2023 Tennessee Code › Title 4 - STATE GOVERNMENT (§§ 4-1-101 — 4-58-110) › Chapter 51 - TENNESSEE EDUCATION LOTTERY IMPLEMENTATION LAW (§§ 4-51-101 — 4-51-301) › Part 1 - GENERAL PROVISIONS (§§ 4-51-101 — 4-51-137) › Section 4-51-111 - Lottery proceeds

(a)
(1)
All lottery proceeds shall be the property of the corporation.
(2)
From its lottery proceeds the corporation shall pay the operating expenses of the corporation. As nearly as practical, at least fifty percent (50%) of the amount of money from the actual sale of lottery tickets or shares shall be made available as prize money; provided that this subdivision (a)(2) shall not be deemed to create any lien, entitlement, cause of action, or other private right, and any rights of holders of tickets or shares shall be determined by the corporation in setting the terms of its lottery or lotteries.
(3)
As nearly as practical, for each fiscal year, net lottery proceeds shall equal at least thirty-five percent (35%) of the lottery proceeds or an amount that maximizes net lottery proceeds; provided, however, that for the first two (2) full fiscal years and any partial first fiscal year of the corporation, net lottery proceeds need only equal, as nearly as practical, thirty percent (30%) of the lottery proceeds. If, after the second full fiscal year, the corporation determines that an amount that maximizes net lottery proceeds is less than thirty-five percent (35%) of the lottery proceeds, then, immediately upon making such determination, the corporation shall file with the state funding board a statement of reasons supporting such determination and a projection of such amount.
(b)
(1)
There is created within the state treasury a "lottery for education account." Amounts remaining in the account at the end of each fiscal year shall not revert to the general fund. Money in the account shall be invested by the state treasurer pursuant to title 9, chapter 4, part 6 for the sole benefit of the account. All earnings attributable to such investments shall be credited to the lottery for education account.
(2)
On or before the fifteenth day of the first month of each quarter, the corporation shall transfer to the state treasury, for credit to the lottery for education account, an amount representing an estimate of the net lottery proceeds for the immediately preceding quarter. Any additional transfers required to reconcile the amount of the net lottery proceeds transferred on the fifteenth day of the month shall be completed by the last business day of the month following the end of the quarter. Upon deposit into the state treasury, net lottery proceeds shall become the unencumbered property of the state of Tennessee and the corporation shall have no power to agree or undertake otherwise. Except as otherwise provided in subdivision (b)(3), such funds shall be expended for education programs and purposes in accordance with the Constitution of Tennessee, Article XI, § 5.
(3)
(A)
A general shortfall reserve subaccount shall be maintained within the lottery for education account.
(B)
Except as provided in subdivision (b)(3)(D), the amount of the general shortfall reserve subaccount shall equal one hundred million dollars ($100,000,000). In any fiscal year, only an amount necessary to maintain the general shortfall reserve subaccount in an amount equal to one hundred million dollars ($100,000,000) shall be deposited into the subaccount.
(C)
If the net lottery proceeds deposited into the lottery for education account in any year, exclusive of the amount in the general shortfall reserve subaccount, are not sufficient to meet the amount appropriated for educational programs and purposes pursuant to subsection (c), the general shortfall reserve subaccount may be drawn upon to meet the deficiency; provided, however, that reserves in the account shall be used first for any shortfall in the amount appropriated to the educational scholarship program and then to any other educational programs and purposes otherwise provided by law for which net lottery proceeds may be expended. In the event it becomes necessary to draw from the general shortfall reserve subaccount in any fiscal year for educational programs and purposes, such programs and purposes shall be reviewed and shall be reduced to the amount of available net lottery proceeds, exclusive of the general shortfall reserve subaccount, estimated to be available in the next fiscal year. In the event the general shortfall reserve subaccount is drawn upon in any fiscal year, the subaccount shall be brought back to its prior level in subsequent fiscal years. Five percent (5%) of net lottery proceeds shall be deposited into the lottery for education account each quarter, until the amount of the general shortfall reserve subaccount equals one hundred million dollars ($100,000,000). Notwithstanding this subdivision (b)(3)(C) to the contrary, the program reduction and repayment provisions of this subdivision (b)(3)(C) shall not be triggered, if amounts in excess of one hundred million dollars ($100,000,000) are recommended for appropriation pursuant to subdivision (b)(3)(D).
(D)
In addition to the amount provided pursuant to subdivision (b)(3)(B), the funding board may recommend appropriation of funds to the general shortfall reserve subaccount if such fund is deemed inadequate. The funding board may recommend appropriation of funds from the general shortfall reserve subaccount if adequate funds are deemed to be available in the general shortfall reserve subaccount and if such funds are needed for educational programs and purposes consistent with the Constitution of Tennessee, Article XI, § 5; provided, that "adequate funds" shall not be deemed to be available if such recommended appropriation would reduce the general shortfall reserve account below one hundred million dollars ($100,000,000).
