A BILL TO BE ENTITLED
AN ACT to create north carolina's "old north State" scholarship for tuition and fees at the university of north carolina system schools and the "long Leaf pine" grant for tuition and fees at the North Carolina community college system schools and to amend the north carolina constitution to provide accountability for expenditures of lottery proceeds on educational programs and purposes.
The General Assembly of North Carolina enacts:
SECTION 1.  Chapter 116 of the General Statutes is amended by adding a new Article to read:
"Article 23A.
"Old North State Scholarships and Long Leaf Pine Grants.
"§ 116-209.40.  Creation.
There shall be an Old North State Scholarship for eligible students matriculating at the constituent institutions of The University of North Carolina and a Long Leaf Pine Grant for eligible students matriculating at the North Carolina Community College System constituent institutions.
"§ 116-209.41.  Definitions. 
(1)	'Academic year' means a period of time, typically nine months, in which a full-time student is expected to complete the equivalent of at least two semesters' academic work, but which may also include summer terms.
(2)	'Eligible High School' means:
a.	A public or private secondary school or charter school that is located in North Carolina and accredited by any of the following: 
1.	The Southern Association of Colleges and Schools.
2.	The North Carolina Department of Public Instruction.
3.	The Association of Christian Schools International; or
b.	Located in another state and accredited by one of the following regional agencies: 
1.	The Southern Association of Colleges and Schools.
2.	The New England Association of Schools and Colleges.
3.	The Middle States Association of Colleges and Schools.
4.	The North Central Association of Colleges and Schools.
5.	The Northwestern Association of Schools and Colleges.
6.	The Western Association of Schools and Colleges. 
(3)	'Eligible postsecondary institution' means a school that is:
a.	A constituent institution of The University of North Carolina.
b.	A constituent college of the North Carolina Community College System.
(4)	'Full-time student' means a matriculated student attending a postsecondary educational institution and enrolled for the equivalent of at least 12 semester hours.
(5)	'Grade point average' means the numbered grade average calculated using a 4.0 scale.
(6)	'Matriculated status' means being recognized as a student in a defined program of study leading to a degree, diploma, or certificate at a postsecondary institution.
(7)	'Semester hours' includes each semester hour attempted, whether remedial or for credit toward a degree, but shall not include any semester hour attempted before graduating from high school or earning a general educational development (GED) equivalency diploma.
(8)	'Student' includes the following:
a.	'Freshman student' means a student at a postsecondary institution who has attempted less than 31 semester hours.
b.	'Sophomore student' means a student at a postsecondary institution who has attempted at least 31 semester hours but less than 61 semester hours.
c.	'Junior student' means a student at a postsecondary institution who has attempted at least 61 semester hours but less than 91 semester hours.
d.	'Senior student' means a student at a postsecondary institution who has attempted at least 91 semester hours but less than 128 semester hours.
(9)	'Title IV' means Title IV of the Higher Education Act of 1965, as amended, 20 U.S.C.A. Sec. 1070, et seq.
"§ 116-209.42.  Ineligibility.
A student is ineligible for any scholarship or grant described in this Part if the student meets any of the following qualifications: (1)	 Is not a United States citizen or a permanent alien who meets the definition of an eligible noncitizen under federal Title IV requirements. 
(2)	Has not complied with United States Selective Service System requirements for registration, if such requirements are applicable to the student. 
(3)	Is in default on a federal Title IV educational loan or a State of North Carolina educational loan, provided that a student who is otherwise eligible and has fully repaid the defaulted loan will be eligible to obtain a scholarship or grant for future academic terms but not retroactively. 
(4)	Owes a refund on a federal Title IV student financial aid program or a North Carolina student financial aid program, provided that a student who is otherwise eligible and has fully paid the refund owed will be eligible to obtain a scholarship or grant for future academic terms but not retroactively. 
(5)	Has been convicted of a felony offense involving marijuana, a controlled substance, or a dangerous drug provided that such ineligibility extends from the date of conviction to the completion of the next academic term. 
(6)	Is incarcerated. 
(7)	Does not meet each qualification listed in the North Carolina General Statutes section relating to the relevant scholarship or grant and applicable to the student. 
"§ 116-209.43.  Eligibility for "Old North State" Scholarship.
(a)	To be eligible for an Old North State Scholarship, an entering freshman student seeking an associate or baccalaureate degree at an eligible public postsecondary institution shall meet all of the following requirements: 
(1)	Meet residency requirements by meeting the requirements to be classified as a legal resident of North Carolina that shall be based upon the in-State tuition policy of the Board of Governors; 
(2)	Meet achievement standards by meeting either of the following: 
a.	Having graduated from an eligible high school while meeting the curriculum requirements of the program of study in 2003 or thereafter and meeting the requirements set out in the applicable subdivision of G.S. 116-209.45. 
b.	In the case of a student who is otherwise qualified but meets any of the following: 
1.	 Did not graduate from high school or complete a home school study program, having received the general educational development (GED) equivalency diploma awarded by the North Carolina Community College System.
