44TH LEGISLATURE - STATE OF NEW MEXICO - FIRST SESSION, 1999

RELATING TO LOTTERY REVENUE; PROVIDING FOR LEGISLATIVE SUCCESS SCHOLARSHIPS; PROVIDING FOR DISTRIBUTION OF ALL LOTTERY REVENUE TO LEGISLATIVE SUCCESS SCHOLARSHIPS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 6-24-3 NMSA 1978 (being Laws 1995, Chapter 155, Section 3) is amended to read:

"6-24-3. PURPOSES.--The purposes of the New Mexico Lottery Act are to:

A. establish and provide for the conduct of a fair and honest lottery for the entertainment of the public; and

B. provide the maximum amount of revenues, without imposing additional taxes or using other state revenues, for the purposes of [(1) funding critical capital outlay needs of the public schools; and

(2)] providing tuition assistance to resident undergraduates at New Mexico post-secondary educational institutions, which shall be known as "legislative success scholarships"."

Section 2. Section 6-24-23 NMSA 1978 (being Laws 1995, Chapter 155, Section 23, as amended) is amended to read:

"6-24-23. [LOTTERY TUITION] LEGISLATIVE SUCCESS SCHOLARSHIP FUND CREATED--PURPOSE.--

A. The "[lottery tuition] legislative success scholarship fund" is created in the state treasury. The fund shall be administered by the commission on higher education. Earnings from investment of the fund shall accrue to the credit of the fund. Any balance in the fund at the end of any fiscal year shall remain in the fund for appropriation by the legislature as provided in this section.

B. After appropriation, if any, by the legislature for scholarships pursuant to Subsection C of Section 21-1-2 NMSA 1978, the remaining money in the [lottery tuition] legislative success scholarship fund is appropriated to the commission on higher education for distribution to New Mexico's public post-secondary educational institutions to provide tuition assistance for New Mexico resident undergraduates as provided by law."

Section 3. Section 6-24-24 NMSA 1978 (being Laws 1995, Chapter 155, Section 24) is amended to read:

"6-24-24. DISPOSITION OF REVENUE.--

A. As nearly as practical, an amount equal to at least fifty percent of the gross annual revenues from the sale of lottery tickets shall be returned to the public in the form of lottery prizes.

B. The authority shall transmit all net revenues to the state treasurer, who shall deposit [sixty percent of the revenues in the public school capital outlay fund for expenditure pursuant to the provisions of the Public School Capital Outlay Act and forty percent] them in the [lottery tuition] legislative success scholarship fund. Estimated net revenues shall be transmitted monthly to the state treasurer for deposit in the [funds, provided] fund, and the total amount of annual net revenues for the fiscal year shall be transmitted no later than August 1 each year.

C. In determining net revenues, operating expenses of the lottery include all costs incurred in the operation and administration of the lottery and all costs resulting from any contracts entered into for the purchase or lease of goods or services required by the lottery, including [but not limited to] the costs of supplies, materials, tickets, independent audit services, independent studies, data transmission, advertising, promotion, incentives, public relations, communications, commissions paid to lottery retailers, printing, distribution of tickets, purchases of annuities or investments to be used to pay future installments of winning lottery tickets, debt service and payment of any revenue bonds issued, contingency reserves, transfers to the reserve fund and any other necessary costs incurred in carrying out the provisions of the New Mexico Lottery Act.

D. An amount up to two percent of the gross annual revenues shall be set aside as a reserve fund to cover bonuses and incentive plans for lottery retailers, special promotions for retailers, purchasing special promotional giveaways, sponsoring special promotional events, compulsive gambling rehabilitation and such other purposes as the board deems necessary to maintain the integrity and meet the revenue goals of the lottery. The board shall report annually to the governor and each regular session of the legislature on the use of the money in the reserve fund. Any balance in excess of fifty thousand dollars ($50,000) at the end of any fiscal year shall be transferred to the [lottery tuition] legislative success scholarship fund."

Section 4. Section 6-24-27 NMSA 1978 (being Laws 1995, Chapter 155, Section 27) is amended to read:

"6-24-27. REVENUE AND BUDGET REPORTS--RECORDS--INDEPENDENT AUDITS.--

A. The board shall:

(1) submit quarterly and annual reports to the governor, legislative finance committee and lottery oversight committee disclosing the total lottery revenue, prizes, commissions, ticket costs, operating expenses and net revenues of the authority during the reporting period and, in the annual report, describe the organizational structure of the authority and summarize the functions performed by each organizational division within the authority;

(2) maintain weekly or more frequent records of lottery transactions, including the distribution of lottery tickets to retailers, revenue received, claims for prizes, prizes paid, prizes forfeited and other financial transactions of the authority; and

(3) use the state government fiscal year.

