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HomeMy WebLinkAboutAgenda - 01-30-2007-1ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: January 30, 2007 Action Agenda. Item No. A- SUBJECT: County Capital Funding Policy - Lottery Proceeds DEPARTMENT: Budget PUBLIC HEARING: (YIN) No ATTACHMENT (S): INFORMATION CONTACT: Donna Coffey 245-2151 State Lottery Provisions Local Government. Commission Memo 2007 Draft Lottery-Related Bills PURPOSE: To discuss how the Board wishes to factor Lottery proceeds into the County Capital Funding Policy. BACKGROUND: During work sessions in the spring of 2005, the Board considered how proceeds from the then unapproved State lottery might factor into the capital funding policy; however, it seemed premature then to consider lottery proceeds as dedicated capital revenue since the General Assembly had not actually authorized a lottery at that time. In August 2005, soon after the Board adopted the current capital funding policy, the North Carolina Education Lottery Act ("the Lottery" or "Lottery") was signed into law. (See N.C. Gen. Stat. § 18C). However, even with the establishment of the Lottery, many fundamental issues, such as when the County would begin receiving Lottery proceeds, the amount of receipts and allowed expenditures remained uncertain until very late in the 2006-07 budget planning process. Based on recommendations from the North Carolina Association of County Commissioners (NCACC), the County Manager's recommended General Fund budget anticipated receiving $2.4 million in Lottery proceeds during the 2006-2007 fiscal year, and the Board approved the recommendation. The Manager also recommended in his Budget Message that the Board revisit its May 2005 capital funding policy and consider earmarking all future Lottery proceeds once the Lottery revenue stream was more established and predictable. In October 2006, the State made its first distribution of Lottery proceeds - $38 million was distributed to the 115 school districts throughout the State. Of this total, Orange County Schools received $230,696, and Chapel Hill Carrboro Schools received $378,348. This work session offers the Board an opportunity to discuss statutory requirements and considerations/observations regarding use of Lottery proceeds and how the monies would fit into the County's capital funding policy. The accompanying memo from the Budget Director outlines "statutory limitations along with other considerations and observations. FINANCIAL IMPACT: The current fiscal year revenue budget includes $2.4 million (the equivalent of 2 cents) in Lottery proceeds to offset school related debt service. RECOMMENDATION (S): The Manager recommends that the Board of County Commissioners conduct this work session to discuss how to factor Lottery proceeds into the County's current capital funding policy. Following tonight's discussion, the Board may chose to include this item on the February 6, 2007 regular meeting agenda to allow for public -comment and Board decisions. 3 To: Orange County Board of Commissioners Laura Blackmon, County Manager From: Donna Coffey, Budget Director Date: January 26, 2007 Subject: County Capital Funding Policy - Lottery Proceeds The intent of this memo is to outline the factors that staff and the county attorney . have considered with regard to the disposition of Lottery proceeds. Background Orange County's ten-year Capital Investment Plan (CIP) serves as a planning tool and provides a mechanism to forecast long-range future School and County capital needs. Annually, staff and the Board of County Commissioners (the "Board") consider many factors as they update the CIP, including funding availability, newly identified Board priorities, and student membership projections. It is important to note that while the Board formally adopts a long-range plan each year, the CIP is a "living document" that can be amended when necessary. Each year, staff and the Board re-assess previously identified capital needs and priorities to determine if future needs remain the same as those outlined in previously approved capital plans. If the needs and priorities of the County have changed, then the Board may revise the previously adopted CIP. The County's current capital funding policy, adopted by the Board in May 2005, identifies the following CIP funding sources: • Article 40 and Article 42 half cent sales taxes • Dedicated ad valorem property taxes o Equivalent to the amount to repay annual debt service for 1988, 1992, 1997 and 2001 voter approved bonds) o Equivalent of four cents on the annual ad valorem property tax to fund recurring capital expenditures for schools [three cents] and county [1 cent]) • School Construction Impacts Fees for each school system • Public School Building Capital funds (annual allocations funded by a portion of corporate income taxes collected by the State of NC) • Debt financing such as general obligation bonds and alternative financing In addition, the Policy outlines a formula for determining the amount of pay-as- you-go revenue available for school and County projects. In accordance with the capital funding policy, pay-as-you go revenue is defined as the amount of money from all non-debt dedicated capital revenue (sales and property taxes, Public School Building Funds and School Construction Impact Fees) that remains after repayment of all school and County capital related debt. It is important to note that full funding of the recurring capital portion of the policy has been deferred since its adoption in 2005. The Board's plan has been to phase in full funding of recurring capital (the equivalent of four cents on the ad valorem property tax) over a period of time. To that end, the Board has allocated the equivalent of two cents, for each of the last two fiscal years, to school recurring capital. The additional two cents needed to fully fund the policy (one additional cent for schools and one cent for County) has not been funded to date. Lottery Proceeds During work sessions in the spring of 2005, the Board considered how proceeds from the then unapproved State lottery might factor into the capital funding policy;. however, it seemed premature then to consider lottery proceeds as dedicated capital revenue since the General Assembly had not actually authorized a lottery at that time. In August 2005, soon after the Board adopted the current capital funding policy, the North Carolina Education Lottery Act ("the Lottery" or "Lottery") was signed into, law. (See N.C. Gen. Stat. § 18C). However, even with the establishment of the Lottery, many fundamental issues, such as when the County would begin receiving Lottery proceeds, the amount of receipts and allowed expenditures remained uncertain until very late in the 2006- 07 