treasurer of state. The treasurer of state shall stamp or otherwise mark on the return the date it was received and shall also show thereon by stamp or otherwise a payment or nonpayment of the deficiency shown by the return. Thereafter, the treasurer of state shall immediately transmit all returns filed under this section to the commissioner. Any wholesale or retail dealer who fails to file a return under this section and the rules of the commissioner may be required, for each day the dealer so fails, to forfeit and pay into the state treasury the sum of one dollar as revenue arising from the tax imposed by sections 5743.01 to 5743.20 of the Revised Code and such sum may be collected by assessment in the manner provided in section 5743.081 of the Revised Code. If the commissioner finds it necessary in order to insure the payment of the tax imposed by sections 5743.01 to 5743.20 of the Revised Code, the commissioner may require returns and payments to be made other than semiannually. The returns shall be signed by the wholesale or retail dealer or an authorized agent thereof.

Sec. 5743.04.  The tax commissioner shall design and procure the stamps provided for in section 5743.03 of the Revised Code and shall enforce and administer sections 5743.01 to 5743.44 of the Revised Code. With respect to packages containing any number of cigarettes other than twenty, if the commissioner finds that it is practicable to collect the taxes levied under sections 5743.02, 5743.023, 5743.024, and 5743.026 of the Revised Code by any method other than that provided in this section and section 5743.03 of the Revised Code, he the commissioner may by rule prescribe such other method for payment of the taxes upon such packages of cigarettes as will adequately protect the revenue; provided, that in any case where the commissioner prescribes that the taxes upon such packages of cigarettes shall be paid on the basis of returns filed by a wholesale or retail dealer, said returns, together with a remittance of all taxes due as shown thereon, shall be filed with the treasurer of state not later than the tenth day of the month following the month in which such cigarettes are sold in this state. The commissioner may promulgate rules in accordance with sections 119.01 to 119.13 of the Revised Code as he the commissioner deems necessary to carry out sections 5743.01 to 5743.44 of the Revised Code and may adopt different detailed rules applicable to diverse methods and conditions of sale of cigarettes, prescribing, in each class of cases, upon whom, as between the wholesale dealer and the retail dealer, the primary duty of affixing stamps shall rest, and the manner in which stamps shall be affixed. A copy of such rules shall be furnished to every licensed dealer as provided in sections 119.01 to 119.13 of the Revised Code. Any such rule so furnished which excuses a wholesale dealer from affixing stamps under the circumstances of the particular case shall be a defense in the prosecution of such dealer for violation of section 5743.03 of the Revised Code.

The commissioner, if he determines after determining that it is practicable to evidence payment of the taxes levied under sections 5743.02, 5743.023, 5743.024, and 5743.026 of the Revised Code by impression made by a metering device, shall by resolution provide that such metering device may be used in lieu of the stamps otherwise provided for in section 5743.03 of the Revised Code. The commissioner may authorize any wholesale or retail dealer to use the metering device approved by him the commissioner. Such device before being used shall be sealed by the treasurer of state, and shall be used only in accordance with the rules prescribed by the commissioner.

Wholesale and retail dealers authorized to use said device shall prepay the tax represented by meter impressions and shall deliver the metering device to the treasurer of state or county treasurer in the county in which the place of business of any wholesaler or retailer is located if such treasurer is designated by the treasurer of state, who shall seal the meter in accordance with the prepayments so made.

Sec. 5743.05.  All stamps provided for by section 5743.03 of the Revised Code, when procured by the tax commissioner, shall be immediately delivered to the treasurer of state, who shall execute a receipt therefor showing the number and aggregate face value of each denomination received by the treasurer of state and any other information that the commissioner requires to enforce the collection and distribution of all taxes imposed under section 5743.024 or 5743.026 of the Revised Code, and deliver the receipt to the commissioner. The treasurer of state shall sell the stamps and, on the fifth day of each month, make a report showing all sales made during the preceding month, with the names of purchasers, the number of each denomination, the aggregate face value purchased by each, and any other information as the commissioner requires to enforce the collection and distribution of all taxes imposed under section 5743.024 of the Revised Code, and deliver it to the commissioner. The treasurer of state shall be accountable for all stamps received and unsold. The stamps shall be sold and accounted for at their face value, except the commissioner shall, by rule certified to the treasurer of state, authorize the sale of stamps and meter impressions to wholesale or retail dealers in this state, or to wholesale dealers outside this state, at a discount of not less than one and eight-tenths per cent or more than ten per cent of their face value, as a commission for affixing and canceling the stamps or meter impressions.

The tax commissioner, by rule certified to the treasurer of state, shall authorize the delivery of stamps and meter impressions to wholesale and retail dealers in this state and to wholesale dealers outside this state on credit when the purchaser files with the commissioner a bond to the state, or an irrevocable letter of credit naming the state as beneficiary, in the amount and in the form prescribed by the commissioner, and with surety to the satisfaction of the treasurer of state, conditioned on payment to the treasurer of state within thirty days for stamps or meter impressions delivered within that time. The tax commissioner shall limit delivery of stamps and meter impressions on credit to the period running from the first day of July of the fiscal year until the first day of the following May. Any discount allowed as a commission for affixing and canceling stamps or meter impressions shall be allowed with respect to sales of stamps and meter impressions on credit.

The treasurer of state shall redeem and pay for any destroyed, unused, or spoiled tax stamps and any unused meter impressions at their net value, and shall refund to wholesale dealers the net amount of state and county taxes paid erroneously or paid on cigarettes which have been sold in interstate or foreign commerce or which have become unsalable, and the net amount of county taxes that were paid on cigarettes that have been sold at retail or for retail sale outside a taxing county. An application for a refund of tax shall be filed with the tax commissioner, on the form prescribed by the commissioner for that purpose, within three years from the date the tax stamps are destroyed or spoiled, from the date of the erroneous payment, or from the date that cigarettes on which taxes have been paid have been sold in interstate or foreign commerce or have become unsalable. On the filing of the application the commissioner shall determine the amount of refund due payable from receipts of the state tax, and, if applicable, payable from receipts of a county tax and certify such amounts to the director of budget and management and treasurer of state for payment from the tax refund fund created by section 5703.052 of the Revised Code. When a refund is granted for payment of an illegal or erroneous assessment issued by the department, the refund shall include interest on the amount of the refund from the date of the overpayment. The interest shall be computed at the rate per annum prescribed by section 5703.47 of the Revised Code.

Sec. 5743.08.  Whenever the tax commissioner discovers any cigarettes, subject to the taxes levied under section 5743.02, 5743.023, 5743.024, or 5743.026 of the Revised Code, and upon which the taxes have not been paid, the commissioner may seize and take possession of such cigarettes, which shall thereupon be forfeited to the state, and the commissioner may within a reasonable time thereafter sell the forfeited cigarettes. From the proceeds of the sale, the tax commissioner shall pay the costs incurred in such proceedings, and any proceeds remaining after the costs are paid shall be considered as revenue arising from the tax; provided that the seizure and sale shall not be deemed to relieve any person from the fine or imprisonment provided for violation of sections 5743.01 to 5743.20 of the Revised Code. The sale shall be made where it is most convenient and economical. The tax commissioner may order the destruction of the forfeited cigarettes if the quantity or quality of the cigarettes is not sufficient to warrant their sale.

Sec. 5743.081.  (A) If any wholesale dealer or retail dealer fails to pay the tax levied under sections section 5743.02, 5743.023, 5743.024, or 5743.026 of the Revised Code as required by sections 5743.01 to 5743.20 of the Revised Code, and by the rules of the tax commissioner, or fails to collect the tax from the purchaser or consumer, the commissioner may make an assessment against the wholesale or retail dealer based upon any information in the commissioner's possession.

The commissioner may make an assessment against any wholesale or retail dealer who fails to file a return required by section 5743.03 or 5743.025 of the Revised Code.

No assessment shall be made against any wholesale or retail dealer for any taxes imposed under sections section 5743.02, 5743.023, 5743.024, or 5743.026 of the Revised Code more than three years after the last day of the calendar month which immediately follows the semiannual period prescribed in section 5743.03 of the Revised Code in which the sale was made, or more than three years after the semiannual return for such period is filed, whichever is later. This section does not bar an assessment against any wholesale or retail dealer who fails to file a return as required by section 5743.03 or 5743.025 of the Revised Code, or who files a fraudulent return.

A penalty of up to thirty per cent may be added to the amount of every assessment made under this section. The commissioner may adopt rules providing for the imposition and remission of penalties added to assessments made under this section.

The commissioner shall give the party assessed written notice of the assessment as provided in section 5703.37 of the Revised Code. The notice shall specify separately any portion of the assessment that represents a county tax.

(B) Unless the party to whom the notice of assessment is directed files with the commissioner within sixty days after service of the notice of assessment, either personally or by certified mail, a petition for reassessment in writing, signed by the party assessed, or by the party's authorized agent having knowledge of the facts, the assessment shall become final and the amount of the assessment shall be due and payable from the party assessed to the treasurer of state. The petition shall indicate the objections of the party assessed, but additional objections may be raised in writing if received prior to the date shown on the final determination by the commissioner.

Unless the petitioner waives a hearing, the commissioner shall assign a time and place for the hearing on the petition and notify the petitioner of the time and place of the hearing by personal service or certified mail, but the commissioner may continue the hearing from time to time if necessary.

The commissioner may make such correction to an assessment as the commissioner finds proper. The commissioner shall serve a copy of the final determination on the petitioner by personal service or certified mail, and the commissioner's decision in the matter shall be final, subject to appeal as provided in section 5717.02 of the Revised Code. Only objections decided on the merits by the board of tax appeals or a court shall be given collateral estoppel or res judicata effect in considering an application for refund of amounts paid pursuant to the assessment.

(C) After an assessment becomes final, if any portion of the assessment remains unpaid, including accrued interest, a certified copy of the commissioner's entry making the assessment final may be filed in the office of the clerk of the court of common pleas in the county in which the wholesale or retail dealer's place of business is located or the county in which the party assessed resides. If the party assessed maintains no place of business in this state and is not a resident of this state, the certified copy of the entry may be filed in the office of the clerk of the court of common pleas of Franklin county.

The clerk, immediately upon the filing of the commissioner's entry, shall enter a judgment for the state against the party assessed in the amount shown on the entry. The judgment may be filed by the clerk in a loose-leaf book entitled "special judgments for state cigarette sales tax," and shall have the same effect as other judgments. Execution shall issue upon the judgment upon the request of the tax commissioner, and all laws applicable to sales on execution shall apply to sales made under the judgment except as otherwise provided in sections 5743.01 to 5743.20 of the Revised Code.

The portion of the assessment not paid within sixty days after the assessment was issued shall bear interest at the rate per annum prescribed by section 5703.47 of the Revised Code from the day the tax commissioner issues the assessment until it is paid. Interest shall be paid in the same manner as the tax and may be collected by the issuance of an assessment under this section.

(D) All money collected by the commissioner under this section shall be paid to the treasurer of state, and when paid shall be considered as revenue arising from the taxes imposed by sections 5743.01 to 5743.20 of the Revised Code.

Sec. 5743.12.  No person shall make a false entry upon an invoice, package, or container of cigarettes upon which an entry is required by sections 5743.01 to 5743.20 of the Revised Code, nor shall any person present any such false entry for the inspection of the tax commissioner with intent to evade the tax levied under section 5743.02, 5743.023, 5743.024, or 5743.026 of the Revised Code.