2.	Completed a home school study program meeting the requirements in lieu of graduating from an eligible high school, earning a cumulative grade point average of at least 3.0 at an eligible public postsecondary institution at the end of the semester in which the student has attempted 30 semester hours, provided that such student shall be eligible to receive a retroactive Old North State Scholarship for such student's freshman year to be paid at the end of the freshman year.
3.	Graduated from a high school which is not an eligible high school, earning a cumulative grade point average of at least 3.0 at an eligible public postsecondary institution at the end of the semester in which the student has attempted 30 semester hours.
If the student is eligible to receive a retroactive Old North State Scholarship for the student's freshman year to be paid at the end of the freshman year; and
(3)	Meet enrollment standards by being admitted, enrolled, and classified as an undergraduate student in a matriculated status. 
(b)	To be eligible for an Old North State Scholarship, a sophomore student seeking an associate or baccalaureate degree at an eligible public postsecondary institution shall: 
(1) 	Meet residency requirements by meeting the requirements to be classified as a legal resident of North Carolina that shall be based upon the in-State tuition policy of the Board of Governors.
(2)	Meet achievement standards by meeting the following criteria:
a.	Earning a cumulative grade point average of at least 3.0 at a postsecondary institution at the end of the quarter or semester in which the student has attempted 30 semester hours; and 
b.	Maintaining satisfactory academic progress in a course of study in accordance with the standards and practices used for federal Title IV programs by the postsecondary institution in which the student is enrolled; and 
c.	Meeting enrollment standards by being admitted, enrolled, and classified as an undergraduate student in a matriculated status or, in the case of an otherwise eligible student who is classified as a professional level student rather than an undergraduate student, being accepted into the professional level program of study prior to receiving a baccalaureate degree. 
(c)	To be eligible for an Old North State Scholarship, a junior student seeking a baccalaureate degree at a public postsecondary institution shall: 
(1)	Meet residency requirements by meeting the requirements to be classified as a legal resident of North Carolina which shall be based upon the in-State tuition policy of the Board of Governors;
(2)	Meet achievement standards by meeting the following criteria: 
a.	Earning a cumulative grade point average of at least 3.0 at a postsecondary institution at the end of the quarter or semester in which the student has attempted 60 semester hours;
b.	Maintaining satisfactory academic progress in a course of study in accordance with the standards and practices used for federal Title IV programs by the postsecondary institution in which the student is enrolled; and 
c.	Meeting enrollment standards by being admitted, enrolled, and classified as an undergraduate student in a matriculated status or, in the case of an otherwise eligible student who is classified as a professional level student rather than an undergraduate student, being accepted into the professional level program of study prior to receiving a baccalaureate degree. 
(d)	To be eligible for an Old North State Scholarship, a senior student seeking a baccalaureate degree at a public postsecondary institution shall: 
(1)	Meet residency requirements by meeting the requirements to be classified as a legal resident of North Carolina which shall be based upon the in-State tuition policy of the Board of Governors;
(2)	Meet achievement standards by meeting the following criteria: 
a.	 Meeting all achievement standards for Old North State eligibility in his or her junior year; 
b.	 Earning a cumulative grade point average of at least 3.0 at a postsecondary institution at the end of the semester in which the student has attempted 90 semester hours; and 
c.	Maintaining satisfactory academic progress in a course of study in accordance with the standards and practices used for federal Title IV programs by the postsecondary institution in which the student is enrolled; and 
(3)	 Meet enrollment standards by being admitted, enrolled, and classified as an undergraduate student in a matriculated status or, in the case of an otherwise eligible student who is classified as a professional level student rather than an undergraduate student, being accepted into the professional level program of study prior to receiving a baccalaureate degree. 
(e)	A student who fails to maintain a cumulative grade point average of at least 3.0 at the end of the semester in which the student has attempted 30 semester hours may attend the next 30 semester hours without an Old North State Scholarship. An otherwise eligible student who regains a cumulative grade point average of at least 3.0 at the end of the semester in which the student has attempted 60 semester hours may requalify for an Old North State Scholarship. 
(f)	For students eligible for an Old North State Scholarship under this section, no minimum number of hours of enrollment is required. 
