As Passed by the House

130th General Assembly Regular Session 2013-2014

Sub. S. B. No. 287

Senator Hughes 

Cosponsors: Senators Eklund, Patton, Sawyer, Seitz 

Representatives Amstutz, Anielski, Beck, Blessing, Boose, Budish, Burkley, Damschroder, Hackett, Henne, Huffman, Letson, Ruhl, Terhar, Young 

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A BILL

To amend sections 135.14, 135.142, 135.143, 135.35,

1

and 3770.06 and to enact section 135.48 of the

2

Revised Code to modify authorized investments of

3

interim moneys and inactive moneys under the

4

Uniform Depository Act.

5

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

Section 1.  That sections 135.14, 135.142, 135.143, 135.35,	6
and 3770.06 be amended and section 135.48 of the Revised Code be	7
enacted to read as follows:	8

Sec. 135.14.  (A) As used in this section:

9

(1) "Treasurer" does not include the treasurer of state, and	10
"governing board" does not include the state board of deposit.	11

(2) "Other obligations" includes notes whether or not issued	12
in anticipation of the issuance of bonds.	13

(B) The treasurer or governing board may invest or deposit	14
any part or all of the interim moneys. The following	15
classifications of obligations shall be eligible for such	16
investment or deposit:	17

(1) United States treasury bills, notes, bonds, or any other	18
obligation or security issued by the United States treasury or any	19
other obligation guaranteed as to principal and interest by the	20
United States.	21

Nothing in the classification of eligible obligations set	22
forth in division (B)(1) of this section or in the classifications	23
of eligible obligations set forth in divisions (B)(2) to (7) of	24
this section shall be construed to authorize any investment in	25
stripped principal or interest obligations of such eligible	26
obligations.	27

(2) Bonds, notes, debentures, or any other obligations or	28
securities issued by any federal government agency or	29
instrumentality, including but not limited to, the federal	30
national mortgage association, federal home loan bank, federal	31
farm credit bank, federal home loan mortgage corporation, and	32
government national mortgage association, and student loan	33
marketing association. All federal agency securities shall be	34
direct issuances of federal government agencies or	35
instrumentalities.	36

(3) Interim deposits in the eligible institutions applying	37
for interim moneys as provided in section 135.08 of the Revised	38
Code. The award of interim deposits shall be made in accordance	39
with section 135.09 of the Revised Code and the treasurer or the	40
governing board shall determine the periods for which such interim	41
deposits are to be made and shall award such interim deposits for	42
such periods, provided that any eligible institution receiving an	43
interim deposit award may, upon notification that the award has	44
been made, decline to accept the interim deposit in which event	45
the award shall be made as though the institution had not applied	46
for such interim deposit.	47

(4) Bonds and other obligations of this state;, or the	48
political subdivisions of this state, provided that, with respect	49
to bonds or other obligations of political subdivisions, all of	50
the following apply:	51

(a) The bonds or other obligations are payable from general	52
revenues of the political subdivision and backed by the full faith	53
and credit of the political subdivision.	54

(b) The bonds or other obligations are rated at the time of	55
purchase in the three highest classifications established by at	56
least one nationally recognized standard rating service and	57
purchased through a registered securities broker or dealer.	58

(c) The aggregate value of the bonds or other obligations	59
does not exceed twenty per cent of interim moneys available for	60
investment at the time of purchase.	61

(d) The treasurer or governing board is not the sole	62
purchaser of the bonds or other obligations at original issuance.	63

No investment shall be made under division (B)(4) of this	64
section unless the treasurer or governing board has completed	65
additional training for making the investments authorized by	66
division (B)(4) of this section. The type and amount of additional	67
training shall be approved by the treasurer of state and may be	68
conducted by or provided under the supervision of the treasurer of	69
state.	70

(5) No-load money market mutual funds consisting exclusively	71
of obligations described in division (B)(1) or (2) of this section	72
and repurchase agreements secured by such obligations, provided	73
that investments in securities described in this division are made	74
only through eligible institutions mentioned in section 135.03 of	75
the Revised Code;	76

(6) The Ohio subdivision's fund as provided in section 135.45	77
of the Revised Code;	78

(7) Up to twenty-fiveforty per cent of interim moneys	79
available for investment in either of the following:	80

(a) Commercial paper notes issued by an entity that is	81
defined in division (D) of section 1705.01 of the Revised Code and	82
that has assets exceeding five hundred million dollars, to which	83
notes all of the following apply:	84

(i) The notes are rated at the time of purchase in the	85
highest classification established by at least two nationally	86
recognized standard rating services.	87

(ii) The aggregate value of the notes does not exceed ten per	88
cent of the aggregate value of the outstanding commercial paper of	89
the issuing corporation.	90

(iii) The notes mature not later than onetwo hundred eighty	91
seventy days after purchase.	92

(iv) The investment in commercial paper notes of a single	93
issuer shall not exceed in the aggregate five per cent of interim	94
moneys available for investment at the time of purchase.	95

(b) Bankers acceptances of banks that are insured by the	96
federal deposit insurance corporation and to which both of the	97
following apply:	98

(i) The obligations are eligible for purchase by the federal	99
reserve system.	100

(ii) The obligationsthat mature not later than one hundred	101
eighty days after purchase.	102

No investment shall be made pursuant to division (B)(7) of	103
this section unless the treasurer or governing board has completed	104
additional training for making the investments authorized by	105
division (B)(7) of this section. The type and amount of additional	106
training shall be approved by the auditortreasurer of state and	107
may be conducted by or provided under the supervision of the	108
auditortreasurer of state.	109

(C) Nothing in the classifications of eligible obligations	110
set forth in divisions (B)(1) to (7) of this section shall be	111
construed to authorize any investment in a derivative, and no	112
treasurer or governing board shall invest in a derivative. For	113
purposes of this division, "derivative" means a financial	114
instrument or contract or obligation whose value or return is	115
based upon or linked to another asset or index, or both, separate	116
from the financial instrument, contract, or obligation itself. Any	117
security, obligation, trust account, or other instrument that is	118
created from an issue of the United States treasury or is created	119
from an obligation of a federal agency or instrumentality or is	120
created from both is considered a derivative instrument. An	121
eligible investment described in this section with a variable	122
interest rate payment, based upon a single interest payment or	123
single index comprised of other eligible investments provided for	124
in division (B)(1) or (2) of this section, is not a derivative,	125
provided that such variable rate investment has a maximum maturity	126
of two years.	127

(D) Except as provided in division (E) of this section, any	128
investment made pursuant to this section must mature within five	129
years from the date of settlement, unless the investment is	130
matched to a specific obligation or debt of the subdivision.	131