budget planning process. Based on recommendations from the North Carolina Association of County Commissioners (NCACC), the County Manager's recommended General Fund budget anticipated receiving $2.4 million in Lottery proceeds during the 2006-2007 fiscal year, and the Board approved the recommendation. The Manager also recommended in his Budget Message that the Board revisit its May 2005 capital funding policy and consider earmarking all future Lottery proceeds once the Lottery revenue stream was more established and predictable. In October 2006, the State made its first distribution of Lottery proceeds - $38 million was distributed to the 115 school districts throughout the State. Of this total, Orange County Schools received $230,696, and Chapel Hill Carrboro Schools received $378,348. Z 5 Statutory Requirements of Lottery Legislation In accordance with N.C. Gen. Stat. § 18C-164(b)(1), the State plans to distribute fifty percent of net Lottery proceeds to the Public School Building Capital Fund' for appropriation to counties "to increase the level of county spending for public school capital outlay purposes". "School capital outlay purposes" include construction costs, land acquisition, site preparation, and school debt service incurred on or after January 1, 2003. It is important to note that N.C. Gen. Stat. § 18C-164(b)(1) further mandates that "a county must continue to spend for public school capital outlay purposes the same amount of money it would have spent for those purposes if it had not received the monies appropriated under this subdivision." In other words, Lottery proceeds must be used to increase the level of county spending for public school capital outlay purposes, and such proceeds may not be used to supplant funds the County would have allocated to school related capital projects. Further, the Public School Building Capital Fund statute under which Lottery proceeds will be distributed to the County contains the following requirements: • No county shall have to provide matching funds • A county may use monies in this Fund to pay for school construction projects in local school administrative units and to retire indebtedness incurred for school construction projects incurred on or after January 1, 2003 • A county may not use monies in this Fund to, pay for school technology needs. • "Public School Buildings" includes only facilities for individual schools used for instructional and related purposes, and does not include central administration, maintenance, or other facilities. Schools Adequate Public Facilities Ordinance (SAPFO) The Board has repeatedly and consistently made education related funding its top priority in expenditures for both day-to-day school operations and capital infrastructure needs. With regard to day-to-day operations, Orange County's per pupil funding is consistently higher than any other county in the State. On the capital infrastructure side, the Board is pro-active in ensuring that sufficient new seats are available for students by joining forces with town and school partners and enacting the Schools Adequate Public Facilities Ordinance (SAPFO). In brief, SAPFO requires that the County's long-range capital plan include funding school projects at a level necessary to accommodate anticipated student membership in future years. In accordance with SAPFO, the Board has programmed new schools into its annual CIP since 2003. 'The Public School Building Capital Fund is governed by N.C. Gen. Stat. § 115C-546.2. (o Considerations and Observations Over the last few months, the county attorney and staff have considered various options for how Lottery proceeds may factor into Orange County's current capital funding policy. Examples of options considered include: Dedicate Lottery proceeds to repay debt service on school projects Appropriate Lottery proceeds, on an annual basis separate from pay-as- you-go funds, to each school district to address older facility renovation needs • Replace school construction impact fees currently allocated to debt service repayment for school projects with Lottery proceeds and set aside school construction impact fees in a reserve for future school construction projects. Other observations include: The allowed uses of school construction impact fees are limited to: (1) the creation of school space to accommodate students generated by newly constructed housing, or (2) the repayment of debt service related to school projects that create new school space to accommodate new students generated by newly constructed housing. Based on the November 15, 2005 student membership projections generated under SAPFO, there are no anticipated new school construction needs between 2006-07 and 2016- 17 for Orange County Schools. On the other hand, there are qualifying debt expenditures that the fees could offset. Additional factors to consider are that, in accordance with the School Construction Impact Fee legislation, the County must expend these impact fees within ten-years following collection or return the monies to the payee on a "first in, first out" basis. • Staff will soon be updating student membership projections that will feed into the upcoming 2007-17 Capital Investment Plan (CIP). The need for new school space may be accelerated or decelerated for one or both of the School systems based on updated membership projections. • Both School districts have expressed on-going needs to up-fit older schools. While renovation projects are not an allowable use of school construction impact fees, they are permitted uses of Lottery proceeds. • Neither School Board has had an opportunity to review and comment on a specific proposal for handling Lottery proceeds. During recent meetings, members of both School Boards have expressed interest in having the School Collaboration Work Group discuss how Lottery proceeds would factor into the County's capital funding policy. • In June 2006, the NC House Rules Committee approved a bill that established a Joint Legislative Lottery Oversight Committee to regularly review the activities of the Lottery and the N.C. Lottery Commission. 