B. The board shall provide, for informational purposes, to the department of finance and administration and the legislative finance committee, by December 1 of each year, a copy of the annual proposed operating budget for the authority for the succeeding fiscal year. This budget proposal shall also be accompanied by an estimate of the net revenues to be deposited in the [public school capital outlay fund and the lottery tuition] legislative success scholarship fund for the current and succeeding fiscal years.

C. The board shall contract with an independent certified public accountant or firm for an annual financial audit of the authority. The certified public accountant or firm shall have no financial interest in any lottery contractor. The certified public accountant or firm shall present an audit report no later than March 1 for the prior fiscal year. The certified public accountant or firm shall evaluate the internal auditing controls in effect during the audit period. The cost of this financial audit shall be an operating expense of the authority. The legislative finance committee may, at any time, order an audit of any phase of the operations of the authority, at the expense of the authority, and shall receive a copy of the annual independent financial audit. A copy of any audit performed by the certified public accountant or ordered by the legislative finance committee shall be transmitted to the governor, the speaker of the house of representatives, the president pro tempore of the senate, the legislative finance committee and the lottery oversight committee."

Section 5. Section 21-1-4.3 NMSA 1978 (being Laws 1996, Chapter 71, Section 3) is amended to read:

"21-1-4.3. [TUITION] LEGISLATIVE SUCCESS SCHOLARSHIPS AUTHORIZED--CERTAIN EDUCATIONAL INSTITUTIONS.--

A. To the extent that funds are made available by the legislature from the [lottery tuition] legislative success scholarship fund, the boards of regents of New Mexico state university, New Mexico institute of mining and technology, eastern New Mexico university, western New Mexico university, the university of New Mexico, New Mexico highlands university and northern New Mexico state school shall award [tuition] legislative success scholarships for qualified resident students attending their respective institutions and branches of those institutions.

B. Except as authorized in Subsection C of this section, the [tuition] legislative success scholarships authorized in this section shall apply only to full-time resident students who, immediately upon completion of a high school curriculum at a public or accredited private New Mexico high school or upon receiving a graduate equivalent diploma, are accepted for entrance to and attend one of the state educational institutions set forth in this section or one of the branches of those institutions. Each [tuition] legislative success scholarship shall be awarded for up to four consecutive years beginning the second semester of the recipient's first year of enrollment [provided that] if the recipient has maintained residency in New Mexico and maintained a grade point average of 2.5 or higher on a 4.0 scale during his first semester of full-time enrollment.

C. The [tuition] legislative success scholarships authorized in this section shall also apply to full-time resident students who, immediately upon completion of a high school curriculum at a public or accredited private New Mexico high school or upon receiving a graduate equivalent diploma, attend a two-year public post-secondary educational institution in New Mexico and who, upon the completion of that curriculum or at the end of two years, whichever is sooner, transfer to one of the post-secondary state educational institutions set forth in this section. Those students shall be eligible for a [tuition] legislative success scholarship for two consecutive years [provided that] if those students maintain residency in New Mexico, maintain a grade-point average of 2.5 or higher on a 4.0 scale and attend the institution full time during the regular academic year.

D. The commission on higher education shall prepare guidelines setting forth explicit student continuing eligibility criteria and guidelines for administration of the [tuition] legislative success scholarship program. Guidelines shall be distributed to the board of regents of each institution to enable a uniform availability of the [resident student tuition] legislative success scholarships."

Section 6. Section 21-1-4.4 NMSA 1978 (being Laws 1996, Chapter 71, Section 4) is amended to read:

"21-1-4.4. COMMISSION ON HIGHER EDUCATION--DETERMINATION OF [TUITION] LEGISLATIVE SUCCESS SCHOLARSHIPS--USE OF [LOTTERY TUITION] LEGISLATIVE SUCCESS SCHOLARSHIP FUND.--Prior to June 1 of each year, the commission on higher education shall determine the amount of money available for [tuition] legislative success scholarships at state public post-secondary educational institutions. Based on the amount appropriated by the legislature from the [lottery tuition] legislative success scholarship fund and on the projected enrollment at all public post-secondary educational institutions, the commission on higher education shall establish the percentage of tuition that shall be awarded for qualified resident students attending New Mexico public post-secondary educational institutions. The percentage of tuition awarded shall be the same for each institution, regardless of the actual cost of tuition at each institution."

Section 7. REPEAL.--Laws 1995, Chapter 155, Section 38 is repealed.

Section 8. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 1999.