A BILL TO BE ENTITLED
AN ACT to create a tRUST FUND FOR essential services to be funded from state lottery proceeds, and to limit any EXPENDITURE from the fund until after January 1, 2057.
The General Assembly of North Carolina enacts:
SECTION 1.  Article XIV of the Constitution of North Carolina is amended by adding a new section to read:
"Sec. 6. Trust Fund For Essential Services.
Five percent (5%) or fifteen million dollars ($15,000,000), whichever is less, of the net revenues of any State Lottery shall be deposited in the Trust Fund For Essential Services. The principal and interest of the Trust Fund For Essential Services shall not be expended before January 1, 2057. On or after January 1, 2057, only one‑half of the annual interest earned on the Trust Fund during the previous year may be appropriated by the General Assembly. The corpus of the Trust Fund may be expended only after January 1, 2057, and only upon a vote of two‑thirds majority of each house of the General Assembly present and voting."
SECTION 2.  The amendment set out in Section 1 of this act shall be submitted to the qualified voters of the State at the statewide general election in November of 2006, which election shall be conducted under the laws then governing elections in the State. Ballots, voting systems, or both may be used in accordance with Chapter 163 of the General Statutes. The question to be used in voting systems and ballots shall be:
"[ ] FOR	[ ] AGAINST
Constitutional amendment providing for the establishment of a Trust Fund For Essential Services."
SECTION 3.  If a majority of the votes cast on the question are in favor of the amendment set out in Section 1 of this act, the State Board of Elections shall certify the amendment to the Secretary of State. The amendment becomes effective January 1, 2007. The Secretary of State shall enroll the amendment so certified among the permanent records of that office.
SECTION 4.  Chapter 143 of the General Statutes is amended by adding a new section to read:
"§ 143‑15.3E.  Trust Fund For Essential Services.
(a)	The Trust Fund For Essential Services is established as an interest‑bearing, nonreverting special fund in the Office of State Budget and Management. Moneys in the Trust Fund For Essential Services shall be held in trust and used solely to provide essential services to the citizens of North Carolina if funds from all other sources available to the State are inadequate to provide those essential governmental services.
The State Treasurer shall hold the Trust Fund For Essential Services separate and apart from all other moneys, funds, and accounts. The State Treasurer shall be the custodian of the Trust Fund For Essential Services and shall invest its assets in accordance with G.S. 147‑69.2 and G.S. 147‑69.3. Investment earnings credited to the assets of the Trust Fund For Essential Services shall become part of the Trust Fund For Essential Services. Any balance remaining in the Trust Fund For Essential Services at the end of any fiscal year shall be carried forward in the Trust Fund For Essential Services for the next succeeding fiscal year.
The North Carolina State Lottery Commission shall annually pay to the Trust Fund For Essential Services five percent (5%) or fifteen million dollars ($15,000,000), whichever is less, of the net revenues of the State lottery.
No funds may be expended from the Trust Fund For Essential Services before January 1, 2057. After January 1, 2057, only one‑half of the annual interest earned on the Trust Fund during the previous year may be appropriated by the General Assembly. The corpus of the Trust Fund may be expended only after January 1, 2057, and only upon a vote of two‑thirds majority of each house of the General Assembly present and voting.
(b)	The Director may not use funds in the Trust Fund For Essential Services unless the use has been approved by an act of the General Assembly."
SECTION 5.  G.S. 18C‑164 reads as rewritten:
"§ 18C‑164.  Transfer of net revenues.
(a)	The funds remaining in the North Carolina State Lottery Fund after receipt of all revenues to the Lottery Fund and after accrual of all obligations of the Commission for prizes and expenses shall be considered to be the net revenues of the North Carolina State Lottery Fund. The net revenues of the North Carolina State Lottery Fund shall be transferred periodically to the Education Lottery Fund, which shall be created in the State treasury.
(a1)	From the Education Lottery Fund, the Commission shall transfer a sum equal to five percent (5%) of the net revenue of the prior year, but not to exceed fifteen million dollars ($15,000,000), to the Trust Fund For Essential Services established by G.S. 143‑15.3E.
(b)	After making the transfer required by subsection (a1) of this section, if five percent (5%) of net revenue exceeds fifteen million dollars ($15,000,000) in a prior year, from the Education Lottery Fund, the Commission shall transfer a sum equal to the difference between fifteen million dollars ($15,000,000) and five percent (5%) of the net revenue of the prior year to the Education Lottery Reserve Fund. A special revenue fund for this purpose shall be established in the State treasury to be known as the Education Lottery Reserve Fund, and that fund shall be capped at fifty million dollars ($50,000,000). Monies in the Education Lottery Reserve Fund may be appropriated only as provided in subsection (e) of this section.
(c)	The Commission shall distribute the remaining net revenue of the Education Lottery Fund, as follows, in the following manner:
(1)	A sum equal to fifty percent (50%) to support reduction of class size in early grades to class size allotments not exceeding 1:18 in order to eliminate achievement gaps and to support academic prekindergarten programs for at‑risk four‑year‑olds who would otherwise not be served in a high‑quality education program in order to help those four‑year‑olds be prepared developmentally to succeed in school.
(2)	A sum equal to forty percent (40%) to the Public School Building Capital Fund in accordance with G.S. 115C‑546.2.
(3)	A sum equal to ten percent (10%) to the State Educational Assistance Authority to fund college and university scholarships in accordance with Article 35A of Chapter 115C of the General Statutes.
(d)	Of the sums transferred under subsection (c) of this section, the General Assembly shall appropriate the funds annually based upon estimates of lottery net revenue to the Education Lottery Fund provided by the Office of State Budget and Management and the Fiscal Research Division of the North Carolina General Assembly.
(e)	If the actual net revenues are less than the appropriation for that given year, then the Governor may transfer from the Education Lottery Reserve Fund an amount sufficient to equal the appropriation by the General Assembly. If the monies available in the Education Lottery Reserve Fund are insufficient to reach a full appropriation, the Governor shall transfer monies in order of priority, to the following:
(1)	To support academic prekindergarten programs for at‑risk four‑year‑olds who would otherwise not be served in a high‑quality education program in order to help those four‑year‑olds be prepared developmentally to succeed in school.
(2)	To reduce class size.
(3)	To provide financial aid for needy students to attend college.
(4)	To the Public School Building Capital Fund to be spent in accordance with this section.
(f)	If the actual net revenues exceed the amounts appropriated in that fiscal year, the excess net revenues shall remain in the Education Lottery Fund, and then be transferred as follows:
(1)	Fifty percent (50%) to the Public School Building Capital Fund to be spent in accordance with this section.
(2)	Fifty percent (50%) to the State Educational Assistance Authority to be spent in accordance with this section."
SECTION 6.  This act is effective when it becomes law.