Sec. 5743.13.  No person shall falsely or fraudulently make, forge, alter, or counterfeit any stamp prescribed by the tax commissioner under section 5743.03 of the Revised Code, or cause to be falsely or fraudulently made, forged, altered, or counterfeited any such stamp, or possess any counterfeiting device, or knowingly and willfully utter, publish, pass, or tender as true, any such false, altered, forged, or counterfeited stamp, or use more than once any such stamp for the purpose of evading the tax levied under section 5743.02, 5743.023, 5743.024, or 5743.026 of the Revised Code.

Sec. 5743.14.  (A) The tax commissioner may inspect any place where cigarettes subject to the tax levied under section 5743.02, 5743.023, 5743.024, or 5743.026 of the Revised Code are sold or stored.

(B) No person shall prevent or hinder the tax commissioner from making a full inspection of any place where cigarettes subject to the tax levied under section 5743.02, 5743.023, 5743.024, or 5743.026 of the Revised Code are sold or stored, or prevent or hinder the full inspection of invoices, books, records, or papers required to be kept by sections 5743.01 to 5743.20 of the Revised Code.

Sec. 5743.32.  To provide revenue for the general revenue fund of the state, an excise tax is hereby levied on the use, consumption, or storage for consumption of cigarettes by consumers in this state at the rate of eleven and one-half thirty-seven mills on each cigarette. The tax shall not apply if the tax levied by section 5743.02 of the Revised Code has been paid.

The money received into the state treasury from the excise tax levied by this section shall be credited to the general revenue fund.

Sec. 5743.33.  Every person who has acquired cigarettes for use, storage, or other consumption subject to the tax levied under section 5743.32, 5743.322, 5743.323, or 5743.324 of the Revised Code, shall, on or before the fifteenth day of the month following receipt of such cigarettes, file with the tax commissioner a return showing the amount of cigarettes acquired, together with remittance of the tax thereon. No such person shall transport within this state, cigarettes that have a wholesale value in excess of sixty dollars, unless he that person has obtained consent to transport the cigarettes from the department of taxation prior to such transportation. Such consent shall not be required if the applicable taxes levied under sections 5743.02, 5743.023, 5743.024, and 5743.026 of the Revised Code have been paid. Application for the consent shall be in the form prescribed by the tax commissioner.

Every person transporting such cigarettes shall possess the consent while transporting or possessing the cigarettes within this state and shall produce the consent upon request of any law enforcement officer or authorized agent of the tax commissioner.

Any person transporting such cigarettes without the consent required by this section, shall be subject to the provisions of this chapter, including the applicable taxes imposed by sections 5743.02, 5743.023, 5743.024, and 5743.026 of the Revised Code.

Sec. 5743.34.  If any person required to pay the tax levied under section 5743.32, 5743.322, 5743.323, or 5743.324 of the Revised Code, fails to make remittance, the tax commissioner may issue an assessment against that person based on any information in the commissioner's possession.

Sections 5743.081 and 5743.082 of the Revised Code relating to the assessments or findings, appeals from assessments or findings, the effect of assessments or findings before or after hearing and before or after filing the same in the office of the clerk of the court of common pleas, and all sections relating to the procedure, authority, duties, liabilities, powers, and privileges of the person assessed, the commissioner, the clerk, and all other public officials, shall be applicable to assessments made pursuant to this section.

Sec. 5743.35.  No person required by section 5743.33 of the Revised Code to file a return with the tax commissioner shall fail to make such return, or fail to pay the applicable taxes levied under section 5743.32, 5743.322, 5743.323, or 5743.324 of the Revised Code, or fail to pay any lawful assessment issued by the commissioner.

Sec. 5747.01.  Except as otherwise expressly provided or clearly appearing from the context, any term used in this chapter has the same meaning as when used in a comparable context in the Internal Revenue Code, and all other statutes of the United States relating to federal income taxes.

As used in this chapter:

(A) "Adjusted gross income" or "Ohio adjusted gross income" means adjusted gross income as defined and used in the Internal Revenue Code, adjusted as provided in this section:

(1) Add interest or dividends on obligations or securities of any state or of any political subdivision or authority of any state, other than this state and its subdivisions and authorities.

(2) Add interest or dividends on obligations of any authority, commission, instrumentality, territory, or possession of the United States that are exempt from federal income taxes but not from state income taxes.

(3) Deduct interest or dividends on obligations of the United States and its territories and possessions or of any authority, commission, or instrumentality of the United States to the extent included in federal adjusted gross income but exempt from state income taxes under the laws of the United States.

(4) Deduct disability and survivor's benefits to the extent included in federal adjusted gross income.

(5) Deduct benefits under Title II of the Social Security Act and tier 1 railroad retirement benefits to the extent included in federal adjusted gross income under section 86 of the Internal Revenue Code.

(6) Add, in In the case of a taxpayer who is a beneficiary of a trust that makes an accumulation distribution as defined in section 665 of the Internal Revenue Code, add, for the beneficiary's taxable years beginning before 2002, the portion, if any, of such distribution that does not exceed the undistributed net income of the trust for the three taxable years preceding the taxable year in which the distribution is made. "Undistributed net income of a trust" means the taxable income of the trust increased by (a)(i) the additions to adjusted gross income required under division (A) of this section and (ii) the personal exemptions allowed to the trust pursuant to section 642(b) of the Internal Revenue Code, and decreased by (b)(i) the deductions to adjusted gross income required under division (A) of this section, (ii) the amount of federal income taxes attributable to such income, and (iii) the amount of taxable income that has been included in the adjusted gross income of a beneficiary by reason of a prior accumulation distribution. Any undistributed net income included in the adjusted gross income of a beneficiary shall reduce the undistributed net income of the trust commencing with the earliest years of the accumulation period.

(7) Deduct the amount of wages and salaries, if any, not otherwise allowable as a deduction but that would have been allowable as a deduction in computing federal adjusted gross income for the taxable year, had the targeted jobs credit allowed and determined under sections 38, 51, and 52 of the Internal Revenue Code not been in effect.

(8) Deduct any interest or interest equivalent on public obligations and purchase obligations to the extent included in federal adjusted gross income.

(9) Add any loss or deduct any gain resulting from the sale, exchange, or other disposition of public obligations to the extent included in federal adjusted gross income.

(10) Deduct or add amounts, as provided under section 5747.70 of the Revised Code, related to contributions to variable college savings program accounts made or tuition credits purchased pursuant to Chapter 3334. of the Revised Code.

(11)(a) Deduct, to the extent not otherwise allowable as a deduction or exclusion in computing federal or Ohio adjusted gross income for the taxable year, the amount the taxpayer paid during the taxable year for medical care insurance and qualified long-term care insurance for the taxpayer, the taxpayer's spouse, and dependents. No deduction for medical care insurance under division (A)(11) of this section shall be allowed either to any taxpayer who is eligible to participate in any subsidized health plan maintained by any employer of the taxpayer or of the taxpayer's spouse, or to any taxpayer who is entitled to, or on application would be entitled to, benefits under part A of Title XVIII of the "Social Security Act," 49 Stat. 620 (1935), 42 U.S.C. 301, as amended. For the purposes of division (A)(11)(a) of this section, "subsidized health plan" means a health plan for which the employer pays any portion of the plan's cost. The deduction allowed under division (A)(11)(a) of this section shall be the net of any related premium refunds, related premium reimbursements, or related insurance premium dividends received during the taxable year.

(b) Deduct, to the extent not otherwise deducted or excluded in computing federal or Ohio adjusted gross income during the taxable year, the amount the taxpayer paid during the taxable year, not compensated for by any insurance or otherwise, for medical care of the taxpayer, the taxpayer's spouse, and dependents, to the extent the expenses exceed seven and one-half per cent of the taxpayer's federal adjusted gross income.

(c) For purposes of division (A)(11) of this section, "medical care" has the meaning given in section 213 of the Internal Revenue Code, subject to the special rules, limitations, and exclusions set forth therein, and "qualified long-term care" has the same meaning given in section 7702(B)(b) of the Internal Revenue Code.

(12)(a) Deduct any amount included in federal adjusted gross income solely because the amount represents a reimbursement or refund of expenses that in any year the taxpayer had deducted as an itemized deduction pursuant to section 63 of the Internal Revenue Code and applicable United States department of the treasury regulations. The deduction otherwise allowed under division (A)(12)(a) of this section shall be reduced to the extent the reimbursement is attributable to an amount the taxpayer deducted under this section in any taxable year.

(b) Add any amount not otherwise included in Ohio adjusted gross income for any taxable year to the extent that the amount is attributable to the recovery during the taxable year of any amount deducted or excluded in computing federal or Ohio adjusted gross income in any taxable year.

(13) Deduct any portion of the deduction described in section 1341(a)(2) of the Internal Revenue Code, for repaying previously reported income received under a claim of right, that meets both of the following requirements:

(a) It is allowable for repayment of an item that was included in the taxpayer's adjusted gross income for a prior taxable year and did not qualify for a credit under division (A) or (B) of section 5747.05 of the Revised Code for that year;

(b) It does not otherwise reduce the taxpayer's adjusted gross income for the current or any other taxable year.

(14) Deduct an amount equal to the deposits made to, and net investment earnings of, a medical savings account during the taxable year, in accordance with section 3924.66 of the Revised Code. The deduction allowed by division (A)(14) of this section does not apply to medical savings account deposits and earnings otherwise deducted or excluded for the current or any other taxable year from the taxpayer's federal adjusted gross income.

(15)(a) Add an amount equal to the funds withdrawn from a medical savings account during the taxable year, and the net investment earnings on those funds, when the funds withdrawn were used for any purpose other than to reimburse an account holder for, or to pay, eligible medical expenses, in accordance with section 3924.66 of the Revised Code;

(b) Add the amounts distributed from a medical savings account under division (A)(2) of section 3924.68 of the Revised Code during the taxable year.

(16) Add any amount claimed as a credit under section 5747.059 of the Revised Code to the extent that such amount satisfies either of the following:

(a) The amount was deducted or excluded from the computation of the taxpayer's federal adjusted gross income as required to be reported for the taxpayer's taxable year under the Internal Revenue Code;

(b) The amount resulted in a reduction of the taxpayer's federal adjusted gross income as required to be reported for any of the taxpayer's taxable years under the Internal Revenue Code.

(17) Deduct the amount contributed by the taxpayer to an individual development account program established by a county department of job and family services pursuant to sections 329.11 to 329.14 of the Revised Code for the purpose of matching funds deposited by program participants. On request of the tax commissioner, the taxpayer shall provide any information that, in the tax commissioner's opinion, is necessary to establish the amount deducted under division (A)(17) of this section.

(18) Beginning in taxable year 2001, if the taxpayer is married and files a joint return and the combined federal adjusted gross income of the taxpayer and the taxpayer's spouse for the taxable year does not exceed one hundred thousand dollars, or if the taxpayer is single and has a federal adjusted gross income for the taxable year not exceeding fifty thousand dollars, deduct amounts paid during the taxable year for qualified tuition and fees paid to an eligible institution for the taxpayer, the taxpayer's spouse, or any dependent of the taxpayer, who is a resident of this state and is enrolled in or attending a program that culminates in a degree or diploma at an eligible institution. The deduction may be claimed only to the extent that qualified tuition and fees are not otherwise deducted or excluded for any taxable year from federal or Ohio adjusted gross income. The deduction may not be claimed for educational expenses for which the taxpayer claims a credit under section 5747.27 of the Revised Code.

(19) Add any reimbursement received during the taxable year of any amount the taxpayer deducted under division (A)(18) of this section in any previous taxable year to the extent the amount is not otherwise included in Ohio adjusted gross income.

(20)(a) Add five-sixths of the amount of depreciation expense allowed by subsection (k) of section 168 of the Internal Revenue Code, including the taxpayer's proportionate or distributive share of the amount of depreciation expense allowed by that subsection to a pass-through entity in which the taxpayer has a direct or indirect ownership interest. The tax commissioner, under procedures established by the commissioner, may waive the add-back related to a pass-through entity if the taxpayer owns, directly or indirectly, less than five per cent of the pass-through entity.