4 House Bill 2212 requires the committee to examine whether the. educational purposes for having the Lottery are being met, such as ensuring that proceeds from the Lottery are designated as additional education funds rather than supplanting already existing resources. In addition, the oversight committee will also monitor the operations, budgeting, and spending of Lottery proceeds through the review of quarterly and annual reports from the Lottery Commission. While the Lottery Commission has full authority over the Lottery, the Lottery Oversight Committee would act as a check on the commission's activities that could prompt lawmakers to modify the Lottery Act. The Lottery Oversight Committee also has the responsibility for studying any Lottery matters that the committee deems necessary and reporting within fifteen days of each convening regular session of the General Assembly on its oversight of the Lottery. • The Local Government Commission (LGC) remains, cautious about Lottery funds citing the fact that the General Assembly could change the disbursement formula in the future. General guidance from the LGC is to "conservatively estimate proceeds "until sufficient time has passed that a more reliable estimate of the revenue levels expected on an annual basis can be determined." For all financing applications that involve Lottery revenue, the Commission plans to require counties to have contingency plans in the event that Lottery revenues are insufficient. In other words, should Lottery revenues "come up short", the County must pledge to take actions necessary to make up the difference. On a promising note, the Commission has recently approved local financing plans that pledge Lottery revenues for a significant portion of debt service. Rockingham County's plan was the first approved LGC plan. C The Lottery is still in its infancy in North Carolina, and there is no history on which to base solid revenue projections. For example, while initial revenues generated by Lottery ticket sales were healthy and revenue streams were on target with original State projections, recent reports have indicated that ticket sales appear to be slowing somewhat. It is also important to note that just this week, as the General Assembly reconvened in Raleigh, two Lottery related bills have been introduced - both bills suggest changes to the distribution formula. It is difficult to project how strong or how slow future years sales, legislative changes and resulting revenues may be at this time. Conclusion The major factors that complicate how the Board can appropriate Lottery proceeds center on supplantion and SAPFO. In essence, Orange County is victim of the Board's past diligence in funding education. While other counties have funded education at lower levels than Orange County, the Board has have been diligent in ensuring that school capital needs have been on the forefront. The Board has ensured that students in the Orange County public schools have 5 U not suffered as the State has consistently pulled back funding. The county attorney plans to speak more to this issue during the January 30 work session. To that end, in order to adhere to State mandates and avoid supplantion issues, there appears to be two options for folding Lottery proceeds into the County's Capital Funding Policy equation: • Continue to use Lottery proceeds to offset annual debt service payments for school related debt. Combine Lottery proceeds with the currently dedicated equivalent of one cent to fund Schools recurring capital in accordance with the County Capital Funding Policy. In turn, both school districts could use the funds to address older facility needs. For your reference, attached are copies of N.C. Gen. Stat. § 18C, LGC Memo 1063, and 2007 Lottery related bills introduced. Laura, Geof, and I will be available at the work session to discuss our observations and answer Board questions. 6 19 GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2005 SESSION LAW 2005-344 HOUSE SILL 1023 AN ACT TO ESTABLISH A STATE LOTTERY TO SUPPORT SCHOOL CONSTRUCTION, TO FUND COLLEGE AND UNIVERSITY SCHOLARSHIPS, AND TO GENERATE FUNDS TO FURTHER THE GOAL OF PROVIDING ENHANCED EDUCATIONAL OPPORTUNITIES SO THAT ALL STUDENTS BY THE HOUSE SELECT COMMITTEEI ONETHE THEIR LOTTERY. POTENTIAL, AS RECOMMENDED The General Assembly of North Carolina enacts: SECTION 1. The General Statutes are amended by adding a new Chapter to read: "Chapter 18C. "North Carolina State Lotter "Article 1. "General Provisions and Definitions. it 11 e i Commission. sion to be the chief administrator of th usement authorized by the CoUninissio: paid, or unconditionally a •egi ed to p93 in those prizes. ,stablished and operated pursuant to thi 'Lottery contractor: means a person other WWI a 1VLLV1 y . 'Person' means any natural perE association, partnerships joint vent UUr 'Retailer''lottery retailer', or '101 Commission has contracted to sell ti ?. 'Share' means any method of partici; on an equivalent basis with a ticket. 10. 'Ticket means any tangible evic participation in a lottery ag me. 1 i 'Vendor' or 'lotteUV vendor' mean; " 18C-104 tlu-oul7h 18C-109 Reserved for future codification purposes. IV A r4; nI _ 7 Mmissi0 ,ili co its rson wi Ubyatic ?.. ?.. --.- -- ---=_??_- "_ 1$C-110. Establishment of the iNorrn 11-aruJI11a 13taLG JLJULLGI %-%J...?...008 Aenc of the State. Tl,p,, . ,c n-epnin l the No -th Carolina State LottelY Commission to establish and oversee the operation of a Oa i? ission shall be located in the Deparhnent of Commerce-for budetaiY purposes on.,.,. ;ion shall be an independent, self-supporting and revenue-raisin a? y of the State. eimburse other governmental entities that provide services to the Commission: ion membership appointment; selection of chair; vacancies; removal; meetinils; R. ission shall consist of nine members three of wham shall be appointed by the om shall be appointed by the General Assemblv a on the recommendation of the of the Senate and three of whom shall be appointed by the General Assemblv upon the Speaker of the House of Representatives. The-Govern^orPsball ?lecttthedini eal artion of the term i ne 1()r i G lQ1 ni tl 3onucai par!Y as ricZ)IUVIkL 1.1V 1 iers of the Commission appointed by the General Assembly upon the recommendation louse of Representatives one member shall have retail sales experience and no more be from the same political pares as the Speaker of the House of Representatives. appointments to the Commission, the appointing authorities shall consider the e with regard to ender, ethnic racial, and a ., egg Composition. records. f the Commission shall be subject to Article 33C of Chapter 143 of the General rovided in this Article records of the Commission shall be open and available to the ith Chaufier_132 of the General Statutes. contracts for the Director. To specify the manner of distribution dissemination or sale of lottery tickets or shares to lottery game retailers or directly to tlle_publlc. 10 To determine the incentives, if any, for any lottery employees lottery vendors, lottery contractors or electronic computer terminal operators. 11 To approve and authorize the Director to enter into contracts with lottery came retailers upon terms and conditions as specified by the Commission. 12 To approve and authorize the Director to enter into agreements with other states to operate and promote multistate lotteries consistent with the purposes set forth in this Chapter. 