(E) The treasurer or governing board may also enter into a	132
written repurchase agreement with any eligible institution	133
mentioned in section 135.03 of the Revised Code or any eligible	134
dealer pursuant to division (M) of this section, under the terms	135
of which agreement the treasurer or governing board purchases, and	136
such institution or dealer agrees unconditionally to repurchase	137
any of the securities listed in divisions (B)(1) to (5), except	138
letters of credit described in division (B)(2), of section 135.18	139
of the Revised Code. The market value of securities subject to an	140
overnight written repurchase agreement must exceed the principal	141
value of the overnight written repurchase agreement by at least	142
two per cent. A written repurchase agreement shall not exceed	143
thirty days and the market value of securities subject to a	144
written repurchase agreement must exceed the principal value of	145
the written repurchase agreement by at least two per cent and be	146
marked to market daily. All securities purchased pursuant to this	147
division shall be delivered into the custody of the treasurer or	148
governing board or an agent designated by the treasurer or	149
governing board. A written repurchase agreement with an eligible	150
securities dealer shall be transacted on a delivery versus payment	151
basis. The agreement shall contain the requirement that for each	152
transaction pursuant to the agreement the participating	153
institution or dealer shall provide all of the following	154
information:	155

(1) The par value of the securities;

156

(2) The type, rate, and maturity date of the securities;

157

(3) A numerical identifier generally accepted in the	158
securities industry that designates the securities.	159

No treasurer or governing board shall enter into a written	160
repurchase agreement under the terms of which the treasurer or	161
governing board agrees to sell securities owned by the subdivision	162
to a purchaser and agrees with that purchaser to unconditionally	163
repurchase those securities.	164

(F) No treasurer or governing board shall make an investment	165
under this section, unless the treasurer or governing board, at	166
the time of making the investment, reasonably expects that the	167
investment can be held until its maturity.	168

(G) No treasurer or governing board shall pay interim moneys	169
into a fund established by another subdivision, treasurer,	170
governing board, or investing authority, if that fund was	171
established for the purpose of investing the public moneys of	172
other subdivisions. This division does not apply to the payment of	173
public moneys into either of the following:	174

(1) The Ohio subdivision's fund pursuant to division (B)(6)	175
of this section;	176

(2) A fund created solely for the purpose of acquiring,	177
constructing, owning, leasing, or operating municipal utilities	178
pursuant to the authority provided under section 715.02 of the	179
Revised Code or Section 4 of Article XVIII, Ohio Constitution.	180

For purposes of division (G) of this section, "subdivision"	181
includes a county.	182

(H) The use of leverage, in which the treasurer or governing	183
board uses its current investment assets as collateral for the	184
purpose of purchasing other assets, is prohibited. The issuance of	185
taxable notes for the purpose of arbitrage is prohibited.	186
Contracting to sell securities that have not yet been acquired by	187
the treasurer or governing board, for the purpose of purchasing	188
such securities on the speculation that bond prices will decline,	189
is prohibited.	190

(I) Whenever, during a period of designation, the treasurer	191
classifies public moneys as interim moneys, the treasurer shall	192
notify the governing board of such action. The notification shall	193
be given within thirty days after such classification and in the	194
event the governing board does not concur in such classification	195
or in the investments or deposits made under this section, the	196
governing board may order the treasurer to sell or liquidate any	197
of such investments or deposits, and any such order shall	198
specifically describe the investments or deposits and fix the date	199
upon which they are to be sold or liquidated. Investments or	200
deposits so ordered to be sold or liquidated shall be sold or	201
liquidated for cash by the treasurer on the date fixed in such	202
order at the then current market price. Neither the treasurer nor	203
the members of the board shall be held accountable for any loss	204
occasioned by sales or liquidations of investments or deposits at	205
prices lower than their cost. Any loss or expense incurred in	206
making such sales or liquidations is payable as other expenses of	207
the treasurer's office.	208

(J) If any investments or deposits purchased under the	209
authority of this section are issuable to a designated payee or to	210
the order of a designated payee, the name of the treasurer and the	211
title of the treasurer's office shall be so designated. If any	212
such securities are registrable either as to principal or	213
interest, or both, then such securities shall be registered in the	214
name of the treasurer as such.	215

(K) The treasurer is responsible for the safekeeping of all	216
documents evidencing a deposit or investment acquired by the	217
treasurer under this section. Any securities may be deposited for	218
safekeeping with a qualified trustee as provided in section 135.18	219
of the Revised Code, except the delivery of securities acquired	220
under any repurchase agreement under this section shall be made to	221
a qualified trustee, provided, however, that the qualified trustee	222
shall be required to report to the treasurer, governing board,	223
auditor of state, or an authorized outside auditor at any time	224
upon request as to the identity, market value, and location of the	225
document evidencing each security, and that if the participating	226
institution is a designated depository of the subdivision for the	227
current period of designation, the securities that are the subject	228
of the repurchase agreement may be delivered to the treasurer or	229
held in trust by the participating institution on behalf of the	230
subdivision. Interest earned on any investments or deposits	231
authorized by this section shall be collected by the treasurer and	232
credited by the treasurer to the proper fund of the subdivision.	233

Upon the expiration of the term of office of a treasurer or	234
in the event of a vacancy in the office of treasurer by reason of	235
death, resignation, removal from office, or otherwise, the	236
treasurer or the treasurer's legal representative shall transfer	237
and deliver to the treasurer's successor all documents evidencing	238
a deposit or investment held by the treasurer. For the investments	239
and deposits so transferred and delivered, such treasurer shall be	240
credited with and the treasurer's successor shall be charged with	241
the amount of money held in such investments and deposits.	242

(L) Whenever investments or deposits acquired under this	243
section mature and become due and payable, the treasurer shall	244
present them for payment according to their tenor, and shall	245
collect the moneys payable thereon. The moneys so collected shall	246
be treated as public moneys subject to sections 135.01 to 135.21	247
of the Revised Code.	248

(M)(1) All investments, except for investments in securities	249
described in divisions (B)(5) and (6) of this section and for	250
investments by a municipal corporation in the issues of such	251
municipal corporation, shall be made only through a member of the	252
national association of securities dealersfinancial industry	253
regulatory authority (FINRA), through a bank, savings bank, or	254
savings and loan association regulated by the superintendent of	255
financial institutions, or through an institution regulated by the	256
comptroller of the currency, federal deposit insurance	257
corporation, or board of governors of the federal reserve system.	258

(2) Payment for investments shall be made only upon the	259
delivery of securities representing such investments to the	260
treasurer, governing board, or qualified trustee. If the	261
securities transferred are not represented by a certificate,	262
payment shall be made only upon receipt of confirmation of	263
transfer from the custodian by the treasurer, governing board, or	264
qualified trustee.	265

(N) In making investments authorized by this section, a	266
treasurer or governing board may retain the services of an	267
investment advisor, provided the advisor is licensed by the	268
division of securities under section 1707.141 of the Revised Code	269
or is registered with the securities and exchange commission, and	270
possesses experience in public funds investment management,	271
specifically in the area of state and local government investment	272
portfolios, or the advisor is an eligible institution mentioned in	273
section 135.03 of the Revised Code.	274