(b) Nothing in division (A)(20) of this section shall be construed to adjust or modify the adjusted basis of any asset.

(c) To the extent the add-back required under division (A)(20)(a) of this section is attributable to property generating nonbusiness income or loss allocated under section 5747.20 of the Revised Code, the add-back shall be sitused to the same location as the nonbusiness income or loss generated by the property for the purpose of determining the credit under division (A) of section 5747.05 of the Revised Code. Otherwise, the add-back shall be apportioned, subject to one or more of the four alternative methods of apportionment enumerated in section 5747.21 of the Revised Code.

(21)(a) If the taxpayer was required to add an amount under division (A)(20)(a) of this section for a taxable year, deduct one-fifth of the amount so added for each of the five succeeding taxable years.

(b) If the amount deducted under division (A)(21)(a) of this section is attributable to an add-back allocated under division (A)(20)(c) of this section, the amount deducted shall be sitused to the same location. Otherwise, the add-back shall be apportioned using the apportionment factors for the taxable year in which the deduction is taken, subject to one or more of the four alternative methods of apportionment enumerated in section 5747.21 of the Revised Code.

(B) "Business income" means income arising from transactions, activities, and sources in the regular course of a trade or business and includes income from tangible and intangible property if the acquisition, rental, management, and disposition of the property constitute integral parts of the regular course of a trade or business operation.

(C) "Nonbusiness income" means all income other than business income and may include, but is not limited to, compensation, rents and royalties from real or tangible personal property, capital gains, interest, dividends and distributions, patent or copyright royalties, or lottery winnings, prizes, and awards.

(D) "Compensation" means any form of remuneration paid to an employee for personal services.

(E) "Fiduciary" means a guardian, trustee, executor, administrator, receiver, conservator, or any other person acting in any fiduciary capacity for any individual, trust, or estate.

(F) "Fiscal year" means an accounting period of twelve months ending on the last day of any month other than December.

(G) "Individual" means any natural person.

(H) "Internal Revenue Code" means the "Internal Revenue Code of 1986," 100 Stat. 2085, 26 U.S.C.A. 1, as amended.

(I) "Resident" means:

(1) An individual who is domiciled in this state, subject to section 5747.24 of the Revised Code;

(2) The estate of a decedent who at the time of death was domiciled in this state. The domicile tests of section 5747.24 of the Revised Code and any election under section 5747.25 of the Revised Code are not controlling for purposes of division (I)(2) of this section.

(3) A trust that, in whole or part, resides in this state. If only part of a trust resides in this state, the trust is a resident only with respect to that part. For the purposes of division (I)(3) of this section, a trust resides in this state to the extent that it consists of the net current value, adjusted for any profits, gains, or losses, of assets or liabilities that were transferred to the trust by any of the following:

(a) The will of a decedent who was domiciled in this state at the time of the decedent's death;

(b) A person who is domiciled in this state if the trust or part of the trust is not irrevocable;

(c) A person who was domiciled in this state when the trust or part of the trust became irrevocable, but only if, for all or some portion of the current taxable year of the trust, at least one beneficiary of the trust is a resident for the purposes of this chapter.

For the purpose of divisions (I)(3)(b) and (c) of this section, the transfer of net assets to a trust is irrevocable to the extent that the transferor is not considered to be the owner of the net assets under sections 671 to 678 of the Internal Revenue Code.

The tax commissioner may adopt rules to ascertain the part of a trust residing in this state under this division.

(J) "Nonresident" means an individual or estate that is not a resident. An individual who is a resident for only part of a taxable year is a nonresident for the remainder of that taxable year.

(K) "Pass-through entity" has the same meaning as in section 5733.04 of the Revised Code.

(L) "Return" means the notifications and reports required to be filed pursuant to this chapter for the purpose of reporting the tax due and includes declarations of estimated tax when so required.

(M) "Taxable year" means the calendar year or the taxpayer's fiscal year ending during the calendar year, or fractional part thereof, upon which the adjusted gross income is calculated pursuant to this chapter.

(N) "Taxpayer" means any person subject to the tax imposed by section 5747.02 of the Revised Code or any pass-through entity that makes the election under division (D) of section 5747.08 of the Revised Code.

(O) "Dependents" means dependents as defined in the Internal Revenue Code and as claimed in the taxpayer's federal income tax return for the taxable year or which the taxpayer would have been permitted to claim had the taxpayer filed a federal income tax return.

(P) "Principal county of employment" means, in the case of a nonresident, the county within the state in which a taxpayer performs services for an employer or, if those services are performed in more than one county, the county in which the major portion of the services are performed.

(Q) As used in sections 5747.50 to 5747.55 of the Revised Code:

(1) "Subdivision" means any county, municipal corporation, park district, or township.

(2) "Essential local government purposes" includes all functions that any subdivision is required by general law to exercise, including like functions that are exercised under a charter adopted pursuant to the Ohio Constitution.

(R) "Overpayment" means any amount already paid that exceeds the figure determined to be the correct amount of the tax.

(S) "Taxable income" applies only to estates only and trusts, and means taxable income as defined and used in the Internal Revenue Code adjusted as follows:

(1) Add interest or dividends on obligations or securities of any state or of any political subdivision or authority of any state, other than this state and its subdivisions and authorities;

(2) Add interest or dividends on obligations of any authority, commission, instrumentality, territory, or possession of the United States that are exempt from federal income taxes but not from state income taxes;

(3) Add the amount of personal exemption allowed to the estate pursuant to section 642(b) of the Internal Revenue Code;

(4) Deduct interest or dividends on obligations of the United States and its territories and possessions or of any authority, commission, or instrumentality of the United States that are exempt from state taxes under the laws of the United States;

(5) Deduct the amount of wages and salaries, if any, not otherwise allowable as a deduction but that would have been allowable as a deduction in computing federal taxable income for the taxable year, had the targeted jobs credit allowed under sections 38, 51, and 52 of the Internal Revenue Code not been in effect;

(6) Deduct any interest or interest equivalent on public obligations and purchase obligations to the extent included in federal taxable income;

(7) Add any loss or deduct any gain resulting from sale, exchange, or other disposition of public obligations to the extent included in federal taxable income;

(8) Except in the case of the final return of an estate, add any amount deducted by the taxpayer on both its Ohio estate tax return pursuant to section 5731.14 of the Revised Code, and on its federal income tax return in determining either federal adjusted gross income or federal taxable income;

(9)(a) Deduct any amount included in federal taxable income solely because the amount represents a reimbursement or refund of expenses that in a previous year the decedent had deducted as an itemized deduction pursuant to section 63 of the Internal Revenue Code and applicable treasury regulations. The deduction otherwise allowed under division (S)(9)(a) of this section shall be reduced to the extent the reimbursement is attributable to an amount the taxpayer or decedent deducted under this section in any taxable year.

(b) Add any amount not otherwise included in Ohio taxable income for any taxable year to the extent that the amount is attributable to the recovery during the taxable year of any amount deducted or excluded in computing federal or Ohio taxable income in any taxable year.

(10) Deduct any portion of the deduction described in section 1341(a)(2) of the Internal Revenue Code, for repaying previously reported income received under a claim of right, that meets both of the following requirements:

(a) It is allowable for repayment of an item that was included in the taxpayer's taxable income or the decedent's adjusted gross income for a prior taxable year and did not qualify for a credit under division (A) or (B) of section 5747.05 of the Revised Code for that year.

(b) It does not otherwise reduce the taxpayer's taxable income or the decedent's adjusted gross income for the current or any other taxable year.

(11) Add any amount claimed as a credit under section 5747.059 of the Revised Code to the extent that the amount satisfies either of the following:

(a) The amount was deducted or excluded from the computation of the taxpayer's federal taxable income as required to be reported for the taxpayer's taxable year under the Internal Revenue Code;

(b) The amount resulted in a reduction in the taxpayer's federal taxable income as required to be reported for any of the taxpayer's taxable years under the Internal Revenue Code.

(12) Deduct any amount that a trust is required to report as farm income on its federal income tax return, but only if the assets of the trust include at least ten acres of land satisfying the definition of "land devoted exclusively to agricultural use" under section 5713.30 of the Revised Code, regardless of whether the land is valued for tax purposes as such land under sections 5713.30 to 5713.38 of the Revised Code.

(T) "School district income" and "school district income tax" have the same meanings as in section 5748.01 of the Revised Code.

(U) As used in divisions (A)(8), (A)(9), (S)(6), and (S)(7) of this section, "public obligations," "purchase obligations," and "interest or interest equivalent" have the same meanings as in section 5709.76 of the Revised Code.

(V) "Limited liability company" means any limited liability company formed under Chapter 1705. of the Revised Code or under the laws of any other state.

(W) "Pass-through entity investor" means any person who, during any portion of a taxable year of a pass-through entity, is a partner, member, shareholder, or investor in that pass-through entity.

(X) "Banking day" has the same meaning as in section 1304.01 of the Revised Code.

(Y) "Month" means a calendar month.

(Z) "Quarter" means the first three months, the second three months, the third three months, or the last three months of the taxpayer's taxable year.

(AA)(1) "Eligible institution" means a state university or state institution of higher education as defined in section 3345.011 of the Revised Code, or a private, nonprofit college, university, or other post-secondary institution located in this state that possesses a certificate of authorization issued by the Ohio board of regents pursuant to Chapter 1713. of the Revised Code or a certificate of registration issued by the state board of proprietary school registration under Chapter 3332. of the Revised Code.

(2) "Qualified tuition and fees" means tuition and fees imposed by an eligible institution as a condition of enrollment or attendance, not exceeding two thousand five hundred dollars in each of the individual's first two years of post-secondary education. If the individual is a part-time student, "qualified tuition and fees" includes tuition and fees paid for the academic equivalent of the first two years of post-secondary education during a maximum of five taxable years, not exceeding a total of five thousand dollars. "Qualified tuition and fees" does not include:

(a) Expenses for any course or activity involving sports, games, or hobbies unless the course or activity is part of the individual's degree or diploma program;

(b) The cost of books, room and board, student activity fees, athletic fees, insurance expenses, or other expenses unrelated to the individual's academic course of instruction;

(c) Tuition, fees, or other expenses paid or reimbursed through an employer, scholarship, grant in aid, or other educational benefit program.

(BB) Any term used in this chapter that is not otherwise defined in this section and that is not used in a comparable context in the Internal Revenue Code and other statutes of the United States relating to federal income taxes has the same meaning as in section 5733.40 of the Revised Code.

Sec. 5747.02.  (A) For the purpose of providing revenue for the support of schools and local government functions, to provide relief to property taxpayers, to provide revenue for the general revenue fund, and to meet the expenses of administering the tax levied by this chapter, there is hereby levied on every individual, trust, and every estate residing in or earning or receiving income in this state, on every individual, trust, and estate earning or receiving lottery winnings, prizes, or awards pursuant to Chapter 3770. of the Revised Code, and on every individual, trust, and estate otherwise having nexus with or in this state under the Constitution of the United States, an annual tax measured in the case of individuals by adjusted gross income less an exemption for the taxpayer, the taxpayer's spouse, and each dependent as provided in section 5747.025 of the Revised Code,; measured in the case of trusts by the sum of the taxable income allocated or apportioned to this state under division (D)(1) of this section; and measured in the case of estates by taxable income. The tax imposed by this section on the balance thus obtained is hereby levied as follows:

(B) If the director of budget and management makes a certification to the tax commissioner under division (B) of section 131.44 of the Revised Code, the amount of tax as determined under division (A) of this section shall be reduced by the percentage prescribed in that certification for taxable years beginning in the calendar year in which that certification is made.