13 Any other powers necessary for the Commission to can-y out its responsibilities under this Chapter. The Commission niay adopt rules to carr oy ut its duties and responsibilities under this Chapter. 18C-115. Reports. The Commission shall send rluarterly and annual reports on the operations of the Commission to the Governor, State Treasurer, and to the General Assembly. The reports shall include complete statements of lottery revenues, prize disbursements, expenses net revenues, and all other financial transactions involving lottery funds, including the occurrence of any audit. it 18C-116. Audits. The State Auditor shall conduct annual audits of all accounts and transactions of the Commission and any others ep cial _postaudits the State Auditor considers to be necessary. 18C-1 7 through 18 Aj : Reserved for future codification purposes. "Article 3. "North Carolina State Lottery Director. "A I RVA 20. Selection of the ]Director, powers and duties. , y_ .. +r,o r Y T hector shall have the tollov To provide for the repo,rl To con uct a background investigation, inclu ing a applicants for em loyment with the Commission, lotte which may includ e a search of the State and Natrona. based on the fingerprints of ap lip cants. To set the salaries of all Commission employees, subiec and to emplowall_personnel of the Commission. Except of Chapter 126 of the General Statutes, all empl oyees from the State Personnel Act. 0 To enter into contracts with lottery retailers and lotte Commission. To provide for the security and accuracy in the c Commission and the Lottery including examining employees lottery vendors lottery contractors and lotte l To receive reports of alleged violations of the law relati report those violations to the appropriate law enforceme To confer with the Commission on the operation and ac available for inspection by the Commission all books, information of the Lotter. To study the operation and administration of other Lott other information concerning the Lottery and makc operation and administration of the Lottery to the Corr General Assembly. To provide monthly financial reports to the Comm disbursements, expenses net revenues and all other fi funds. ?UO To enter into afreements with other states to aper consistent with the purposes set forth in this Chal Commission. " 18C-121. Accountability; books and records. The Director shall make and keep books and records that accurate 4....,.,.,,,,Y„+-,v ;,,,,i„A;,,rr the riinfl-ihitition r,f tickets or shares to lotterv 2 in, ail es and to collect demographic and recommendations to improve the fission to the Governor, and to the ion of all lottery revenues, prize lcial transactions involving lottery If The Commission shall nzalce [,particular l,rize denomination that , lllilln tl; ?ese prizes at the time that 1 gg The Commission shall, _ in ,]op and provide infoimation to the 1 8C-131. Sales and sale price of tic a The Commission maw sell i filers to sell tickets and shares, or dl zmission. No ticket or share in a lottc blished by the Commission. The minimum retail price of imum retail price shall not a12p_lx t for future codification purposes. "Article 4. ^-rT A++41n7 ection shall be unry oz a s,iubs , j1j,buviliV?a1AvL e? T+ elmll hP a pfP„Ge for the Verson who sold a. ticket or share in violation of subsection (d) of'thls 13 section if the person does either of the following: U Shows that the purchaser produced a drivers license, a . special identification card issued under G S 20-37.7, a military identification card, or a passe) showing the purchaser to be at least 18 years old and bearing a DlZsical description of the person named on the card that reasonably describes the purchaser. Produces evidence of other facts that reasonably indicated at the time of sale that the purchaser was at least 18 years old. 18C-132. Procedures for drawings and claiming_prizes; payment of prizes; protection of information concerning certain prize winners' drawing among O If a lottery game uses a daily or less frequent drawing of winnin members, a mitries or a drawing amon finalists all of the followin conditions shall be met: The drawings shall be open to the pub ic. 2 The drawings shall be witnessed by an independent certified public accountant. ed by the. independent certified public Anv equi merit used in the drawings shall be inspect accountant and an employee of the Commission both before and after the drawings. Audio and visual records of the drawings and inspections shall be made. If a valid claim is not made for a prize within the applicable period the unclaimed prize money may be used to increase prize payments for future games or may be used for other ptlr?oses consistent with this Cha ter. Prizes that remain unclaimed after the period set by the Commission far claiming the prizes shall not be considered abandoned propel r?garne the Commission shall r,.? e r+P,- +?,p ?x»i?°afiinn csf the claim neriod._for prizes for each lotte n Her who sold the winning ticket or s] filer. ion, shall be paid to a member se„_parent, or child living in rder without attachments if )etent jurisdiction restricting current and valid Address Chapter 15C of the General Erdential information under remains a certified pro . am ifin? inforna atian shall be a court order if inspection of Ite 1 Q!' ag in "per rules adopted by the Commission that ap All platers acknowledge that the deterznr ag me-ply rules and the winner'validatzon procedi Commission for the particular lottery game Involved, 18C-134. Prize winners with outstanding debt. support; offset. Q Before paving a prize of six hundred dolh the prize the Conunission shall submit the nam Tl?+y??,hr+o»t of Pi-.u rmP.. c1,nll_ within 10 davs after r , _ t _ ..._ -1 L.. 4-1n - person awes a debt to a State ag.?ency as provided in the Setoff Debt Collection Act Chapter 105A of the general Statutes and shall notify the Commission of the amount of the prize subject to debt set-off. The ?ammission shall remit the amount identified by the Department of Revenue to the Department and shall pay in, renigning funds from the _prize to the prizewinner. Except as provided In this section, the_provisions of Chapter 105A of the General Statutes app1Y ta_ he funds identified by the Department of Revenue and remitted by the Commission to tlIe Department. '§.- 18C-135 through 1$C-139: Reserved for future codification purposes. "Article 5. "I otte1y Game Retailers. 18C-140. Contracting with lotter game retailers. The Commission may contract with lottery game retailers to sell tickets or shares for. lottery ames upon Such terins and conditions as it considers appropriate No contract to act as a lottery dame retailer is assignable ar transferable All contracts with lottery gaine retailers shall provide that the Director may terminate the contract if the Lottery game retailer knowingly violates a provision of this Chapter. 