(O)(1) Except as otherwise provided in divisions (O)(2) and	275
(3) of this section, no treasurer or governing board shall make an	276
investment or deposit under this section, unless there is on file	277
with the auditor of state a written investment policy approved by	278
the treasurer or governing board. The policy shall require that	279
all entities conducting investment business with the treasurer or	280
governing board shall sign the investment policy of that	281
subdivision. All brokers, dealers, and financial institutions,	282
described in division (M)(1) of this section, initiating	283
transactions with the treasurer or governing board by giving	284
advice or making investment recommendations shall sign the	285
treasurer's or governing board's investment policy thereby	286
acknowledging their agreement to abide by the policy's contents.	287
All brokers, dealers, and financial institutions, described in	288
division (M)(1) of this section, executing transactions initiated	289
by the treasurer or governing board, having read the policy's	290
contents, shall sign the investment policy thereby acknowledging	291
their comprehension and receipt.	292

(2) If a written investment policy described in division	293
(O)(1) of this section is not filed on behalf of the subdivision	294
with the auditor of state, the treasurer or governing board of	295
that subdivision shall invest the subdivision's interim moneys	296
only in interim deposits pursuant to division (B)(3) of this	297
section or interim deposits pursuant to section 135.145 of the	298
Revised Code and approved by the treasurer of state, no-load money	299
market mutual funds pursuant to division (B)(5) of this section,	300
or the Ohio subdivision's fund pursuant to division (B)(6) of this	301
section.	302

(3) Divisions (O)(1) and (2) of this section do not apply to	303
a treasurer or governing board of a subdivision whose average	304
annual portfolio of investments held pursuant to this section is	305
one hundred thousand dollars or less, provided that the treasurer	306
or governing board certifies, on a form prescribed by the auditor	307
of state, that the treasurer or governing board will comply and is	308
in compliance with the provisions of sections 135.01 to 135.21 of	309
the Revised Code.	310

(P) A treasurer or governing board may enter into a written	311
investment or deposit agreement that includes a provision under	312
which the parties agree to submit to nonbinding arbitration to	313
settle any controversy that may arise out of the agreement,	314
including any controversy pertaining to losses of public moneys	315
resulting from investment or deposit. The arbitration provision	316
shall be set forth entirely in the agreement, and the agreement	317
shall include a conspicuous notice to the parties that any party	318
to the arbitration may apply to the court of common pleas of the	319
county in which the arbitration was held for an order to vacate,	320
modify, or correct the award. Any such party may also apply to the	321
court for an order to change venue to a court of common pleas	322
located more than one hundred miles from the county in which the	323
treasurer or governing board is located.	324

For purposes of this division, "investment or deposit	325
agreement" means any agreement between a treasurer or governing	326
board and a person, under which agreement the person agrees to	327
invest, deposit, or otherwise manage a subdivision's interim	328
moneys on behalf of the treasurer or governing board, or agrees to	329
provide investment advice to the treasurer or governing board.	330

(Q) An investment made by the treasurer or governing board	331
pursuant to this section prior to September 27, 1996, that was a	332
legal investment under the law as it existed before September 27,	333
1996, may be held until maturity, or if the investment does not	334
have a maturity date, it may be held until five years from	335
September 27, 1996, regardless of whether the investment would	336
qualify as a legal investment under the terms of this section as	337
amended.	338

Sec. 135.142.  (A) In addition to the investments authorized	339
by section 135.14 of the Revised Code, any board of education, by	340
a two-thirds vote of its members, may authorize the treasurer of	341
the board of education to invest up to twenty-fiveforty per cent	342
of the interim moneys of the board, available for investment at	343
any one time, in either of the following:	344

(1) Commercial paper notes issued by any entity that is	345
defined in division (D) of section 1705.01 of the Revised Code and	346
has assets exceeding five hundred million dollars, and to which	347
notes all of the following apply:	348

(a) The notes are rated at the time of purchase in the	349
highest classification established by at least two nationally	350
recognized standard rating services;.	351

(b) The aggregate value of the notes does not exceed ten per	352
cent of the aggregate value of the outstanding commercial paper of	353
the issuing corporation;.	354

(c) The notes mature no later than onetwo hundred eighty	355
seventy days after purchase.	356

(d) The investment in commercial paper notes of a single	357
issuer shall not exceed in the aggregate five per cent of interim	358
moneys of the board available for investment at the time of	359
purchase.	360

(2) Bankers' acceptances of banks that are members ofinsured	361
by the federal deposit insurance corporation to which obligations	362
both of the following apply:	363

(a) The obligations are eligible for purchase by the federal	364
reserve system;	365

(b) The obligationsand that mature no later than one hundred	366
eighty days after purchase.	367

(B) No investment authorized pursuant to division (A) of this	368
section shall be made, whether or not authorized by a board of	369
education, unless the treasurer of the board of education has	370
completed additional training for making the types of investments	371
authorized pursuant to division (A) of this section. The type and	372
amount of such training shall be approved and may be conducted by	373
or provided under the supervision of the auditortreasurer of	374
state.	375

(C) The treasurer of the board of education shall prepare	376
annually and submit to the board of education, the superintendent	377
of public instruction, and the auditor of state, on or before the	378
thirty-first day of August, a report listing each investment made	379
pursuant to division (A) of this section during the preceding	380
fiscal year, income earned from such investments, fees and	381
commissions paid pursuant to division (D) of this section, and any	382
other information required by the board, the superintendent, and	383
the auditor of state.	384

(D) A board of education may make appropriations and	385
expenditures for fees and commissions in connection with	386
investments made pursuant to division (A) of this section.	387

(E)(1) In addition to the investments authorized by section	388
135.14 of the Revised Code and division (A) of this section, any	389
board of education that is a party to an agreement with the	390
treasurer of state pursuant to division (G) of section 135.143 of	391
the Revised Code and that has outstanding obligations issued under	392
authority of section 133.10 or 133.301 of the Revised Code may	393
authorize the treasurer of the board of education to invest	394
interim moneys of the board in debt interests rated in either of	395
the two highest rating classifications by at least two nationally	396
recognized standard rating agenciesservices and issued by	397
entities that are defined in division (D) of section 1705.01 of	398
the Revised Code. The debt interests purchased under authority of	399
division (E) of this section shall mature not later than the	400
latest maturity date of the outstanding obligations issued under	401
authority of section 133.10 or 133.301 of the Revised Code.	402

(2) If any of the debt interests acquired under division	403
(E)(1) of this section ceases to be rated as there required, its	404
issuer shall notify the treasurer of state of this fact within	405
twenty-four hours. At any time thereafter the treasurer of state	406
may require collateralization at the rate of one hundred two per	407
cent of any remaining obligation of the entity, with securities	408
authorized for investment under section 135.143 of the Revised	409
Code. The collateral shall be delivered to and held by a custodian	410
acceptable to the treasurer of state, marked to market daily, and	411
any default to be cured within twelve hours. Unlimited	412
substitution shall be allowed of comparable securities.	413

Sec. 135.143.  (A) The treasurer of state may invest or	414
execute transactions for any part or all of the interim funds of	415
the state in the following classifications of obligations:	416

(1) United States treasury bills, notes, bonds, or any other	417
obligations or securities issued by the United States treasury or	418
any other obligation guaranteed as to principal and interest by	419
the United States;	420

(2) Bonds, notes, debentures, or any other obligations or	421
securities issued by any federal government agency or	422
instrumentality;	423