(C) The levy of this tax on income does not prevent a municipal corporation, a joint economic development zone created under section 715.691, or a joint economic development district created under section 715.70 or 715.71 or sections 715.72 to 715.81 of the Revised Code from levying a tax on income.

(D) For the purpose of determining the tax imposed against a trust under this section:

(1)(a) Except as provided in division (D)(1)(b) of this section, the taxable income of the trust shall be allocated and apportioned to this state in the same manner as the net income of a corporation is allocated and apportioned to this state under sections 5733.05 and 5733.051 of the Revised Code.

(b) Notwithstanding divisions (E) and (F) of section 5733.051 of the Revised Code, capital gains and losses from the sale or other disposition of intangible property that may produce income enumerated in division (F) of that section and dividends and distributions from a domestic international sales corporation, or from a payor the location of whose physical assets is unavailable to the trust, are allocable to this state to the extent the capital gains and losses or dividends and distributions are attributable to assets held by a trust or portion of a trust that is a resident for the purposes of this chapter.

(c) Notwithstanding division (D)(1)(a) of this section, income from intangible assets not described in division (D)(1)(b) of this section and capital gains and losses from the sale or disposition of intangible assets not described in division (D)(1)(b) of this section are allocable to this state to the extent those assets are held by a trust or portion of a trust that is a resident for the purposes of this chapter.

(2) The tax shall be the sum of the taxable income allocated and apportioned to this state under division (D)(1) of this section multiplied by the rates prescribed by division (A) of this section.

(3) Only credits enumerated in divisions (A)(14) to (33) of section 5747.98 of the Revised Code are applicable against the tax.

(E) For the purposes of this section, "trust" means any trust described in Subchapter J of the Internal Revenue Code, excluding a trust exempted from taxation under section 501(c)(3) of Internal Revenue Code.

Sec. 5747.05.  As used in this section, "income tax" includes both a tax on net income and a tax measured by net income.

The following credits shall be allowed against the income tax imposed by section 5747.02 of the Revised Code on individuals and estates:

(A)(1) The amount of tax otherwise due under section 5747.02 of the Revised Code on such portion of the adjusted gross income of any nonresident taxpayer that is not allocable to this state pursuant to sections 5747.20 to 5747.23 of the Revised Code;

(2) The credit provided under this division shall not exceed the portion of the total tax due under section 5747.02 of the Revised Code that the amount of the nonresident taxpayer's adjusted gross income not allocated to this state pursuant to sections 5747.20 to 5747.23 of the Revised Code bears to the total adjusted gross income of the nonresident taxpayer derived from all sources everywhere.

(3) The tax commissioner may enter into an agreement with the taxing authorities of any state or of the District of Columbia that imposes an income tax to provide that compensation paid in this state to a nonresident taxpayer shall not be subject to the tax levied in section 5747.02 of the Revised Code so long as compensation paid in such other state or in the District of Columbia to a resident taxpayer shall likewise not be subject to the income tax of such other state or of the District of Columbia.

(B) The lesser of division (B)(1) or (2) of this section:

(1) The amount of tax otherwise due under section 5747.02 of the Revised Code on such portion of the adjusted gross income of a resident taxpayer that in another state or in the District of Columbia is subjected to an income tax. The credit provided under division (B)(1) of this section shall not exceed the portion of the total tax due under section 5747.02 of the Revised Code that the amount of the resident taxpayer's adjusted gross income subjected to an income tax in the other state or in the District of Columbia bears to the total adjusted gross income of the resident taxpayer derived from all sources everywhere.

(2) The amount of income tax liability to another state or the District of Columbia on the portion of the adjusted gross income of a resident taxpayer that in another state or in the District of Columbia is subjected to an income tax. The credit provided under division (B)(2) of this section shall not exceed the amount of tax otherwise due under section 5747.02 of the Revised Code.

(3) If the credit provided under division (B) of this section is affected by a change in either the portion of adjusted gross income of a resident taxpayer subjected to an income tax in another state or the District of Columbia or the amount of income tax liability that has been paid to another state or the District of Columbia, the taxpayer shall report the change to the tax commissioner within sixty days of the change in such form as the commissioner requires.

(a) In the case of an underpayment, the report shall be accompanied by payment of any additional tax due as a result of the reduction in credit together with interest on the additional tax and is a return subject to assessment under section 5747.13 of the Revised Code solely for the purpose of assessing any additional tax due under this division, together with any applicable penalty and interest. It shall not reopen the computation of the taxpayer's tax liability under this chapter from a previously filed return no longer subject to assessment except to the extent that such liability is affected by an adjustment to the credit allowed by division (B) of this section.

(b) In the case of an overpayment, an application for refund may be filed under this division within the sixty day period prescribed for filing the report even if it is beyond the period prescribed in section 5747.11 of the Revised Code if it otherwise conforms to the requirements of such section. An application filed under this division shall only claim refund of overpayments resulting from an adjustment to the credit allowed by division (B) of this section unless it is also filed within the time prescribed in section 5747.11 of the Revised Code. It shall not reopen the computation of the taxpayer's tax liability except to the extent that such liability is affected by an adjustment to the credit allowed by division (B) of this section.

(C) For a taxpayer sixty-five years of age or older during the taxable year, a credit for such year equal to fifty dollars for each return required to be filed under section 5747.08 of the Revised Code.

(D) A taxpayer sixty-five years of age or older during the taxable year who has received a lump-sum distribution from a pension, retirement, or profit-sharing plan in the taxable year may elect to receive a credit under this division in lieu of the credit to which he the taxpayer is entitled under division (C) of this section. A taxpayer making such election shall receive a credit for the taxable year equal to fifty dollars times the taxpayer's expected remaining life as shown by annuity tables issued under the provisions of the Internal Revenue Code and in effect for the calendar year which includes the last day of the taxable year. A taxpayer making an election under this division is not entitled to the credit authorized under division (C) of this section in subsequent taxable years except that if such election was made prior to July 1, 1983, the taxpayer is entitled to one-half the credit authorized under such division in subsequent taxable years but may not make another election under this division.

(E) A taxpayer who is not sixty-five years of age or older during the taxable year who has received a lump-sum distribution from a pension, retirement, or profit-sharing plan in a taxable year ending on or before July 31, 1991, may elect to take a credit against the tax otherwise due under this chapter for such year equal to fifty dollars times the expected remaining life of a taxpayer sixty-five years of age as shown by annuity tables issued under the provisions of the Internal Revenue Code and in effect for the calendar year which includes the last day of the taxable year. A taxpayer making an election under this division is not entitled to a credit under division (C) or (D) of this section in any subsequent year except that if such election was made prior to July 1, 1983, the taxpayer is entitled to one-half the credit authorized under division (C) of this section in subsequent years but may not make another election under this division. No taxpayer may make an election under this division for a taxable year ending on or after August 1, 1991.

(F) A taxpayer making an election under either division (D) or (E) of this section may make only one such election in the taxpayer's lifetime.

(G)(1) On a joint return filed by a husband and wife, each of whom had adjusted gross income of at least five hundred dollars, exclusive of interest, dividends and distributions, royalties, rent, and capital gains, a credit equal to the percentage shown in the table contained in this division of the amount of tax due after allowing for any other credit that precedes the credit under this division in the order required under section 5747.98 of the Revised Code.

(2) The credit to which a taxpayer is entitled under this division in any taxable year is the percentage shown in column B that corresponds with the taxpayer's adjusted gross income, less exemptions for the taxable year:

(3) The credit allowed under this division shall not exceed six hundred fifty dollars in any taxable year.

(H) No claim for credit under this section shall be allowed unless the claimant furnishes such supporting information as the tax commissioner prescribes by rules. Each credit under this section shall be claimed in the order required under section 5747.98 of the Revised Code.

(I) An individual who is a resident for part of a taxable year and a nonresident for the remainder of the taxable year is allowed the credits under divisions (A) and (B) of this section in accordance with rules prescribed by the tax commissioner. In no event shall the same income be subject to both credits.

(J) The credit allowed under division (A) of this section shall be calculated based upon the amount of tax due under section 5747.02 of the Revised Code after subtracting any other credits that precede the credit under that division in the order required under section 5747.98 of the Revised Code. The credit allowed under division (B) of this section shall be calculated based upon the amount of tax due under section 5747.02 of the Revised Code after subtracting any other credits that precede the credit under that division in the order required under section 5747.98 of the Revised Code.

(K) No credit shall be allowed under division (B) of this section unless the taxpayer furnishes such proof as the tax commissioner shall require that the income tax liability has been paid to another state or the District of Columbia.

(L) No credit shall be allowed under division (B) of this section for compensation that is not subject to the income tax of another state or the District of Columbia as the result of an agreement entered into by the tax commissioner under division (A)(3) of this section.

Sec. 5901.02.  In each county there shall be a commission known as "the veterans service commission." Except as provided in section 5901.021 of the Revised Code, the commission shall be composed of five persons. Those persons shall be residents of the county and shall be appointed to five-year terms by a judge of the court of common pleas. At the time of appointment or reappointment to the commission, no commission member appointed under this section shall be an employee of the commission or hold an elective or other appointive office of the county served by the commission.

Each member of the commission appointed under this section shall be an honorably discharged or honorably separated veteran. Within sixty days after the date of appointment, each such member of the commission shall file the member's form DD214 with the governor's office of veterans affairs in accordance with guidelines established by the director of that office. Appointments to the commission Such appointments shall be made from lists of recommended persons, in the manner specified in the following paragraph. One person shall be a representative recommended by the American Legion; one person shall be a representative recommended by the Veterans of Foreign Wars; one person shall be a representative recommended by the Disabled American Veterans; one person shall be a representative recommended by the AMVETS; and one person shall be a representative recommended by the Military Order of the Purple Heart of the U.S.A., the Vietnam Veterans of America, or the Korean War Veterans Association. If any such organization has no post or chapter located in the county, the appointment shall be made from lists of recommended persons submitted by posts or chapters of any other congressionally chartered veterans organizations located in the county. If no such other organizations have posts or chapters located in the county, the judge described in the following paragraph responsible for making appointments under this section may appoint any qualified veteran to represent the veteran community.

On or before the fifteenth day of October of each year, the appointing judge of the court of common pleas who is responsible for making appointments to the commission shall notify each post or chapter of each organization within the county from which the member may or must be appointed that it may submit a list containing three recommendations of persons who are eligible for appointment. If the judge does not receive any recommendations within sixty days after providing the required notification, the judge may appoint any qualified veteran to represent the veteran community. The judge shall make the appointment on or before the fifteenth day of January of each year. Vacancies occurring on the commission Any vacancy in a membership appointed under this section shall be filled in the same manner as the original appointments.

Beginning in the year 2000, appointments appointment of members to the commission under this section shall be made as follows:

(A) Appointments for members to represent the American Legion shall be made for terms to commence in years ending in zero and five.

(B) Appointments for members to represent the Veterans of Foreign Wars shall be made for terms to commence in years ending in one and six.

(C) Appointments for members to represent the Disabled American Veterans shall be made for terms to commence in years ending in two and seven.

(D) Appointments for members to represent the AMVETS shall be made for terms to commence in years ending in three and eight.

(E) Appointments for members to represent the Military Order of the Purple Heart of the U.S.A., the Vietnam Veterans of America, or the Korean War Veterans Association shall be made for terms to commence in years ending in four and nine.

The terms immediately preceding the initial appointments made under divisions (A) to (E) of this section may be for periods of less than five years.

