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

RELATING TO STATE LOTTERY REVENUES; CHANGING THE FORMULA FOR DISTRIBUTION OF LOTTERY NET REVENUES; DISTRIBUTING LOTTERY REVENUES TO PUBLIC SCHOOLS FOR EDUCATIONAL TECHNOLOGY PURSUANT TO THE TECHNOLOGY FOR EDUCATION ACT; PROVIDING FOR LEGISLATIVE APPROPRIATION OF OPERATING EXPENSES OF BOARD; MAKING AN APPROPRIATION.

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

Section 1. 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] forty percent of the revenues in the [public school capital outlay] educational technology fund for expenditure pursuant to the provisions of the [Public School Capital Outlay] Technology for Education Act and [forty] sixty percent in the lottery tuition fund. Estimated net revenues shall be transmitted monthly to the state treasurer for deposit in the funds, provided the total amount of annual net revenues for the fiscal year shall be transmitted no later than August 1 [each] of the following fiscal 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 fund."

Section 2. 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] budget purposes, to the department of finance and administration and the legislative finance committee, by [December] September 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] educational technology fund and the lottery tuition 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.

D. The legislature shall annually appropriate the portion of revenues for operating expenses of the authority."

Section 3. Section 22-15A-9 NMSA 1978 (being Laws 1994, Chapter 96, Section 9) is amended to read:

"22-15A-9. EDUCATIONAL TECHNOLOGY FUND--DISTRIBUTION.--

A. Upon annual review and approval of a school district's educational technology plan, the bureau shall determine a separate distribution from the educational technology fund for each school district.

B. On or before July 31 of each year, the bureau shall distribute money in the educational technology fund directly to each school district in an amount equal to ninety percent of the district's estimated entitlement as determined by the projected membership for the school year. A school district's entitlement is that portion of the total amount of the annual appropriation that the projected membership bears to the projected membership of the state. Kindergarten membership shall be calculated on a one-half full-time equivalent basis.

C. On or before January 30 of each year, the bureau shall recompute each entitlement using the final funded membership for that year and shall allocate the balance of the annual appropriation adjusting for any over- or under-projection of membership.

D. Any school district receiving funding pursuant to the Technology for Education Act is responsible for the purchase, distribution, use and maintenance of educational technology.

E. As used in this section:

(1) "annual appropriation" means the sum of appropriations to the educational technology fund for the fiscal year and the state lottery revenues distributed to the fund in the prior fiscal year; and

(2) "membership" means the total enrollment of qualified students, as defined in the Public School Finance Act, on the current roll of class or school on a specified day. The current roll is established by the addition of original entries and re-entries minus withdrawals. Withdrawal of students, in addition to students formally withdrawn from the public school, includes students absent from the public school for as many as ten consecutive school days."

Section 4. REPEAL.--Laws 1995, Chapter 155, Section 38 is repealed.

Section 5. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 1999.