(3)(a) Bonds, notes, and other direct obligations of the	424
state of Ohio, including, but not limited to, any obligations	425
issued by the treasurer of state and of, the Ohio public	426
facilities commission, the Ohio building authority, and the Ohio	427
housing finance agency, the Ohio water development authority, and	428
the Ohio turnpike infrastructure commission;	429

(b) Bonds, notes, and other obligations of any state or	430
political subdivision thereof rated in the three highest	431
categories by at least one nationally recognized standard rating	432
service and purchased through a registered securities broker or	433
dealer, provided the treasurer of state is not the sole purchaser	434
of the bonds, notes, or other obligations at original issuance.	435

(4)(a) Written repurchase agreements with any eligible Ohio	436
financial institution that is a member of the federal reserve	437
system or federal home loan bank, or any recognizedregistered	438
United States government securities dealer, under the terms of	439
which agreement the treasurer of state purchases and the eligible	440
financial institution or dealer agrees unconditionally to	441
repurchase any of the securities that are listed in division	442
(A)(1), (2), or (6) of this section and that will mature or are	443
redeemable within ten years from the date of purchase. The market	444
value of securities subject to these transactions must exceed the	445
principal value of the repurchase agreement by an amount specified	446
by the treasurer of state, and the securities must be delivered	447
into the custody of the treasurer of state or the qualified	448
trustee or agent designated by the treasurer of state. The	449
agreement shall contain the requirement that for each transaction	450
pursuant to the agreement, the participating institution or dealer	451
shall provide all of the following information:	452

(i) The par value of the securities;

453

(ii) The type, rate, and maturity date of the securities;

454

(iii) A numerical identifier generally accepted in the	455
securities industry that designates the securities.	456

(b) The treasurer of state also may sell any securities,	457
listed in division (A)(1), (2), or (6) of this section, regardless	458
of maturity or time of redemption of the securities, under the	459
same terms and conditions for repurchase, provided that the	460
securities have been fully paid for and are owned by the treasurer	461
of state at the time of the sale.	462

(5) Securities lending agreements with any eligible financial	463
institution that is a member of the federal reserve system or	464
federal home loan bank or any recognized United States government	465
securities dealer, under the terms of which agreements the	466
treasurer of state lends securities and the eligible financial	467
institution or dealer agrees to simultaneously exchange similar	468
securities or cash, equal value for equal value.	469

Securities and cash received as collateral for a securities	470
lending agreement are not interim funds of the state. The	471
investment of cash collateral received pursuant to a securities	472
lending agreement may be invested only in such instruments	473
specified by the treasurer of state in accordance with a written	474
investment policy.	475

(6) Various forms of commercial paper issued by any	476
corporationentity that is incorporatedorganized under the laws	477
of the United States or a state, which notes are rated at the time	478
of purchase in the two highest categories by two nationally	479
recognized standard rating agenciesservices, provided that the	480
total amount invested under this section in any commercial paper	481
at any time shall not exceed twenty-fiveforty per cent of the	482
state's total average portfolio, as determined and calculated by	483
the treasurer of state;	484

(7) Bankers acceptances, maturing in two hundred seventy days	485
or less, which are eligible for purchase by the federal reserve	486
system, provided that the total amount invested in bankers	487
acceptances at any time shall not exceed ten per cent of the	488
state's total average portfolio, as determined and calculated by	489
the treasurer of state;	490

(8) Certificates of deposit in eligible institutions applying	491
for interim moneys as provided in section 135.08 of the Revised	492
Code, including linked deposits as provided in sections 135.61 to	493
135.67 of the Revised Code, agricultural linked deposits as	494
provided in sections 135.71 to 135.76 of the Revised Code, and	495
housing linked deposits as provided in sections 135.81 to 135.87	496
of the Revised Code;	497

(9) The state treasurer's investment pool authorized under	498
section 135.45 of the Revised Code;	499

(10) Debt interests, other than commercial paper described in	500
division (A)(6) of this section, rated at the time of purchase in	501
the three highest categories by two nationally recognized standard	502
rating agenciesservices and issued by corporationsentities that	503
are incorporatedorganized under the laws of the United States or	504
a state, or issued by foreign nations diplomatically recognized by	505
the United States government, or any instrument based on, derived	506
from, or related to such interests, provided that:	507

(a) The investments in debt interests other than commercial	508
paper shall not exceed in the aggregate twenty-five per cent of	509
the state's portfolio;.	510

(b) The investments in debt interests issued by foreign	511
nations shall not exceed in the aggregate one per cent of the	512
state's portfolio;.	513

The treasurer of state shall invest under division (A)(10) of	514
this section in a debt interest issued by a foreign nation only if	515
the debt interest is backed by the full faith and credit of that	516
foreign nation, and provided that all interest and principal shall	517
be denominated and payable in United States funds.	518

(c) TheWhen added to the investment in commercial paper, the	519
investments in the debt interests of a single issuer shall not	520
exceed in the aggregate one-half of onefive per cent of the	521
state's portfolio, except that debt interests of a single issuer	522
that is a foreign nation shall not exceed in the aggregate one per	523
cent of the state's portfolio.	524

The treasurer of state shall invest under division (A)(10) of	525
this section in a debt interest issued by a foreign nation only if	526
the debt interest is backed by the full faith and credit of that	527
foreign nation, and provided that all interest and principal shall	528
be denominated and payable in United States funds.	529

(d) For purposes of division (A)(10) of this section, a debt	530
interest is rated in the three highest categories by two	531
nationally recognized standard rating agenciesservices if either	532
the debt interest itself or the issuer of the debt interest is	533
rated, or is implicitly rated, at the time of purchase in the	534
three highest categories by two nationally recognized standard	535
rating agenciesservices.	536

(e) For purposes of division (A)(10) of this section, the	537
"state's portfolio" means the state's total average portfolio, as	538
determined and calculated by the treasurer of state.	539

(11) No-load money market mutual funds rated in the highest	540
category by one nationally recognized standard rating service or	541
consisting exclusively of obligations described in division	542
(A)(1), (2), or (6) of this section and repurchase agreements	543
secured by such obligations.	544

(12) Obligations of a political subdivision issued under	545
Chapter 133. of the Revised Code and identified in an agreement	546
described in division (G) of this section.	547

(B) Whenever, during a period of designation, the treasurer	548
of state classifies public moneys as interim moneys, the treasurer	549
of state shall notify the state board of deposit of such action.	550
The notification shall be given within thirty days after such	551
classification and, in the event the state board of deposit does	552
not concur in such classification or in the investments or	553
deposits made under this section, the board may order the	554
treasurer of state to sell or liquidate any of the investments or	555
deposits, and any such order shall specifically describe the	556
investments or deposits and fix the date upon which they are to be	557
sold or liquidated. Investments or deposits so ordered to be sold	558
or liquidated shall be sold or liquidated for cash by the	559
treasurer of state on the date fixed in such order at the then	560
current market price. Neither the treasurer of state nor the	561
members of the state board of deposit shall be held accountable	562
for any loss occasioned by sales or liquidations of investments or	563
deposits at prices lower than their cost. Any loss or expense	564
incurred in making these sales or liquidations is payable as other	565
expenses of the treasurer's office.	566