18C-141. Selection of lottery game retailers. (a) The Director shall recommend to the Commission those persons with whom to contract as lottery game retailers. To the extent practicable, the Director shall meet the minority participation goals under Article 8 of Chapter 143 of the General Stahttes. The Director may not recommend contracting with any of the following: A natural person under 21 Years of age This minimum age shall not prohibit employees of a lottery game retailer who are under 21 years of age from selling lottery, tickets or shares during their employment.. A person who would be engaged exclusively in the business of sellin lg? otteWiclcets or shares or operating.. electronic computer terminals or other devices solely for entertainment. Upon approval of the Commission the Director shall enter into a contract with the person to sell tickets or shares upon such terms and conditions as the commission directs. " 18C-142. Compensation for lottery game retailers. The amount of compensation aid to lotte me retailers for their sales of lotte tickets or shares shall be yZ. six percent?6%) of the retail price of the ticlcets or shares sold for each lottery game. The Commission shall authorize an incentive bonus of up to one percent (1 %) of the retail price of the tickets or shares sold based on timely basis. submission of reports and remission of lottery revenues to the Commission on ...a " 18C-143. Responsibilities of lotterame retailers. Cal A lottery game retailer shall comp y with all provisions of this Article and the contract with the Commission. A lottery game retailer shall sell no lottery tickets .,_or shares unless the retailer conspicuously displays a certificate of authori si . ed b the Director to sell-lottery tickets or shares. o A lotteryYga__ me retailer s call furnish an appro riate bond or letter of credit 'if so requested by the _Director. The Commission may authorize the Director to purchase blanket bonds coverrng_the activities of any or all lottery game retailers. The Commission shall adopt rules to establish procedures governing how the lottery game retailers: 1 Account for all tickets or shares in their custody including tickets and shares sold. 2 Account for the mono collected from the sale of tickets and shares. 3 Remit funds to the Commission ravided that all payments shall be in the form of electronic fund transfers or other recorded financial instruments as authorized by te Commission and Approved by the Director. 18C-144 through 18C-149: Reserved for future codification purposes. "Article 6. "Lottery Vendors and Lotteiy Contractors. "8 18C-150. Procurements. -.C 4:L- Q+nj,+n0'hitf nlgV i7CP, tlj(_ I A*) 1 Upon the completion of the bidding )m the Commission has previousl contract ?l RPfnr? ;r rnntract require to be let §§J8' fie , or ne Ior tie I ar in : [om the contract is to be awarded. )sidiary corporation of the vendor to whom the contract is to be awarded. with a five percent {50 o o or more interest in the vendor or parent or ation of the vendor to whom the contract is to be awarded. ., y ig_atii 2 3 Ol 4 )mmi ldors shall cooperate with the Director in completing ai luding_ any appropriate investigation authorization, ission shall adopt rules that provide for disclosures be e information necessary to allow for a full and complete nlpetence inte 7 back round and character of the lot .nts compiled b t lie Director in conducting the investi a I infonnation under Chapter 132. 18C-159: Reserved for future codification purposes. "Article 7. ?17Tr..-Fly Onv? jyna etafim T _ iftPrv Fmld_ initi s cr( I by 'nu( Cy Fund is created wi Commission and may tting_the Commission.,, A Lott er,! Fund: is Chapter, y • .Y • to an surpius nrnas: ;: or purposes as described in this Chapter. >f the following: fe 101 ff ff QD WIN SuuUI V Iblull. Twenty-five percent (25%) shall be transferred to the State Educational _Assistance and is appropriated to Rind scholarships pursuant to Article 35A of Chapter 115C of the General Statutes. Twnniv-five percent (25%) shall be transferred to a special revenue fund to be established in Reserved for future codification purposes. - "Article 8. "Miscellaneous. , Lal regulation. . • I. di ac n( It C tic restriction, reiulation, or prohibition for the manufacture trans por[ation sLUra G, ulbLLIU ,L, ;possession, or sale of an lottery tickets or shares or for the operation of any lottery game, sl :o the o eration of the Commission or lottery games established by this Chapter. 72 through 18C-179: Reserved for future codification purposes. SECTION 2. Chapter 115C of the General Statutes is amended by adding a new Article to read: "Article 35A. "Collie Scholarships. ,99.1. Definitions. flowing definitions apply to this Article: W Academic year. - A period of time in which a .student is expected to complete the equival of at least two semesters' or three quarters' academic worlc. Authority. The State Education Assistance Authority created by Article 23 of Chapter of the General Statutes. Eli postsecondaz-y institution. - A school that is: a. A constituent institution of The University of North Carolina as defined in G.S. 11 !dl• A nonpublic postsecondarF-n 116-22(.1) or 1.1 -43.5 C.. hi-stitutio as defined in G.S 6 Title IV. - Title IV of the.. f 1965, as amended, 20 U.S.C. § 107( G icle, a student seeking a de ee, diploma, or F the followin& requirements: (1 --1) the funds." SECTION 3.(a) G.S. 14-289 reads as rewritten: 14-289. Advertising lotteries. Except as provided in Cha ter 18C of the General Statutes or in connection with a lawful raffle as provided in Part 2 of this Article, if anyone by writing or printing or by circular or letter or in any other way, advertises or publishes an account of a lottery, whether within or without this State, stating how, when or where the same is to be or has been drawn, or what are the prizes therein or anylo them, or the price of a ticket or any share or interest therein, or where or how it may be obtained, he shall of a Class 2 misdemeanor." SECTION 3.