(g)	(1)	Except as set out in paragraph (2) of this subsection, a student may receive the Old North State Scholarship until the first of these events: 
a.	The student has earned a baccalaureate degree; or 
b.	 The student has attempted at any postsecondary institution a total of 127 semester hours. 
(2)	A student enrolled in an undergraduate degree program designed to be more than 127 semester hours in length is eligible to receive the Old North State Scholarship for the lesser of: 
a.	A total of 150 attempted semester hours; or 
b.	The number of hours required for graduation if the student has a 3.0 cumulative grade point average of at least 3.0 after the term in which the student attempted 127 semester hours. 
(h)	Subject to the amounts appropriated by the General Assembly and provisions relating to the scholarship shortfall reserve subaccount in G.S. 116-209.47, an Old North State Scholarship awarded under this section shall include tuition, approved mandatory fees, and a book allowance not to exceed two hundred fifty dollars ($250.00) per semester.
"§ 116-209.44.  Eligibility for Long Leaf Pine Grant.
(a)	To be eligible for a Long Leaf Pine Grant, a student seeking a diploma or certificate at a College of the North Carolina Community College System shall: 
(1)	Meet residency requirements by meeting the requirements to be classified as a legal resident of North Carolina that shall be based upon the in-State tuition policy of the Board of Governors; and 
(2)	Meet enrollment standards by being admitted, enrolled, and classified as an undergraduate student in a matriculated status in a program of study leading to a certificate or diploma and maintaining satisfactory academic progress in accordance with the standards and practices used for federal Title IV programs by the institution at which the student is enrolled. 
(b)	There is no minimum number of hours of enrollment required for eligibility for a Long Leaf Pine Grant under this section. 
(c)	An eligible student may receive Long Leaf Pine Grants for all coursework required by the institution for two programs of study leading to a certificate or diploma, including remedial or developmental studies. A student may change the program of study twice. 
(d)	Subject to the amounts appropriated by the General Assembly and provisions relating to the scholarship shortfall reserve subaccount in G.S. 116-209.47, a Long Leaf Pine Grant awarded under this section shall include tuition, approved mandatory fees, and a book allowance not to exceed two hundred fifty dollars ($250.00) per semester.
"§ 116-209.45.  High school reporting systems.
Each high school shall adopt the following reporting system for purposes of identifying and qualifying graduating seniors for the Old North State Scholarship and the Long Leaf Pine Grant program: 
(1)	For students graduating from high school in 2003, or thereafter, a final grade point average of at least a 3.5 on a 4 point scale in their core curriculum subjects if the student meets the college preparatory curriculum requirements, and graduates in the top ten percent (10%) of their graduating class; or 
(2)	For students graduating from high school in 2003 or thereafter, a final grade point average of at least a 3.5 on a 4 point scale in their core curriculum subjects if the student meets the career and technical curriculum requirements, and graduates in the top ten percent (10%) of their graduating class.
"§ 116-209.46.  Old North State/Long Leaf Pine Trust Fund.
There shall be an Old North State/Long Leaf Pine Trust Fund to be administered by the State Education Assistance Authority, to provide for the funding of scholarships and grants to students qualified under the provisions of this Article. Each fiscal year, net proceeds of any lottery, which the General Assembly may, by law, create and regulate, shall be transferred to the trust fund. In the event the General Assembly does not create a lottery, notwithstanding any other provision of law, there is annually appropriated from the General Fund to the Old North State/Long Leaf Pine Trust Fund an amount equal to the amount that would otherwise have been distributed to local governments pursuant to the following sections of the General Statutes, repealed by Section 34.15 of S.L. 2001‑424, in the fiscal year their repeal becomes effective:
(1)	G.S. 105‑164.44C. Reimbursement for sales taxes on food stamp foods and supplemental foods.
(2)	G.S. 105‑275.1. Reimbursement for exclusion of manufacturers' inventories and poultry and livestock.
(3)	G.S. 105‑275.2. Reimbursement to counties and municipalities for repeal of State tax on intangible personal property.
(4)	G.S. 105‑277.001. Reimbursement for exclusion of retailers' and wholesalers' inventories.
(5)	G.S. 105‑277.1A. Property classified for taxation at reduced valuation; duties of tax collectors; reimbursement of localities for portion of tax lost.
Any funds appropriated under this subsection and not needed to fund scholarships and grants, and not needed to maintain the Scholarship Shortfall Reserve subaccount in G.S. 116-209.38, shall revert to the General Fund.
"§ 116-209.47.  Scholarship Shortfall Reserve Subaccount.