(C) If any securities or obligations invested in by the	567
treasurer of state pursuant to this section are registrable either	568
as to principal or interest, or both, such securities or	569
obligations shall be registered in the name of the treasurer of	570
state.	571

(D) The treasurer of state is responsible for the safekeeping	572
of all securities or obligations under this section. Any such	573
securities or obligations may be deposited for safekeeping as	574
provided in section 113.05 of the Revised Code.	575

(E) Interest earned on any investments or deposits authorized	576
by this section shall be collected by the treasurer of state and	577
credited by the treasurer of state to the proper fund of the	578
state.	579

(F) Whenever investments or deposits acquired under this	580
section mature and become due and payable, the treasurer of state	581
shall present them for payment according to their tenor, and shall	582
collect the moneys payable thereon. The moneys so collected shall	583
be treated as public moneys subject to sections 135.01 to 135.21	584
of the Revised Code.	585

(G) The treasurer of state and any political subdivision	586
issuing obligations referred to in division (A)(12) of this	587
section, which obligations mature within one year from the	588
original date of issuance, may enter into an agreement providing	589
for:	590

(1) The purchase of those obligations by the treasurer of	591
state on terms and subject to conditions set forth in the	592
agreement;	593

(2) The payment by the political subdivision to the treasurer	594
of state of a reasonable fee as consideration for the agreement of	595
the treasurer of state to purchase those obligations; provided,	596
however, that the treasurer of state shall not be authorized to	597
enter into any such agreement with a board of education of a	598
school district that has an outstanding obligation with respect to	599
a loan received under authority of section 3313.483 of the Revised	600
Code.	601

(H) For purposes of division (G) of this section, a fee shall	602
not be considered reasonable unless it is set to recover only the	603
direct costs, a reasonable estimate of the indirect costs	604
associated with the purchasing of obligations of a political	605
subdivision under division (G) of this section and any reselling	606
of the obligations or any interest in the obligations, including	607
interests in a fund comprised of the obligations, and the	608
administration thereof. No money from the general revenue fund	609
shall be used to subsidize the purchase or resale of these	610
obligations.	611

(I) All money collected by the treasurer of state from the	612
fee imposed by division (G) of this section shall be deposited to	613
the credit of the state political subdivision obligations fund,	614
which is hereby created in the state treasury. Money credited to	615
the fund shall be used solely to pay the treasurer of state's	616
direct and indirect costs associated with purchasing and reselling	617
obligations of a political subdivision under division (G) of this	618
section.	619

(J) As used in this section, "political subdivision" means a	620
county, township, municipal corporation, or board of education of	621
a school district.	622

Sec. 135.35.  (A) The investing authority shall deposit or	623
invest any part or all of the county's inactive moneys and shall	624
invest all of the money in the county public library fund when	625
required by section 135.352 of the Revised Code. The following	626
classifications of securities and obligations are eligible for	627
such deposit or investment:	628

(1) United States treasury bills, notes, bonds, or any other	629
obligation or security issued by the United States treasury, any	630
other obligation guaranteed as to principal or interest by the	631
United States, or any book entry, zero-coupon United States	632
treasury security that is a direct obligation of the United	633
States.	634

Nothing in the classification of eligible securities and	635
obligations set forth in divisions (A)(2) to (11)(10) of this	636
section shall be construed to authorize any investment in stripped	637
principal or interest obligations of such eligible securities and	638
obligations.	639

(2) Bonds, notes, debentures, or any other obligations or	640
securities issued by any federal government agency or	641
instrumentality, including, but not limited to, the federal	642
national mortgage association, federal home loan bank, federal	643
farm credit bank, federal home loan mortgage corporation, and	644
government national mortgage association, and student loan	645
marketing association. All federal agency securities shall be	646
direct issuances of federal government agencies or	647
instrumentalities.	648

(3) Time certificates of deposit or savings or deposit	649
accounts, including, but not limited to, passbook accounts, in any	650
eligible institution mentioned in section 135.32 of the Revised	651
Code;	652

(4) Bonds and other obligations of this state or the	653
political subdivisions of this state;	654

(5) No-load money market mutual funds rated in the highest	655
category at the time of purchase by at least one nationally	656
recognized standard rating service or consisting exclusively of	657
obligations described in division (A)(1) or, (2), or (6) of this	658
section 135.143 of the Revised Code and repurchase agreements	659
secured by such obligations, provided that investments in	660
securities described in this division are made only through	661
eligible institutions mentioned in section 135.32 of the Revised	662
Code;	663

(6) The Ohio subdivision's fund as provided in section 135.45	664
of the Revised Code;	665

(7) Securities lending agreements with any eligible	666
institution mentioned in section 135.32 of the Revised Code that	667
is a member of the federal reserve system or federal home loan	668
bank or with any recognized United States government securities	669
dealer meeting the description in division (J)(1) of this section,	670
under the terms of which agreements the investing authority lends	671
securities and the eligible institution or dealer agrees to	672
simultaneously exchange similar securities or cash, equal value	673
for equal value.	674

Securities and cash received as collateral for a securities	675
lending agreement are not inactive moneys of the county or moneys	676
of a county public library fund. The investment of cash collateral	677
received pursuant to a securities lending agreement may be	678
invested only in instruments specified by the investing authority	679
in the written investment policy described in division (K) of this	680
section.	681

(8) Up to twenty-five per cent of the county's total average	682
portfolio in either of the following investments:	683

(a) Commercial paper notes issued by an entity that is	684
defined in division (D) of section 1705.01 of the Revised Code and	685
that has assets exceeding five hundred million dollars, to which	686
notes all of the following apply:	687

(i) The notes are rated at the time of purchase in the	688
highest classification established by at least two nationally	689
recognized standard rating services.	690

(ii) The aggregate value of the notes does not exceed ten per	691
cent of the aggregate value of the outstanding commercial paper of	692
the issuing corporation.	693

(iii) The notes mature not later than two hundred seventy	694
days after purchase.	695

(b) Bankers acceptances of banks that are insured by the	696
federal deposit insurance corporation and to which both of the	697
following apply:	698

(i) The obligations are eligible for purchase by the federal	699
reserve system.	700

(ii) The obligationsthat mature not later than one hundred	701
eighty days after purchase.	702

No investment shall be made pursuant to division (A)(8) of	703
this section unless the investing authority has completed	704
additional training for making the investments authorized by	705
division (A)(8) of this section. The type and amount of additional	706
training shall be approved by the auditortreasurer of state and	707
may be conducted by or provided under the supervision of the	708
auditortreasurer of state.	709

(9) Up to fifteen per cent of the county's total average	710
portfolio in notes issued by corporations that are incorporated	711
under the laws of the United States and that are operating within	712
the United States, or by depository institutions that are doing	713
business under authority granted by the United States or any state	714
and that are operating within the United States, provided both of	715
the following apply:	716

(a) The notes are rated in the second highest or higher	717
category by at least two nationally recognized standard rating	718
services at the time of purchase.	719

(b) The notes mature not later than two years after purchase.

