To amend section 3770.06 and to enact section 3317.0212 of the Revised Code to require that a portion of lottery profits be distributed annually on a per pupil basis to public and chartered nonpublic schools.

Section 1. That section 3770.06 be amended and section 3317.0212 of the Revised Code be enacted to read as follows:

Sec. 3317.0212. (A) As used in this section:

(1) "Chartered nonpublic school" has the same meaning as in section 3310.01 of the Revised Code.

(2) "Per pupil distribution amount" means the excess lottery profits amount, determined under division (B)(2)(b) of section 3770.06 of the Revised Code, divided by the sum of the student counts for all entities for which student counts are prescribed by division (A)(3) of this section.

(3) "Student count" means:

(a) For a city, exempted village, or local school district, the district's formula ADM for the previous fiscal year, minus the following:

(i) The number of students included in the district's formula ADM who were enrolled in a community school, as certified under division (A)(2)(a) of section 3317.03 of the Revised Code and verified by the superintendent of public instruction;

(ii) The number of students included in the district's formula ADM who were enrolled in an alternative school under the pilot project scholarship program, as certified under division (A)(2)(b) of that section and verified by the superintendent of public instruction;

(iii) The number of students included in the district's formula ADM who were enrolled in a chartered nonpublic school under the educational choice scholarship pilot program, as certified under division (A)(2)(g) of that section and verified by the superintendent of public instruction;

(iv) The number of students included in the district's formula ADM who were enrolled in an alternative public provider or registered private provider under the autism scholarship program, as certified under division (A)(2)(h) of that section and verified by the superintendent of public instruction;

(v) The number of students included in the district's formula ADM who were enrolled in a science, technology, engineering, and mathematics school, as certified under division (A)(2)(i) of that section and verified by the superintendent of public instruction.

(b) For a joint vocational school district, the district's formula ADM for the previous fiscal year;

(c) For a community school established under Chapter 3314. of the Revised Code, the number of students reported for the previous fiscal year under divisions (B)(2)(a) and (b) of section 3314.08 of the Revised Code, minus the number of the school's students who also were enrolled in a joint vocational school district as certified under division (D)(1) of section 3317.03 of the Revised Code, all on an FTE basis and as verified by the superintendent of public instruction;

(d) For a STEM school established under Chapter 3326. of the Revised Code, the number of students reported for the previous fiscal year under division (A) of section 3326.32 of the Revised Code, minus the number of the school's students who also were enrolled in a joint vocational school district as certified under division (D)(1) of section 3317.03 of the Revised Code, all on an FTE basis and as verified by the superintendent of public instruction;

(e) For a chartered nonpublic school, the number of students enrolled in the school during the previous fiscal year as reported to the department of education in the manner and by the deadline established by the department of education for purposes of this section. A chartered nonpublic school's "student count" shall be determined on an FTE basis and shall include students enrolled in the school with a scholarship under sections 3313.974 to 3313.979 or Chapter 3310. of the Revised Code.

(B) On or before August 1, 2009, and on or before the first day of August of each fiscal year thereafter, the department of education shall pay to each entity for which a separate student count is prescribed by division (A)(3)(a), (b), (c), (d), or (e) of this section an amount equal to the entity's student count multiplied by the per pupil distribution amount. The amount paid to an entity under this section is in addition to any other amount calculated and paid to the entity under this chapter or Chapter 3310., 3313., 3314., or 3326. of the Revised Code.

(C) The amount paid to an entity under this section may be used for any lawful purpose, except for the payment of salaries and benefits, in support of the entity's elementary, secondary, vocational, or special education programs.

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

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

(B)(1) Pursuant to Section 6 of Article XV, Ohio Constitution, there is hereby established in the state treasury the lottery profits education fund. Whenever, in the judgment of the director of budget and management, the amount to the credit of the state lottery fund that does not represent proceeds from statewide joint lottery games is in excess of that needed to meet the maturing obligations of the commission and as working capital for its further operations, the director shall transfer the excess to the lottery profits education fund in connection with the statewide lottery. In addition, whenever, in the judgment of the director of budget and management, the amount to the credit of the state lottery fund that represents proceeds from statewide joint lottery games equals the entire net proceeds of those games as described in division (B)(5) of section 3770.03 of the Revised Code and the rules adopted under that division, the director shall transfer those proceeds to the lottery profits education fund. There shall also be credited to the fund any repayments of moneys loaned from the educational excellence investment fund. Investment earnings of the lottery profits education fund shall be credited to the fund.

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

(2)(a) As used in this division, "base lottery profits amount" means the total amount appropriated from the lottery profits education fund group for foundation funding for fiscal year 2009.

(b) On or before July 15, 2009, and on or before the fifteenth day of July of each fiscal year thereafter, the director of budget and management shall certify to the superintendent of public instruction the amount by which lottery profit transfers into the lottery profits education fund during the previous fiscal year exceeded the sum of (i) the base lottery profits amount plus (ii) the amount paid from the lottery profits education fund during the previous fiscal year for debt service on obligations issued to pay costs of capital facilities, including those for a system of common schools throughout the state pursuant to section 2n of Article VIII, Ohio Constitution. That excess amount is the "excess lottery profits amount" that is available for distribution in the current fiscal year. The department of education shall distribute that excess lottery profits amount during the current fiscal year in accordance with section 3317.0212 of the Revised Code.

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

To provide all or a part of the amounts necessary to fund deferred prizes awarded by the commission in connection with the statewide lottery, the treasurer of state, in consultation with the commission, may invest moneys contained in the deferred prizes trust fund which represents proceeds from the statewide lottery in obligations of the type permitted for the investment of state funds but whose maturities are thirty years or less. Notwithstanding the requirements of any other section of the Revised Code, to provide all or part of the amounts necessary to fund deferred prizes awarded by the commission in connection with statewide joint lottery games, the treasurer of state, in consultation with the commission, may invest moneys in the trust fund which represent proceeds derived from the statewide joint lottery games in accordance with the rules the commission adopts under division (B)(5) of section 3770.03 of the Revised Code. Investments of the trust fund are not subject to the provisions of division (A)(10) of section 135.143 of the Revised Code limiting to twenty-five per cent the amount of the state's total average portfolio that may be invested in debt interests and limiting to one-half of one per cent the amount that may be invested in debt interests of a single issuer.

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

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

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

The state lottery commission shall establish an internal audit program before the beginning of each fiscal year, subject to the approval of the auditor of state. At the end of each fiscal year, the commission shall prepare and submit an annual report to the auditor of state for the auditor of state's review and approval, specifying the internal audit work completed by the end of that fiscal year and reporting on compliance with the annual internal audit program. The form and content of the report shall be prescribed by the auditor of state under division (C) of section 117.20 of the Revised Code.

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

Section 2.  That existing section 3770.06 of the Revised Code is hereby repealed.