(E)
The comptroller of the treasury shall annually review and report to the education committee of the senate and the education administration committee of the house of representatives concerning the adequacy of the balance of the general shortfall reserve subaccount, whether payment from net lottery proceeds for educational programs authorized in the Constitution of Tennessee has been sufficient to fund the programs without drawing on the general shortfall reserve subaccount and whether triggers for replenishing or increasing the general shortfall reserve subaccount, if deemed inadequate, are sufficient.
(4)
A special reserve subaccount shall be maintained within the lottery for education account. The amount of the special reserve subaccount shall be equal to one percent (1%) of net lottery proceeds deposited into the lottery for education account from all deposits made to the fund from the initial deposit until the last deposit made in fiscal year 2007-2008. Transfers to the special reserve subaccount shall be made from the lottery for education account quarterly until the end of such fiscal year. The amount in the special reserve subaccount may be used to make or support loans to local government units for educational programs and purposes in accordance with the Constitution of Tennessee, Article XI, § 5 and to pay or secure debt issued for such programs and purposes as otherwise provided by law. Such amount shall supplement, not supplant, nonlottery educational resources for such programs and purposes. Notwithstanding this section to the contrary, treasurer's earnings on the special reserve subaccount shall be credited to the special reserve subaccount to be used in a manner consistent with this subdivision (b)(4).
(c)
(1)
No later than the date in 2003 upon which the state funding board presents state revenue estimates to the governor pursuant to §
9-4-5202(e)(3)
, the funding board shall establish a projected revenue range for net lottery proceeds for the remainder of the current fiscal year and the next succeeding fiscal year. No later than the date of presentation of such estimates to the governor by the state funding board in all subsequent years, the funding board shall project the revenue for net lottery proceeds for the remainder of the then current fiscal year and the next succeeding four (4) fiscal years. Such projection shall be made in the same manner as other state revenues are projected by the funding board, which figure may be adjusted prior to the enactment of the general appropriations act. In making such projections, the funding board shall recognize unusual fluctuations in lottery proceeds. In making such projections, the funding board is authorized to obtain information from those having expertise and experience in projecting revenue from the sale of lottery tickets or shares.
(2)
(A)
(i)
Before December 15, 2003, and before December 15 in each succeeding year, the Tennessee student assistance corporation shall prepare a report setting forth an estimate of the total cost of lottery related financial assistance to be provided to Tennessee citizens during the next fiscal year pursuant to title 49, chapter 4, part 9. Such report shall include the major assumptions and the methodology used in arriving at such estimate. For the report due in December 2003, the Tennessee student assistance corporation shall base its estimate of total costs on the award values established pursuant to title 49, chapter 4, part 9. For subsequent reports, the Tennessee student assistance corporation shall base its estimate of total costs on the award values in effect at the time the report is prepared. The Tennessee higher education commission, the board of trustees of the University of Tennessee system, the state board of regents, the department of education and the Tennessee independent college and universities association shall provide the Tennessee student assistance corporation with such information as is needed to prepare its report. The Tennessee student assistance corporation shall deliver its report to the governor, the funding board, the speaker of the senate, the speaker of the house of representatives, the chairs of the senate and house of representatives finance, ways and means committees, the chair of the education committee of the senate, the chair of the education administration committee of the house of representatives, the state and local government committee of the senate, the state government committee of the house of representatives, and the office of legislative budget analysis.
(ii)
Before December 15 of each year, the state funding board, with the assistance of the Tennessee student assistance corporation, shall project long-term funding needs of the lottery scholarship and grant programs established under title 49, chapter 4, part 9. The projections shall cover at least the four (4) fiscal years next succeeding the current fiscal year. The analysis shall be performed to determine if adjustments in lottery scholarship and grant programs should be made to prevent funding required in the future for such programs from exceeding estimates of net lottery proceeds made under subdivision (c)(1).
(B)
Before December 15, 2003, and before December 15 in each succeeding year, appropriate state agencies shall submit to the funding board and to the governor their recommendations for other educational programs and purposes consistent with the Constitution of Tennessee, Article XI, § 5 based on the difference between the funding board's projections and recommendations for the lottery scholarship program based on the report submitted pursuant to subdivision (c)(2)(A). In no event shall such recommendations exceed the projections of the funding board for a specific fiscal year.
(3)
(A)
The governor shall submit to the general assembly in the annual budget document prepared pursuant to title 9, chapter 4, part 51 recommendations concerning the distributions to be made from the lottery for education account based on the projections of the funding board, including recommended appropriations by the funding board from the general shortfall reserve subaccount, if any, and any treasurer's earnings credited to the lottery for education account.
(B)
In a separate budget category entitled "net education lottery proceeds," the governor shall estimate the amount of net lottery proceeds and treasurer's earnings thereon to be credited to the lottery for education account during the fiscal year and the amount of unappropriated surplus estimated to be accrued in the account at the beginning of the fiscal year. The sum of estimated net lottery proceeds, treasurer's earnings thereon, and unappropriated surplus shall be designated "net education lottery proceeds."