720

(10) No-load money market mutual funds rated in the highest	721
category at the time of purchase by at least one nationally	722
recognized standard rating service and consisting exclusively of	723
obligations described in division (A)(1), (2), or (6) of section	724
135.143 of the Revised Code;	725

(11) Debt interests rated at the time of purchase in the	726
three highest categories by two nationally recognized standard	727
rating services and issued by foreign nations diplomatically	728
recognized by the United States government. All interest and	729
principal shall be denominated and payable in United States funds.	730
The investments made under division (A)(11)(10) of this section	731
shall not exceed in the aggregate one per cent of a county's total	732
average portfolio.	733

The investing authority shall invest under division	734
(A)(11)(10) of this section in a debt interest issued by a foreign	735
nation only if the debt interest is backed by the full faith and	736
credit of that foreign nation, there is no prior history of	737
default, and the debt interest matures not later than five years	738
after purchase. For purposes of division (A)(11)(10) of this	739
section, a debt interest is rated in the three highest categories	740
by two nationally recognized standard rating services if either	741
the debt interest itself or the issuer of the debt interest is	742
rated, or is implicitly rated, at the time of purchase in the	743
three highest categories by two nationally recognized standard	744
rating services.	745

(12)(11) A current unpaid or delinquent tax line of credit	746
authorized under division (G) of section 135.341 of the Revised	747
Code, provided that all of the conditions for entering into such a	748
line of credit under that division are satisfied, or bonds and	749
other obligations of a county land reutilization corporation	750
organized under Chapter 1724. of the Revised Code, if the county	751
land reutilization corporation is located wholly or partly within	752
the same county as the investing authority.	753

(B) Nothing in the classifications of eligible obligations	754
and securities set forth in divisions (A)(1) to (11)(10) of this	755
section shall be construed to authorize investment in a	756
derivative, and no investing authority shall invest any county	757
inactive moneys or any moneys in a county public library fund in a	758
derivative. For purposes of this division, "derivative" means a	759
financial instrument or contract or obligation whose value or	760
return is based upon or linked to another asset or index, or both,	761
separate from the financial instrument, contract, or obligation	762
itself. Any security, obligation, trust account, or other	763
instrument that is created from an issue of the United States	764
treasury or is created from an obligation of a federal agency or	765
instrumentality or is created from both is considered a derivative	766
instrument. An eligible investment described in this section with	767
a variable interest rate payment, based upon a single interest	768
payment or single index comprised of other eligible investments	769
provided for in division (A)(1) or (2) of this section, is not a	770
derivative, provided that such variable rate investment has a	771
maximum maturity of two years. A treasury inflation-protected	772
security shall not be considered a derivative, provided the	773
security matures not later than five years after purchase.	774

(C) Except as provided in division (D) of this section, any	775
investment made pursuant to this section must mature within five	776
years from the date of settlement, unless the investment is	777
matched to a specific obligation or debt of the county or to a	778
specific obligation or debt of a political subdivision of this	779
state, and the investment is specifically approved by the	780
investment advisory committee.	781

(D) The investing authority may also enter into a written	782
repurchase agreement with any eligible institution mentioned in	783
section 135.32 of the Revised Code or any eligible securities	784
dealer pursuant to division (J) of this section, under the terms	785
of which agreement the investing authority purchases and the	786
eligible institution or dealer agrees unconditionally to	787
repurchase any of the securities listed in divisions (B)(1) to	788
(5), except letters of credit described in division (B)(2), of	789
section 135.18 of the Revised Code. The market value of securities	790
subject to an overnight written repurchase agreement must exceed	791
the principal value of the overnight written repurchase agreement	792
by at least two per cent. A written repurchase agreement must	793
exceed the principal value of the overnight written repurchase	794
agreement, by at least two per cent. A written repurchase	795
agreement shall not exceed thirty days, and the market value of	796
securities subject to a written repurchase agreement must exceed	797
the principal value of the written repurchase agreement by at	798
least two per cent and be marked to market daily. All securities	799
purchased pursuant to this division shall be delivered into the	800
custody of the investing authority or the qualified custodian of	801
the investing authority or an agent designated by the investing	802
authority. A written repurchase agreement with an eligible	803
securities dealer shall be transacted on a delivery versus payment	804
basis. The agreement shall contain the requirement that for each	805
transaction pursuant to the agreement the participating	806
institution shall provide all of the following information:	807

(1) The par value of the securities;

808

(2) The type, rate, and maturity date of the securities;

809

(3) A numerical identifier generally accepted in the	810
securities industry that designates the securities.	811

No investing authority shall enter into a written repurchase	812
agreement under the terms of which the investing authority agrees	813
to sell securities owned by the county to a purchaser and agrees	814
with that purchaser to unconditionally repurchase those	815
securities.	816

(E) No investing authority shall make an investment under	817
this section, unless the investing authority, at the time of	818
making the investment, reasonably expects that the investment can	819
be held until its maturity. The investing authority's written	820
investment policy shall specify the conditions under which an	821
investment may be redeemed or sold prior to maturity.	822

(F) No investing authority shall pay a county's inactive	823
moneys or moneys of a county public library fund into a fund	824
established by another subdivision, treasurer, governing board, or	825
investing authority, if that fund was established by the	826
subdivision, treasurer, governing board, or investing authority	827
for the purpose of investing or depositing the public moneys of	828
other subdivisions. This division does not apply to the payment of	829
public moneys into either of the following:	830

(1) The Ohio subdivision's fund pursuant to division (A)(6)	831
of this section;	832

(2) A fund created solely for the purpose of acquiring,	833
constructing, owning, leasing, or operating municipal utilities	834
pursuant to the authority provided under section 715.02 of the	835
Revised Code or Section 4 of Article XVIII, Ohio Constitution.	836

For purposes of division (F) of this section, "subdivision"	837
includes a county.	838

(G) The use of leverage, in which the county uses its current	839
investment assets as collateral for the purpose of purchasing	840
other assets, is prohibited. The issuance of taxable notes for the	841
purpose of arbitrage is prohibited. Contracting to sell securities	842
not owned by the county, for the purpose of purchasing such	843
securities on the speculation that bond prices will decline, is	844
prohibited.	845

(H) Any securities, certificates of deposit, deposit	846
accounts, or any other documents evidencing deposits or	847
investments made under authority of this section shall be issued	848
in the name of the county with the county treasurer or investing	849
authority as the designated payee. If any such deposits or	850
investments are registrable either as to principal or interest, or	851
both, they shall be registered in the name of the treasurer.	852

(I) The investing authority shall be responsible for the	853
safekeeping of all documents evidencing a deposit or investment	854
acquired under this section, including, but not limited to,	855
safekeeping receipts evidencing securities deposited with a	856
qualified trustee, as provided in section 135.37 of the Revised	857
Code, and documents confirming the purchase of securities under	858
any repurchase agreement under this section shall be deposited	859
with a qualified trustee, provided, however, that the qualified	860
trustee shall be required to report to the investing authority,	861
auditor of state, or an authorized outside auditor at any time	862
upon request as to the identity, market value, and location of the	863
document evidencing each security, and that if the participating	864
institution is a designated depository of the county for the	865
current period of designation, the securities that are the subject	866
of the repurchase agreement may be delivered to the treasurer or	867
held in trust by the participating institution on behalf of the	868
investing authority.	869