Sec. 5901.021. This section applies only to counties having a population, according to the most recent decennial census, of more than four hundred thousand. In any such county in which the veterans service commission submits a budget request under section 5901.11 of the Revised Code for the ensuing fiscal year that exceeds (1) twenty-five-thousandths of one per cent of the assessed value of property in the county or (2) the amount appropriated to the commission from the county general fund in the current fiscal year by more than ten per cent of that appropriation, the board of county commissioners, by resolution, may create not more than six memberships on the veterans service commission in addition to the memberships provided for by section 5901.02 of the Revised Code. The board shall prescribe the number of years such memberships shall exist, which shall not exceed five years. Once a board of county commissioners creates such memberships, it may not create additional memberships under this section if the total number of such memberships would exceed six. The board shall appoint residents of the county to each of the additional memberships for terms prescribed by the board and commencing on a date fixed by the board.

If the board of county commissioners appoints such additional members, the board may permit the commission to submit an original or revised budget request for the ensuing fiscal year later than the last Monday in May, as otherwise required under section 5901.11 of the Revised Code.

The board of county commissioners may remove, for cause, any member appointed under this section; shall provide for whether such members may be reappointed upon the expiration of their terms; and shall fill any vacancy in a membership appointed under this section for the unexpired term in the manner provided for the original appointment.

Sec. 5901.03.  The veterans service commission shall select one of its members as president, one as vice-president, and one as secretary. The commission shall meet at least once each month. A judge of the court of common pleas may remove, for cause, any member of the commission for cause appointed under section 5901.02 of the Revised Code, and shall fill vacancies occuring on the commission occurring among memberships appointed under that section for the unexpired terms, in the manner provided in section 5901.02 of the Revised Code for the original appointments.

The commission's duties shall include but are not limited to the following:

(A) Employing such staff as are necessary to carry out the commission's duties, and fixing their compensation;

(B) Establishing policies and procedures for the administration of the commission and the veterans service office;

(C) Establishing policies and procedures for the administration of assistance as provided under this chapter;

(D) Causing the budgets of the veterans service commission and veterans service office to be presented to the board of county commissioners for approval;

(E) Establishing programs of outreach and coordination with other agencies to enhance available services to veterans within the county;

(F) Promoting, monitoring, and providing funding for ongoing education and training for veterans service commissioners and staff;

(G) Making reports to the organizations represented on the commission, as provided in section 5901.02 of the Revised Code, and to others, upon request;

(H) Establishing regularly scheduled transportation for veterans to and from veterans administration medical centers whose districts the county is within, through contractual agreements or through other arrangements determined by the commission to be most cost-effective;

(I) Participating in appropriate memorial and commemorative activities to help promote patriotism and veterans services;

(J) Taking any other actions required by this chapter.

Sec. 5919.34.  (A) As used in this section:

(1) "Academic term" means any one of the following:

(a) Fall term, which consists of fall semester or fall quarter, as appropriate;

(b) Winter term, which consists of winter semester, winter quarter, or spring semester, as appropriate;

(c) Spring term, which consists of spring quarter;

(d) Summer term, which consists of summer semester or summer quarter, as appropriate.

(2) "Eligible applicant" means any individual to whom all of the following apply:

(a) The individual does not possess a baccalaureate degree.

(b) The individual has enlisted, re-enlisted, or extended current enlistment in the Ohio national guard or is an individual to which division (F) of this section applies.

(c) The individual is actively enrolled as a full-time or part-time student for at least six credit hours of course work in a semester or quarter in a two-year or four-year degree-granting program at an institution of higher education or in a diploma-granting program at an institution of higher education that is a school of nursing.

(d) The individual has not accumulated ninety-six eligibility units under division (E) of this section.

(3) "Institution of higher education" means an Ohio institution of higher education that is state-assisted, that is nonprofit and has received a certificate of authorization from the Ohio board of regents pursuant to Chapter 1713. of the Revised Code, that is a private institution exempt from regulation under Chapter 3332. of the Revised Code as prescribed in section 3333.046 of the Revised Code, or that holds a certificate of registration and program authorization issued by the state board of proprietary school registration pursuant to section 3332.05 of the Revised Code.

(4) "State university" has the same meaning as in section 3345.011 of the Revised Code.

(B)(1) There is hereby created a scholarship program to be known as the Ohio national guard scholarship program. For the fiscal year 2000, the number of participants in the program for the fall term is limited to the equivalent of two thousand five hundred full-time participants; the number of participants in the program for the winter term is limited to the equivalent of two thousand five hundred full-time participants; the number of participants in the program for the spring term is limited to the equivalent of one thousand six hundred seventy-five full-time participants; and the number of participants in the program for the summer term is limited to the equivalent of six hundred full-time participants. Except as provided in division (B)(2) of this section for the fiscal year 2001 and succeeding fiscal years, the number of participants in the program for the fall term is limited to the equivalent of three thousand five hundred full-time participants; the number of participants in the program for the winter term is limited to the equivalent of three thousand five hundred full-time participants; the number of participants in the program for the spring term is limited to the equivalent of two thousand three hundred forty-five full-time participants; and the number of participants in the program for the summer term is limited to the equivalent of eight hundred full-time participants.

(2) After the application deadline for any academic term in fiscal year 2001, the adjutant general may request the controlling board, if sufficient appropriated funds are available, to approve the following number of additional participants for that term:

(a) For the fall or winter academic term, up to the equivalent of five hundred additional full-time participants;

(b) For the spring academic term, up to the equivalent of three hundred seventy-five additional full-time participants;

(c) For the summer academic term, up to the equivalent of one hundred twenty-five additional full-time participants.

(C) If the adjutant general estimates that appropriations for all scholarships applied for under this section and likely to be used during an academic term are inadequate for all eligible applicants for that academic term to receive scholarships, the adjutant general shall promptly inform all applicants not receiving scholarships for that academic term of the next academic term that appropriations will be adequate for the scholarships. Any such eligible applicant may again apply for a scholarship beginning that academic term if the applicant is in compliance with all requirements established by this section and the adjutant general for the program. The adjutant general shall process all applications for scholarships for each academic term in the order in which they are received. The scholarships shall be made without regard to financial need. At no time shall one person be placed in priority over another because of sex, race, or religion.

(D)(1) Except as provided in division (H)(I) of this section, for each academic term that an eligible applicant is approved for a scholarship under this section and either remains a current member in good standing of the Ohio national guard or is eligible for a scholarship under division (F)(1) of this section, the institution of higher education in which the applicant is enrolled shall, if the applicant's enlistment obligation extends beyond the end of that academic term or if division (F)(1) of this section applies, be paid on the applicant's behalf the applicable one of the following amounts:

(1)(a) If the institution is state-assisted, an amount equal to one hundred per cent of the institution's tuition charges;

(2)(b) If the institution is a nonprofit private institution or a private institution exempt from regulation under Chapter 3332. of the Revised Code as prescribed in section 3333.046 of the Revised Code, an amount equal to one hundred per cent of the average tuition charges of all state universities;

(3)(c) If the institution is an institution that holds a certificate of registration from the state board of proprietary school registration, the lesser of the following:

(a)(i) An amount equal to one hundred per cent of the total instructional and general charges of the institution;

(b)(ii) An amount equal to one hundred per cent of the average tuition charges of all state universities.

(4)(2) An eligible applicant's scholarship shall not be reduced by the amount of that applicant's benefits under "the Montgomery G.I. Bill Act of 1984," Pub. L. No. 98-525, 98 Stat. 2553 (1984).

(E) A scholarship recipient under this section shall be entitled to receive scholarships under this section for the number of quarters or semesters it takes the recipient to accumulate ninety-six eligibility units as determined under divisions (E)(1) to (3) of this section.

(1) To determine the maximum number of semesters or quarters for which a recipient is entitled to a scholarship under this section, the adjutant general shall convert a recipient's credit hours of enrollment for each academic term into eligibility units in accordance with the following table:

(2) A scholarship recipient under this section may continue to apply for scholarships under this section until the recipient has accumulated ninety-six eligibility units.

(3) If a scholarship recipient withdraws from courses prior to the end of an academic term so that the recipient's enrollment for that academic term is less than six credit hours, no scholarship shall be paid on behalf of that person for that academic term except that. Except as provided in division (F)(3) of this section, if a scholarship has already been paid on behalf of the person for that academic term, the adjutant general shall add to that person's accumulated eligibility units the number of eligibility units for which the scholarship was paid.

(F) This division applies to any eligible applicant called into active duty on or after September 11, 2001. As used in this division, "active duty" means active duty pursuant to an executive order of the president of the United States, an act of the congress of the United States, or section 5919.29 or 5923.21 of the Revised Code.

(1) An individual to whom this division applies is eligible for scholarships under this section for those academic terms that were missed or could have been missed as a result of the individual's call into active duty. Scholarships shall not be paid for the academic term in which an eligible applicant's enlistment obligation ends unless an applicant is eligible under this division for a scholarship for such academic term due to previous active duty.

(2) When an individual to whom this division applies withdraws or otherwise fails to complete courses, for which scholarships have been awarded under this section, because the individual was called into active duty, the institution of higher education shall grant the individual a leave of absence from the individual's education program and shall not impose any academic penalty for such withdrawal or failure to complete courses. Division (F)(2) of this section applies regardless of whether or not the scholarship amount was paid to the institution of higher education.

(3) If an individual to whom this division applies withdraws or otherwise fails to complete courses because the individual was called into active duty, and if scholarships for those courses have already been paid, either:

(a) The adjutant general shall not add to that person's accumulated eligibility units calculated under division (E) of this section the number of eligibility units for the academic courses or term for which the scholarship was paid and the institution of higher education shall repay the scholarship amount to the state.

(b) The adjutant general shall add to that individual's accumulated eligibility units calculated under division (E) of this section the number of eligibility units for the academic courses or term for which the scholarship was paid if the institution of higher education agrees to permit the individual to complete the remainder of the academic courses in which the individual was enrolled at the time the individual was called into active duty.

(G) A scholarship recipient under this section who fails to complete the term of enlistment, re-enlistment, or extension of current enlistment the recipient was serving at the time a scholarship was paid on behalf of the recipient under this section is liable to the state for repayment of a percentage of all Ohio national guard scholarships paid on behalf of the recipient under this section, plus interest at the rate of ten per cent per annum calculated from the dates the scholarships were paid. This percentage shall equal the percentage of the current term of enlistment, re-enlistment, or extension of enlistment a recipient has not completed as of the date the recipient is discharged from the Ohio national guard.

The attorney general may commence a civil action on behalf of the adjutant general to recover the amount of the scholarships and the interest provided for in this division and the expenses incurred in prosecuting the action, including court costs and reasonable attorney's fees. A scholarship recipient is not liable under this division if the recipient's failure to complete the term of enlistment being served at the time a scholarship was paid on behalf of the recipient under this section is due to the recipient's death; discharge from the national guard due to disability; or the recipient's enlistment, for a term not less than the recipient's remaining term in the national guard, in the active component of the United States armed forces or the active reserve component of the United States armed forces.

(G)(H) On or before the first day of each academic term, the adjutant general shall provide an eligibility roster to each institution of higher education at which one or more scholarship recipients have applied for enrollment. The institution shall use the roster to certify the actual full-time or part-time enrollment of each scholarship recipient listed as enrolled at the institution and return the roster to the adjutant general within thirty days after the first day of the academic term. The adjutant general shall report to the Ohio board of regents the number of students in the Ohio national guard scholarship program at each institution of higher education. The Ohio board of regents shall provide for payment of the appropriate number and amount of scholarships to each institution of higher education pursuant to division (D) of this section. The adjutant general shall report on a quarterly basis to the director of budget and management, the speaker of the house of representatives, and the president of the senate the number of Ohio national guard scholarship recipients and a projection of the cost of the program for the remainder of the biennium.