(b) G.S. 14-290 reads as rewritten: 14-290. Dealing in lotteries. Except as provided in Chapter 18C of the General Statutes or in connection with a lawful raffle as provided in Part 2 of this Article, if any person shall open, set on foot, carry on, promote, make or draw, publicly or privately, a lottery, by whatever name, style or title the same may be denominated or known; or if any person shall, by such way and means, expose or set to sale any house, real estate, goods, chattels, cash, written evidence of debt, certificates of claims or any other thing of value whatsoever, every person so offending shall be guilty of a Class 2 misdemeanor which may include a fine not to exceed two thousand dollars ($2,000). Any person who engages in disposing of any species of property whatsoever, including money and evidences of debt, or in any manner distributes gifts or prizes upon tickets, bottle crowns, bottle caps, seals on containers, other devices or certificates sold for that purpose, sllaIl be held liable to prosecution under this section. Any person who shall have in his possession any tickets, certificates or orders used in the operation of any lottery shall be held liable under this section, and the mere possession of such tickets shall be prima facie evidence of the violation of this section. This section shall not a _ j tothe possession of a lottery .. __ _ I--...,. t.,,<, MAY """Airrrtr?rl in snnthnr state." SECTION 3.(c) G.S. 14-291 reads as rewritten: 14-291. Selling lottery tickets and acting as agent for lotteries. Except as provided in Chapter 18C of the General Statutes or in connection with a lawful raffle w provided in Part 2 of this Article, if any person shall sell, barter or otherwise dispose of any lottery ticket of order for any number of shares in any lottery, or shall in anywise be concerned in such lottery, by acting aE _ ___L :.....1,- c+-fo -P„,. ^r T Pl,alf of ,,n-,, c„nh lottery to be drawn or paid either out of or within the State, such person shall be guilty of a Class 2 misdemeanor." SECTION 3.(d) G.& 14-291.1 reads as rewritten: '§ 14-291.1. Selling 'numbers' tickets; possession prima facie evidence of violation. Except as provided in Chapter 18C of the General Statutes., in connection with a lawful lottery conducted n another state, or in connection with a lawful raffle as provided in Part 2 of this Article, if any person shall ,ell, barter or cause to be sold or bartered, any ticket, token, certificate or order for any number or shares in any lottery, commonly known as the numbers or butter and egg lottery, or lotteries of similar character, to be it-awn or paid within or without the State, such person shall be guilty of a Class 2 misdemeanor. Any person ,vho shall have in his possession any tickets, tokens, certificates or orders used in the operation of any such lottery shall be guilty under this section, and the possession of such tickets shall be prima facie evidence of the violation of this section." SECTION 3.(e) G.S. 14-292 reads as rewritten: '§ 14-292. Gambling. Except as provided in Chapter 18C of the General Statutes or in Part 2 of this Article, any person or organization that operates any game of chance or any person who plays at or bets on any game of chance at which any money, property or other thing of value is bet, whether the same be in stake or not, shall be guilty of a Class 2 misdemeanor. This section shall not apply to a person wlao plays at or bets on any lottery game being lawfully conducted in any state." SECTION 3.(f) G.S. 14-293 reads as rewritten: 14-293. Allowing gambling in houses of public entertainment; penalty. *Except as provided in Chapter 18C of the General Statutes, if any keeper of an ordinary or other house of entertainment, or of a house wherein alcoholic beverages are retailed, shall knowingly suffer any game, at which money or property, or anything of value, is bet, whether the same be in stake or not, -to be played in any such house, or in any part of the premises occupied therewith; or shall furnish persons so playing or betting either on said premises or elsewhere with drink or other thing for their comfort or subsistence during the time of play, lie shall be guilty of a Class 2 misdemeanor. Any person who shall be convicted under this section shall, upon such conviction, forfeit his license to do any of the businesses mentioned in this section, and shall be forever debarred from doing any of such businesses in this State. The court shall embody in its judgment that such person has forfeited his license, and no board of county commissioners, board of town commissioners or board of aldermen shall thereafter have power or authority to grant to such convicted person or his agent a license to do any of the businesses mentioned herein." SECTION 3.(g) G.S. 14-299 reads as rewritten: 14-299. Property exhibited by gamblers to be seized; disposition of same. mil-Except as provided in Chapter 18C of the General Statutes or in G.S. 14-292 all moneys or other property or thing of value exhibited for the purpose of alluring persons to bet on any game, or used in the conduct of any such game, including any motor vehicle used in the conduct of a lottery within the purview of G.S. 14-291.1, shall be liable to be seized by any court of competent jurisdiction or by any person acting under its warrant. Moneys so seized shall be turned over to and paid to the treasurer of the county wherein they are seized, and placed in the general fund of the county. Any property seized which is used for and is suitable only for gambling shall be destroyed, and all other property so seized shall be sold in the manner provided for the sale of personal property by execution, and the proceeds derived from said sale shall (after deducting the expenses of keeping the property and the costs of the sale and after paying, according to their- priorities all known prior, bona fide liens which were created without the lienor having knowledge or notice that the motor vehicle or other property was being used or to be used in connection with the conduct of such game or lottery) be turned over and paid to the treasurer of the county wherein the property was seized, to be placed by said treasurer in the general fund of the county." SECTION 4. Chapter 14 of the General Statutes is amended by adding the following new section to read: »e 1 A 2M 17 P-4 Anne not annly to the Lotterv. G.S. 66-58(b) reads as rewritten: "(b) The provisions of subsection (a) of this section shall not apply to: 23 The North Carolina State Lottery Commission." SECTION 6. Part 2 of Article 4 of Chapter 114 is amended by adding a new section to read: Itf: , 1A--10 14 Cr;m;nal recnrcl checks for the North Carolina State Lottery Commission g +r?n>>no+ +bA 1ncrarnr;ntc of the nromective emnlovee ICI aL. ON 7. G.S. 1168-54 is amended by adding a new subsection to read: • ti r.._ _ -1- - --4. 1.... +'4,a 0-";vv;nn fnr r.1atmt provided in G S 143D-14. a)t Z are not aoanoonea pro erLY. SECTION 8. G.S. 120-123 is amended by adding a new subdivision at the end to read: " 78 The North Carolina State Lottery Conimissron as established in Chapter 18C of the General Statutes." SECTION 9. G.S. 126-5(cl) reads as rewritten: "(c1 Except as to the provisions of Articles 6 and 7 of this Chapter, the provisions of this Chapter shall not apply to: 1 Constitutional officers of the State. 