Upon the expiration of the term of office of an investing	870
authority or in the event of a vacancy in the office for any	871
reason, the officer or the officer's legal representative shall	872
transfer and deliver to the officer's successor all documents	873
mentioned in this division for which the officer has been	874
responsible for safekeeping. For all such documents transferred	875
and delivered, the officer shall be credited with, and the	876
officer's successor shall be charged with, the amount of moneys	877
evidenced by such documents.	878

(J)(1) All investments, except for investments in securities	879
described in divisions (A)(5), (6), and (12)(11) of this section,	880
shall be made only through a member of the national association of	881
securities dealersfinancial industry regulatory authority	882
(FINRA), through a bank, savings bank, or savings and loan	883
association regulated by the superintendent of financial	884
institutions, or through an institution regulated by the	885
comptroller of the currency, federal deposit insurance	886
corporation, or board of governors of the federal reserve system.	887

(2) Payment for investments shall be made only upon the	888
delivery of securities representing such investments to the	889
treasurer, investing authority, or qualified trustee. If the	890
securities transferred are not represented by a certificate,	891
payment shall be made only upon receipt of confirmation of	892
transfer from the custodian by the treasurer, governing board, or	893
qualified trustee.	894

(K)(1) Except as otherwise provided in division (K)(2) of	895
this section, no investing authority shall make an investment or	896
deposit under this section, unless there is on file with the	897
auditor of state a written investment policy approved by the	898
investing authority. The policy shall require that all entities	899
conducting investment business with the investing authority shall	900
sign the investment policy of that investing authority. All	901
brokers, dealers, and financial institutions, described in	902
division (J)(1) of this section, initiating transactions with the	903
investing authority by giving advice or making investment	904
recommendations shall sign the investing authority's investment	905
policy thereby acknowledging their agreement to abide by the	906
policy's contents. All brokers, dealers, and financial	907
institutions, described in division (J)(1) of this section,	908
executing transactions initiated by the investing authority,	909
having read the policy's contents, shall sign the investment	910
policy thereby acknowledging their comprehension and receipt.	911

(2) If a written investment policy described in division	912
(K)(1) of this section is not filed on behalf of the county with	913
the auditor of state, the investing authority of that county shall	914
invest the county's inactive moneys and moneys of the county	915
public library fund only in time certificates of deposits or	916
savings or deposit accounts pursuant to division (A)(3) of this	917
section, no-load money market mutual funds pursuant to division	918
(A)(5) of this section, or the Ohio subdivision's fund pursuant to	919
division (A)(6) of this section.	920

(L)(1) The investing authority shall establish and maintain	921
an inventory of all obligations and securities acquired by the	922
investing authority pursuant to this section. The inventory shall	923
include a description of each obligation or security, including	924
type, cost, par value, maturity date, settlement date, and any	925
coupon rate.	926

(2) The investing authority shall also keep a complete record	927
of all purchases and sales of the obligations and securities made	928
pursuant to this section.	929

(3) The investing authority shall maintain a monthly	930
portfolio report and issue a copy of the monthly portfolio report	931
describing such investments to the county investment advisory	932
committee, detailing the current inventory of all obligations and	933
securities, all transactions during the month that affected the	934
inventory, any income received from the obligations and	935
securities, and any investment expenses paid, and stating the	936
names of any persons effecting transactions on behalf of the	937
investing authority.	938

(4) The monthly portfolio report shall be a public record and	939
available for inspection under section 149.43 of the Revised Code.	940

(5) The inventory and the monthly portfolio report shall be	941
filed with the board of county commissioners. The monthly	942
portfolio report also shall be filed with the treasurer of state.	943

(M) An investing authority may enter into a written	944
investment or deposit agreement that includes a provision under	945
which the parties agree to submit to nonbinding arbitration to	946
settle any controversy that may arise out of the agreement,	947
including any controversy pertaining to losses of public moneys	948
resulting from investment or deposit. The arbitration provision	949
shall be set forth entirely in the agreement, and the agreement	950
shall include a conspicuous notice to the parties that any party	951
to the arbitration may apply to the court of common pleas of the	952
county in which the arbitration was held for an order to vacate,	953
modify, or correct the award. Any such party may also apply to the	954
court for an order to change venue to a court of common pleas	955
located more than one hundred miles from the county in which the	956
investing authority is located.	957

For purposes of this division, "investment or deposit	958
agreement" means any agreement between an investing authority and	959
a person, under which agreement the person agrees to invest,	960
deposit, or otherwise manage, on behalf of the investing	961
authority, a county's inactive moneys or moneys in a county public	962
library fund, or agrees to provide investment advice to the	963
investing authority.	964

(N)(1) An investment held in the county portfolio on	965
September 27, 1996, that was a legal investment under the law as	966
it existed before September 27, 1996, may be held until maturity,	967
or if the investment does not have a maturity date the investment	968
may be held until five years from September 27, 1996, regardless	969
of whether the investment would qualify as a legal investment	970
under the terms of this section as amended.	971

(2) An investment held in the county portfolio on the	972
effective date of this amendmentSeptember 10, 2012, that was a	973
legal investment under the law as it existed before the effective	974
date of this amendmentSeptember 10, 2012, may be held until	975
maturity.	976

Sec. 135.48. The state board of deposit may adopt rules under	977
section 111.15 of the Revised Code that are necessary to implement	978
this chapter.	979

Sec. 3770.06.  (A) There is hereby created the state lottery	980
gross revenue fund, which shall be in the custody of the treasurer	981
of state but shall not be part of the state treasury. All gross	982
revenues received from sales of lottery tickets, fines, fees, and	983
related proceeds in connection with the statewide lottery and all	984
gross proceeds from statewide joint lottery games shall be	985
deposited into the fund. The treasurer of state shall invest any	986
portion of the fund not needed for immediate use in the same	987
manner as, and subject to all provisions of law with respect to	988
the investment of, state funds. The treasurer of state shall	989
disburse money from the fund on order of the director of the state	990
lottery commission or the director's designee.	991

Except for gross proceeds from statewide joint lottery games,	992
all revenues of the state lottery gross revenue fund that are not	993
paid to holders of winning lottery tickets, that are not required	994
to meet short-term prize liabilities, that are not credited to	995
lottery sales agents in the form of bonuses, commissions, or	996
reimbursements, that are not paid to financial institutions to	997
reimburse those institutions for sales agent nonsufficient funds,	998
and that are collected from sales agents for remittance to	999
insurers under contract to provide sales agent bonding services	1000
shall be transferred to the state lottery fund, which is hereby	1001
created in the state treasury. In addition, all revenues of the	1002
state lottery gross revenue fund that represent the gross proceeds	1003
from the statewide joint lottery games and that are not paid to	1004
holders of winning lottery tickets, that are not required to meet	1005
short-term prize liabilities, that are not credited to lottery	1006
sales agents in the form of bonuses, commissions, or	1007
reimbursements, and that are not necessary to cover operating	1008
expenses associated with those games or to otherwise comply with	1009
the agreements signed by the governor that the director enters	1010
into under division (J) of section 3770.02 of the Revised Code or	1011
the rules the commission adopts under division (B)(5) of section	1012
3770.03 of the Revised Code shall be transferred to the state	1013
lottery fund. All investment earnings of the fund shall be	1014
credited to the fund. Moneys shall be disbursed from the fund	1015
pursuant to vouchers approved by the director. Total disbursements	1016
for monetary prize awards to holders of winning lottery tickets in	1017
connection with the statewide lottery and purchases of goods and	1018
services awarded as prizes to holders of winning lottery tickets	1019
shall be of an amount equal to at least fifty per cent of the	1020
total revenue accruing from the sale of lottery tickets.	1021