(C)
In the budget document, the governor shall submit specific recommendations as to the educational programs and purposes for which appropriations should be made from the lottery for education account. Such recommendation shall include the specific value of each category of awards to be offered pursuant to title 49, chapter 4, part 9. The recommendation for each category of award shall be the value of such award as set in the previous general appropriations act unless such value, based on the estimates of the Tennessee student assistance corporation and the funding board, should be adjusted in a manner consistent with title 49, chapter 4, part 9 and this chapter.
(D)
The governor's recommendations as to the educational programs and purposes for which appropriations should be made in accordance with this subdivision (c)(3) shall be referred to the education committee of the senate and the education administration committee of the house of representatives for recommendation and comments prior to final action by the finance, ways and means committees of both houses on the general appropriations act.
(4)
The general assembly shall appropriate from the lottery for education account by specific reference to it, or by reference to "net education lottery proceeds." All appropriations to any particular budget unit shall be made together in a separate part entitled, identified, administered, and accounted for separately as a distinct budget unit for net education lottery proceeds. Such appropriations shall otherwise be made in the manner required by law for appropriations.
(5)
It is the intent of the general assembly that appropriations from the lottery for education account shall be allocated and expended for educational programs and purposes only in accordance with the Constitution of Tennessee, Article XI, § 5. Such net education lottery proceeds shall be used to supplement, not supplant, existing resources for educational programs and purposes.
(d)
Any funds appropriated, but not expended, for educational programs or purposes from the lottery for education account or from the general shortfall reserve subaccount shall not revert to the general fund at the end of the fiscal year but shall be credited, respectively, to the lottery for education account or the general shortfall reserve subaccount and retained there until allocated and appropriated as provided in subdivision (b)(3) and subsection (c).
(e)
In compliance with the requirement of this chapter that there shall be a separate accounting of net education lottery proceeds, no deficiency in the lottery for education account shall be replenished by book entries reducing any nonlottery reserve of general funds, including specifically, but without limitation, the reserve for revenue fluctuations or other reserve accounts established by law; nor shall any program or project started specifically from net education lottery proceeds be continued from the general fund; such programs must be adjusted or discontinued according to available net education lottery proceeds unless the general assembly by general law establishes eligibility requirements and appropriates specific other funds within the general appropriations act; nor shall any nonlottery surplus in the general fund be reduced. No surplus in the lottery for education account shall be reduced to correct any nonlottery deficiencies in sums available for general appropriations, and no surplus in the lottery for education account shall be included in any revenue or surplus calculated for setting aside any additional funds in the reserve for revenue fluctuations as provided in §
9-4-211
.
(f)
(1)
There is created a special account in the state treasury to be known as the "after school programs special account," hereinafter referred to as the "after school account." In accordance with §
4-51-123
, one hundred percent (100%) of moneys constituting an unclaimed prize shall be deposited in the after school account at the end of each fiscal year.
(2)
In any fiscal year in which the financial assistance program for attendance at post-secondary educational institutions located within this state is funded pursuant to title 49, chapter 4, part 9, and excess is available from net lottery proceeds for other educational purposes and projects consistent with the Constitution of Tennessee, Article XI, § 5, then in any such fiscal year moneys in the after school account may be appropriated by the general assembly from such account pursuant to subdivision (f)(3).
(3)
Moneys in the after school account shall be used exclusively for after school programs consistent with the Constitution of Tennessee, Article XI, § 5. Such moneys shall supplement, not supplant, nonlottery educational resources for after school educational programs and purposes. The general assembly shall appropriate from the after school programs special account by specific reference to it, or by reference to the "after school account." Such appropriations shall otherwise be made in the manner required by law for appropriations.
(4)
Any reserve balance remaining unexpended at the end of a fiscal year in the after school account shall not revert to the general fund but shall be carried forward into the subsequent fiscal year.
(5)
Notwithstanding this section to the contrary, interest accruing on investments and deposits of the after school account shall be credited to such account, shall not revert to the general fund, and shall be carried forward into the subsequent fiscal year.
(6)
Moneys in the after school account shall be invested by the state treasurer in accordance with §
9-4-603
.
Amended by 2021 Tenn. Acts, ch. 64, s 5, eff. 3/29/2021.
Amended by 2019 Tenn. Acts, ch. 345, s 12, eff. 5/10/2019.
Amended by 2015 Tenn. Acts, ch. 182, Secs.s 2, s 3, s 4eff. 4/17/2015.
Amended by 2013 Tenn. Acts, ch. 236, s 64, eff. 4/19/2013.
Acts 2003 , ch. 297, § 2; 2004, ch. 625, §1; 2004, ch. 841, § 2; 2005, ch. 417, §§ 3 - 5; 2006, ch. 940, §1; 2009 , ch. 531, §§ 60, 61; 2010 , ch. 1030, § 7; 2011 , ch. 410, § 9 (b); 2012 , ch. 896, §§ 1- 3; 2012 , ch. 925, § 14.