There shall be a Scholarship Shortfall Reserve subaccount established for the purposes of holding money from the Scholarship Trust Fund to make up the difference in cost of scholarships and grants to recipient students in years for which revenues in the Scholarship Trust Fund fall below needed amounts to continue the funding of such scholarships and grants. The purpose of this subaccount shall be to prevent the loss of scholarships and grants to students during their course of study for reasons unrelated to their eligibility. An amount equal to fifty 50 percent (50%) of the total amount of funds in the Scholarship Trust Fund disbursed during the preceding fiscal year in the form of scholarships and grants shall be deposited and maintained in the Scholarship Shortfall reserve subaccount. If the net proceeds paid into the Scholarship Trust Fund in any year are not sufficient to meet the amount appropriated for scholarships and grants, the Shortfall Reserve subaccount may be drawn to meet the deficiency. In the event it becomes necessary to draw from the reserve subaccount in any fiscal year, the scholarship program shall be reviewed by The University of North Carolina Board of Governors and the North Carolina Community College Board of Trustees and shall be reduced to accommodate available trust fund proceeds, exclusive of the shortfall reserve subaccount, through such methods as reducing the family income cap qualification, reducing or eliminating grants for student fees and books, and reducing the academic years funded.
"§ 116-209.48.  Tuition and fee policy.
The University of North Carolina Board of Governors, the North Carolina Community College Board of Trustees, Governor, and General Assembly shall not consider the Old North State Scholarship or Long Leaf Pine Grant when setting tuition and fee schedules, such that tuition and fees are raised on the scholarship or grant recipient to maximize institutional dollars flowing from the Trust Fund or such that tuition and fees are raised on the general student population.
"§ 116-209.49.  Federal aid.
An Old North State Scholarship and a Long Leaf Pine Grant may be applied only to tuition and mandatory fees not covered by any Pell Grant or other federal grant. Before receiving scholarships under this Article, all students shall apply for the federal Pell grant and apply any funds received under the Pell Grant to their tuition and fees.
"§ 116-209.50.  Rules and funding.
(a)	The University of North Carolina Board of Governors and the North Carolina Community College Board of Trustees may issue rules not inconsistent with the provisions of this Article relating to grants and scholarships described in this Article. 
(b)	The funding for the scholarships and grants described in this Article shall be subject to annual appropriations enacted by the General Assembly which shall establish the total amount of funding for these scholarships and grants.
"§ 116-209.51. Department of Public Instruction rules.
The Department of Public Instruction shall develop procedures for all of the following:
(1)	 Weighting high school grades to ensure fairness.
(2)	 Weighting high school grades to take into account any grade inflation.
(3)	 Assessing students who are home schooled.
"§ 116-209.52. Payment procedures.
The State Education Assistance Authority shall develop a procedure for the payment of the scholarships and grants to the institutions of higher education and for monitoring recipients of the scholarships to ensure that they remain eligible for the support based on successful progress toward the receipt of a degree."
SECTION 2.  Article IX of the Constitution of North Carolina is amended by adding a new section to read:
"Sec. 6. State Lottery.
(1)	The General Assembly may by law provide for the operation and regulation of a lottery or lotteries by or on behalf of the State and for any matters relating to the purposes or provisions of this section. Proceeds derived from the lottery or lotteries operated by or on behalf of the State shall be used to pay the operating expenses of the lottery or lotteries, including all prizes, without any appropriation required by law, and for the programs and purposes as provided by this section.
(2)	Net proceeds of a lottery or lotteries operated by or on behalf of the State, after payment of operating expenses and prizes, shall be separately accounted for and shall be specifically identified by the Governor in the budget presented to the General Assembly as a separate budget category entitled 'Lottery Proceeds', and the Governor shall make specific recommendations as to the educational programs and educational purposes to which those net proceeds shall be appropriated. The General Assembly shall appropriate all 'Lottery Proceeds' only for educational programs and educational purposes in a separate budget category. The 'Lottery Proceeds' shall be used to support improvements and enhancements in educational programs and educational purposes, and these 'Lottery Proceeds' shall be used to supplement, not supplant, nonlottery resources for the educational programs and educational purposes."
SECTION 3.  The amendment set out in Section 1 of this act shall be submitted to the qualified voters of the State at the general election in November 2002, 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 the voting systems and ballots shall be:
				"[  ] FOR		[  ] AGAINST
	Constitutional amendment limiting the use of proceeds of any lottery or lotteries operated by or on behalf of the State to specific purposes and to provide that those lottery proceeds shall supplement and not supplant funds from nonlottery sources for those purposes."
SECTION 4.  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 upon this certification. The Secretary of State shall enroll the amendment so certified among the permanent records of that office.
SECTION 5.  This act is effective when it becomes law and shall apply to scholarships and grants for the academic year beginning with the Fall semester of 2003.