2 Officers and employees of the Judicial Department. 3 4) Officers and employees of the General Assembly. Members of boards, committees, commissions, councils, and advisory councils compensated (5) on a per diem basis. Officials or employees whose salaries are fixed by the General Assembly, or by the Governor, or by the Governor and Council of State, or by the Governor subject to the (6) approval of the Council of State. Employees of the Office of the Governor that the Governor, at any time, in the Governor's exempts from the application of the provisions of this Chapter by means of a discretion , letter to the State Personnel Director designating these employees. (7) Employees of the Office of the Lieutenant Governor, that the Lieutenant Governor, at any in the Lieutenant Governor's discretion, exempts from the application of the provisions time , of this Chapter by means of a letter to the State Personnel Director designating these (8) employees. Instructional and research staff, physicians, and dentists of The University of North (9) Carolina. Employees whose salaries are fixed under the authority vested in the Board of Governors of and 116-11(5) 116-11(4) S f G isi , , . . ons o The University of North Carolina by the prov (10) (11)) 116-14. Repealed by Session Laws 1991, c. 84, s. 1. North Carolina School of Science and Mathematics' employees whose salaries are fixed in accordance with the provisions of G.S. 116-235(c)(1) and G.S. 116-235(c)(2). 12 (13) Repealed by Session Laws 2001-474, s. 15, effective November 29, 2001. , ? 14 Employees of the North Carolina State Ports Authority. Employees of the North Carolina Global TransPark Authority. N The executive director and one associate director of the North Carolina Center for Nursing established under Article 9F of Chapter 90 of the General Statutes. 17 ? Repealed by Session Laws 2004-129, s. 37, effective July 1, 2004. d Commission established in Article 75 of Chapter 143 t F T 18 un rus Employees of the Tobacco (19) of the General Statutes. Employees of the Health and Wellness Trust Fund Commission established in Article 21 of (20) Chapter 130A of the General Statutes. loyees of the North Carolina Rural Redevelopment Authority created in Part 2D of Em p Article 10 of Chapter 143B of the General Statutes. 21 Employees of the Clean Water Management Trust Fund. 22 23 Employees of the North Carolina Turnpike Authority. The Executive Administrator and the Deputy Executive Administrator of the Teachers' and 24 State Employees' Comprehensive Major Medical Plan. The North Carolina State Lottery Director and employees of the North Carolina State Lotter" SECTION 10. G.S. 147-69.2(a) reads as rewritten: lies to funds held by the State Treasurer, to the credit of This section a " (a) (1) pp The Teachers' and State Employees Retirement System, 2 The Consolidated Judicial Retirement System, ?3 The Teachers' and State Employees Hospital and Medical Insurance Plan, 4 The General Assembly Medical and Hospital Care Plan, 5 The Disability Salary Continuation Plan, 6 The Firemen's and Rescue Workers' Pension Fund, 7 The Local Governmental Employees' Retirement System, 8 The Legislative Retirement System, 9 The Escheat Fund, 10 The Legislative Retirement Fund, 11 The State Education Assistance Authority, 12 The State Property Fire Insurance Fund, 13 The Stock Workers' Compensation Fund, 14 The Mutual Workers' Compensation Fund, 15 The Public School Insurance Fund, 16 The Liability Insurance Trust Fund, 17 Trust funds of The University of North Carolina and with the State Treasurer pursuant to G.S. 116-36.1, 17a) North Carolina Veterans Home Trust Fund, 17b) North Carolina National Guard Pension Fund, 17c) Retiree Health Premium Reserve Account, ftn4 17d) The Election Ftm+Fund, 17e The North Carolina State Lottery Fund, and its constituent institutions deposited 18) Any other special fund created by or pursuant to law a ro riations made pursuantto the Executive Budget Act. for purposes other than meeting it SECTION 11.(a) The Commission may adopt emergency rules pursuant to G.S. 15013-21.1A with a reference to this section as the basis for the adoption of those rules as emergency rules. SECTION 11.(b) This section shall become effective when it becomes law and shall expire June 30, 2007, SECTION 12. The first security audit required under G.S. 18C-123(a) shall be conducted at the beginning of the first calendar year. after the effective date of this act. The first audit required under G.S. 18e123(d) shall be conducted at the end of the first fiscal year after the effective date of this act, SECTION 13. The Department of Health and Human Services shall study the effects of the establishment and operation of the North Carolina State Lottery on the incidence of gambling addiction in this State. The Department shall report the results of its study, including any proposed legislation, to the Joint Legislative Health Care Oversight Committee, the Senate Appropriations Committee on Health and Human Services, the House of Representatives Appropriations Subcommittee on Health and Human Services, and the Fiscal Research Division not later than January 1, 2007, SECTION 14. Nothing in this act shall be construed to obligate the General Assembly to appropriate funds to implement this act. SECTION 15. The State Treasurer shall lend to the North Carolina State Lottery Commission, at a rate of interest comparable to short-term rates in the private capital market and with repayment terms satisfactory to both parties, sufficient funds to cover initial operating expenses of the Commission, except that the total amount borrowed by the Commission shall not exceed ten million dollars ($10,000,000). The borrowed funds shall be deposited in the North Carolina State Lottery Fund and shall be available for expenditure for the purposes set forth in this act without further action by the General Assembly. The Commission shall repay any funds lent to it pursuant to this section within twenty-four months after the effective date of this act. a? SECTION 16. Except as otherwise provided in this act, it is effective when it becomes law. In the General Assembly read three times and ratified this the 30th' day of August, 2005. s/ Beverly E. Perdue President of the Senate s/ James B. Black Speaker of the House of Representatives s/ Michael F. Easley Governor Approved 11.30 a.m. this 31st day of August, 2005 This document (also available in PDF and RTE formats) is not air official doctanerrt. Please read the NCGri Web Site disclar`tner for more information. ?