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?*x rn o <br />RICHARD H. MOORE <br />TREASURER <br />TO: <br />FROM: <br />DATE: <br />State of North Carolina <br />Department of State Treasurer <br />State and Local Government Finance Division <br />and the Local Government Commission <br />County Finance Officers and Their Auditors <br />T. Vance Holloman, Deputy Treasurer <br />August 2, 2006 <br />as <br />T. VANCE HOLLOMAN <br />DEPUTY TREASURER <br />Memorandum # 1063 <br />SUBJECT: General Guidelines for Using State Lottery Proceeds for School Construction <br />The N. C. General Assembly has adopted legislation (Session Law 2005-344) allocating a portion of <br />the net revenues from the N. C. State Lottery Fund to the Public School Building Capital Fund <br />(PSBCF) to' be used for the construction of public schools in the State based on formulas and <br />criteria established in the legislation. A county may use lottery revenues in the PSBCF to pay for <br />school construction projects in local school administrative units and to retire indebtedness <br />incurred for school construction projects on or after January 1, 2003 (G.S. 115C-546.2.(d)(4)). This <br />memorandum provides general guidelines to counties regarding the use of lottery funds for public <br />school construction projects, as well as information on how the Local Government Commission will <br />review plans to use such funds for repayment of debt issued for public school construction. <br />Public school construction projects originally funded from revenue sources other than lottery <br />revenues transferred to the Public School Building Capital Fund must be completed from those <br />original revenue sources. If these projects were financed by debt, lottery revenues can be used for <br />debt service payments provided the debt was incurred on or after January 1, 2003. Lottery <br />revenues cannot be used to pay for computers, software, programming, etc. and other school <br />technology needs. <br />For financing new school construction projects using lottery revenues, the general guidance of the <br />Commission is to conservatively estimate the distribution amounts available for debt service from <br />this new revenue source until sufficient time has passed that a more reliable estimate of the <br />revenue levels expected on an annual basis can be determined. In addition, a portion of the final <br />annual allocations to counties is based upon relative effective tax rates and may vary from year to <br />year. <br />When considering financing applications which use State Lottery funds for debt service, we will <br />require assurance that local units commit to and provide for the possible use of other available <br />secondary revenues to meet debt service requirements in the event that lottery revenues are <br />insufficient. This is the same policy that we follow with other uncertain revenue streams. This <br />policy is critical to protect the strong ratings that local governments across the state have earned. <br />If you have any questions, please contact Tim Romocki at (919) 807-2360. <br />325 North Salisbury Street, Raleigh, North Carolina 27603-1385 <br />Telephone: (919) 807-2350 Fax: (919) 807-2352 Website: www.nctreasurer.com <br />An Equal Opportunity/Affirmative Action Employer