(H)(I) The chancellor of the Ohio board of regents and the adjutant general may adopt rules pursuant to Chapter 119. of the Revised Code governing the administration and fiscal management of the Ohio national guard scholarship program and the procedure by which the Ohio board of regents and the department of the adjutant general may modify the amount of scholarships a member receives based on the amount of other state financial aid a member receives.

(I)(J) Notwithstanding division (A) of section 127.14 of the Revised Code, the controlling board shall not transfer all or part of any appropriation for the Ohio national guard scholarship program.

Section 2. That existing sections 131.44, 173.06, 173.40, 2913.40, 3721.51, 3721.56, 5101.11, 5111.02, 5111.10, 5111.86, 5111.871, 5112.01, 5112.06, 5112.07, 5112.11, 5123.041, 5733.04, 5743.02, 5743.03, 5743.04, 5743.05, 5743.08, 5743.081, 5743.12, 5743.13, 5743.14, 5743.32, 5743.33, 5743.34, 5743.35, 5747.01, 5747.02, 5747.05, 5901.02, 5901.03, and 5919.34 and sections 5743.023 and 5743.322 of the Revised Code are hereby repealed.

Section 3. (A) As used in this section, "net additional tax" means the net additional amount of tax due on all packages of Ohio stamped cigarettes and on all unaffixed Ohio cigarette tax stamps that a wholesale or retail dealer has on hand as of the beginning of business on July 1, 2002, as a result of the amendment of section 5743.02 and the repeal of section 5743.023 of the Revised Code by this act.

(B) The amendment by this act of sections 5743.02, 5743.03, 5743.04, 5743.05, 5743.08, 5743.081, 5743.12, 5743.13, 5743.14, 5743.32, 5743.33, 5743.34, and 5743.35 and the repeal by this act of sections 5743.023 and 5743.322 of the Revised Code take effect July 1, 2002.

(C) In addition to the return required by section 5743.03 of the Revised Code, each wholesale dealer and each retail dealer shall make and file a return on forms prescribed by the Tax Commissioner, showing the net additional tax due and any other information that the Commissioner considers necessary for the administration of sections 5743.01 to 5743.20 of the Revised Code. Not later than July 31, 2002, each wholesale dealer and each retail dealer shall deliver the return to the Treasurer of State, together with a remittance of an amount equal to one-third of the net additional tax. The Treasurer of State shall stamp or otherwise mark on the return the date it was received and also shall show on the return by stamp or otherwise the tax payment remitted with the return. The Treasurer of State immediately shall transmit all returns filed under this section to the Tax Commissioner. Not later than August 31, 2002, and also not later than September 30, 2002, each such dealer shall remit to the Treasurer of State an amount equal to one-third of the net additional tax. Any wholesale or retail dealer who fails to file a return or remit the net additional tax as prescribed by this section, for each day the dealer fails to do so, shall forfeit and pay into the state treasury, as revenue arising from the tax imposed by this section, a late charge equal to the greater of fifty dollars or ten per cent of the tax due. Any unpaid or unreported tax liability or late charge levied by this section may be collected by assessment in the manner provided in section 5743.081 or 5743.082 of the Revised Code.

Section 4. (A) Notwithstanding sections 5743.02 and 5743.32 of the Revised Code, as amended by this act, the rate of the tax imposed by those sections shall be thirty-four and one-half mills on each cigarette from the first day of the first month after the month in which the Director of Budget and Management makes the certification to the Tax Commissioner under division (B) of this section.

(B) In the first month beginning after fiscal year 2002 in which the balance in the Budget Stabilization Fund created under section 131.43 of the Revised Code equals or exceeds five per cent of the General Revenue Fund revenues for the preceding fiscal year, the Director of Budget and Management shall certify such fact to the Tax Commissioner. The Tax Commissioner shall notify wholesale and retail dealers of the reduction in the rate of such taxes.

Section 5. To ease taxpayer compliance burdens, each taxpayer having a taxable year ending after September 10, 2001, and before the effective date of this section, may elect to apply to that taxable year the amendment by this act of section 5733.04 of the Revised Code, by the addition of divisions (I)(17) and (18) of that section, and of section 5747.01 of the Revised Code by the addition of divisions (A)(20) and (21) of that section. If the taxpayer has more than one taxable year ending during that period and makes that election, the election applies to all those taxable years. The election shall accompany or be reflected in the report or return when filed, or shall accompany or be reflected in an amended report. The election is revocable at the option of the person making the election, but no revocation is effective if it is made after the ninetieth day before the last day of the applicable period of time described in division (B) of section 5733.12 or division (B) of section 5747.11 of the Revised Code, as applicable.

Section 6. (A) The Committee to Study State and Local Taxes is hereby created. The committee shall consist of nine members. The Speaker of the House of Representatives shall appoint three members of the House of Representatives to the committee, not more than two of whom shall be from the majority party. The President of the Senate shall appoint three members of the Senate to the committee, not more than two of whom shall be from the majority party. One member shall be the Tax Commissioner, one shall be the Director of Budget and Management, and one shall be the Director of Development. Vacancies shall be filled in the same manner as original appointments. The members of the committee shall be appointed within thirty days after the effective date of this section. The members shall select a chairperson of the committee from among themselves. A majority of the committee constitutes a quorum for the conduct of official business.

(B) The committee may request staff assistance from the Legislative Service Commission as well as the participating agencies. The committee may meet during periods when the General Assembly has adjourned, and may solicit and take testimony from experts on public finance and taxation as well as from interested parties. All state agencies and local governments shall comply promptly with any requests by the committee for data or other information the committee requires to properly complete its research.

(C) The committee shall:

(1) Make a study of the current state and local tax structure, including a determination of how the current tax structure affects various sectors of the economy, such as business, industry, and individuals;

(2) Examine the current state and local tax structure with attention to its equity, simplicity, stability, neutrality, and competitiveness. The committee shall take ease of administration and compliance into consideration as an aspect of "simplicity." The committee shall take long term revenues into consideration as an aspect of "stability."

(3) Identify aspects of the tax structure that present particular obstacles to equity, simplicity, stability, neutrality, and competitiveness;

(4) Analyze who bears the ultimate tax burden with respect to any particular tax;

(5) Evaluate priorities in the tax structure.

(D) On or before March 1, 2003, the committee shall prepare and submit to the Governor, Speaker of the House of Representatives, and President of the Senate, and to the Minority Leaders of the House and Senate, a report summarizing the committee's review of the state and local tax structure. The report shall include recommendations for improvements in the tax structure, which recommendations shall be revenue neutral in the aggregate.

Section 7. The amendment by this act of section 5747.01 of the Revised Code by the addition to divisions (A)(6), (I), and (S) and the addition of division (S)(12) of that section, and the amendment by this act of sections 5747.02 and 5747.05 of the Revised Code, apply to taxable years beginning on or after January 1, 2002.

Section 8. That Section 5.02 of Sub. H.B. 73 of the 124th General Assembly, as amended by Am. Sub. H.B. 405 of the 124th General Assembly, be amended to read as follows:

" Sec. 5.02.  ENFORCEMENT

State Highway Safety Fund Group

General Services Fund Group

COLLECTIVE BARGAINING INCREASES

Notwithstanding division (D) of section 127.14 and division (B) of section 131.35 of the Revised Code, except for the General Revenue Fund, the Controlling Board may, upon the request of either the Director of Budget and Management, or the Department of Public Safety with the approval of the Director of Budget and Management, increase appropriations for any fund, as necessary for the Department of Public Safety, to assist in paying the costs of increases in employee compensation that have occurred pursuant to collective bargaining agreements under Chapter 4117. of the Revised Code and, for exempt employees, under section 124.152 of the Revised Code.

PATROL REIMBURSEMENT FUND CASH TRANSFER

On the effective date of this amendment or as soon as possible thereafter, the Director of Budget and Management shall transfer $551,150.59 in cash from the Patrol Reimbursement Fund (Fund 838) to the Turnpike Policing Fund (Fund 837). This transfer will correct an inaccurate deposit made at the end of fiscal year 2001.

On the effective date of this amendment or as soon as possible thereafter, the Director of Budget and Management shall transfer up to $189,309 in cash in fiscal year 2002 and shall transfer up to $192,411 $2,454,232 in cash in fiscal year 2003 from the Financial Responsibility Compliance (Fund 835) to the State Highway Safety Fund (Fund 036)."

Section 9. That existing Section 5.02 of Sub. H.B. 73 of the 124th General Assembly, as amended by Am. Sub. H.B. 405 of the 124th General Assembly, is hereby repealed.

Section 10. That Sections 16, 16.02, 44, 44.19, 63.07, 94, 94.02, 94.06, 94.07, 125, and 144 of Am. Sub. H.B. 94 of the 124th General Assembly be amended to read as follows:

" Sec. 16.  AGE DEPARTMENT OF AGING

General Revenue Fund

General Services Fund Group

Federal Special Revenue Fund Group

State Special Revenue Fund Group

Sec. 16.02.  PASSPORT

Appropriation item 490-403, PASSPORT, and the amounts set aside for the PASSPORT Waiver Program in appropriation item 490-610, PASSPORT/Residential State Supplement, may be used to assess clients regardless of Medicaid eligibility.

The Director of Aging shall adopt rules under section 111.15 of the Revised Code governing the nonwaiver funded PASSPORT program, including client eligibility.

The Department of Aging shall administer the Medicaid Waiver funded PASSPORT Home Care program as delegated by the Department of Job and Family Services in an interagency agreement. The foregoing appropriation item 490-403, PASSPORT, and the amounts set aside for the PASSPORT Waiver Program in appropriation item 490-610, PASSPORT/Residential State Supplement, shall be used to provide the required state match for federal Medicaid funds supporting the Medicaid Waiver funded PASSPORT Home Care program. Appropriation item 490-403, PASSPORT, and the amounts set aside for the PASSPORT Waiver Program in appropriation item 490-610, PASSPORT/Residential State Supplement, may also be used to support the Department of Aging's administrative costs associated with operating the PASSPORT program.

The foregoing appropriation item 490-607, PASSPORT, shall be used to provide the federal matching share for all PASSPORT program costs determined by the Department of Job and Family Services to be eligible for Medicaid reimbursement.

SENIOR COMMUNITY SERVICES

The foregoing appropriation item 490-411, Senior Community Services, shall be used for services designated by the Department of Aging, including, but not limited to, home-delivered meals, transportation services, personal care services, respite services, home repair, and care coordination. Service priority shall be given to low income, frail, and cognitively impaired persons 60 years of age and over. The department shall promote cost sharing by service recipients for those services funded with block grant funds, including, where possible, sliding-fee scale payment systems based on the income of service recipients.

ALZHEIMERS RESPITE

The foregoing appropriation item 490-414, Alzheimers Respite, shall be used only to fund Alzheimer's disease services under section 173.04 of the Revised Code.

TRANSPORTATION FOR ELDERLY

The foregoing appropriation item 490-416, Transportation for Elderly, shall be used for non-capital expenses related to transportation services for the elderly that provide access to such things as healthcare services, congregate meals, socialization programs, and grocery shopping. The appropriation shall be allocated to the following agencies:

(A) $45,000 per fiscal year to the Cincinnati Jewish Vocational Services;

(B) $45,000 per fiscal year to the Cleveland Jewish Community Center;

(C) $45,000 per fiscal year to the Columbus Jewish Federation;

(D) $20,000 per fiscal year to the Dayton Jewish Family Services;

(E) $10,000 per fiscal year to the Akron Jewish Community Center;

(F) $5,000 per fiscal year to the Youngstown Jewish Federation;

(G) $3,000 per fiscal year to the Canton Jewish Federation;

(H) $10,000 per fiscal year to the Toledo Jewish Federation.