*x rn o RICHARD H. MOORE TREASURER TO: FROM: DATE: State of North Carolina Department of State Treasurer State and Local Government Finance Division and the Local Government Commission County Finance Officers and Their Auditors T. Vance Holloman, Deputy Treasurer August 2, 2006 as T. VANCE HOLLOMAN DEPUTY TREASURER Memorandum # 1063 SUBJECT: General Guidelines for Using State Lottery Proceeds for School Construction The N. C. General Assembly has adopted legislation (Session Law 2005-344) allocating a portion of the net revenues from the N. C. State Lottery Fund to the Public School Building Capital Fund (PSBCF) to' be used for the construction of public schools in the State based on formulas and criteria established in the legislation. A county may use lottery revenues in the PSBCF to pay for school construction projects in local school administrative units and to retire indebtedness incurred for school construction projects on or after January 1, 2003 (G.S. 115C-546.2.(d)(4)). This memorandum provides general guidelines to counties regarding the use of lottery funds for public school construction projects, as well as information on how the Local Government Commission will review plans to use such funds for repayment of debt issued for public school construction. Public school construction projects originally funded from revenue sources other than lottery revenues transferred to the Public School Building Capital Fund must be completed from those original revenue sources. If these projects were financed by debt, lottery revenues can be used for debt service payments provided the debt was incurred on or after January 1, 2003. Lottery revenues cannot be used to pay for computers, software, programming, etc. and other school technology needs. For financing new school construction projects using lottery revenues, the general guidance of the Commission is to conservatively estimate the distribution amounts available for debt service from this new revenue source until sufficient time has passed that a more reliable estimate of the revenue levels expected on an annual basis can be determined. In addition, a portion of the final annual allocations to counties is based upon relative effective tax rates and may vary from year to year. When considering financing applications which use State Lottery funds for debt service, we will require assurance that local units commit to and provide for the possible use of other available secondary revenues to meet debt service requirements in the event that lottery revenues are insufficient. This is the same policy that we follow with other uncertain revenue streams. This policy is critical to protect the strong ratings that local governments across the state have earned. If you have any questions, please contact Tim Romocki at (919) 807-2360. 325 North Salisbury Street, Raleigh, North Carolina 27603-1385 Telephone: (919) 807-2350 Fax: (919) 807-2352 Website: www.nctreasurer.com An Equal Opportunity/Affirmative Action Employer 19 []Eiled] http://www.ncga.state.nc.us/Sessions/2007/Bills/House... . . (B I - GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2007 H D HOUSE DRH70007-ST-2 (11/13) Short Title: School Capital Fund Formula/Lottery Proceeds. Sponsors: I Representatives Goforth and J. Harrell (Primary .Sponsors). Referred to: A .BILL TO BE ENTITLED AN ACT TO CHANGE THE SCHOOL CAPITAL- CONSTRUCTION FORMULA IN THE. STATE LOTTERY ACT TO PROVIDE FOR DISTRIBUTION OF - ALL THE. FUNDS BASED ON AVERAGE DAILY MEMBERSHIP. The. General Assembly of North Carolina enacts: SECTION 1. G.S. 115C-546.2(d) reads as rewritten: "(d) Monies transferred into the Fund in accordance with Chapter 18C of the General Statutes shall be allocated for capital projects for school construction projects ns fel ews: . (4) A sum equ?d to sixty-five pereent these mom* es lleeate -on a per . average -daily membership basis according to the average daily membership f6r the budget year as determined and certified 'by the State Board of 1 .4' r) 1 /7,< 1r) 1) n7 0 .1 r AAA 39 [Filed] http://www.nega.state.ne.us/Sessions/2007/Bills/House ... Education. (2) A sum equal te thir-ty-five per-eent (350%) of these me tfansfeffed in with G.S. 18C-164 shall o fbljewi?ig definitions applying to this subdi-vi u- ?? " tav rate nau tiplied by n ffifee_yeaf weighted after-a.`- e studies.- b-. - "State -ayei age-f Geefive-tfflE-r-ate" means, th C-. "Sales studies" le;q assessment ratio studies per-f6rmed by. the. ?'?7 ? el ? et rev» ?"?ment ?R T? D pa1 (3) No county shall have to provide matching funds required under subsection (c) of this section. (4) A county may use monies in this Fund to pay for school construction projects in local school administrative units and to retire indebtedness incurred for school construction projects incurred on or after January 1, 2003-.2000. (5) A- county may not use monies in this, Fund to pay for school technology needs." SECTION 2. This act becomes effective July 1, 2007. . >. of? 1 104191W7 0.1 G A AN :2 [F 16d] http://www.nega.state.ne.us/Sessions/2007/Bills/Senate... . (®R GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2007. S. D SENATE DRS65001-LB-3At (11/13) Short Title: Lottery School Capital Fund Formula. Sponsors: Senators Snow, and Nesbitt. Referred to: A BILL TO BE ENTITLED AN ACT TO CHANGE THE SCHOOL CAPITAL CONSTRUCTION FORMULA IN THE, STATE LOTTERY ACT TO PROVIDE FOR -DISTRIBUTION OF ALL. THE FUNDS BASED ON AVERAGE DAILY MEMBERSHIP. The General Assembly of North-Carolina enacts: SECTION 1. G.S. 115C-546.2(4) reads as rewritten: "(d) Monies transferred into the Fund in accordance with Chapter 18C of the General Statutes shall be allocated for capital projects for school construction pr6j ects -a ffel '? (650%) of th alleged -on a per average daily membership basis according to the average daily membership for the budget year as determined and- certified by the State Board of 7 ?? 1 M. MOM a•27 AT%A >2 [F l'ed] littp:HwWw.ncRa.state.nc.us/Sessions/2007/Bills/Senate... Education. (7). A sum e"a to fiiiAYr_ five per-een+ (351%) e f these me-v?yon tfansfeffed in aeeer-danee with G.S. 18G464 shall t ' t t ff ti f th tP 'l St ? tP 'l9' am r t e -as -a pereen a ' i t - th e e ee age-o e h d - d - .-r a t (1000% ?, ? , .,?. ) - ith ra e s grea er an o it ne ?an r e per een ii th A , w t -a-. mean s e " ""I %.10un y studies. 'L, "state rate" means i"Wes assessment ratio studies" ?e?aCGt' assessment of Feyenuea de"- (-±. 1054_280(b- (3) No county shall have to provide matching funds required under subsection (c) of this section. (-4) A county may use monies in this Fund to pay for school construction projects in local school administrative units and to retire indebtedness incurred for school construction projects incurred on or after January 1; 20032000. (5 A county may not use monies in this Fund to pay for .school technology needs." SECTION 2. This act is effective when it becomes law. ?^ 7 1"/n<in nn-7 n.) 1 e IN