(B) Pursuant to Section 6 of Article XV, Ohio Constitution,	1022
there is hereby established in the state treasury the lottery	1023
profits education fund. Whenever, in the judgment of the director	1024
of the state lottery commission, the amount to the credit of the	1025
state lottery fund that does not represent proceeds from statewide	1026
joint lottery games is in excess of that needed to meet the	1027
maturing obligations of the commission and as working capital for	1028
its further operations, the director of the state lottery	1029
commission shall recommend the amount of the excess to be	1030
transferred to the lottery profits education fund, and the	1031
director of budget and management may transfer the excess to the	1032
lottery profits education fund in connection with the statewide	1033
lottery. In addition, whenever, in the judgment of the director of	1034
the state lottery commission, the amount to the credit of the	1035
state lottery fund that represents proceeds from statewide joint	1036
lottery games equals the entire net proceeds of those games as	1037
described in division (B)(5) of section 3770.03 of the Revised	1038
Code and the rules adopted under that division, the director of	1039
the state lottery commission shall recommend the amount of the	1040
proceeds to be transferred to the lottery profits education fund,	1041
and the director of budget and management may transfer those	1042
proceeds to the lottery profits education fund. Investment	1043
earnings of the lottery profits education fund shall be credited	1044
to the fund.	1045

The lottery profits education fund shall be used solely for	1046
the support of elementary, secondary, vocational, and special	1047
education programs as determined in appropriations made by the	1048
general assembly, or as provided in applicable bond proceedings	1049
for the payment of debt service on obligations issued to pay costs	1050
of capital facilities, including those for a system of common	1051
schools throughout the state pursuant to section 2n of Article	1052
VIII, Ohio Constitution. When determining the availability of	1053
money in the lottery profits education fund, the director of	1054
budget and management may consider all balances and estimated	1055
revenues of the fund.	1056

(C) There is hereby established in the state treasury the	1057
deferred prizes trust fund. With the approval of the director of	1058
budget and management, an amount sufficient to fund annuity prizes	1059
shall be transferred from the state lottery fund and credited to	1060
the trust fund. The treasurer of state shall credit all earnings	1061
arising from investments purchased under this division to the	1062
trust fund. Within sixty days after the end of each fiscal year,	1063
the treasurer of state shall certify to the director of budget and	1064
management whether the actuarial amount of the trust fund is	1065
sufficient over the fund's life for continued funding of all	1066
remaining deferred prize liabilities as of the last day of the	1067
fiscal year just ended. Also, within that sixty days, the director	1068
of budget and management shall certify the amount of investment	1069
earnings necessary to have been credited to the trust fund during	1070
the fiscal year just ending to provide for such continued funding	1071
of deferred prizes. Any earnings credited in excess of the latter	1072
certified amount shall be transferred to the lottery profits	1073
education fund.	1074

To provide all or a part of the amounts necessary to fund	1075
deferred prizes awarded by the commission in connection with the	1076
statewide lottery, the treasurer of state, in consultation with	1077
the commission, may invest moneys contained in the deferred prizes	1078
trust fund which represents proceeds from the statewide lottery in	1079
obligations of the type permitted for the investment of state	1080
funds but whose maturities are thirty years or less.	1081
Notwithstanding the requirements of any other section of the	1082
Revised Code, to provide all or part of the amounts necessary to	1083
fund deferred prizes awarded by the commission in connection with	1084
statewide joint lottery games, the treasurer of state, in	1085
consultation with the commission, may invest moneys in the trust	1086
fund which represent proceeds derived from the statewide joint	1087
lottery games in accordance with the rules the commission adopts	1088
under division (B)(5) of section 3770.03 of the Revised Code.	1089
Investments of the trust fund are not subject to the provisions of	1090
division (A)(10) of section 135.143 of the Revised Code limiting	1091
to twenty-five per cent the amount of the state's total average	1092
portfolio that may be invested in debt interests other than	1093
commercial paper and limiting to one-half of onefive per cent	1094
the amount that may be invested in debt interests, including	1095
commercial paper, of a single issuer.	1096

All purchases made under this division shall be effected on a	1097
delivery versus payment method and shall be in the custody of the	1098
treasurer of state.	1099

The treasurer of state may retain an investment advisor, if	1100
necessary. The commission shall pay any costs incurred by the	1101
treasurer of state in retaining an investment advisor.	1102

(D) The auditor of state shall conduct annual audits of all	1103
funds and any other audits as the auditor of state or the general	1104
assembly considers necessary. The auditor of state may examine all	1105
records, files, and other documents of the commission, and records	1106
of lottery sales agents that pertain to their activities as	1107
agents, for purposes of conducting authorized audits.	1108

(E) The state lottery commission shall establish an internal	1109
audit plan before the beginning of each fiscal year, subject to	1110
the approval of the office of internal audit in the office of	1111
budget and management. At the end of each fiscal year, the	1112
commission shall prepare and submit an annual report to the office	1113
of internal audit for the office's review and approval, specifying	1114
the internal audit work completed by the end of that fiscal year	1115
and reporting on compliance with the annual internal audit plan.	1116

(F) Whenever, in the judgment of the director of budget and	1117
management, an amount of net state lottery proceeds is necessary	1118
to be applied to the payment of debt service on obligations, all	1119
as defined in sections 151.01 and 151.03 of the Revised Code, the	1120
director shall transfer that amount directly from the state	1121
lottery fund or from the lottery profits education fund to the	1122
bond service fund defined in those sections. The provisions of	1123
this division are subject to any prior pledges or obligation of	1124
those amounts to the payment of bond service charges as defined in	1125
division (C) of section 3318.21 of the Revised Code, as referred	1126
to in division (B) of this section.	1127

Section 2.  That existing sections 135.14, 135.142, 135.143,	1128
135.35, and 3770.06 of the Revised Code are hereby repealed.	1129

Section 3.  Section 135.14 of the Revised Code is presented	1130
in this act as a composite of the section as amended by both Sub.	1131
H.B. 473 and Am. Sub. H.B. 640 of the 123rd General Assembly. The	1132
General Assembly, applying the principle stated in division (B) of	1133
section 1.52 of the Revised Code that amendments are to be	1134
harmonized if reasonably capable of simultaneous operation, finds	1135
that the composite is the resulting version of the section in	1136
effect prior to the effective date of the section as presented in	1137
this act.	1138