Agencies receiving funding from appropriation item 490-416, Transportation for Elderly, shall coordinate services with other local service agencies.

RESIDENTIAL STATE SUPPLEMENT

Under the Residential State Supplement Program, the amount used to determine whether a resident is eligible for payment and for determining the amount per month the eligible resident will receive shall be as follows:

(A) $900 for a residential care facility, as defined in section 3721.01 of the Revised Code;

(B) $900 for an adult group home, as defined in Chapter 3722. of the Revised Code;

(C) $800 for an adult foster home, as defined in Chapter 173. of the Revised Code;

(D) $800 for an adult family home, as defined in Chapter 3722. of the Revised Code;

(E) $800 for an adult community alternative home, as defined in Chapter 3724. of the Revised Code;

(F) $800 for an adult residential facility, as defined in Chapter 5119. of the Revised Code;

(G) $600 for adult community mental health housing services, as defined in division (B)(5) of section 173.35 of the Revised Code.

The Departments of Aging and Job and Family Services shall reflect this amount in any applicable rules the departments adopt under section 173.35 of the Revised Code.

TRANSFER OF RESIDENTIAL STATE SUPPLEMENT APPROPRIATIONS

The Department of Aging may transfer cash by intrastate transfer vouchers from the foregoing appropriation items 490-412, Residential State Supplement, and 490-610, PASSPORT/Residential State Supplement, to the Department of Job and Family Services' Fund 4J5, Home and Community-Based Services for the Aged Fund. The funds shall be used to make benefit payments to Residential State Supplement recipients.

LONG-TERM CARE OMBUDSMAN

The foregoing appropriation item 490-410, Long-Term Care Ombudsman, shall be used for a program to fund ombudsman program activities in nursing homes, adult care facilities, boarding homes, and home and community care services.

PRESCRIPTION DRUG DISCOUNT PROGRAM

The foregoing appropriation item 490-419, Prescription Drug Discount Program, shall be used to administer a prescription drug discount program.

SENIOR FACILITIES

Of the foregoing appropriation item 490-504, Senior Facilities, in fiscal year 2002, $10,000 shall be for the Tri-city Senior Center, $10,000 shall be for the Westlake Senior Center, and $10,000 shall be for the Rocky River Senior Center.

Of the foregoing appropriation item 490-504, Senior Facilities, $10,000 shall be for the Jilliard Senior Center, $10,000 shall be for the Northwest Stark County Senior Center, and $10,000 shall be for the North Ridgeville Senior Center.

REGIONAL LONG-TERM CARE OMBUDSMAN PROGRAMS

The foregoing appropriation item 490-609, Regional Long-Term Care Ombudsman Programs, shall be used solely to pay the costs of operating the regional long-term care ombudsman programs.

PASSPORT/RESIDENTIAL STATE SUPPLEMENT

Of the foregoing appropriation item 490-610, PASSPORT/Residential State Supplement, up to $2,835,000 each fiscal year shall be used to fund the Residential State Supplement Program. The remaining available funds shall be used to fund the PASSPORT program.

Sec. 44.  EDU DEPARTMENT OF EDUCATION

General Revenue Fund

General Services Fund Group

Federal Special Revenue Fund Group

State Special Revenue Fund Group

Lottery Profits Education Fund Group

Sec. 44.19.  LOTTERY PROFITS EDUCATION FUND

Appropriation item 200-612, Base Cost Funding (Fund 017), shall be used in conjunction with appropriation item 200-501, Base Cost Funding (GRF), to provide payments to school districts pursuant to Chapter 3317. of the Revised Code.

Of the foregoing appropriation item 200-612, Base Cost Funding (Fund 017), $25,000,000 in each fiscal year shall be used from the funds transferred from the Unclaimed Prizes Trust Fund pursuant to the section entitled "Transfers from the Unclaimed Prizes Fund" of this act Am. Sub. H.B. 94 of the 124th General Assembly.

The Department of Education, with the approval of the Director of Budget and Management, shall determine the monthly distribution schedules of appropriation item 200-501, Base Cost Funding (GRF), and appropriation item 200-612, Base Cost Funding (Fund 017). If adjustments to the monthly distribution schedule are necessary, the Department of Education shall make such adjustments with the approval of the Director of Budget and Management.

Of the foregoing appropriation item 200-682, Lease Rental Payment Reimbursement (Fund 017), $10,000,000 in fiscal year 2003 shall be used from the funds transferred from the Unclaimed Prizes Trust Fund pursuant to the paragraph with the heading "Transfers from the Unclaimed Prizes Fund" in Am. Sub. H.B. 94 of the 124th General Assembly.

The Director of Budget and Management shall transfer via intrastate transfer voucher the amount appropriated under the Lottery Profits Education Fund for appropriation item 200-682, Lease Rental Payment Reimbursement, to the General Revenue Fund on a schedule determined by the director. These funds shall support the appropriation item 230-428, Lease Rental Payments (GRF), of the School Facilities Commission.

LOTTERY PROFITS TRANSFERS*

On the fifteenth day of May of each fiscal year, the Director of Budget and Management shall determine if lottery profits transfers will meet the appropriation amounts from the Lottery Profits Education Fund.

On or after the date specified in each fiscal year, if the director determines that lottery profits will not meet appropriations and if other funds are not available to meet the shortfall, the Superintendent of Public Instruction shall take the actions specified under the "Reallocation of Funds" section of this act Am. Sub. H.B. 94 of the 124th General Assembly.

TRANSFERS FROM THE UNCLAIMED PRIZES FUND

By the fifteenth day of January of fiscal year 2002 and fiscal year 2003, the Director of Budget and Management shall respectively transfer $25,000,000 for fiscal year 2002 and $35,000,000 for fiscal year 2003 from the State Lottery Commission's Unclaimed Prizes Fund to the Lottery Profits Education Fund, to be used solely for purposes specified in the Department of Education's budget. Transfers of unclaimed prizes under this provision shall not count as lottery profits in the determination made concerning excess profits titled "Lottery Profits" under the Department of Education in this act Am. Sub. H.B. 94 of the 124th General Assembly.

TEACHER CERTIFICATION AND LICENSURE

The foregoing appropriation item 200-681, Teacher Certification and Licensure, shall be used by the Department of Education in each year of the biennium to administer teacher certification and licensure functions pursuant to sections 3301.071, 3301.074, 3301.50, 3301.51, 3319.088, 3319.22, 3319.24 to 3319.28, 3319.281, 3319.282, 3319.29, 3319.301, 3319.31, and 3319.51 of the Revised Code.

Sec. 63.07. MEDICAID PROGRAM SUPPORT FUND - STATE

The foregoing appropriation item 600-671, Medicaid Program Support, shall be used by the Department of Job and Family Services to pay for Medicaid services and contracts.

HEALTH CARE SERVICES ADMINISTRATION

The foregoing appropriation item 600-654, Health Care Services Administration, shall be used by the Department of Job and Family Services for costs associated with the administration of the Medicaid program.

HEALTH CARE SERVICES ADMINISTRATION FUND

For fiscal year 2003, the Director of Job and Family Services may deposit revenue received from federal reimbursement for allowable Title XIX administrative expenditures made by state or local entities into the Health Care Services Administration Fund (Fund 5U3).

Of the amount received by the Department of Job and Family Services during fiscal year 2003 from the first installment of assessments paid under section 5112.06 of the Revised Code and intergovernmental transfers made under section 5112.07 of the Revised Code, the Director of Job and Family Services shall deposit $175,000 into the state treasury to the credit of the Health Care Services Administration Fund (Fund 5U3).

Sec. 94.  BOR BOARD OF REGENTS

General Revenue Fund

General Services Fund Group

Federal Special Revenue Fund Group

State Special Revenue Fund Group

Sec. 94.02. MISSION-BASED CORE FUNDING FOR HIGHER EDUCATION

JOBS CHALLENGE

Funds appropriated to appropriation item 235-415, Jobs Challenge, shall be distributed to state-assisted community and technical colleges, regional campuses of state-assisted universities, and other organizationally distinct and identifiable member campuses of the EnterpriseOhio Network in support of noncredit job-related training. In fiscal years 2002 and 2003, $2,114,673 and $1,981,841, respectively, shall be distributed as performance grants to EnterpriseOhio Network campuses based upon each campus's documented performance according to criteria established by the Board of Regents for increasing training and related services to businesses, industries, and public sector organizations.

Of the foregoing appropriation item 235-415, Jobs Challenge, $3,130,087 in fiscal year 2002 and $2,875,953 in fiscal year 2003 shall be allocated to the Targeted Industries Training Grant Program to attract, develop, and retain business and industry strategically important to the state's economy.

Also, in fiscal years 2002 and 2003, $2,991,513 and $3,629,797, respectively, shall be allocated to the Non-credit Incentives Grant Program to reward two-year campuses for increasing the amount of non-credit skill upgrading services provided to Ohio employers and employees. The funds shall be distributed to campuses in proportion to each campus's share of noncredit job-related training revenues received by all campuses for the previous fiscal year. It is the intent of the General Assembly that this workforce development incentive component of the Jobs Challenge Program reward campus noncredit job-related training efforts in the same manner that the Research Challenge Program rewards campuses for their ability to obtain sponsored research revenues.

Of the foregoing appropriation item 235-415, Jobs Challenge, $1,863,726 in fiscal year 2002 and $1,712,409 in fiscal year 2003 shall be allocated as an incentive to support local EnterpriseOhio Network Campus/Adult Workforce Education Center Partnerships. The purpose of the partnerships is to promote and deliver coordinated, comprehensive training to local employers. Each partnership shall include a formal agreement between one or more EnterpriseOhio Network campus and one or more adult workforce education center for the delivery of training services.

ACCESS CHALLENGE

In each fiscal year, the foregoing appropriation item 235-418, Access Challenge, shall be distributed to Ohio's state-assisted access colleges and universities. For the purposes of this allocation, "access campuses" includes state-assisted community colleges, state community colleges, technical colleges, Shawnee State University, Central State University, Cleveland State University, the regional campuses of state-assisted universities, and, where they are organizationally distinct and identifiable, the community-technical colleges located at the University of Cincinnati, Youngstown State University, and the University of Akron.

In fiscal years 2002 and 2003, Access Challenge subsidies shall be distributed by the Board of Regents to eligible access campuses on the basis of each campus's share of fiscal year 1999 all-terms subsidy eligible General Studies FTEs. For the purpose of these calculations, the average all-terms subsidy eligible General Studies FTEs for Youngstown State University's eligible Comm-Tech enrollments shall equal 348.

For the purposes of this calculation, Cleveland State University's enrollments shall be adjusted by the ratio of the sum of subsidy-eligible lower-division FTE student enrollments eligible for access funding to the sum of subsidy-eligible General Studies FTE student enrollments at Central State University and Shawnee State University, and for the following universities and their regional campuses: Ohio State University, Ohio University, Kent State University, Bowling Green State University, Miami University, the University of Cincinnati, the University of Akron, and Wright State University.

SUCCESS CHALLENGE

The foregoing appropriation item 235-420, Success Challenge, shall be used by the Board of Regents to promote degree completion by students enrolled at a main campus of a state-assisted university.

In each fiscal year, two-thirds of the appropriations shall be distributed to state-assisted university main campuses in proportion to each campus's share of the total statewide bachelor's degrees granted by university main campuses to "at-risk" students. In fiscal years 2002 and 2003, an "at-risk" student means any undergraduate student who has received an Ohio Instructional Grant during the past ten years. An eligible institution shall not receive its share of this distribution until it has submitted a plan that addresses how the subsidy will be used to better serve at-risk students and increase their likelihood of successful completion of a bachelor's degree program. The Board of Regents shall disseminate to all state-supported institutions of higher education all such plans submitted by institutions that received Success Challenge funds.

In each fiscal year, one-third of the appropriations shall be distributed to university main campuses in proportion to each campus's share of the total bachelor's degrees granted by university main campuses to undergraduate students who completed their bachelor's degrees in a "timely manner" in the previous fiscal year. For the purposes of this section, "timely manner" means the normal time it would take for a full-time degree-seeking undergraduate student to complete the student's degree. Generally, for such students pursuing a bachelor's degree, "timely manner" means four years. Exceptions to this general rule shall be permitted for students enrolled in programs specifically designed to be completed in a longer time period. The Board of Regents shall collect base-line data beginning with the 1998-99 academic year to assess the timely completion statistics by university main campuses.

EMINENT SCHOLARS

The foregoing appropriation item 235-451, Eminent Scholars, shall be used by the Ohio Board of Regents to establish an Ohio Eminent Scholars Program, the purpose of which is to invest educational resources to address problems that are of vital statewide significance while fostering the growth in eminence of Ohio's academic programs. Endowment grants of $750,000 to state colleges and universities and nonprofit Ohio institutions of higher education holding certificates of authorization issued under section 1713.02 of the Revised Code to match endowment gifts from nonstate sources may be made in accordance with a plan established by the Ohio Board of Regents. Matching gifts in science and technology programs shall be $750,000, and in all other program areas, $500,000. The grants shall have as their purpose attracting and sustaining in Ohio scholar-leaders of national or international prominence, each of whom will assist the state in one of the following three areas: (1) improving the state's economic development; (2) strengthening the state's system of K-12 education; or (3) improving public health and safety. Such scholar-leaders shall, among their duties, share broadly the benefits and knowledge unique to their fields of scholarship to the betterment of Ohio and its people.

RESEARCH CHALLENGE

The foregoing appropriation item 235-454, Research Challenge, shall be used to enhance the basic research capabilities of public colleges and universities and accredited Ohio institutions of higher education holding certificates of authorization issued pursuant to section 1713.02 of the Revised Code, in order to strengthen academic research for pursuing Ohio's economic redevelopment goals. The Board of Regents, in consultation with the colleges and universities, shall administer the Research Challenge Program and utilize a means of matching, on a fractional basis, external funds attracted in the previous year by institutions for basic research. The program may include incentives for increasing the amount of external research funds coming to eligible institutions and for focusing research efforts upon critical state needs. Colleges and universities shall submit for review and approval to the Board of Regents plans for the institutional allocation of state dollars received through the program. The institutional plans shall provide the rationale for the allocation in terms of the strategic targeting of funds for academic and state purposes, for strengthening research programs, and for increasing the amount of external research funds, and shall include an evaluation process to provide results of the increased support.

The Board of Regents shall submit a biennial report of progress to the General Assembly.

COMPUTER SCIENCE GRADUATE EDUCATION

The foregoing appropriation item 235-554, Computer Science Graduate Education, shall be used by the Board of Regents to support improvements in graduate programs in computer science at state-assisted universities. In each fiscal year, up to $200,000 may be used to support collaborative efforts in graduate education in this program area.

Sec. 94.06. PLEDGE OF FEES*

Any new pledge of fees, or new agreement for adjustment of fees, made in the 2001-2003 biennium to secure bonds or notes of a state-assisted institution of higher education for a project for which bonds or notes were not outstanding on the effective date of this section shall be effective only after approval by the Board of Regents, unless approved in a previous biennium.

HIGHER EDUCATION GENERAL OBLIGATION DEBT SERVICE

The foregoing appropriation item 235-909, Higher Education General Obligation Debt Service, shall be used to pay all debt service and financing costs at the times they are required to be made pursuant to sections 151.01 and 151.04 of the Revised Code during the period from July 1, 2001, to June 30, 2003. The Office of the Sinking Fund or the Director of Budget and Management shall effectuate the required payments by an interstate transfer voucher.

Of the foregoing appropriation item 235-909, Higher Educatoin General Obligation Debt Service, surplus funds net of encumbrances from the appropriation for fiscal year 2002 shall be reappropriated to appropriation item 235-501, State Share of Instruction, for fiscal year 2003.

LEASE RENTAL PAYMENTS

The foregoing appropriation item 235-401, Lease Rental Payments, shall be used to meet all payments at the times they are required to be made during the period from July 1, 2001, to June 30, 2003, by the Board of Regents pursuant to leases and agreements made under section 154.21 of the Revised Code, but limited to the aggregate amount of $563,969,000. Nothing in this act Am. Sub. H.B. 94 of the 124th General Assembly shall be deemed to contravene the obligation of the state to pay, without necessity for further appropriation, from the sources pledged thereto, the bond service charges on obligations issued pursuant to section 154.21 of the Revised Code.

Of the forgoing appropriation item 235-401, Lease-Rental Payments, surplus funds net of encumbrances from the appropriation for fiscal year 2002 shall be reappropriated to appropriation item 235-501, State Share of Instruction, for fiscal year 2003.

Sec. 94.07. OHIO INSTRUCTIONAL GRANTS

Notwithstanding section 3333.12 of the Revised Code, in lieu of the tables in that section, instructional grants for all full-time students shall be made for fiscal year 2002 using the tables under this heading.

The tables under this heading prescribe the maximum grant amounts covering two semesters, three quarters, or a comparable portion of one academic year. The grant amount for a full-time student enrolled in an eligible institution for a semester or quarter in addition to the portion of the academic year covered by a grant determined under these tables shall be a percentage of the maximum prescribed in the applicable table. The maximum grant for a fourth quarter shall be one-third of the maximum amount prescribed under the table. The maximum grant for a third semester shall be one-half of the maximum amount prescribed under the table.

For a full-time student who is a dependent and enrolled in a nonprofit educational institution that is not a state-assisted institution and that has a certificate of authorization issued pursuant to Chapter 1713. of the Revised Code, the amount of the instructional grant for two semesters, three quarters, or a comparable portion of the academic year shall be determined in accordance with the following table:

For a full-time student who is financially independent and enrolled in a nonprofit educational institution that is not a state-assisted institution and that has a certificate of authorization issued pursuant to Chapter 1713. of the Revised Code, the amount of the instructional grant for two semesters, three quarters, or a comparable portion of the academic year shall be determined in accordance with the following table:

For a full-time student who is a dependent and enrolled in an educational institution that holds a certificate of registration from the state board of proprietary school registration, the amount of the instructional grant for two semesters, three quarters, or a comparable portion of the academic year shall be determined in accordance with the following table:

For a full-time student who is financially independent and enrolled in an educational institution that holds a certificate of registration from the state board of proprietary school registration, the amount of the instructional grant for two semesters, three quarters, or a comparable portion of the academic year shall be determined in accordance with the following table:

For a full-time student who is a dependent and enrolled in a state-assisted educational institution, the amount of the instructional grant for two semesters, three quarters, or a comparable portion of the academic year shall be determined in accordance with the following table:

For a full-time student who is financially independent and enrolled in a state-assisted educational institution, the amount of the instructional grant for two semesters, three quarters, or a comparable portion of the academic year shall be determined in accordance with the following table:

The foregoing appropriation item 235-503, Ohio Instructional Grants, shall be used to make the payments authorized by division (C) of section 3333.26 of the Revised Code to the institutions described in that division. In addition, this appropriation shall be used to reimburse the institutions described in division (B) of section 3333.26 of the Revised Code for the cost of the waivers required by that division.

Of the appropriation item 235-503, Ohio Instructional Grants, up to $3,800,000 of surplus funds net of encumbrances from the appropriation for fiscal year 2002 shall be reappropriated to appropriation item 235-534, Student Workforce Development Grants, for fiscal year 2003.

WAR ORPHANS SCHOLARSHIPS

The foregoing appropriation item 235-504, War Orphans Scholarships, shall be used to reimburse state-assisted institutions of higher education for waivers of instructional fees and general fees provided by them, to provide grants to institutions that have received a certificate of authorization from the Ohio Board of Regents under Chapter 1713. of the Revised Code, in accordance with the provisions of section 5910.04 of the Revised Code, and to fund additional scholarship benefits provided by section 5910.032 of the Revised Code.

PART-TIME STUDENT INSTRUCTIONAL GRANTS

The foregoing appropriation item 235-549, Part-time Student Instructional Grants, shall be used to support a grant program for part-time undergraduate students who are Ohio residents and who are enrolled in degree granting programs.

Eligibility for participation in the program shall include degree granting educational institutions that hold a certificate of registration from the State Board of Proprietary School Registration, and nonprofit institutions that have a certificate of authorization issued pursuant to Chapter 1713. of the Revised Code, as well as state-assisted colleges and universities. Grants shall be given to students on the basis of need, as determined by the college, which, in making these determinations, shall give special consideration to single-parent heads-of-household and displaced homemakers who enroll in an educational degree program that prepares the individual for a career. In determining need, the college also shall consider the availability of educational assistance from a student's employer. It is the intent of the General Assembly that these grants not supplant such assistance.

Sec. 125. UNCLAIMED FUNDS TRANSER TRANSFER

Notwithstanding division (A) of section 169.05 of the Revised Code, prior to June 30, 2003, upon the request of the Director of Budget and Management, the Director of Commerce shall transfer to the General Revenue Fund up to $30,000,000 $80,800,000 of the unclaimed funds that have been reported by the holder of unclaimed funds as provided by section 169.05 of the Revised Code, irrespective of the allocation of the unclaimed funds under that section.

Sec. 144. TRANSFERS TO THE GENERAL REVENUE FUND

Notwithstanding any other provision of law to the contrary, including Am. Sub. H.B. 94 and Am. Sub. H.B. 405 of the 124th General Assembly as subsequently amended, during fiscal years 2002 and 2003, the Director of Budget and Management is hereby authorized to transfer make such transfers of cash to the General Revenue Fund from non-federal, non-General Revenue Fund funds that are not constitutionally restricted to, as are necessary to ensure that expenditures from the General Revenue Fund do not exceed amounts credited to it. The Director shall issue any directives to state agencies that are necessary to accomplish the purposes of this section. The total amount of cash transfers made pursuant to this section to the General Revenue Fund during fiscal years 2002 and 2003 shall not exceed $31,794,657."

Section 11. That existing Sections 16, 16.02, 44, 44.19, 63.07, 94, 94.02, 94.06, 94.07, 125, and 144 of Am. Sub. H.B. 94 of the 124th General Assembly are hereby repealed.

Section 12. That Section 13 of Am. Sub. H.B. 94 of the 124th General Assembly, as amended by Am. Sub. H.B. 524 of the 124th General Assembly, be amended to read as follows:

" Sec. 13. DAS DEPARTMENT OF ADMINISTRATIVE SERVICES

General Revenue Fund

General Services Fund Group

Intragovernmental Service Fund Group

Agency Fund Group

Holding Account Redistribution Fund Group

Section 13. That existing Section 13 of Am. Sub. H.B. 94 of the 124th General Assembly, as amended by Am. Sub. H.B. 524 of the 124th General Assembly, is hereby repealed.

Section 14. That Sections 63 and 63.37 of Am. Sub. H.B. 94 of the 124th General Assembly, as amended by Am. Sub. H.B. 299 of the 124th General Assembly, be amended to read as follows:

" Sec. 63.  JFS DEPARTMENT OF JOB AND FAMILY SERVICES

General Revenue Fund

General Services Fund Group

Federal Special Revenue Fund Group

State Special Revenue Fund Group